Segment Reporting

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Reportable Segments

We had three reportable operating segments at March 31, 2017, the first two of which consist of the ownership and rental of (i) industrial and (ii) medical office real estate investments. Properties not included in our reportable segments, which do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment, are generally referred to as non-reportable Rental Operations. Our non-reportable Rental Operations primarily include our office properties. 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 March 31,
	2017		2016
Revenues
Rental Operations:
Industrial	$	156,882	$	142,980
Medical Office	47,522		42,225
Non-reportable Rental Operations	13,133		14,896
Service Operations	9,399		23,151
Total segment revenues	226,936		223,252
Other revenue	378		1,702
Consolidated revenue from continuing operations	227,314		224,954
Discontinued operations	—		229
Consolidated revenue	$	227,314	$	225,183

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 March 31,
	2017			2016
PNOI
Industrial	$	115,572		$	100,983
Medical Office	28,851			25,519
Non-reportable Rental Operations	1,192			1,598
PNOI, excluding all sold/held-for-sale properties	145,615			128,100
PNOI from sold/held-for-sale properties included in continuing operations	2,789			12,738
PNOI, continuing operations	$	148,404		$	140,838
Earnings from Service Operations	1,775			2,231
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net	2,928			2,923
Revenues related to lease buyouts	9,785			165
Amortization of lease concessions and above and below market rents	(543		)	(633		)
Intercompany rents and other adjusting items	180			7
Non-Segment Items:
Equity in earnings of unconsolidated companies	4,749			21,860
Interest expense	(30,505		)	(37,730		)
Depreciation and amortization expense	(81,557		)	(77,798		)
Gain on sale of properties	37,046			15,577
Impairment charges	(859		)	(6,405		)
Interest and other income, net	533			2,523
General and administrative expenses	(19,232		)	(18,098		)
Gain on land sales	1,505			130
Other operating expenses	(738		)	(1,237		)
Gain on extinguishment of debt	25			—
Acquisition-related activity	—			(3		)
Other non-segment revenues and expenses, net	(583		)	(402		)
Income from continuing operations before income taxes	$	72,913		$	43,948

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):

	March 31, 2017		December 31, 2016
Assets
Rental Operations:
Industrial	$	5,042,142	$	4,828,984
Medical Office	1,365,645		1,338,844
Non-reportable Rental Operations	86,522		162,893
Service Operations	125,455		127,154
Total segment assets	6,619,764		6,457,875
Non-segment assets	338,746		314,127
Consolidated assets	$	6,958,510	$	6,772,002