Segment Information

6 Months Ended

Jun. 30, 2017

20. Segment Information

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ and NOI⁽¹⁾ by segment for the three months ended June 30, 2017

(Amounts in thousands)		For the Three Months Ended June 30, 2017
			Total		New York			Washington, DC			Other
Total revenues			$	626,039	$	436,862		$	118,336		$	70,841
Total expenses				442,643		279,835			82,317			80,491
Operating income (loss)				183,396		157,027			36,019			(9,650)
Income (loss) from partially owned entities				46,276		(272)			255			46,293
Income from real estate fund investments				4,391		-			-			4,391
Interest and other investment income (loss), net				9,307		1,499			(23)			7,831
Interest and debt expense				(96,797)		(60,335)			(12,008)			(24,454)
Income before income taxes				146,573		97,919			24,243			24,411
Income tax benefit (expense)				248		906			(362)			(296)
Income from continuing operations				146,821		98,825			23,881			24,115
Income from discontinued operations				663		-			-			663
Net income				147,484		98,825			23,881			24,778
Less net income attributable to noncontrolling interests
	in consolidated subsidiaries			(7,677)		(2,645)			-			(5,032)
Net income attributable to the Operating Partnership				139,807		96,180			23,881			19,746
Interest and debt expense⁽²⁾				118,585		78,202			13,567			26,816
Depreciation and amortization⁽²⁾				168,248		110,449			33,648			24,151
Income tax expense (benefit)⁽²⁾				289		(869)			353			805
EBITDA⁽¹⁾				426,929		283,962	⁽³⁾		71,449	⁽⁴⁾		71,518	⁽⁵⁾
Non-cash adjustments for straight-line rents, amortization of
	acquired below-market leases, net, and other ⁽²⁾			(44,580)		(26,741)			(1,826)			(16,013)
NOI⁽¹⁾			$	382,349	$	257,221	⁽³⁾	$	69,623	⁽⁴⁾	$	55,505	⁽⁵⁾

(Amounts in thousands)		For the Three Months Ended June 30, 2016
			Total		New York			Washington, DC			Other
Total revenues			$	621,708	$	425,770		$	127,468		$	68,470
Total expenses				434,894		268,135			89,106			77,653
Operating income (loss)				186,814		157,635			38,362			(9,183)
Income (loss) from partially owned entities				642		(1,001)			(2,370)			4,013
Income from real estate fund investments				16,389		-			-			16,389
Interest and other investment income, net				10,236		1,214			34			8,988
Interest and debt expense				(105,576)		(56,395)			(19,817)			(29,364)
Net gain on disposition of wholly owned and partially
	owned assets			159,511		159,511			-			-
Income (loss) before income taxes				268,016		260,964			16,209			(9,157)
Income tax expense				(2,109)		(816)			(318)			(975)
Income (loss) from continuing operations				265,907		260,148			15,891			(10,132)
Income from discontinued operations				2,475		-			-			2,475
Net income (loss)				268,382		260,148			15,891			(7,657)
Less net income attributable to noncontrolling interests
	in consolidated subsidiaries			(13,025)		(3,397)			-			(9,628)
Net income (loss) attributable to the Operating Partnership				255,357		256,751			15,891			(17,285)
Interest and debt expense⁽²⁾				127,799		71,171			21,926			34,702
Depreciation and amortization⁽²⁾				173,352		111,314			37,196			24,842
Income tax expense ⁽²⁾				4,704		889			2,205			1,610
EBITDA⁽¹⁾				561,212		440,125	⁽³⁾		77,218	⁽⁴⁾		43,869	⁽⁵⁾
Non-cash adjustments for straight-line rents, amortization of
	acquired below-market leases, net, and other ⁽²⁾			(74,383)		(50,045)			(6,067)			(18,271)
NOI⁽¹⁾			$	486,829	$	390,080	⁽³⁾	$	71,151	⁽⁴⁾	$	25,598	⁽⁵⁾

See notes on pages 45 through 48.

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ and NOI⁽¹⁾ by segment for the six months ended June 30, 2017.

