Segment Reporting

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We have four reportable operating segments at September 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 nine months ended September 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 nine months ended September 30, 2012 and 2011, respectively (in thousands): 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Revenues
Rental Operations:
Industrial	$	109,400	$	95,676	$	327,713	$	281,083
Office	67,701		66,157		201,606		207,387
Medical Office	23,007		14,292		64,669		41,280
Non-reportable Rental Operations	4,695		5,485		16,067		16,783
General contractor and service fee revenue (“Service Operations”)	93,932		127,708		226,507		409,617
Total Segment Revenues	298,735		309,318		836,562		956,150

Other Revenue	4,154			2,971			6,396			8,219
Consolidated Revenue from continuing operations	302,889			312,289			842,958			964,369
Discontinued Operations	143			50,315			2,987			151,373
Consolidated Revenue	$	303,032		$	362,604		$	845,945		$	1,115,742
Reconciliation of Funds From Operations
Net earnings excluding depreciation and Non-Segment Items
Industrial	$	81,165		$	70,214		$	244,651		$	203,854
Office	38,302			38,271			117,367			120,999
Medical Office	14,851			8,797			42,344			25,121
Non-reportable Rental Operations	3,026			3,905			11,238			12,232
Service Operations	6,213			7,161			16,988			30,437
	143,557			128,348			432,588			392,643
Non-Segment Items:
Interest expense	(61,539		)	(54,528		)	(183,623		)	(161,765		)
Interest and other income	150			172			394			543
Other operating expenses	(130		)	(60		)	(591		)	(171		)
General and administrative expenses	(8,934		)	(9,493		)	(32,367		)	(29,231		)
Undeveloped land carrying costs	(2,140		)	(2,259		)	(6,606		)	(7,021		)
Acquisition-related activity	(954		)	(342		)	(2,563		)	(1,525		)
Income tax benefit	103			194			103			194
Other non-segment income	3,278			1,934			4,119			4,456
Net (income) loss attributable to noncontrolling interests - consolidated entities not wholly owned by the Partnership	(59		)	(43		)	(365		)	163
Joint venture items	8,997			11,635			27,999			30,597
Dividends on preferred shares/Preferred Units	(11,081		)	(14,399		)	(35,356		)	(46,347		)
Adjustments for redemption/repurchase of preferred shares/Preferred Units	—			(3,633		)	(5,730		)	(3,796		)
Discontinued operations	(92		)	14,745			17			41,163
FFO of Partnership attributable to common unitholders	71,156			72,271			198,019			219,903
Net loss attributable to noncontrolling interests - common limited partnership interests in the Partnership	459			868			1,736			369
Noncontrolling interest share of FFO adjustments	(1,638		)	(2,835		)	(5,358		)	(6,206		)
FFO of General Partner attributable to common shareholders	69,977			70,304			194,397			214,066
Depreciation and amortization on continuing operations	(95,117		)	(81,068		)	(279,136		)	(242,043		)
Depreciation and amortization on discontinued operations	(22		)	(16,267		)	(1,202		)	(50,386		)
Company’s share of joint venture adjustments	(8,782		)	(8,531		)	(26,008		)	(24,798		)
Earnings from depreciated property sales on continuing operations	403			(1,437		)	245			66,910
Earnings from depreciated property sales on discontinued operations	1,608			2,088			11,179			16,405
Earnings from depreciated property sales - share of joint venture	2,065			—			2,065			91
Noncontrolling interest share of FFO adjustments	1,638			2,835			5,358			6,206
Net loss of General Partner attributable to common shareholders	$	(28,230	)	$	(32,076	)	$	(93,102	)	$	(13,549	)
Add back: Net loss attributable to noncontrolling interests - common limited partnership interests in the Partnership	(459		)	(868		)	(1,736		)	(369		)
Net loss of Partnership attributable to common unitholders	$	(28,689	)	$	(32,944	)	$	(94,838	)	$	(13,918	)

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

	September 30, 2012		December 31, 2011
Assets
Rental Operations:
Industrial	$	3,753,022	$	3,586,250
Office	1,676,389		1,742,196
Medical Office	820,898		580,177
Non-reportable Rental Operations	180,998		209,056
Service Operations	161,953		167,382
Total Segment Assets	6,593,260		6,285,061
Non-Segment Assets - Partnership	596,857		718,921
Consolidated Assets - Partnership	$	7,190,117	$	7,003,982
Non-Segment Assets - General Partner	—		455
Consolidated Assets - General Partner	$	7,190,117	$	7,004,437