Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 11, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Brookfield DTLA Fund Office Trust Investor Inc. | |
Entity Central Index Key | 1,575,311 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Investments in Real Estate: | ||
Land | $ 227,555 | $ 227,555 |
Buildings and improvements | 2,177,539 | 2,167,746 |
Tenant improvements | 301,810 | 279,948 |
Investments in real estate, gross | 2,706,904 | 2,675,249 |
Less: accumulated depreciation | 310,886 | 256,130 |
Investments in real estate, net | 2,396,018 | 2,419,119 |
Cash and cash equivalents | 65,504 | 53,736 |
Restricted cash | 59,662 | 53,830 |
Rents, deferred rents and other receivables, net | 110,270 | 95,690 |
Intangible assets, net | 81,474 | 99,710 |
Deferred charges, net | 62,225 | 66,791 |
Prepaid and other assets, net | 3,549 | 9,134 |
Total assets | 2,778,702 | 2,798,010 |
Liabilities: | ||
Mortgage loans, net | 2,121,223 | 2,111,405 |
Accounts payable and other liabilities | 73,868 | 105,004 |
Due to affiliates, net | 3,272 | 9,335 |
Intangible liabilities, net | 24,035 | 30,208 |
Total liabilities | 2,222,398 | 2,255,952 |
Commitments and Contingencies | ||
Mezzanine Equity: | ||
Mezzanine equity | 798,992 | 726,595 |
Total mezzanine equity | 798,992 | 726,595 |
Stockholders’ Deficit: | ||
Common stock, $0.01 par value, 1,000 shares issued and outstanding as of September 30, 2016 and December 31, 2015 | 0 | 0 |
Additional paid-in capital | 194,210 | 191,710 |
Accumulated deficit | (205,217) | (177,879) |
Accumulated other comprehensive loss | (4,148) | (2,580) |
Noncontrolling interest – Series B common interest | (227,533) | (195,788) |
Total stockholders’ deficit | (242,688) | (184,537) |
Total liabilities and deficit | 2,778,702 | 2,798,010 |
7.625% Series A Cumulative Redeemable Preferred Stock, $0.01 par value, 9,730,370 shares issued and outstanding as of September 30, 2016 and December 31, 2015 | ||
Mezzanine Equity: | ||
Mezzanine equity | 368,215 | 354,304 |
Series A-1 preferred interest | ||
Mezzanine Equity: | ||
Mezzanine equity | 361,993 | 349,084 |
Senior participating preferred interest | ||
Mezzanine Equity: | ||
Mezzanine equity | 24,835 | 23,207 |
Series B preferred interest | ||
Mezzanine Equity: | ||
Mezzanine equity | $ 43,949 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 1,000 | 1,000 |
Common stock, shares outstanding (in shares) | 1,000 | 1,000 |
Series A preferred stock | ||
Preferred stock features | 7.625% Series A Cumulative Redeemable Preferred Stock | 7.625% Series A Cumulative Redeemable Preferred Stock |
Series A preferred stock dividend rate | 7.625% | 7.625% |
Series A preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Series A preferred stock, shares issued (in shares) | 9,730,370 | 9,730,370 |
Series A preferred stock, shares outstanding (in shares) | 9,730,370 | 9,730,370 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | ||||
Rental income | $ 40,334 | $ 41,211 | $ 124,071 | $ 119,200 |
Tenant reimbursements | 23,481 | 21,545 | 69,318 | 66,756 |
Parking | 9,251 | 8,746 | 27,772 | 26,238 |
Interest and other | 4,342 | 3,059 | 10,028 | 13,313 |
Total revenue | 77,408 | 74,561 | 231,189 | 225,507 |
Expenses: | ||||
Rental property operating and maintenance | 24,435 | 24,893 | 71,509 | 71,106 |
Real estate taxes | 9,573 | 6,934 | 28,413 | 26,412 |
Parking | 2,213 | 2,119 | 6,259 | 5,948 |
Other expense | 1,428 | 405 | 3,125 | 1,773 |
Depreciation and amortization | 25,695 | 25,618 | 78,032 | 74,191 |
Interest | 23,458 | 23,939 | 71,479 | 71,213 |
Total expenses | 86,802 | 83,908 | 258,817 | 250,643 |
Net loss | (9,394) | (9,347) | (27,628) | (25,136) |
Series B common interest – allocation of net loss | (10,532) | (10,310) | (30,023) | (29,756) |
Net loss attributable to Brookfield DTLA | (4,954) | (4,752) | (13,427) | (13,185) |
Net loss available to common interest holders of Brookfield DTLA | (9,591) | (9,389) | (27,338) | (27,096) |
Series A-1 Preferred Interest | ||||
Expenses: | ||||
Current dividends | 4,303 | 4,303 | 12,909 | 12,909 |
Senior participating preferred interest | ||||
Expenses: | ||||
Current dividends | 0 | 608 | 0 | 1,792 |
Redemption measurement adjustment | 908 | 804 | 1,964 | 3,104 |
Series B preferred interest | ||||
Expenses: | ||||
Current dividends | 881 | 0 | 949 | 0 |
Series A preferred stock | ||||
Expenses: | ||||
Current dividends | $ 4,637 | $ 4,637 | $ 13,911 | $ 13,911 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (9,394) | $ (9,347) | $ (27,628) | $ (25,136) |
Derivative transactions: | ||||
Derivative holding gains (losses) | 1,832 | (3,579) | (3,290) | (3,707) |
Comprehensive loss | (7,562) | (12,926) | (30,918) | (28,843) |
Comprehensive loss attributable to noncontrolling interests | 3,481 | 6,468 | 15,922 | 13,891 |
Comprehensive loss available to common interest holders of Brookfield DTLA | $ (4,081) | $ (6,458) | $ (14,996) | $ (14,952) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Non-controlling Interest |
Balance, beginning of period at Dec. 31, 2014 | $ (98,398) | $ 0 | $ 191,710 | $ (137,339) | $ (2,066) | $ (150,703) |
Balance, beginning of period (in shares) at Dec. 31, 2014 | 1,000 | |||||
Increase (Decrease) in Stockholder's Equity [Roll Forward] | ||||||
Net loss | (25,136) | (13,185) | (11,951) | |||
Other comprehensive loss | (3,707) | (1,767) | (1,940) | |||
Dividends on Series A preferred stock, Series A-1 preferred interest, senior participating preferred interest and Series B preferred interest | (31,716) | (13,911) | (17,805) | |||
Balance, end of period at Sep. 30, 2015 | (158,957) | $ 0 | 191,710 | (164,435) | (3,833) | (182,399) |
Balance, end of period (in shares) at Sep. 30, 2015 | 1,000 | |||||
Balance, beginning of period at Dec. 31, 2015 | (184,537) | $ 0 | 191,710 | (177,879) | (2,580) | (195,788) |
Balance, beginning of period (in shares) at Dec. 31, 2015 | 1,000 | |||||
Increase (Decrease) in Stockholder's Equity [Roll Forward] | ||||||
Net loss | (27,628) | (13,427) | (14,201) | |||
Other comprehensive loss | (3,290) | (1,568) | (1,722) | |||
Contribution from Brookfield DTLA Holdings | 2,500 | 2,500 | ||||
Dividends on Series A preferred stock, Series A-1 preferred interest, senior participating preferred interest and Series B preferred interest | (29,733) | (13,911) | (15,822) | |||
Balance, end of period at Sep. 30, 2016 | $ (242,688) | $ 0 | $ 194,210 | $ (205,217) | $ (4,148) | $ (227,533) |
Balance, end of period (in shares) at Sep. 30, 2016 | 1,000 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (27,628) | $ (25,136) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Gain on sale of land held for investment | 0 | 28 |
Depreciation and amortization | 78,032 | 74,191 |
(Recovery of) provision for doubtful accounts | (239) | 72 |
Amortization of below-market leases/ above-market leases | (2,733) | (2,214) |
Straight-line rent amortization | (14,574) | (14,036) |
Amortization of tenant inducements | 2,502 | 1,916 |
Amortization of discounts and deferred financing costs | 3,499 | 3,797 |
Changes in assets and liabilities: | ||
Rents, deferred rents and other receivables | (2,508) | 343 |
Deferred charges | (3,912) | (16,243) |
Prepaid and other assets | 5,585 | 7,797 |
Accounts payable and other liabilities | (2,761) | 5,978 |
Due to affiliates, net | (6,064) | (3,688) |
Net cash provided by operating activities | 29,199 | 32,749 |
Cash flows from investing activities: | ||
Proceeds from sale of land held for investment | 0 | 2,028 |
Expenditures for improvements to real estate | (41,189) | (40,743) |
Increase in restricted cash | (5,832) | (10,233) |
Net cash used in investing activities | (47,021) | (48,948) |
Cash flows from financing activities: | ||
Proceeds from mortgage loans | 470,000 | 0 |
Principal payments on mortgage loans | (460,543) | 0 |
Dividends paid on Series A preferred stock | (21,893) | 0 |
Distribution to senior participating preferred interest | (336) | 0 |
Contributions from Series B preferred interest | 43,000 | 0 |
Contribution from Brookfield DTLA Holdings | 2,500 | 0 |
Financing fees paid | (3,138) | (43) |
Net cash provided by (used in) financing activities | 29,590 | (43) |
Net change in cash and cash equivalents | 11,768 | (16,242) |
Cash and cash equivalents at beginning of period | 53,736 | 125,004 |
Cash and cash equivalents at end of period | 65,504 | 108,762 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 67,901 | 67,425 |
Supplemental disclosure of non-cash activities: | ||
Accrual for real estate improvements | 6,758 | 12,633 |
Accrual for deferred leasing costs | 2,169 | 5,257 |
Decrease in fair value of interest rate swap, net | $ (3,290) | $ (3,707) |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Brookfield DTLA Fund Office Trust Investor Inc. (“Brookfield DTLA” or the “Company”) is a Maryland corporation and was incorporated on April 19, 2013. Brookfield DTLA was formed for the purpose of consummating the transactions contemplated in the Agreement and Plan of Merger dated as of April 24, 2013, as amended (the “Merger Agreement”), and the issuance of shares of 7.625% Series A Cumulative Redeemable Preferred Stock (the “Series A preferred stock”) in connection with the acquisition of MPG Office Trust, Inc. and MPG Office, L.P. (together, “MPG”). Brookfield DTLA is a direct subsidiary of Brookfield DTLA Holdings LLC (“Brookfield DTLA Holdings”), a Delaware limited liability company, and an indirect subsidiary of Brookfield Office Properties Inc. (“BPO”). Brookfield DTLA owns BOA Plaza, EY Plaza, Wells Fargo Center–North Tower, Wells Fargo Center–South Tower, Gas Company Tower and 777 Tower, each of which are Class A office properties located in the Los Angeles Central Business District (the “LACBD”). Brookfield DTLA receives its income primarily from rental income (including tenant reimbursements) generated from the operations of its office and retail properties, and to a lesser extent, from its parking garages. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation As used in these condensed consolidated financial statements and related notes, unless the context requires otherwise, the terms “Brookfield DTLA,” the “Company,” “us,” “we” and “our” refer to Brookfield DTLA Fund Office Trust Investor Inc. Principles of Consolidation and Combination and Basis of Presentation The unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information and with the instructions to Form 10‑Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal and recurring nature, considered necessary for a fair presentation of the financial position and interim results of Brookfield DTLA as of and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of those that may be expected for a full fiscal year. The condensed consolidated balance sheet data as of December 31, 2015 has been derived from Brookfield DTLA’s audited financial statements; however, the accompanying notes to the condensed consolidated financial statements do not include all disclosures required by GAAP. The financial information included herein should be read in conjunction with the consolidated financial statements and related notes included in Brookfield DTLA’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 28, 2016 . Reclassifications In December 2015, Brookfield DTLA adopted the guidance in Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. We have combined the amortization of deferred financing costs ( $901 ) and the amortization of debt discounts ( $2,896 ) and presented a new total ( $3,797 ) in the condensed consolidated statement of cash flows for the nine months ended September 30, 2015 so as to reflect the presentation of such costs in the condensed consolidated balance sheet as of December 31, 2015 . Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. For example, estimates and assumptions have been made with respect to fair values of assets and liabilities for applying the acquisition method of accounting, the useful lives of assets, recoverable amounts of receivables, impairment of long-lived assets and fair value of debt. Actual results could ultimately differ from such estimates. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09 establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration that the entity expects to be entitled to receive in exchange for those goods or services and also requires certain additional disclosures. ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2014-09 on Brookfield DTLA’s consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This topic provides guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and requires related footnote disclosures. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15 on Brookfield DTLA’s consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis to ASC Topic 810 , Consolidation . ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with VIEs, and (iv) provide a scope exception for certain entities. The guidance in ASU 2015-02 became effective for Brookfield DTLA beginning January 1, 2016. The implementation of this pronouncement did not have a material impact on Brookfield DTLA’s consolidated financial statements. In April 2015, the FASB issued ASU 2015-03 that requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, as opposed to being presented as assets. Brookfield DTLA elected to early adopt ASU 2015-03 effective as of December 31, 2015. There was no effect on our consolidated statements of operations for the three and nine months ended September 30, 2015 as a result of adopting this pronouncement. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments to ASC Topic 230, Statement of Cash Flows . ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We do not expect the adoption of this update to have a material impact on Brookfield DTLA’s consolidated financial statements. Income Taxes Brookfield DTLA has elected to be taxed as a real estate investment trust (“REIT”) pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its tax period ended December 31, 2013. Brookfield DTLA conducts and intends to conduct its operations so as to continue to qualify as a REIT. Accordingly, Brookfield DTLA is not subject to U.S. federal income tax, provided that it continues to qualify as a REIT and distributions to its stockholders, if any, generally equal or exceed its taxable income. Brookfield DTLA has elected to treat certain of its subsidiaries as taxable REIT subsidiaries (“TRS”). Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our tenants, and holding assets that we cannot hold directly. A TRS is subject to both federal and state income taxes. Qualification and taxation as a REIT depends upon Brookfield DTLA’s ability to meet the various qualification tests imposed under the Code related to annual operating results, asset diversification, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that Brookfield DTLA will be organized or be able to operate in a manner so as to continue to qualify as a REIT. If Brookfield DTLA fails to qualify as a REIT in any taxable year, it will be subject to federal and state income tax on its taxable income at regular corporate tax rates, and it may be ineligible to qualify as a REIT for four subsequent tax years. Brookfield DTLA may also be subject to certain state or local income taxes, or franchise taxes on its REIT activities. Brookfield DTLA made no provision for income taxes in its condensed consolidated financial statements for the three and nine months ended September 30, 2016 and 2015 , respectively. Brookfield DTLA’s taxable income or loss is different than its financial statement income or loss. Brookfield DTLA recognizes tax benefits from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more likely than not recognition threshold. Brookfield DTLA had no unrecognized tax benefits as of September 30, 2016 and December 31, 2015 , and Brookfield DTLA does not expect its unrecognized tax benefits balance to change during the next 12 months. As of September 30, 2016 , Brookfield DTLA’s 2013 tax period and 2014 and 2015 tax years remain open due to the statute of limitations and may be subject to examination by federal, state and local authorities. The 2012 tax year as well as the short tax period ended October 15, 2013 for Brookfield DTLA and its subsidiaries remain open due to the statute of limitations and may be subject to examination by federal, state and local tax authorities. |
Rents, Deferred Rents and Other
Rents, Deferred Rents and Other Receivables, Net | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Rents, Deferred Rents and Other Receivables, Net | Rents, Deferred Rents and Other Receivables, Net Brookfield DTLA’s rents, deferred rents and other receivables are presented net of the following amounts in the condensed consolidated balance sheets (in thousands): September 30, 2016 December 31, 2015 Allowance for doubtful accounts $ 245 $ 484 Accumulated amortization of tenant inducements 9,027 6,525 Brookfield DTLA recorded a $(311) thousand and $(239) thousand recovery of doubtful accounts during the three and nine months ended September 30, 2016 , respectively. Brookfield DTLA recorded a $182 thousand and $72 thousand provision for doubtful accounts during the three and nine months ended September 30, 2015 , respectively. |
Intangible Assets and Liabiliti
Intangible Assets and Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Liabilities | Intangible Assets and Liabilities Brookfield DTLA’s intangible assets and liabilities are summarized as follows (in thousands): September 30, 2016 December 31, 2015 Intangible Assets In-place leases $ 110,519 $ 110,519 Tenant relationships 46,248 46,248 Above-market leases 39,936 39,936 196,703 196,703 Less: accumulated amortization 115,229 96,993 Intangible assets, net $ 81,474 $ 99,710 Intangible Liabilities Below-market leases $ 76,344 $ 76,344 Less: accumulated amortization 52,309 46,136 Intangible liabilities, net $ 24,035 $ 30,208 The impact of the amortization of acquired below-market leases, net of acquired above-market leases, on rental income and of acquired in-place leases and tenant relationships on depreciation and amortization expense is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Rental income $ (158 ) $ 943 $ 2,733 $ 2,214 Depreciation and amortization expense 4,994 5,819 14,796 16,591 As of September 30, 2016 , the estimate of the amortization/accretion of intangible assets and liabilities during the remainder of 2016 , the next four years and thereafter is as follows (in thousands): In-Place Leases Other Intangible Assets Intangible Liabilities 2016 $ 4,013 $ 1,874 $ 1,808 2017 10,477 6,324 5,656 2018 6,754 5,146 3,812 2019 5,704 4,313 3,238 2020 5,059 3,417 3,031 Thereafter 14,441 13,952 6,490 $ 46,448 $ 35,026 $ 24,035 |
Deferred Charges, Net
Deferred Charges, Net | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred Charges, Net | Deferred Charges, Net Brookfield DTLA’s deferred charges are presented net of the following amounts in the condensed consolidated balance sheets (in thousands): September 30, 2016 December 31, 2015 Accumulated amortization of leasing costs $ 46,713 $ 38,234 |
Mortgage Loans
Mortgage Loans | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Mortgage Loans | Mortgage Loans Brookfield DTLA’s debt is as follows (in thousands, except percentage amounts): Contractual Maturity Date Principal Amount as of Interest Rate September 30, 2016 December 31, 2015 Floating-Rate Debt Variable-Rate Loans: Wells Fargo Center–South Tower (1) 12/1/2016 2.33 % $ 290,000 $ 290,000 777 Tower (2) 11/1/2018 2.71 % 220,000 200,000 Figueroa at 7th (3) 9/10/2017 2.77 % 35,000 35,000 Total variable-rate loans 545,000 525,000 Variable-Rate Swapped to Fixed-Rate Loan: EY Plaza (4) 11/27/2020 3.93 % 181,834 184,377 Total floating-rate debt 726,834 709,377 Fixed-Rate Debt: Wells Fargo Center–North Tower 4/6/2017 5.70 % 550,000 550,000 BOA Plaza 9/1/2024 4.05 % 400,000 400,000 Gas Company Tower 8/6/2021 3.47 % 319,000 — Gas Company Tower 8/6/2021 6.50 % 131,000 — Total fixed-rate debt 1,400,000 950,000 Debt Refinanced: Gas Company Tower — 458,000 Total debt 2,126,834 2,117,377 Less: unamortized discounts and debt issuance costs 5,611 5,972 Total debt, net $ 2,121,223 $ 2,111,405 __________ (1) This loan bears interest at LIBOR plus 1.80% . As required by the loan agreement, we have entered into an interest rate cap agreement that limits the LIBOR portion of the interest rate to 4.75% . Brookfield DTLA has two options to extend the maturity date of the loan, each for a period of one year, subject to meeting certain debt yield and loan to value ratios (as specified in the loan agreement). As of December 31, 2015 and September 30, 2016 , the Company did not meet the criteria specified in the loan agreement to extend this loan on its contractual maturity date. (2) This loan bears interest at LIBOR plus 2.18% . As required by the loan agreement, we have entered into an interest rate cap agreement that limits the LIBOR portion of the interest rate to 5.75% . Brookfield DTLA has two options to extend the maturity date of the loan, each for a period of one year, subject to meeting certain debt yield and loan to value ratios (as specified in the loan agreement). (3) This loan bears interest at LIBOR plus 2.25% . Brookfield DTLA has two options to extend the maturity date of this loan, each for a period of 12 months, subject to meeting certain debt yield and loan to value ratios (as specified in the loan agreement). (4) This loan bears interest at LIBOR plus 1.75% . As required by the loan agreement, we have entered into an interest rate swap agreement to hedge this loan, which effectively fixes the LIBOR portion of the interest rate at 2.178% . The effective interest rate of 3.93% includes interest on the swap. Debt Refinanced On July 11, 2016 , Brookfield DTLA Holdings refinanced the $458.0 million mortgage loan secured by Gas Company Tower. In connection with the refinancing, Brookfield DTLA Holdings repaid $8.0 million of principal and was required to fund various loan reserves, including a $20.7 million tenant improvement and leasing commission reserve, a $4.5 million rent concession reserve, and a $3.0 million tax reserve at closing. During July 2016, the Company received $37.0 million in cash contributions from Brookfield DTLA Holdings, of which $19.7 million was used to pay for costs associated with the refinancing of Gas Company Tower. The new $450.0 million mortgage loan is comprised of a $319.0 million senior loan and a $131.0 million mezzanine loan, which bear interest at fixed rates equal to 3.4727% and 6.50% , respectively, mature on August 6, 2021 , and require the payment of interest-only until maturity. The senior loan is locked out from prepayment until September 6, 2017 , after which it can be prepaid, in whole or in part, with prepayment penalties (as defined in the underlying loan agreement) until April 6, 2021 after which the loan can be repaid without penalty. The mezzanine loan is locked out from prepayment until September 6, 2017 , after which the loan can be repaid, in whole or in part, without penalty. Debt Modification On September 1, 2016 , Brookfield DTLA Holdings modified the mortgage loan secured by 777 Tower, which increased the loan amount from $200.0 million to $220.0 million . As a result of the modification, the Company received net proceeds of $19.7 million , which will be used for general corporate purposes. The terms of the modified loan increased the interest rate by 48 basis points to LIBOR plus 2.18% , effective September 1, 2016 . No other terms or conditions of the original loan were changed as part of the modification. Debt Maturities As Brookfield DTLA’s debt matures, principal payment obligations present