Segment Reporting

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Reportable Segments

We had three reportable operating segments at September 30, 2016, the first two of which consist of the ownership and rental of (i) industrial and (ii) medical office real estate investments. Beginning in 2016, our office properties are no longer presented as a separate reportable segment, as they no longer meet the quantitative thresholds for separate presentation, and are referred to as part of our non-reportable Rental Operations. The operations of our industrial and medical office properties as well as our non-reportable Rental Operations, are collectively referred to as "Rental Operations." Our third 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.

Revenues by Reportable Segment

The following table shows the revenues for each of the reportable segments, as well as a reconciliation to consolidated revenues (in thousands): 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenues
Rental Operations:
Industrial	$	149,746	$	136,276	$	432,945	$	419,391
Medical Office	45,353		39,911		130,713		120,213
Non-reportable Rental Operations	10,065		23,277		38,490		72,103
Service Operations	19,351		33,599		68,546		110,320
Total segment revenues	224,515		233,063		670,694		722,027
Other revenue	1,684		1,474		7,023		5,842
Consolidated revenue from continuing operations	226,199		234,537		677,717		727,869
Discontinued operations	380		7		735		32,171
Consolidated revenue	$	226,579	$	234,544	$	678,452	$	760,040

Supplemental Performance Measure

Property-level net operating income on a cash basis ("PNOI") is the non-GAAP supplemental performance measure that we use to evaluate the performance of, and to allocate resources among, the real estate investments in the reportable and operating segments that comprise our Rental Operations. PNOI for our Rental Operations segments is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items (collectively referred to as "Rental Operations revenues and expenses excluded from PNOI," as shown in the following table). Additionally, we do not allocate interest expense, depreciation expense and certain other non-property specific revenues and expenses (collectively referred to as "Non-Segment Items," as shown in the following table) to our individual operating segments.

We evaluate the performance of our Service Operations reportable segment using net income or loss, as allocated to that segment ("Earnings from Service Operations").

The following table shows a reconciliation of our segment-level measures of profitability to consolidated income from continuing operations before income taxes (in thousands and excluding discontinued operations): 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
PNOI
Industrial	$	109,350		$	96,966		$	314,349		$	285,087
Medical Office	29,401			25,827			84,822			76,878
Non-reportable Rental Operations	4,083			4,636			12,273			14,100
PNOI, excluding all sold/held-for-sale properties	142,834			127,429			411,444			376,065
PNOI from sold/held-for-sale properties included in continuing operations	1,840			12,136			16,512			46,635
PNOI, continuing operations	$	144,674		$	139,565		$	427,956		$	422,700
Earnings from Service Operations	2,169			3,905			8,216			11,865
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net	5,008			5,723			10,832			16,830
Revenues related to lease buyouts	1,491			408			1,725			1,366
Amortization of lease concessions and above and below market rents	(303		)	(357		)	(1,361		)	(2,559		)
Intercompany rents and other adjusting items	(27		)	(434		)	(246		)	(1,306		)
Non-Segment Items:
Equity in earnings (loss) of unconsolidated companies	12,010			(5,088		)	37,404			16,281
Gain on dissolution of unconsolidated company	—			—			30,697			—
Promote income	2,212			—			26,299			—
Interest expense	(34,606		)	(41,615		)	(109,520		)	(134,576		)
Depreciation and amortization expense	(80,688		)	(79,898		)	(238,647		)	(240,135		)
Gain on sale of properties	82,698			71,259			137,589			202,153
Impairment charges on non-depreciable properties	(3,042		)	(2,426		)	(15,098		)	(7,896		)
Interest and other income, net	507			1,343			3,597			3,056
General and administrative expenses	(12,534		)	(11,340		)	(42,216		)	(47,582		)
Gain on land sales	1,601			1,659			2,438			24,096
Other operating expenses	(1,424		)	(1,467		)	(3,496		)	(4,579		)
(Loss) gain on extinguishment of debt	(6,243		)	64			(8,673		)	(82,589		)
Acquisition-related activity	(7		)	(5,660		)	(82		)	(6,993		)
Other non-segment revenues and expenses, net	(1,392		)	(1,806		)	(1,715		)	(2,065		)
Income from continuing operations before income taxes	$	112,104		$	73,835		$	265,699		$	168,067

The most comparable GAAP measure to PNOI is income from continuing operations before income taxes. PNOI excludes expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for income from continuing operations before income taxes or any other measures derived in accordance with GAAP. Furthermore, PNOI may not be comparable to other similarly titled measures of other companies.

Assets by Reportable Segment

The assets for each of the reportable segments were as follows (in thousands):

	September 30, 2016		December 31, 2015
Assets
Rental Operations:
Industrial	$	4,712,532	$	4,552,107
Medical Office	1,319,955		1,269,546
Non-reportable Rental Operations	214,130		367,469
Service Operations	129,775		137,257
Total segment assets	6,376,392		6,326,379
Non-segment assets	485,689		569,136
Consolidated assets	$	6,862,081	$	6,895,515