(Amounts in thousands)		For the Six Months Ended June 30, 2017
			Total		New York			Washington, DC			Other
Total revenues			$	1,246,887	$	863,101		$	234,543		$	149,243
Total expenses				907,024		560,656			166,305			180,063
Operating income (loss)				339,863		302,445			68,238			(30,820)
Income (loss) from partially owned entities				47,721		(2,365)			342			49,744
Income from real estate fund investments				4,659		-			-			4,659
Interest and other investment income, net				18,535		2,971			41			15,523
Interest and debt expense				(191,082)		(118,322)			(23,569)			(49,191)
Net gains on disposition of wholly owned and partially
	owned assets			501		-			-			501
Income (loss) before income taxes				220,197		184,729			45,052			(9,584)
Income tax (expense) benefit				(1,957)		763			(716)			(2,004)
Income (loss) from continuing operations				218,240		185,492			44,336			(11,588)
Income from discontinued operations				3,091		-			-			3,091
Net income (loss)				221,331		185,492			44,336			(8,497)
Less net income attributable to noncontrolling interests
	in consolidated subsidiaries			(14,414)		(5,489)			-			(8,925)
Net income (loss) attributable to the Operating Partnership				206,917		180,003			44,336			(17,422)
Interest and debt expense⁽²⁾				234,912		154,125			26,748			54,039
Depreciation and amortization⁽²⁾				339,785		223,259			69,141			47,385
Income tax expense (benefit)⁽²⁾				2,718		(642)			720			2,640
EBITDA⁽¹⁾				784,332		556,745	⁽³⁾		140,945	⁽⁴⁾		86,642	⁽⁵⁾
Non-cash adjustments for straight-line rents, amortization of
	acquired below-market leases, net, and other ⁽²⁾			(61,708)		(52,159)			(5,892)			(3,657)
NOI⁽¹⁾			$	722,624	$	504,586	⁽³⁾	$	135,053	⁽⁴⁾	$	82,985	⁽⁵⁾

See notes on pages 45 through 48.

Below is a summary of net income and a reconciliation of net income to EBITDA⁽¹⁾ and NOI⁽¹⁾ by segment for the six months ended June 30, 2016.

(Amounts in thousands)		For the Six Months Ended June 30, 2016
		Total		New York			Washington, DC			Other
Total revenues		$	1,234,745	$	836,595		$	255,480		$	142,670
Total expenses			1,048,211		537,730			345,671			164,810
Operating income (loss)			186,534		298,865			(90,191)			(22,140)
(Loss) income from partially owned entities			(3,598)		(4,564)			(3,679)			4,645
Income from real estate fund investments			27,673		-			-			27,673
Interest and other investment income, net			13,754		2,329			92			11,333
Interest and debt expense			(206,065)		(110,981)			(35,752)			(59,332)
Net gains on disposition of wholly owned and partially
	owned assets		160,225		159,511			-			714
Income (loss) before income taxes			178,523		345,160			(129,530)			(37,107)
Income tax expense			(4,940)		(1,775)			(582)			(2,583)
Income (loss) from continuing operations			173,583		343,385			(130,112)			(39,690)
Income from discontinued operations			3,191		-			-			3,191
Net income (loss)			176,774		343,385			(130,112)			(36,499)
Less net income attributable to noncontrolling interests
	in consolidated subsidiaries		(22,703)		(6,826)			-			(15,877)
Net income (loss) attributable to the Operating Partnership			154,071		336,559			(130,112)			(52,376)
Interest and debt expense⁽²⁾			253,919		142,369			40,637			70,913
Depreciation and amortization⁽²⁾			348,163		219,717			77,795			50,651
Income tax expense⁽²⁾			7,965		1,979			2,470			3,516
EBITDA⁽¹⁾			764,118		700,624	⁽³⁾		(9,210)	⁽⁴⁾		72,704	⁽⁵⁾
Non-cash adjustments for straight-line rents, amortization of
	acquired below-market leases, net, and other ⁽²⁾		(133,739)		(97,555)			(10,264)			(25,920)
NOI⁽¹⁾		$	630,379	$	603,069	⁽³⁾	$	(19,474)	⁽⁴⁾	$	46,784	⁽⁵⁾

See notes on pages 45 through 48.