significant future cash requirements. As of September 30, 2016 , our debt to be repaid during the remainder of 2016 , the next four years and thereafter is as follows (in thousands): 2016 $ 290,976 2017 589,026 2018 224,232 2019 4,449 2020 168,151 Thereafter 850,000 $ 2,126,834 As of September 30, 2016 , $506.8 million of our debt may be prepaid without penalty, $550.0 million may be prepaid with prepayment penalties or defeased (as defined in the underlying loan agreement) at our option, $400.0 million may be defeased (as defined in the underlying loan agreement), $220.0 million may be prepaid with prepayment penalties, and $450.0 million is locked out from prepayment until September 6, 2017 . Wells Fargo Center–South Tower— Brookfield DTLA currently intends to refinance the $290.0 million mortgage loan secured by Wells Fargo Center–South Tower on or about its December 1, 2016 maturity date. We do not have a commitment from the lenders to extend the maturity date of or to refinance this loan. As of December 31, 2015 and September 30, 2016 , the Company did not meet the criteria specified in the loan agreement to extend this loan on its contractual maturity date. This loan will most likely require a paydown upon extension or refinancing (depending on market conditions), funding of additional reserve amounts, or both. As of September 30, 2016 , Brookfield DTLA anticipates the need for additional cash of approximately $51 million to complete the refinancing. We may use cash on hand to make any such payments or cash received as a capital contribution from Brookfield DTLA Holdings. If we are unable or unwilling to use cash on hand or do not use cash contributed by Brookfield DTLA Holdings to make such payments, we may face challenges in repaying, extending or refinancing this loan on favorable terms or at all, and we may be forced to give back the asset to the lenders. Wells Fargo Center–North Tower— Brookfield DTLA currently intends to refinance the $550.0 million mortgage loan secured by Wells Fargo Center–North Tower on or about its April 6, 2017 maturity date with new debt with a lower leverage ratio. We do not have a commitment from the lenders to extend the maturity date of or to refinance this loan. This loan will most likely require a paydown upon extension or refinancing (depending on market conditions), funding of additional reserve amounts, or both. As of September 30, 2016 Brookfield DTLA anticipates the need for additional cash of approximately $125 million to complete the refinancing. We may use cash on hand to make any such payments or cash received as a capital contribution from Brookfield DTLA Holdings. If we are unable or unwilling to use cash on hand or do not use cash contributed by Brookfield DTLA Holdings to make such payments, we may face challenges in repaying, extending or refinancing this loan on favorable terms or at all, and we may be forced to give back the asset to the lenders. Non-Recourse Carve Out Guarantees All of Brookfield DTLA’s $2.1 billion of mortgage debt is subject to “non-recourse carve out” guarantees that expire upon elimination of the underlying loan obligations. Under these guarantees, these otherwise non‑recourse loans can become partially or fully recourse against Brookfield DTLA Holdings if certain triggering events occur as defined in the loan agreements. Debt Reporting Pursuant to the terms of certain of our mortgage loan agreements, Brookfield DTLA is required to report a debt service coverage ratio (“DSCR”) calculated using the formulas specified in the underlying loan agreements. We have submitted the required reports to the lenders for the measurement periods ended September 30, 2016 and were in compliance with the amounts required by the loan agreements. Pursuant to the terms of the Wells Fargo Center–South Tower, Wells Fargo Center–North Tower, EY Plaza, and Figueroa at 7th mortgage loan agreements, we are required to provide annual audited financial statements of Brookfield DTLA Holdings to the lenders or agents. The receipt of any opinion other than an “unqualified” audit opinion on our annual audited financial statements is an event of default under the loan agreements for the properties listed above. If an event of default occurs, the lenders have the right to pursue the remedies contained in the loan documents, including acceleration of all or a portion of the debt and foreclosure. |
Mezzanine Equity
Mezzanine Equity | 9 Months Ended |
Sep. 30, 2016 | |
Temporary Equity Disclosure [Abstract] | |
Mezzanine Equity | Mezzanine Equity Mezzanine equity in the condensed consolidated balance sheets is comprised of the Series A preferred stock, a Series A-1 preferred interest, a senior participating preferred interest and, as of September 30, 2016 , a Series B preferred interest (collectively, the “Preferred Interests”). The Series A-1 preferred interest, senior participating preferred interest and Series B preferred interest are held by a noncontrolling interest holder. The Preferred Interests are classified in mezzanine equity because they are callable, and the holder of the Series A-1 preferred interest, senior participating preferred interest, Series B preferred interest, and some of the Series A preferred stock indirectly controls the ability to elect to redeem such instruments, through its controlling interest in the Company and its subsidiaries. There is no commitment or obligation on the part of Brookfield DTLA or Brookfield DTLA Holdings to redeem the Preferred Interests. See “—Series B Preferred Interest” below for a discussion of the issuance of the Series B preferred interest during the nine months ended September 30, 2016 . The Preferred Interests included within mezzanine equity were recorded at fair value on the date of issuance and have been adjusted to the greater of their carrying amount or redemption value as of September 30, 2016 and December 31, 2015 . Adjustments to increase the carrying amount to redemption value are recorded in the consolidated statement of operations as a redemption measurement adjustment. Dividends and Distributions On January 4, 2016 , Brookfield DTLA paid a cash dividend of $2.25 per share to holders of record of its Series A preferred stock at the close of business on December 15, 2015 using cash on hand. This dividend payment reduced the accumulated and unpaid dividends owed on the Series A preferred stock by $21.9 million . Any future dividends declared would be at the discretion of Brookfield DTLA’s board of directors and would depend on its financial condition, results of operations, contractual obligations and the terms of its financing agreements at the time a dividend is considered, and other relevant factors. On April 5, 2016 , Brookfield DTLA made a $0.3 million cash distribution to Brookfield DTLA Holdings as a return of investment related to the senior participating preferred interest held by Brookfield DTLA Holdings using cash on hand. Series A Preferred Stock As of September 30, 2016 and December 31, 2015 , 9,730,370 shares of Series A preferred stock were outstanding, of which 9,357,469 shares were issued to third parties and 372,901 shares were issued to DTLA Fund Holding Co., a subsidiary of Brookfield DTLA Holdings. On January 4, 2016 , Brookfield DTLA paid a cash dividend of $2.25 per share to holders of record of its Series A preferred stock at the close of business on December 15, 2015 using cash on hand. This dividend payment reduced the accumulated and unpaid dividends owed on the Series A preferred stock by $21.9 million . The dividend was declared on December 4, 2015 by the board of directors in connection with the settlement on a class-wide basis of the litigation brought in Maryland State Court and styled as In re MPG Office Trust Inc. Preferred Shareholder Litigation , Case No. 24-C-13-004097. See Note 13 “Commitments and Contingencies—Litigation—Merger-Related Litigation” for additional information regarding the dividend payment. No dividends were declared on the Series A preferred stock during the nine months ended September 30, 2016 and 2015 . Dividends on the Series A preferred stock are cumulative, and therefore, will continue to accrue at an annual rate of $1.90625 per share. As of September 30, 2016 , the cumulative amount of unpaid dividends totals $125.0 million and has been reflected in the carrying amount of the Series A preferred stock. The Series A preferred stock does not have a stated maturity and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A preferred stock will rank senior to our common stock with respect to the payment of distributions. We may, at our option, redeem the Series A preferred stock, in whole or in part, for cash at a redemption price of $25.00 per share, plus all accumulated and unpaid dividends on such Series A preferred stock up to and including the redemption date. The Series A preferred stock is not convertible into or exchangeable for any other property or securities of Brookfield DTLA. As of September 30, 2016 , the Series A preferred stock is reported at its redemption value of $368.2 million calculated using the redemption price of $25.00 per share plus all accumulated and unpaid dividends on such Series A preferred stock through September 30, 2016 . Series A-1 Preferred Interest The Series A-1 preferred interest has mirror rights to the Series A preferred interests issued by Brookfield DTLA Fund Properties II LLC (“New OP”), which are held by a wholly owned subsidiary of Brookfield DTLA, but only with respect to their respective preferred liquidation preferences, and share pro rata with 48.13% to the Series A-1 preferred interest and 51.87% to the Series A preferred interest based on their current liquidation preferences in accordance with their respective preferred liquidation preferences in distributions from New OP, until their preferred liquidation preferences have been reduced to zero. Thereafter, distributions will be made 47.66% to the common component of the Series A interest and 52.34% to the common component of the Series B interest, which is held by Brookfield DTLA Holdings. The economic terms of the Series A preferred stock mirror those of the New OP Series A preferred interests, including distributions in respect of the preferred liquidation preference. As of September 30, 2016 , the Series A-1 preferred interest is reported at its redemption value of $362.0 million calculated using its liquidation value of $225.7 million plus $136.3 million of accumulated and unpaid dividends on such Series A-1 preferred interest through September 30, 2016 . Senior Participating Preferred Interest On October 15, 2013 , Brookfield DTLA Fund Properties III LLC (“DTLA OP”) issued a senior participating preferred interest to Brookfield DTLA Holdings in connection with the formation of Brookfield DTLA and the MPG acquisition. The senior participating preferred interest was comprised of $240.0 million in preferred interests with a 7.0% coupon and a 4.0% participating interest in the residual value of DTLA OP, which owns 333 South Hope Co. LLC and EYP Realty LLC. As of December 31, 2015 , the 7.0% preferred interest portion of the senior participating preferred interest had been fully repaid to Brookfield DTLA Holdings. On April 5, 2016 , Brookfield DTLA made a $0.3 million cash distribution to Brookfield DTLA Holdings as a return of investment related to the senior participating preferred interest held by Brookfield DTLA Holdings using cash on hand. As of September 30, 2016 , the senior participating preferred interest is reported at its redemption value of $24.8 million using the value of the participating interest. Series B Preferred Interest Brookfield DTLA Holdings made a commitment to make future capital contributions in cash or property to New OP, which directly or indirectly owns the Brookfield DTLA properties, to fund up to $260.0 million of its