Segment Reporting

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We have four reportable operating segments at June 30, 2012, the first three of which consist of the ownership and rental of (i) industrial, (ii) office and (iii) medical office real estate investments. The operations of our industrial, office and medical office properties, along with our retail properties, are collectively referred to as “Rental Operations.” Our retail properties, as well as any other properties not included in our reportable segments, do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment. The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as “Service Operations.” Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.

During 2012, one of the quantitative thresholds was triggered, which required our medical office property operating segment to be presented as a separate reportable segment. As such, our medical office properties are presented as a separate reportable segment for the three and six months ended June 30, 2012, as well as for the comparative prior periods.

Other revenue consists of other operating revenues not identified with one of our operating segments. Interest expense and other non-property specific revenues and expenses are not allocated to individual segments in determining our performance measure.

We assess and measure our overall operating results based upon an industry performance measure referred to as Funds From Operations (“FFO”), which management believes is a useful indicator of our consolidated operating performance. FFO is used by industry analysts and investors as a supplemental operating performance measure of a REIT. The National Association of Real Estate Investment Trusts (“NAREIT”) created FFO as a non-GAAP supplemental measure of REIT operating performance. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP, gains or losses from sales of previously depreciated real estate assets, impairment charges related to depreciable real estate assets, plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures. The most comparable GAAP measure is net income (loss) attributable to common shareholders or common unitholders. FFO attributable to common shareholders or common unitholders should not be considered as a substitute for net income (loss) attributable to common shareholders or common unitholders or any other measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. FFO is calculated in accordance with the definition that was adopted by the Board of Governors of NAREIT.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Management believes that the use of FFO attributable to common shareholders or common unitholders, combined with net income (which remains the primary measure of performance), improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful. Management believes that the use of FFO as a performance measure enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REITs activity and assist them in comparing these operating results between periods or between different companies.

We do not allocate certain income and expenses (“Non-Segment Items”, as shown in the table below) to our operating segments. Thus, the operational performance measure presented here on a segment-level basis represents net earnings, excluding depreciation expense and the Non-Segment Items not allocated, and is not meant to present FFO as defined by NAREIT.

The following table shows (i) the revenues for each of the reportable segments and (ii) a reconciliation of FFO attributable to common shareholders or common unitholders to net income (loss) attributable to common shareholders or common unitholders for the three and six months ended June 30, 2012 and 2011, respectively (in thousands): 

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenues
Rental Operations:
Industrial	$	110,257		$	92,293		$	218,497		$	185,673
Office	67,003			65,303			133,905			141,231
Medical Office	20,921			13,503			41,662			26,987
Non-reportable Rental Operations	5,714			5,645			11,372			11,299
General contractor and service fee revenue (“Service Operations”)	63,607			135,362			132,575			281,909
Total Segment Revenues	267,502			312,106			538,011			647,099
Other Revenue	1,113			3,265			2,242			5,248
Consolidated Revenue from continuing operations	268,615			315,371			540,253			652,347
Discontinued Operations	664			48,064			2,660			100,791
Consolidated Revenue	$	269,279		$	363,435		$	542,913		$	753,138
Reconciliation of Funds From Operations
Net earnings excluding depreciation and Non-Segment Items
Industrial	$	83,796		$	67,524		$	163,614		$	133,862
Office	39,827			39,442			79,064			82,727
Medical Office	13,826			8,625			27,493			16,427
Non-reportable Rental Operations	4,204			4,018			8,212			8,224
Service Operations	5,728			12,393			10,775			23,276
	147,381			132,002			289,158			264,516
Non-Segment Items:
Interest expense	(61,220		)	(53,814		)	(122,138		)	(106,461		)
Interest and other income	98			284			244			371
Other operating expenses	(196		)	(26		)	(461		)	(111		)
General and administrative expenses	(11,594		)	(8,541		)	(23,433		)	(19,738		)

Undeveloped land carrying costs	(2,168		)	(2,453		)	(4,466		)	(4,762		)
Acquisition-related activity	(1,029		)	(594		)	(1,609		)	(1,183		)
Other non-segment income	489			1,541			841			2,522
Net (income) loss attributable to noncontrolling interests - consolidated entities not wholly owned by the Partnership	(138		)	84			(306		)	206
Joint venture items	8,907			10,352			19,002			18,962
Dividends on preferred shares/Preferred Units	(11,082		)	(15,974		)	(24,275		)	(31,948		)
Adjustments for redemption/repurchase of preferred shares/Preferred Units	—			—			(5,730		)	(163		)
Discontinued operations	(27		)	12,938			36			25,421
FFO of Partnership attributable to common unitholders	69,421			75,799			126,863			147,632
Net (income) loss attributable to noncontrolling interests - common limited partnership interests in the Partnership	466			706			1,277			(499		)
Noncontrolling interest share of FFO adjustments	(1,660		)	(2,802		)	(3,720		)	(3,371		)
FFO of General Partner attributable to common shareholders	68,227			73,703			124,420			143,762
Depreciation and amortization on continuing operations	(92,721		)	(83,351		)	(184,084		)	(161,057		)
Depreciation and amortization on discontinued operations	(222		)	(16,762		)	(1,115		)	(34,037		)
Company’s share of joint venture adjustments	(8,640		)	(8,639		)	(17,226		)	(16,267		)
Earnings from depreciated property sales on continuing operations	119			492			(158		)	68,348
Earnings from depreciated property sales on discontinued operations	3,095			2,713			9,571			14,316
Earnings from depreciated property sales - share of joint venture	—			—			—			91
Noncontrolling interest share of FFO adjustments	1,660			2,802			3,720			3,371
Net income (loss) of General Partner attributable to common shareholders	$	(28,482	)	$	(29,042	)	$	(64,872	)	$	18,527
Add back: Net income (loss) attributable to noncontrolling interests - common limited partnership interests in the Partnership	(466		)	(706		)	(1,277		)	499
Net income (loss) of Partnership attributable to common unitholders	$	(28,948	)	$	(29,748	)	$	(66,149	)	$	19,026

The assets for each of the reportable segments as of June 30, 2012 and December 31, 2011 are as follows (in thousands):

	June 30, 2012		December 31, 2011
Assets
Rental Operations:
Industrial	$	3,736,149	$	3,586,250
Office	1,677,805		1,742,196
Medical Office	702,514		580,177
Non-reportable Rental Operations	186,864		209,056
Service Operations	159,666		167,382
Total Segment Assets	6,462,998		6,285,061
Non-Segment Assets - Partnership	605,092		718,921
Consolidated Assets - Partnership	$	7,068,090	$	7,003,982
Non-Segment Assets - General Partner	—		455
Consolidated Assets - Company	$	7,068,090	$	7,004,437