Notes to preceding tabular information:

(1)

EBITDA represents "Earnings Before Interest, Taxes, Depreciation and Amortization." NOI represents "Net Operating Income" (the equivalent of EBITDA on a cash basis). We calculate EBITDA and NOI on an Operating Partnership basis which is before allocation to the noncontrolling interest of the Operating Partnership. We consider EBITDA the primary non-GAAP financial measure for making decisions and assessing the unlevered performance of our segments as it relates to the total return on assets as opposed to the levered return on equity. We also consider NOI a key non-GAAP financial measure. As properties are bought and sold based on a multiple of NOI, we utilize this measure to make investment decisions as well as to compare the performance of our assets to those of our peers. EBITDA and NOI should not be considered substitutes for net income. EBITDA and NOI may not be comparable to similarly titled measures employed by other companies.

Our 7.5% interest in Fashion Centre Mall/Washington Tower and our interest in Rosslyn Plaza (ranging from 43.7% to 50.4%) will not be included in the spin-off of our Washington, DC segment and have been reclassified to Other. The prior year's presentation has been conformed to the current year. In addition, on January 1, 2017, we reclassified our investment in 85 Tenth Avenue from Other to the New York segment as a result of the December 1, 2016 repayment of our loans receivable and the receipt of a 49.9% ownership interest in the property.

(2)

Interest and debt expense, depreciation and amortization and income tax expense (benefit) in the reconciliation of net income (loss) to EBITDA and straight-line rents, amortization of acquired below-market leases, net and other non-cash adjustments in the reconciliation of EBITDA to NOI include our share of these items from partially owned entities.

Notes to preceding tabular information - continued:

(3)	The elements of "New York" EBITDA are summarized below.

	(Amounts in thousands)				For the Three Months Ended					For the Six Months Ended
					June 30,					June 30,
					2017		2016			2017		2016
	Office				$	169,327	$	165,576	^(a)	$	339,405	$	320,585	^(a)
	Retail					90,183		91,421	^(a)		179,446		181,022	^(a)
	Residential					6,190		6,337			12,468		12,687
	Alexander's					11,742		11,805			23,304		23,374
	Hotel Pennsylvania					6,520		3,797			2,122		325
		Total New York EBITDA, as adjusted				283,962		278,936			556,745		537,993
	Certain items that impact EBITDA:
		Net gain on sale of 47% ownership interest
			in 7 West 34th Street			-		159,511			-		159,511
		EBITDA from sold properties				-		1,678			-		3,120
			Total of certain items that impact EBITDA			-		161,189			-		162,631
				Total New York EBITDA	$	283,962	$	440,125		$	556,745	$	700,624

The elements of "New York" NOI are summarized below.

(Amounts in thousands)				For the Three Months Ended					For the Six Months Ended
				June 30,					June 30,
				2017		2016			2017		2016
Office				$	158,105	$	142,639	^(a)	$	317,632	$	277,071	^(a)
Retail					80,193		71,084	^(a)		159,827		139,433	^(a)
Residential					5,341		5,627			10,881		11,199
Alexander's					7,029		6,616			14,059		13,233
Hotel Pennsylvania					6,553		3,830			2,187		390
	Total New York NOI, as adjusted				257,221		229,796			504,586		441,326
Certain items that impact NOI:
	Net gain on sale of 47% ownership interest
		in 7 West 34th Street			-		159,511			-		159,511
	NOI from sold properties				-		773			-		2,232
		Total of certain items that impact NOI			-		160,284			-		161,743
			Total New York NOI	$	257,221	$	390,080		$	504,586	$	603,069


(a)	Beginning in January 2017 for office buildings with retail at the base, we have adjusted the allocation of real estate taxes between the retail and office elements above. This has no effect on our consolidated financial statements but resulted in a reallocation of $3,931 and $7,845 of income from retail to office for the three and six months ended June 30, 2016, respectively.

(4)	The elements of "Washington, DC" EBITDA are summarized below.