future cash needs, for which it would be entitled to receive a preferred return, if and when called by New OP. On May 16, 2016 , New OP issued a Series B preferred interest to Brookfield DTLA Holdings in connection with a $6.0 million cash contribution from Brookfield DTLA Holdings to the Company under this commitment, which is entitled to receive a preferred return of 9.0% . The Company used these funds for general corporate purposes. On July 11, 2016 and July 13, 2016 , the Company received $30.0 million and $7.0 million , respectively, in cash contributions from Brookfield DTLA Holdings, which are entitled to receive a preferred return of 9.0% as part of the Series B preferred interest. Of the $37.0 million contributed during July 2016, $19.7 million was used to pay for costs associated with the refinancing of Gas Company Tower, with the remainder to be used for general corporate purposes. As of September 30, 2016 , the Series B preferred interest is reported at its redemption value of $43.9 million calculated using its liquidation value of $43.0 million plus $0.9 million of dividends on the preferred interest through September 30, 2016 . Change in Mezzanine Equity A summary of the change in mezzanine equity for the nine months ended September 30, 2016 is as follows (in thousands, except share amounts): Number of Shares of Series A Preferred Stock Series A Preferred Stock Noncontrolling Interests Total Mezzanine Equity Series A-1 Preferred Interest Senior Participating Preferred Interest Series B Preferred Interest Balance, December 31, 2015 9,730,370 $ 354,304 $ 349,084 $ 23,207 $ — $ 726,595 Issuance of Series B preferred interest 43,000 43,000 Current dividends 13,911 12,909 — 949 27,769 Other payment to noncontrolling interest (336 ) (336 ) Redemption measurement adjustment 1,964 1,964 Balance, September 30, 2016 9,730,370 $ 368,215 $ 361,993 $ 24,835 $ 43,949 $ 798,992 |
Noncontrolling Interests
Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests | Noncontrolling Interests Mezzanine Equity Component The Series A-1 preferred interest, senior participating preferred interest and Series B preferred interest consist of equity interests of New OP, DTLA OP and New OP, respectively, which are owned directly by Brookfield DTLA Holdings. These noncontrolling interests are presented as mezzanine equity in the condensed consolidated balance sheet. See Note 7 “Mezzanine Equity.” Stockholders’ Deficit Component The Series B common interest ranks junior to the Series A preferred stock as to dividends and upon liquidation and is presented in the condensed consolidated balance sheet as noncontrolling interest. On April 21, 2016 , Brookfield DTLA received a $2.5 million capital contribution from Brookfield DTLA Holdings, which was used for general corporate purposes. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss A summary of the change in accumulated other comprehensive loss related to Brookfield DTLA’s cash flow hedges is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Balance at beginning of period $ (10,537 ) $ (4,465 ) $ (5,415 ) $ (4,337 ) Other comprehensive gain (loss) before reclassifications 1,832 (3,579 ) (3,290 ) (3,707 ) Amounts reclassified from accumulated other comprehensive loss — — — — Net current-period other comprehensive gain (loss) 1,832 (3,579 ) (3,290 ) (3,707 ) Balance at end of period $ (8,705 ) $ (8,044 ) $ (8,705 ) $ (8,044 ) |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The valuation of Brookfield DTLA’s interest rate swap is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flow of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. We have incorporated credit valuation adjustments to appropriately reflect both our own and the respective counterparty’s non-performance risk in the fair value measurements. Brookfield DTLA’s (liabilities) assets measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, are as follows (in thousands): Fair Value Measurements Using Total Fair Value Quoted Prices in Active Markets for Identical (Liabilities) Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest rate swap at: September 30, 2016 $ (8,705 ) $ — $ (8,705 ) $ — December 31, 2015 (5,415 ) — (5,415 ) — Interest rate caps at: September 30, 2016 $ — $ — $ — $ — December 31, 2015 19 — 19 — |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Financial Instruments Derivative Financial Instruments A summary of the fair value of Brookfield DTLA’s derivative financial instruments is as follows (in thousands): Fair Value September 30, 2016 December 31, 2015 Derivatives designated as cash flow hedging instruments: Interest rate swap $ (8,705 ) $ (5,415 ) A summary of the effect of derivative financial instruments reported in the condensed consolidated financial statements is as follows (in thousands): Amount of Loss Recognized in AOCL Amount of Loss Reclassified from AOCL to Statement of Operations Derivatives designated as cash flow hedging instruments: Interest rate swap for the nine months ended: September 30, 2016 $ (3,290 ) $ — September 30, 2015 (3,707 ) — Interest Rate Swap— As of September 30, 2016 and December 31, 2015 , Brookfield DTLA held an interest rate swap with a notional amount of $185.0 million , which was assigned to the EY Plaza mortgage loan. The swap requires net settlement each month and expires on November 2, 2020 . Interest Rate Caps— Brookfield DTLA holds interest rate caps pursuant to the terms of certain of its mortgage loan agreements with the following notional amounts (in thousands): September 30, 2016 December 31, 2015 Wells Fargo Center–South Tower $ 290,000 $ 290,000 777 Tower 220,000 200,000 $ 510,000 $ 490,000 On September 1, 2016, the Company increased the notional amount of the interest rate cap agreement related to its 777 Tower mortgage loan from $200.0 million to $220.0 million pursuant to the terms of the modified loan agreement. Other Financial Instruments The estimated fair value and carrying amount of Brookfield DTLA’s mortgage loans are as follows (in thousands): September 30, 2016 December 31, 2015 Estimated fair value $ 2,128,930 $ 2,114,761 Carrying amount 2,126,834 2,117,377 We calculated the estimated fair value of our mortgage loans by discounting the future contractual cash flows of the loans using current risk adjusted rates available to borrowers with similar credit ratings. The estimated fair value of mortgage loans is classified as Level 3. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Management Agreements Brookfield DTLA has entered into arrangements with BOP Management Inc., an affiliate of BPO, under which the affiliate provides property management and various other services. Property management fees under these agreements are calculated based on 2.75% of rents collected (as defined in the management agreements). In addition, the Company pays BOP Asset Manager LLC an asset management fee, which is calculated based on 0.75% of the capital contributed by Brookfield DTLA Holdings. A summary of costs incurred by Brookfield DTLA under these arrangements is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Property management fee expense $ 1,955 $ 1,843 $ 5,864 $ 5,679 Asset management fee expense 1,583 1,578 4,748 4,645 General, administrative and reimbursable expenses 615 664 1,857 1,950 Leasing and construction management fees 410 2,436 1,321 5,964 Insurance Agreements Insurance premiums for Brookfield DTLA are paid by an affiliate of BPO. Brookfield DTLA reimburses this BPO affiliate for the actual cost of such premiums. A summary of costs incurred by Brookfield DTLA under this arrangement is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Insurance expense $ 1,950 $ 2,172 $ 5,873 $ 6,517 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation General— Brookfield DTLA and its subsidiaries may be subject to pending legal proceedings and litigation incidental to its business. After consultation with legal counsel, management believes that any liability that may potentially result upon resolution of such matters is not expected to have a material adverse effect on the Company’s business, financial condition or consolidated financial statements as a whole. Merger-Related Litigation— Following the announcement of the execution of the Agreement and Plan of Merger dated as of April 24, 2013, as amended (the “Merger Agreement”), seven putative class actions were filed against Brookfield Office Properties Inc. (“BPO”), Brookfield DTLA, Brookfield DTLA Holdings LLC, Brookfield DTLA Fund Office Trust Inc., Brookfield DTLA Fund Properties (collectively, the “Brookfield Parties”), MPG Office Trust, Inc., MPG Office, L.P., and the members of MPG Office Trust, Inc.’s board of directors. Five of these lawsuits were filed on behalf of MPG Office Trust, Inc.’s common stockholders: (i) two lawsuits, captioned Coyne v. MPG Office Trust, Inc., et al ., No. BC507342 (the “Coyne Action”), and Masih v. MPG Office Trust, Inc., et al. , No. BC507962 (the “Masih Action”), were filed in the Superior Court of the State of California in Los Angeles County (the “California State Court”) on April 29, 2013 and May 3, 2013, respectively; and (ii) three lawsuits, captioned Kim v. MPG Office Trust, Inc. et al ., No. 24‑C-13-002600 (the “Kim Action”), Perkins v. MPG Office Trust, Inc., et al. , No. 24-C-13-002778 (the “Perkins Action”) and Dell’Osso v. MPG Office Trust, Inc., et al., No. 24‑C-13-003283 (the “Dell’Osso Action”) were filed in the Circuit Court for Baltimore City, Maryland on May 1, 2013, May 8, 2013 and May 22, 2013, respectively (collectively, the “Common Stock Actions”). Two lawsuits, captioned Cohen v. MPG Office Trust, Inc. et al. , No. 24-C-13-004097 (the “Cohen Action”) and Donlan v. Weinstein, et al ., No. 24‑C-13-004293 (the “Donlan Action”), were filed on behalf of MPG Office Trust, Inc.’s preferred stockholders in the Circuit Court for Baltimore City, Maryland on June 20, 2013 and July 2, 2013, respectively (collectively, the “Preferred Stock Actions”). In each of the Common Stock Actions, the plaintiffs allege, among other things, that MPG Office Trust, Inc.’s board of directors breached their fiduciary duties in connection with the merger by failing to maximize the value of MPG Office Trust, Inc. and ignoring or failing to protect against conflicts of interest, and that the relevant Brookfield Parties named as defendants aided and abetted those breaches of fiduciary duty. The Kim Action further alleges that MPG Office, L.P. also aided and abetted the breaches of fiduciary duty by MPG Office Trust, Inc.’s board of directors, and the Dell’Osso Action further alleges that MPG Office Trust, Inc. and MPG Office, L.P. aided and abetted the breaches of fiduciary duty by MPG Office Trust, Inc.’s board of directors. On June 4, 2013, the Kim and Perkins plaintiffs filed identical, amended complaints in the Circuit Court for Baltimore City, Maryland. On June 5, 2013, the Masih plaintiffs also filed an amended complaint in the Superior Court of the State of California in Los Angeles County. The three amended complaints, as well as the Dell’Osso Action complaint, allege that the preliminary proxy statement filed by MPG Office Trust, Inc. with the SEC on May 21, 2013 is false and/or misleading because it fails to include certain details of the process leading up to the merger and fails to provide adequate information concerning MPG Office Trust, Inc.’s financial advisors. In each of the Preferred Stock Actions, which were brought on behalf of MPG Office Trust, Inc.’s preferred stockholders, the plaintiffs allege, among other things, that, by entering into the Merger Agreement and tender offer, MPG Office Trust, Inc. breached the Articles Supplementary, which governs the issuance of the MPG preferred shares, that MPG Office Trust, Inc.’s board of directors breached their fiduciary duties by agreeing to a merger agreement that violated