Segment Reporting

6 Months Ended

Jun. 30, 2011

Segment Reporting

Segment Reporting

9. Segment Reporting

We have three reportable operating segments, the first two of which consist of the ownership and rental of (i) office and (ii) industrial real estate investments. The operations of our office and industrial properties, along with our medical office and retail properties, are collectively referred to as "Rental Operations." Our medical office and retail properties do not by themselves meet the quantitative thresholds for separate presentation as reportable segments. The third reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development 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.

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 like our General Partner. The National Association of Real Estate Investment Trusts ("NAREIT") created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from net income determined in accordance with GAAP. FFO is a non-GAAP financial measure. The most comparable GAAP measure is net income (loss) attributable to common unitholders. FFO attributable to common unitholders should not be considered as a substitute for net income (loss) attributable to 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. 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.

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. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated 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.

Management believes that the use of FFO attributable to 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 excluding gains or losses related to sales of previously depreciated real estate assets and excluding real estate asset depreciation and amortization enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT's activity and assist them in comparing these operating results between periods or between different companies.

The following table shows (i) the revenues for each of the reportable segments and (ii) a reconciliation of FFO attributable to common unitholders to net income (loss) attributable to common unitholders for the three and six months ended June 30, 2011 and 2010, respectively (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Revenues
Rental Operations:
Office	$	109,671		$	122,790		$	231,787		$	249,703
Industrial		95,062			62,499			191,345			128,583
Non-reportable Rental Operations segments		19,710			16,725			39,364			32,958
General contractor and service fee revenue ("Service Operations")		135,362			168,398			281,909			282,039
Total Segment Revenues		359,805			370,412			744,405			693,283
Other Revenue		3,265			3,574			5,248			5,840
Consolidated Revenue from continuing operations		363,070			373,986			749,653			699,123
Discontinued Operations		365			11,234			3,485			23,997
Consolidated Revenue	$	363,435		$	385,220		$	753,138		$	723,120
Reconciliation of Funds From Operations
Net earnings excluding depreciation and Non-Segment Items
Office	$	63,250		$	71,588		$	130,376		$	142,867
Industrial		69,093			47,515			136,918			95,850
Non-reportable Rental Operations segments		13,024			11,577			25,398			22,155
Service Operations		12,393			7,781			23,276			14,260
		157,760			138,461			315,968			275,132
Non-Segment Items:
Interest expense		(66,846	)		(58,044	)		(132,950	)		(114,300	)
Impairment charges		—			(7,974	)		—			(7,974	)
Interest and other income		284			204			371			355
Other operating expenses		(26	)		(145	)		(111	)		(422	)
General and administrative expenses		(8,541	)		(9,151	)		(19,738	)		(22,695	)
Undeveloped land carrying costs		(2,453	)		(2,542	)		(4,762	)		(4,793	)
Loss on debt transactions		—			(15,773	)		—			(16,127	)
Acquisition costs		(594	)		—			(1,183	)		—
Other non-segment income		1,541			1,973			2,522			3,722
Net (income) loss attributable to noncontrolling interests		84			(108	)		206			(106	)
Joint venture items		10,352			12,384			18,962			24,572
Distributions on Preferred Units		(15,974	)		(18,363	)		(31,948	)		(36,726	)
Adjustments for repurchase of Preferred Units		—			(4,492	)		(163	)		(4,492	)
Discontinued operations		212			4,289			458			8,440
FFO attributable to common unitholders		75,799			40,719			147,632			104,586
Depreciation and amortization on continuing operations		(100,058	)		(78,956	)		(194,743	)		(159,481	)
Depreciation and amortization on discontinued operations		(55	)		(3,049	)		(351	)		(6,692	)
Partnership's share of joint venture adjustments		(8,639	)		(10,372	)		(16,267	)		(19,935	)
Earnings from depreciated property sales on continuing operations		493			4,973			68,348			7,042
Earnings from depreciated property sales on discontinued operations		2,712			3,078			14,316			12,856
Earnings from depreciated property sales - share of joint venture		—			4			91			2,308
Net income (loss) attributable to common unitholders	$	(29,748	)	$	(43,603	)	$	19,026		$	(59,316	)

The assets for each of the reportable segments as of June 30, 2011 and December 31, 2010 are as follows (in thousands):

	June 30, 2011		December 31, 2010
Assets
Rental Operations:
Office	$	2,769,228	$	3,122,565
Industrial		3,314,481		3,210,566
Non-reportable Rental Operations segments		634,058		627,491
Service Operations		169,559		231,662
Total Segment Assets		6,887,326		7,192,284
Non-Segment Assets		639,379		451,840
Consolidated Assets	$	7,526,705	$	7,644,124