	(Amounts in thousands)			For the Three Months Ended				For the Six Months Ended
				June 30,				June 30,
				2017		2016		2017		2016
	Office			$	57,418	$	61,357	$	113,710	$	119,376
	Residential				14,031		10,118		27,235		20,426
		Total Washington, DC EBITDA, as adjusted			71,449		71,475		140,945		139,802
	Certain items that impact EBITDA:
		EBITDA from sold properties			-		5,743		-		11,688
		Skyline properties impairment loss			-		-		-		(160,700)
		Total of certain items that impact EBITDA			-		5,743		-		(149,012)
			Total Washington, DC EBITDA	$	71,449	$	77,218	$	140,945	$	(9,210)

The elements of "Washington, DC" NOI are summarized below.

(Amounts in thousands)			For the Three Months Ended				For the Six Months Ended
			June 30,				June 30,
			2017		2016		2017		2016
Office			$	55,592	$	57,501	$	107,818	$	112,937
Residential				14,031		10,118		27,235		20,426
	Total Washington, DC NOI, as adjusted			69,623		67,619		135,053		133,363
Certain items that impact NOI:
	NOI from sold properties			-		3,532		-		7,863
	Skyline properties impairment loss			-		-		-		(160,700)
	Total of certain items that impact NOI			-		3,532		-		(152,837)
		Total Washington, DC NOI	$	69,623	$	71,151	$	135,053	$	(19,474)

(5)	The elements of "Other" EBITDA are summarized below.

	(Amounts in thousands)		For the Three Months Ended				For the Six Months Ended
			June 30,				June 30,
			2017		2016		2017		2016
	theMART (including trade shows)		$	24,122	$	25,965	$	48,306	$	48,993
	555 California Street			12,144		12,117		24,227		23,732
	Other investments			12,383		17,407		23,998		33,091
				48,649		55,489		96,531		105,816
	Our share of real estate fund investments			(304)		7,544		(3,539)		12,855
	Corporate general and administrative expenses^(a)			(23,235)		(24,239)		(56,222)		(54,845)
	Investment income and other, net^(a)			9,629		5,471		18,169		12,446
	Net gain resulting from UE operating partnership
		unit issuances		15,900		-		15,900		-
	Net gain on sale of property at Suffolk Downs			15,314		-		15,314		-
	Net gain on repayment of our Suffolk Downs JV
		debt investments		11,373		-		11,373		-
	Acquisition and transaction related costs^(b)			(6,471)		(2,879)		(14,476)		(7,486)
	Residual retail properties discontinued operations			663		2,483		3,091		3,204
	Other			-		-		501		714
		Total Other	$	71,518	$	43,869	$	86,642	$	72,704

The elements of "Other" NOI are summarized below.

(Amounts in thousands)		For the Three Months Ended				For the Six Months Ended
		June 30,				June 30,
		2017		2016		2017		2016
theMART (including trade shows)		$	22,904	$	24,233	$	45,808	$	45,955
555 California Street			11,258		8,033		22,633		13,922
Other investments			6,630		6,002		15,909		13,528
			40,792		38,268		84,350		73,405
Our share of real estate fund investments			1,995		1,522		4,931		3,865
Corporate general and administrative expenses^(a)			(17,790)		(19,267)		(40,268)		(39,364)
Investment income and other, net^(a)			9,629		5,471		18,169		12,446
Net gain on sale of property at Suffolk Downs			15,314		-		15,314		-
Net gain on repayment of our Suffolk Downs JV
	debt investments		11,373		-		11,373		-
Acquisition and transaction related costs^(b)			(6,471)		(2,879)		(14,476)		(7,486)
Residual retail properties discontinued operations			663		2,483		3,091		3,204
Other			-		-		501		714
	Total Other	$	55,505	$	25,598	$	82,985	$	46,784


(a)	The amounts in these captions (for this table only) exclude the results of the mark-to-market of our deferred compensation plan of $789 and $4,359 of income for the three months ended June 30, 2017 and 2016, respectively, and $3,258 and $2,421 of income for the six months ended June 30, 2017 and 2016, respectively.
(b)	Includes transaction costs related to the spin-off of our Washington, DC business of $6,211 and $1,606 for the three months ended June 30, 2017 and 2016, respectively, and $13,464 and $1,858 for the six months ended June 30, 2017 and 2016, respectively.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details