the preferred stockholders’ contractual rights and that the relevant Brookfield Parties named as defendants aided and abetted those breaches of contract and fiduciary duty. On July 15, 2013, the plaintiffs in the Preferred Stock Actions filed a joint amended complaint in the Circuit Court for Baltimore City, Maryland that further alleged that MPG Office Trust, Inc.’s board of directors failed to disclose material information regarding BPO’s extension of the tender offer. The plaintiffs in the seven lawsuits sought an injunction against the merger, rescission or rescissory damages in the event the merger was consummated, an award of fees and costs, including attorneys’ and experts’ fees, and other relief. On July 10, 2013, solely to avoid the costs, risks and uncertainties inherent in litigation, the Brookfield Parties and the other named defendants in the Common Stock Actions signed a memorandum of understanding, regarding a proposed settlement of all claims asserted therein. The parties subsequently entered into a stipulation of settlement dated November 21, 2013 providing for the release of all asserted claims, additional disclosures by MPG concerning the merger made prior to the merger’s approval, and the payment, by the defendants, of an award of attorneys’ fees and expenses in an amount not to exceed $475,000 . After a hearing on June 4, 2014, the California State Court granted plaintiffs’ motion for final approval of the settlement, and entered a Final Order and Judgment, awarding the plaintiffs’ counsel’s attorneys’ fees and expenses in the amount of $475,000 , which was paid by MPG Office LLC on June 18, 2014. On July 13, 2016 , BPO and the Company entered into a settlement agreement with the insurance carrier under the MPG directors and officers liability insurance policy that was in effect at the time of the merger. On August 17, 2016 , the Company received a settlement totaling $1,106,344 , which partially reimbursed the Company for amounts paid to settle both the Common Stock Actions and the Preferred Stock Actions. The Company included the settlement in interest and other revenue in its condensed consolidated statements of operations for the three and nine months ended September 30, 2016 . In the Preferred Stock Actions, at a hearing on July 24, 2013, the Maryland State Court denied the plaintiffs’ motion for preliminary injunction seeking to enjoin the tender offer. The plaintiffs filed a second amended complaint on November 22, 2013 that added additional arguments in support of their allegations that the new preferred shares do not have the same rights as the MPG preferred shares. The defendants moved to dismiss the second amended complaint on December 20, 2013, and briefing on the motion concluded on February 28, 2014. At a hearing on June 18, 2014, the Maryland State Court heard oral arguments on the defendants’ motion to dismiss and reserved judgment on the decision. On October 21, 2014, the parties sent a joint letter to the Maryland State Court stating that since the June 18 meeting, the parties have commenced discussions towards a possible resolution of the lawsuit, requesting that the court temporarily refrain from deciding the pending motion to dismiss to facilitate the discussions. On March 30, 2015, the plaintiff in the Cohen Action and the defendants entered into a memorandum of understanding setting forth an agreement in principle to settle the Preferred Stock Actions on a class-wide basis and dismiss the case with prejudice in exchange for the payment of $2.25 per share of Series A preferred stock of accumulated and unpaid dividends (the “Dividend Payment”) to holders of record on a record date to be set after final approval of the settlement by the Maryland State Court, plus any attorneys’ fees awarded by the Maryland State Court to the plaintiff’s counsel. The dividend will reduce the amount of accumulated and unpaid dividends on the Series A preferred stock, and the terms of the Series A preferred stock will otherwise remain unchanged. On August 18, 2015, the Maryland State Court entered an order preliminarily approving the settlement and scheduling a final fairness hearing for October 27, 2015. On September 28, 2015, the plaintiff filed a motion for final certification of the settlement class, final approval of the class action settlement and approval of attorneys’ fees and reimbursement of expenses, seeking a total fee and expense award of $5,250,000 . The defendants submitted their opposition to the plaintiff’s fee application on October 13, 2015. On October 16, 2015, the plaintiff filed a motion seeking discovery related to the valuation of the Dividend Payment in connection with its fee application and served related discovery requests on the defendants. On October 23, 2015, the defendants filed their opposition to that motion, as well as a motion for a protective order precluding discovery. On October 27, 2015, the Maryland State Court held a hearing to decide whether to grant final approval of the settlement and to rule on the parties’ discovery motions. At the hearing, the Court ordered limited discovery to occur prior to ruling on the fee application. On October 28, 2015, the Maryland State Court issued an order granting final approval of the settlement. The time to appeal the order expired on November 30, 2015 without any appeals having been filed. On December 4, 2015 , in accordance with the final approval order and the terms of the parties’ settlement agreement, the board of directors declared a cash dividend of $2.25 per share to holders of record of its Series A preferred stock at the close of business on December 15, 2015 . On January 4, 2016 , Brookfield DTLA paid the Dividend Payment totaling $21.9 million using cash on hand. On December 16, 2015, after taking certain limited discovery permitted by the Maryland State Court during the October 27 hearing, the plaintiff served the defendants with its reply memorandum of law in support of its motion for attorneys’ fees and expenses. That same day, the plaintiff requested that the Court permit it to file the reply memorandum and an exhibit thereto under seal given the confidential nature of the information contained therein. On December 17, 2015, the plaintiff provided the Court with plaintiff’s counsel’s time records for the Court’s in camera review. On January 15, 2016, the defendants filed a surreply to the plaintiff’s reply memorandum after obtaining the Court’s permission to do so. After a hearing on April 6, 2016, the Maryland State Court issued an order on April 18, 2016 granting an award of attorneys’ fees and expenses to the plaintiffs totaling $2,212,688 . On April 21, 2016 , the Company paid the awarded amount to the plaintiffs’ counsel. On July 13, 2016 , BPO and the Company entered into a settlement agreement with the insurance carrier under the MPG directors and officers liability insurance policy that was in effect at the time of the merger. On August 17, 2016 , the Company received a settlement totaling $1,106,344 , which partially reimbursed the Company for amounts paid to settle both the Common Stock Actions and the Preferred Stock Actions. The Company included the settlement in interest and other revenue in its condensed consolidated statements of operations for the three and nine months ended September 30, 2016 . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Combination and Basis of Presentation | Principles of Consolidation and Combination and Basis of Presentation The unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information and with the instructions to Form 10‑Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments, consisting of only those of a normal and recurring nature, considered necessary for a fair presentation of the financial position and interim results of Brookfield DTLA as of and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of those that may be expected for a full fiscal year. The condensed consolidated balance sheet data as of December 31, 2015 has been derived from Brookfield DTLA’s audited financial statements; however, the accompanying notes to the condensed consolidated financial statements do not include all disclosures required by GAAP. The financial information included herein should be read in conjunction with the consolidated financial statements and related notes included in Brookfield DTLA’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 28, 2016 . |
Reclassifications | Reclassifications In December 2015, Brookfield DTLA adopted the guidance in Accounting Standards Update (“ASU”) 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. We have combined the amortization of deferred financing costs ( $901 ) and the amortization of debt discounts ( $2,896 ) and presented a new total ( $3,797 ) in the condensed consolidated statement of cash flows for the nine months ended September 30, 2015 so as to reflect the presentation of such costs in the condensed consolidated balance sheet as of December 31, 2015 . |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. For example, estimates and assumptions have been made with respect to fair values of assets and liabilities for applying the acquisition method of accounting, the useful lives of assets, recoverable amounts of receivables, impairment of long-lived assets and fair value of debt. Actual results could ultimately differ from such estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09 establishing Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration that the entity expects to be entitled to receive in exchange for those goods or services and also requires certain additional disclosures. ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017. We are currently evaluating the impact of the adoption of ASU 2014-09 on Brookfield DTLA’s consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This topic provides guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and requires related footnote disclosures. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15 on Brookfield DTLA’s consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis to ASC Topic 810 , Consolidation . ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with VIEs, and (iv) provide a scope exception for certain entities. The guidance in ASU 2015-02 became effective for Brookfield DTLA beginning January 1, 2016. The implementation of this pronouncement did not have a material impact on Brookfield DTLA’s consolidated financial statements. In April 2015, the FASB issued ASU 2015-03 that requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, as opposed to being presented as assets. Brookfield DTLA elected to early adopt ASU 2015-03 effective as of December 31, 2015. There was no effect on our consolidated statements of operations for the three and nine months ended September 30, 2015 as a result of adopting this pronouncement. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments to ASC Topic 230, Statement of Cash Flows . ASU 2016-15 clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows to reduce diversity in practice with respect to (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2017, with early adoption permitted. We do not expect the adoption of this update to have a material impact on Brookfield DTLA’s consolidated financial statements. |
