Segment Reporting

9 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

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 nine months ended September 30, 2011 and 2010, respectively (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenues
Rental Operations:
Office	$	111,376		$	124,397		$	340,483		$	371,206
Industrial	98,874			84,249			290,219			212,832
Non-reportable Rental Operations segments	20,334			16,495			59,698			49,453
General contractor and service fee revenue (“Service Operations”)	127,708			132,351			409,617			414,391
Total Segment Revenues	358,292			357,492			1,100,017			1,047,882
Other Revenue	2,971			3,158			8,219			8,998
Consolidated Revenue from continuing operations	361,263			360,650			1,108,236			1,056,880
Discontinued Operations	1,341			11,385			7,506			38,276
Consolidated Revenue	$	362,604		$	372,035		$	1,115,742		$	1,095,156
Reconciliation of Funds From Operations
Net earnings excluding depreciation and Non-Segment Items
Office	$	62,768		$	72,015		$	191,787		$	213,409
Industrial	72,006			62,716			208,925			158,395
Non-reportable Rental Operations segments	13,115			10,729			38,513			32,884
Service Operations	7,161			7,698			30,437			21,958
	155,050			153,158			469,662			426,646
Non-Segment Items:
Interest expense	(66,875		)	(61,491		)	(199,269		)	(175,076		)
Impairment charges	—			(1,860		)	—			(9,834		)
Interest and other income	172			149			543			504
Other operating expenses	(60		)	(580		)	(171		)	(1,002		)
General and administrative expenses	(9,493		)	(8,476		)	(29,231		)	(31,171		)
Undeveloped land carrying costs	(2,259		)	(2,359		)	(7,021		)	(7,152		)
Loss on debt transactions	—			(167		)	—			(16,294		)
Acquisition-related activity	(342		)	57,513			(1,525		)	57,513
Income tax benefit	194			1,126			194			1,126
Other non-segment income	1,934			2,552			4,456			6,274
Net (income) loss attributable to noncontrolling interests	(43		)	48			163			(58		)
Joint venture items	11,635			7,916			30,597			32,488
Distributions on Preferred Units	(14,399		)	(16,726		)	(46,347		)	(53,452		)
Adjustments for redemption/repurchase of Preferred Units	(3,633		)	(5,652		)	(3,796		)	(10,144		)
Discontinued operations	390			3,801			1,648			13,170
FFO attributable to common unitholders	72,271			128,952			219,903			233,538
Depreciation and amortization on continuing operations	(96,909		)	(94,487		)	(290,751		)	(253,209		)
Depreciation and amortization on discontinued operations	(426		)	(3,426		)	(1,678		)	(10,877		)
Partnership’s share of joint venture adjustments	(8,531		)	(7,336		)	(24,798		)	(27,271		)
Earnings from depreciated property sales on continuing operations	(1,437		)	(125		)	66,910			6,917
Earnings from depreciated property sales on discontinued operations	2,088			11,527			16,405			24,383
Earnings from depreciated property sales - share of joint venture	—			—			91			2,308
Net income (loss) attributable to common unitholders	$	(32,944	)	$	35,105		$	(13,918	)	$	(24,211	)

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

	September 30, 2011		December 31, 2010
Assets
Rental Operations:
Office	$	2,759,739	$	3,122,565
Industrial	3,388,125		3,210,566
Non-reportable Rental Operations segments	640,885		627,491
Service Operations	175,839		231,662
Total Segment Assets	6,964,588		7,192,284
Non-Segment Assets	539,638		451,840
Consolidated Assets	$	7,504,226	$	7,644,124