Income Taxes | Income Taxes Brookfield DTLA has elected to be taxed as a real estate investment trust (“REIT”) pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its tax period ended December 31, 2013. Brookfield DTLA conducts and intends to conduct its operations so as to continue to qualify as a REIT. Accordingly, Brookfield DTLA is not subject to U.S. federal income tax, provided that it continues to qualify as a REIT and distributions to its stockholders, if any, generally equal or exceed its taxable income. Brookfield DTLA has elected to treat certain of its subsidiaries as taxable REIT subsidiaries (“TRS”). Certain activities that we undertake must be conducted by a TRS, such as non-customary services for our tenants, and holding assets that we cannot hold directly. A TRS is subject to both federal and state income taxes. Qualification and taxation as a REIT depends upon Brookfield DTLA’s ability to meet the various qualification tests imposed under the Code related to annual operating results, asset diversification, distribution levels and diversity of stock ownership. Accordingly, no assurance can be given that Brookfield DTLA will be organized or be able to operate in a manner so as to continue to qualify as a REIT. If Brookfield DTLA fails to qualify as a REIT in any taxable year, it will be subject to federal and state income tax on its taxable income at regular corporate tax rates, and it may be ineligible to qualify as a REIT for four subsequent tax years. Brookfield DTLA may also be subject to certain state or local income taxes, or franchise taxes on its REIT activities. Brookfield DTLA made no provision for income taxes in its condensed consolidated financial statements for the three and nine months ended September 30, 2016 and 2015 , respectively. Brookfield DTLA’s taxable income or loss is different than its financial statement income or loss. Brookfield DTLA recognizes tax benefits from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more likely than not recognition threshold. Brookfield DTLA had no unrecognized tax benefits as of September 30, 2016 and December 31, 2015 , and Brookfield DTLA does not expect its unrecognized tax benefits balance to change during the next 12 months. As of September 30, 2016 , Brookfield DTLA’s 2013 tax period and 2014 and 2015 tax years remain open due to the statute of limitations and may be subject to examination by federal, state and local authorities. The 2012 tax year as well as the short tax period ended October 15, 2013 for Brookfield DTLA and its subsidiaries remain open due to the statute of limitations and may be subject to examination by federal, state and local tax authorities. |
Rents, Deferred Rents and Oth22
Rents, Deferred Rents and Other Receivables, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Schedule of Rents, Deferred Rents and Other Receivables | Brookfield DTLA’s rents, deferred rents and other receivables are presented net of the following amounts in the condensed consolidated balance sheets (in thousands): September 30, 2016 December 31, 2015 Allowance for doubtful accounts $ 245 $ 484 Accumulated amortization of tenant inducements 9,027 6,525 |
Intangible Assets and Liabili23
Intangible Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets and Liabilities | Brookfield DTLA’s intangible assets and liabilities are summarized as follows (in thousands): September 30, 2016 December 31, 2015 Intangible Assets In-place leases $ 110,519 $ 110,519 Tenant relationships 46,248 46,248 Above-market leases 39,936 39,936 196,703 196,703 Less: accumulated amortization 115,229 96,993 Intangible assets, net $ 81,474 $ 99,710 Intangible Liabilities Below-market leases $ 76,344 $ 76,344 Less: accumulated amortization 52,309 46,136 Intangible liabilities, net $ 24,035 $ 30,208 |
Schedule of Impact of Intangible Amortization Expense | The impact of the amortization of acquired below-market leases, net of acquired above-market leases, on rental income and of acquired in-place leases and tenant relationships on depreciation and amortization expense is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Rental income $ (158 ) $ 943 $ 2,733 $ 2,214 Depreciation and amortization expense 4,994 5,819 14,796 16,591 |
Schedule of Estimated Future Amortization/Accretion of Intangible Assets and Liabilities | As of September 30, 2016 , the estimate of the amortization/accretion of intangible assets and liabilities during the remainder of 2016 , the next four years and thereafter is as follows (in thousands): In-Place Leases Other Intangible Assets Intangible Liabilities 2016 $ 4,013 $ 1,874 $ 1,808 2017 10,477 6,324 5,656 2018 6,754 5,146 3,812 2019 5,704 4,313 3,238 2020 5,059 3,417 3,031 Thereafter 14,441 13,952 6,490 $ 46,448 $ 35,026 $ 24,035 |
Deferred Charges, Net (Tables)
Deferred Charges, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Charges | Brookfield DTLA’s deferred charges are presented net of the following amounts in the condensed consolidated balance sheets (in thousands): September 30, 2016 December 31, 2015 Accumulated amortization of leasing costs $ 46,713 $ 38,234 |
Mortgage Loans (Tables)
Mortgage Loans (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Brookfield DTLA’s debt is as follows (in thousands, except percentage amounts): Contractual Maturity Date Principal Amount as of Interest Rate September 30, 2016 December 31, 2015 Floating-Rate Debt Variable-Rate Loans: Wells Fargo Center–South Tower (1) 12/1/2016 2.33 % $ 290,000 $ 290,000 777 Tower (2) 11/1/2018 2.71 % 220,000 200,000 Figueroa at 7th (3) 9/10/2017 2.77 % 35,000 35,000 Total variable-rate loans 545,000 525,000 Variable-Rate Swapped to Fixed-Rate Loan: EY Plaza (4) 11/27/2020 3.93 % 181,834 184,377 Total floating-rate debt 726,834 709,377 Fixed-Rate Debt: Wells Fargo Center–North Tower 4/6/2017 5.70 % 550,000 550,000 BOA Plaza 9/1/2024 4.05 % 400,000 400,000 Gas Company Tower 8/6/2021 3.47 % 319,000 — Gas Company Tower 8/6/2021 6.50 % 131,000 — Total fixed-rate debt 1,400,000 950,000 Debt Refinanced: Gas Company Tower — 458,000 Total debt 2,126,834 2,117,377 Less: unamortized discounts and debt issuance costs 5,611 5,972 Total debt, net $ 2,121,223 $ 2,111,405 __________ (1) This loan bears interest at LIBOR plus 1.80% . As required by the loan agreement, we have entered into an interest rate cap agreement that limits the LIBOR portion of the interest rate to 4.75% . Brookfield DTLA has two options to extend the maturity date of the loan, each for a period of one year, subject to meeting certain debt yield and loan to value ratios (as specified in the loan agreement). As of December 31, 2015 and September 30, 2016 , the Company did not meet the criteria specified in the loan agreement to extend this loan on its contractual maturity date. (2) This loan bears interest at LIBOR plus 2.18% . As required by the loan agreement, we have entered into an interest rate cap agreement that limits the LIBOR portion of the interest rate to 5.75% . Brookfield DTLA has two options to extend the maturity date of the loan, each for a period of one year, subject to meeting certain debt yield and loan to value ratios (as specified in the loan agreement). (3) This loan bears interest at LIBOR plus 2.25% . Brookfield DTLA has two options to extend the maturity date of this loan, each for a period of 12 months, subject to meeting certain debt yield and loan to value ratios (as specified in the loan agreement). (4) This loan bears interest at LIBOR plus 1.75% . As required by the loan agreement, we have entered into an interest rate swap agreement to hedge this loan, which effectively fixes the LIBOR portion of the interest rate at 2.178% . The effective interest rate of 3.93% includes interest on the swap. |
Schedule of Maturities of Debt | As of September 30, 2016 , our debt to be repaid during the remainder of 2016 , the next four years and thereafter is as follows (in thousands): 2016 $ 290,976 2017 589,026 2018 224,232 2019 4,449 2020 168,151 Thereafter 850,000 $ 2,126,834 |
Mezzanine Equity (Tables)
Mezzanine Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Temporary Equity Disclosure [Abstract] | |
Summary of Change in Mezzanine Equity | A summary of the change in mezzanine equity for the nine months ended September 30, 2016 is as follows (in thousands, except share amounts): Number of Shares of Series A Preferred Stock Series A Preferred Stock Noncontrolling Interests Total Mezzanine Equity Series A-1 Preferred Interest Senior Participating Preferred Interest Series B Preferred Interest Balance, December 31, 2015 9,730,370 $ 354,304 $ 349,084 $ 23,207 $ — $ 726,595 Issuance of Series B preferred interest 43,000 43,000 Current dividends 13,911 12,909 — 949 27,769 Other payment to noncontrolling interest (336 ) (336 ) Redemption measurement adjustment 1,964 1,964 Balance, September 30, 2016 9,730,370 $ 368,215 $ 361,993 $ 24,835 $ 43,949 $ 798,992 |
Accumulated Other Comprehensi27
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Summary of the Change in Accumulated Other Comprehensive Loss Related to Cash Flow Hedges | A summary of the change in accumulated other comprehensive loss related to Brookfield DTLA’s cash flow hedges is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Balance at beginning of period $ (10,537 ) $ (4,465 ) $ (5,415 ) $ (4,337 ) Other comprehensive gain (loss) before reclassifications 1,832 (3,579 ) (3,290 ) (3,707 ) Amounts reclassified from accumulated other comprehensive loss — — — — Net current-period other comprehensive gain (loss) 1,832 (3,579 ) (3,290 ) (3,707 ) Balance at end of period $ (8,705 ) $ (8,044 ) $ (8,705 ) $ (8,044 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of (Liabilities) Assets Measured at Fair Value on a Recurring Basis | Brookfield DTLA’s (liabilities) assets measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, are as follows (in thousands): Fair Value Measurements Using Total Fair Value Quoted Prices in Active Markets for Identical (Liabilities) Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Interest rate swap at: September 30, 2016 $ (8,705 ) $ — $ (8,705 ) $ — December 31, 2015 (5,415 ) — (5,415 ) — Interest rate caps at: September 30, 2016 $ — $ — $ — $ — December 31, 2015 19 — 19 — |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, All Other Investments [Abstract] | |
Summary of the Fair Value of Derivative Financial Instruments | A summary of the fair value of Brookfield DTLA’s derivative financial instruments is as follows (in thousands): Fair Value September 30, 2016 December 31, 2015 Derivatives designated as cash flow hedging instruments: Interest rate swap $ (8,705 ) $ (5,415 ) |
Summary of the Effect of Derivative Financial Instruments Reported in the Condensed Consolidated Financial Statements | A summary of the effect of derivative financial instruments reported in the condensed consolidated financial statements is as follows (in thousands): Amount of Loss Recognized in AOCL Amount of Loss Reclassified from AOCL to Statement of Operations Derivatives designated as cash flow hedging instruments: Interest rate swap for the nine months ended: September 30, 2016 $ (3,290 ) $ — September 30, 2015 (3,707 ) — |
Schedule of Notional Amounts of Interest Rate Caps Pursuant to the Terms of Certain Mortgage Loan Agreements | Brookfield DTLA holds interest rate caps pursuant to the terms of certain of its mortgage loan agreements with the following notional amounts (in thousands): September 30, 2016 December 31, 2015 Wells Fargo Center–South Tower $ 290,000 $ 290,000 777 Tower 220,000 200,000 $ 510,000 $ 490,000 |
Summary of the Estimated Fair Value and Carrying Amount of Mortgage Loans | The estimated fair value and carrying amount of Brookfield DTLA’s mortgage loans are as follows (in thousands): September 30, 2016 December 31, 2015 Estimated fair value $ 2,128,930 $ 2,114,761 Carrying amount 2,126,834 2,117,377 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Summary of Costs Incurred Under Arrangements with Related Parties | A summary of costs incurred by Brookfield DTLA under this arrangement is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Insurance expense $ 1,950 $ 2,172 $ 5,873 $ 6,517 A summary of costs incurred by Brookfield DTLA under these arrangements is as follows (in thousands): For the Three Months Ended For the Nine Months Ended Sept. 30, 2016 Sept. 30, 2015 Sept. 30, 2016 Sept. 30, 2015 Property management fee expense $ 1,955 $ 1,843 $ 5,864 $ 5,679 Asset management fee expense 1,583 1,578 4,748 4,645 General, administrative and reimbursable expenses 615 664 1,857 1,950 Leasing and construction management fees 410 2,436 1,321 5,964 |
Organization and Description 31
Organization and Description of Business - Narrative (Details) | Oct. 15, 2013 | Sep. 30, 2016 | Dec. 31, 2015 |
Series A preferred stock | |||
Organization and Description of Business [Line Items] | |||
Preferred stock, dividend rate, percentage | 7.625% | 7.625% | 7.625% |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||||
Provision for income taxes | $ 0 | $ 0 | $ 0 | $ 0 | |
Unrecognized tax benefits | $ 0 | 0 | $ 0 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Amortization of discounts and deferred financing costs | $ 3,499,000 | 3,797,000 | |||
Accounting Standards Update 2015-03 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Amortization of deferred financing costs | 901,000 | ||||
Amortization of debt discounts | 2,896,000 | ||||
Amortization of discounts and deferred financing costs | $ 3,797,000 |
Rents, Deferred Rents and Oth33
Rents, Deferred Rents and Other Receivables, Net - Schedule of Rents, Deferred Rents and Other Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Receivables [Abstract] | ||
Allowance for doubtful accounts | $ 245 | $ 484 |
Accumulated amortization of tenant inducements | $ 9,027 | $ 6,525 |
Rents, Deferred Rents and Oth34
Rents, Deferred Rents and Other Receivables, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Receivables [Abstract] | ||||
(Recovery of) provision for doubtful accounts | $ (311) | $ 182 | $ (239) | $ 72 |
Intangible Assets and Liabili35
Intangible Assets and Liabilities - Summary of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Intangible Assets | ||
In-place leases | $ 110,519 | $ 110,519 |
Tenant relationships | 46,248 | 46,248 |
Above-market leases | 39,936 | 39,936 |
Intangible assets, gross | 196,703 | 196,703 |
Less: accumulated amortization | 115,229 | 96,993 |
Intangible assets, net | 81,474 | 99,710 |
Intangible Liabilities | ||
Below-market leases | 76,344 | 76,344 |
Less: accumulated amortization | 52,309 | 46,136 |
Intangible liabilities, net | $ 24,035 | $ 30,208 |
Intangible Assets and Liabili36
Intangible Assets and Liabilities - Schedule of Impact of Intangible Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Rental income | ||||
Acquired Indefinite-lived Intangible Assets and Liabilities [Line Items] | ||||
Amortization of intangible assets | $ (158) | $ 943 | $ 2,733 | $ 2,214 |
Depreciation and amortization expense | ||||
Acquired Indefinite-lived Intangible Assets and Liabilities [Line Items] | ||||
Amortization of intangible assets | $ 4,994 | $ 5,819 | $ 14,796 | $ 16,591 |
Intangible Assets and Liabili37
Intangible Assets and Liabilities - Schedule of Estimated Future Amortization/Accretion of Intangible Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Intangible assets, net | $ 81,474 | $ 99,710 |
Below Market Lease, Net, Amortization Income, Fiscal Year Maturity [Abstract] | ||
2,016 | 1,808 | |
2,017 | 5,656 | |
2,018 | 3,812 | |
2,019 | 3,238 | |
2,020 | 3,031 | |
Thereafter | 6,490 | |
Intangible liabilities, net | 24,035 | $ 30,208 |
In-Place Leases | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2,016 | 4,013 | |
2,017 | 10,477 | |
2,018 | 6,754 | |
2,019 | 5,704 | |
2,020 | 5,059 | |
Thereafter | 14,441 | |
Intangible assets, net | 46,448 | |
Other Intangible Assets | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2,016 | 1,874 | |
2,017 | 6,324 | |
2,018 | 5,146 | |
2,019 | 4,313 | |
2,020 | 3,417 | |
Thereafter | 13,952 | |
Intangible assets, net | $ 35,026 |
Deferred Charges, Net - Schedul
Deferred Charges, Net - Schedule of Deferred Charges (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Accumulated amortization of leasing costs | $ 46,713 | $ 38,234 |
Mortgage Loans - Schedule of De
Mortgage Loans - Schedule of Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Jul. 11, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||
Total debt, gross | $ 2,126,834 | $ 2,117,377 | |
Less: unamortized discounts and debt issuance costs | 5,611 | 5,972 | |
Total debt, net | 2,121,223 | 2,111,405 | |
Variable Rate Loans | |||
Debt Instrument [Line Items] | |||
Total debt, gross | $ 545,000 | 525,000 | |
Variable Rate Loans | Wells Fargo Center - South Tower | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Dec. 1, 2016 | ||
Variable interest rate | 2.33% | ||
Total debt, gross | $ 290,000 | 290,000 | |
Variable Rate Loans | 777 Tower | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Nov. 1, 2018 | ||
Variable interest rate | 2.71% | ||
Total debt, gross | $ 220,000 | 200,000 | |
Variable Rate Loans | Figueroa at 7th | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Sep. 10, 2017 | ||
Variable interest rate | 2.7682% | ||
Total debt, gross | $ 35,000 | 35,000 | |
Floating Rate Debt | |||
Debt Instrument [Line Items] | |||
Total debt, gross | $ 726,834 | 709,377 | |
Floating Rate Debt | EY Plaza | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Nov. 27, 2020 | ||
Variable interest rate | 3.928% | ||
Total debt, gross | $ 181,834 | 184,377 | |
Fixed Rate Debt | |||
Debt Instrument [Line Items] | |||
Total debt, gross | $ 1,400,000 | 950,000 | |
Fixed Rate Debt | Wells Fargo Center - North Tower | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Apr. 6, 2017 | ||
Fixed interest rate | 5.697% | ||
Total debt, gross | $ 550,000 | 550,000 | |
Fixed Rate Debt | Bank of America Plaza | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Sep. 1, 2024 | ||
Fixed interest rate | 4.05% | ||
Total debt, gross | $ 400,000 | 400,000 | |
Fixed Rate Debt - Senior Loan | Gas Company Tower | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Aug. 6, 2021 | ||
Fixed interest rate | 3.4727% | 3.4727% | |
Total debt, gross | $ 319,000 | 0 | |
Fixed Rate Debt - Mezzanine Loan | Gas Company Tower | |||
Debt Instrument [Line Items] | |||
Contractual maturity date | Aug. 6, 2021 | ||
Fixed interest rate | 6.50% | 6.50% | |
Total debt, gross | $ 131,000 | 0 | |
Debt Refinanced | Gas Company Tower | |||
Debt Instrument [Line Items] | |||
Total debt, gross | $ 0 | $ 458,000 |
Mortgage Loans - Schedule of 40
Mortgage Loans - Schedule of Debt (Footnote) (Details) - extension_option | Sep. 01, 2016 | Sep. 30, 2016 |
Variable Rate Loans | Wells Fargo Center - South Tower | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 2.33% | |
Variable Rate Loans | Wells Fargo Center - South Tower | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.80% | |
Cap interest rate | 4.75% | |
Number of options to extend | 2 | |
Option extension period | 1 year | |
Variable Rate Loans | 777 Tower | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 2.71% | |
Variable Rate Loans | 777 Tower | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.18% | 2.18% |
Cap interest rate | 5.75% | |
Number of options to extend | 2 | |
Option extension period | 1 year | |
Variable Rate Loans | Figueroa at 7th | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 2.7682% | |
Variable Rate Loans | Figueroa at 7th | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.25% | |
Number of options to extend | 2 | |
Option extension period | 12 months | |
Floating Rate Debt | EY Plaza | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 3.928% | |
Floating Rate Debt | EY Plaza | LIBOR | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.75% | |
Swap rate | 2.178% | |
Effective interest rate | 3.928% |
Mortgage Loans - Schedule of Ma
Mortgage Loans - Schedule of Maturities of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
2,016 | $ 290,976 | |
2,017 | 589,026 | |
2,018 | 224,232 | |
2,019 | 4,449 | |
2,020 | 168,151 | |
Thereafter | 850,000 | |
Total | $ 2,126,834 | $ 2,117,377 |
Mortgage Loans - Narrative (Det
Mortgage Loans - Narrative (Details) - USD ($) | Sep. 01, 2016 | Jul. 13, 2016 | Jul. 13, 2016 | Jul. 11, 2016 | May 16, 2016 | Sep. 30, 2016 | Sep. 30, 2015 |
Debt Instrument [Line Items] | |||||||
Prepayment amount without penalty | $ 506,800,000 | ||||||
Prepayment amount with penalty or available to be defeased | 550,000,000 | ||||||
Amount available to be defeased after lock-out periods | 400,000,000 | ||||||
Prepaid with penalties | 220,000,000 | ||||||
Amount unavailable for prepayment | 450,000,000 | ||||||
Issuance of Series B preferred interest | 43,000,000 | ||||||
Proceeds from mortgage loans | 470,000,000 | $ 0 | |||||
Debt subject to non-recourse carve out guarantees | $ 2,100,000,000 | ||||||
Covenant compliance | Pursuant to the terms of certain of our mortgage loan agreements, Brookfield DTLA is required to report a debt service coverage ratio (“DSCR”) calculated using the formulas specified in the underlying loan agreements. We have submitted the required reports to the lenders for the measurement periods ended September 30, 2016 and were in compliance with the amounts required by the loan agreements. | ||||||
Gas Company Tower | |||||||
Debt Instrument [Line Items] | |||||||
New mortgage loan | $ 450,000,000 | ||||||
Gas Company Tower | Fixed Rate Debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt refinanced or to be refinanced | 458,000,000 | ||||||
Principal paydown upon refinancing | 8,000,000 | ||||||
Cash required to refinance debt | 19,700,000 | ||||||
Gas Company Tower | Fixed Rate Debt - Senior Loan | |||||||
Debt Instrument [Line Items] | |||||||
Tenant improvement and leasing commission reserve | 20,700,000 | ||||||
Rent concession reserve | 4,500,000 | ||||||
Property tax reserve | 3,000,000 | ||||||
New mortgage loan | $ 319,000,000 | ||||||
Fixed interest rate | 3.4727% | 3.4727% | |||||
Maturity date | Aug. 6, 2021 | ||||||
Gas Company Tower | Fixed Rate Debt - Mezzanine Loan | |||||||
Debt Instrument [Line Items] | |||||||
New mortgage loan | $ 131,000,000 | ||||||
Fixed interest rate | 6.50% | 6.50% | |||||
Maturity date | Aug. 6, 2021 | ||||||
777 Tower | Variable Rate Loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt refinanced or to be refinanced | $ 200,000,000 | ||||||
New mortgage loan | 220,000,000 | ||||||
Proceeds from mortgage loans | $ 19,746,892 | ||||||
Maturity date | Nov. 1, 2018 | ||||||
Wells Fargo Center - South Tower | Variable Rate Loans | |||||||
Debt Instrument [Line Items] | |||||||
Debt refinanced or to be refinanced | $ 290,000,000 | ||||||
Cash required to refinance debt | $ 51,000,000 | ||||||
Maturity date | Dec. 1, 2016 | ||||||
Wells Fargo Center - North Tower | Fixed Rate Debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt refinanced or to be refinanced | $ 550,000,000 | ||||||
Cash required to refinance debt | $ 125,000,000 | ||||||
Fixed interest rate | 5.697% | ||||||
Maturity date | Apr. 6, 2017 | ||||||
Series B preferred interest | |||||||
Debt Instrument [Line Items] | |||||||
Issuance of Series B preferred interest | $ 37,000,000 | $ 7,000,000 | $ 30,000,000 | $ 6,000,000 | $ 43,000,000 | ||
LIBOR | 777 Tower | Variable Rate Loans | |||||||
Debt Instrument [Line Items] | |||||||
Increase (decrease) in basis spread | The terms of the modified loan increased the interest rate by 48 basis points | ||||||
Basis spread on variable rate | 2.18% | 2.18% | |||||
LIBOR | Wells Fargo Center - South Tower | Variable Rate Loans | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.80% |
Mezzanine Equity - Narrative (D
Mezzanine Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 13, 2016 | Jul. 13, 2016 | Jul. 11, 2016 | May 17, 2016 | May 16, 2016 | Apr. 05, 2016 | Jan. 04, 2016 | Dec. 04, 2015 | Oct. 15, 2013 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Class of Stock [Line Items] | |||||||||||||
Other payment to noncontrolling interest | $ 336 | $ 0 | |||||||||||
Redemption value | 798,992 | $ 798,992 | $ 726,595 | ||||||||||
Issuance of Series B preferred interest | $ 43,000 | ||||||||||||
Series A Preferred Interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Current preferred liquidation percentage | 51.87% | ||||||||||||
Series A-1 Preferred Interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Current preferred liquidation percentage | 48.13% | ||||||||||||
Common component of Series A interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Preferred liquidation percentage after current liquidation preference has been reduced to zero | 47.66% | ||||||||||||
Common component of Series B interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Preferred liquidation percentage after current liquidation preference has been reduced to zero | 52.34% | ||||||||||||
Series A preferred stock | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Preferred stock dividends paid (in USD per share) | $ 2.25 | ||||||||||||
Dividend payment | $ 21,900 | ||||||||||||
Series A preferred stock, shares outstanding (in shares) | 9,730,370 | 9,730,370 | 9,730,370 | ||||||||||
Preferred stock dividends declared (in USD per share) | $ 2.25 | $ 0 | $ 0 | ||||||||||
Preferred stock, dividend rate (in USD per share) | 1.90625 | ||||||||||||
Preferred stock, amount of preferred dividends in arrears | $ 125,000 | ||||||||||||
Preferred stock, redemption price per share (in USD per share) | $ 25 | $ 25 | |||||||||||
Redemption value | $ 368,215 | $ 368,215 | $ 354,304 | ||||||||||
Series A preferred stock | Third party issuance | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Series A preferred stock, shares outstanding (in shares) | 9,357,469 | 9,357,469 | 9,357,469 | ||||||||||
Series A preferred stock | Brookfield DTLA Holdings LLC | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Series A preferred stock, shares outstanding (in shares) | 372,901 | 372,901 | 372,901 | ||||||||||
Series A-1 Preferred Interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Preferred stock, amount of preferred dividends in arrears | $ 136,300 | ||||||||||||
Redemption value | $ 361,993 | 361,993 | $ 349,084 | ||||||||||
Liquidation value | 225,700 | 225,700 | |||||||||||
Senior participating preferred interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Other payment to noncontrolling interest | $ 300 | ||||||||||||
Redemption value | 24,835 | 24,835 | 23,207 | ||||||||||
Stated value of preferred interest issued | $ 240,000 | ||||||||||||
Coupon rate, preferred interest | 7.00% | ||||||||||||
Senior participating preferred interest | Brookfield DTLA Holdings LLC | 333 South Hope and EYP Realty | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Residual interest | 4.00% | ||||||||||||
Series B preferred interest | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Redemption value | 43,949 | 43,949 | $ 0 | ||||||||||
Liquidation value | 43,000 | 43,000 | |||||||||||
Coupon rate, preferred interest | 9.00% | ||||||||||||
Maximum funding commitment | 260,000 | 260,000 | |||||||||||
Issuance of Series B preferred interest | $ 37,000 | $ 7,000 | $ 30,000 | $ 6,000 | 43,000 | ||||||||
Accumulated and unpaid dividends | $ 900 | $ 900 | |||||||||||
Fixed Rate Debt | Gas Company Tower | |||||||||||||
Class of Stock [Line Items] | |||||||||||||
Cash required to refinance debt | $ 19,700 |
Mezzanine Equity - Summary of C
Mezzanine Equity - Summary of Change in Mezzanine Equity (Details) - USD ($) $ in Thousands | Jul. 13, 2016 | Jul. 13, 2016 | Jul. 11, 2016 | May 16, 2016 | Sep. 30, 2016 |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Balance, December 31, 2015 | $ 726,595 | ||||
Issuance of Series B preferred interest | 43,000 | ||||
Current dividends | 27,769 | ||||
Other payment to noncontrolling interest | (336) | ||||
Redemption measurement adjustment | 1,964 | ||||
Balance, September 30, 2016 | $ 798,992 | ||||
Series A preferred stock | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Balance, December 31, 2015 (in shares) | 9,730,370 | ||||
Balance, December 31, 2015 | $ 354,304 | ||||
Current dividends | $ 13,911 | ||||
Balance, September 30, 2016 (in shares) | 9,730,370 | ||||
Balance, September 30, 2016 | $ 368,215 | ||||
Series A-1 Preferred Interest | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Balance, December 31, 2015 | 349,084 | ||||
Current dividends | 12,909 | ||||
Balance, September 30, 2016 | 361,993 | ||||
Senior Participating Preferred Interest | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Balance, December 31, 2015 | 23,207 | ||||
Current dividends | 0 | ||||
Other payment to noncontrolling interest | (336) | ||||
Redemption measurement adjustment | 1,964 | ||||
Balance, September 30, 2016 | 24,835 | ||||
Series B preferred interest | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Balance, December 31, 2015 | 0 | ||||
Issuance of Series B preferred interest | $ 7,000 | $ 37,000 | $ 30,000 | $ 6,000 | 43,000 |
Current dividends | 949 | ||||
Balance, September 30, 2016 | $ 43,949 |
Noncontrolling Interests Narrat
Noncontrolling Interests Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Noncontrolling Interests [Abstract] | ||
Contribution from Brookfield DTLA Holdings | $ 2,500 | $ 0 |
Accumulated Other Comprehensi46
Accumulated Other Comprehensive Loss - Summary of Change in Accumulated Other Comprehensive Loss Related to Cash Flow Hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | $ (2,580) | |||
Balance at end of period | $ (4,148) | (4,148) | ||
Accumulated Other Comprehensive Loss | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||
Balance at beginning of period | (10,537) | $ (4,465) | (5,415) | $ (4,337) |
Other comprehensive gain (loss) before reclassifications | 1,832 | (3,579) | (3,290) | (3,707) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 |
Net current-period other comprehensive gain (loss) | 1,832 | (3,579) | (3,290) | (3,707) |
Balance at end of period | $ (8,705) | $ (8,044) | $ (8,705) | $ (8,044) |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of (Liabilities) Assets Measured at Fair Value on a Recurring Basis, Aggregated by the Level in the Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cash flow hedge derivative at fair value, net | $ (8,705) | $ (5,415) |
Interest Rate Swap | Quoted Prices in Active Markets for Identical (Liabilities) Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cash flow hedge derivative at fair value, net | 0 | 0 |
Interest Rate Swap | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cash flow hedge derivative at fair value, net | (8,705) | (5,415) |
Interest Rate Swap | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cash flow hedge derivative at fair value, net | 0 | 0 |
Interest Rate Cap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative instruments not designated as hedging instruments, asset at fair value | 0 | 19 |
Interest Rate Cap | Quoted Prices in Active Markets for Identical (Liabilities) Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative instruments not designated as hedging instruments, asset at fair value | 0 | 0 |
Interest Rate Cap | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative instruments not designated as hedging instruments, asset at fair value | 0 | 19 |
Interest Rate Cap | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative instruments not designated as hedging instruments, asset at fair value | $ 0 | $ 0 |
Financial Instruments - Summary
Financial Instruments - Summary of Fair Value of Derivative Instruments (Details) - Interest Rate Swap - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Interest rate cash flow hedge derivative at fair value, net | $ (8,705) | $ (5,415) |
Accounts Payable and Other Liabilities | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Interest rate cash flow hedge derivative at fair value, net | $ (8,705) | $ (5,415) |
Financial Instruments - Summa49
Financial Instruments - Summary of Effect of Derivative Instruments (Details) - Interest Rate Swap - Cash Flow Hedging - Designated as Hedging Instrument - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative [Line Items] | ||
Amount of Loss Recognized in AOCL | $ (3,290) | $ (3,707) |
Amount of Loss Reclassified from AOCL to Statement of Operations | $ 0 | $ 0 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
EY Plaza | Interest Rate Swap | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Notional amount | $ 185 | $ 185 |
Financial Instruments - Schedul
Financial Instruments - Schedule of Interest Rate Derivatives (Details) - Interest Rate Cap - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 01, 2016 | Aug. 31, 2016 | Dec. 31, 2015 |
Derivative Instruments, Interest Rate Caps [Line Items] | ||||
Notional amount | $ 510,000 | $ 490,000 | ||
Wells Fargo Center - South Tower | ||||
Derivative Instruments, Interest Rate Caps [Line Items] | ||||
Notional amount | 290,000 | 290,000 | ||
777 Tower | ||||
Derivative Instruments, Interest Rate Caps [Line Items] | ||||
Notional amount | $ 220,000 | $ 220,000 | $ 200,000 | $ 200,000 |
Financial Instruments - Summa52
Financial Instruments - Summary of Fair Value and Carrying Amounts of Mortgage Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage loans | $ 2,126,834 | $ 2,117,377 |
Carrying amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage loans | 2,126,834 | 2,117,377 |
Significant Unobservable Inputs (Level 3) | Estimated fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage loans | $ 2,128,930 | $ 2,114,761 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Property management fee, percent | 2.75% |
Asset management fee, percent | 0.75% |
Related Party Transactions - Su
Related Party Transactions - Summary of Costs Incurred Under Arrangements with Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Property management fee expense | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expenses | $ 1,955 | $ 1,843 | $ 5,864 | $ 5,679 |
Asset management fee expense | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expenses | 1,583 | 1,578 | 4,748 | 4,645 |
General, administrative and reimbursable expenses | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expenses | 615 | 664 | 1,857 | 1,950 |
Leasing and construction management fees | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expenses | 410 | 2,436 | 1,321 | 5,964 |
Insurance expense | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction expenses | $ 1,950 | $ 2,172 | $ 5,873 | $ 6,517 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | Aug. 17, 2016USD ($) | Apr. 21, 2016USD ($) | Apr. 18, 2016USD ($) | Jan. 04, 2016USD ($) | Dec. 04, 2015$ / shares | Jun. 18, 2014USD ($) | Apr. 24, 2013lawsuit | Sep. 30, 2016$ / shares | Sep. 30, 2015$ / shares | Jul. 13, 2016USD ($) | Sep. 28, 2015USD ($) | Mar. 30, 2015$ / shares | Nov. 21, 2013USD ($) |
Putative Class Actions Filed Against Brookfield Office Properties, Inc. | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of claims filed | lawsuit | 7 | ||||||||||||
MPG common stock | MPG Office LLC | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Maximum stipulation of settlement | $ 475,000 | ||||||||||||
Payment for legal settlement | $ 475,000 | ||||||||||||
Series A preferred stock | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Payment for legal settlement | $ 2,212,688 | ||||||||||||
Proposed litigation payment per preferred share of accumulated and unpaid dividends (in USD per share) | $ / shares | $ 2.25 | ||||||||||||
Proposed litigation settlement, attorneys' fees | $ 5,250,000 | ||||||||||||
Preferred stock dividends declared (in USD per share) | $ / shares | $ 2.25 | $ 0 | $ 0 | ||||||||||
Dividend payment | $ 21,900,000 | ||||||||||||
Attorneys' fees and expenses awarded | $ 2,212,688 | ||||||||||||
Common and Series A preferred stock | MPG Office LLC | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Insurance settlement receivable | $ 1,106,344 | ||||||||||||
Cash received from insurance settlement | $ 1,106,344 |