Segment Information

The Company has two reportable segments, real estate and debt and preferred equity investments. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.

The primary sources of revenue are generated from tenant rents and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, insurance, real estate taxes and ground rent expense (at certain applicable properties). See Note 5, "Debt and Preferred Equity Investments," for additional details on our debt and preferred equity investments.

Selected consolidated results of operations for the three months ended March 31, 2018 and 2017, and selected asset information as of March 31, 2018 and December 31, 2017, regarding our operating segments are as follows (in thousands):



	Real Estate Segment		Debt and Preferred Equity Segment		Total Company
Total revenues
Three months ended:
March 31, 2018	$	256,405	$	45,290	$	301,695
March 31, 2017	337,082		40,299		377,381
Net income before equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, purchase price and other fair value adjustments, gain on sale of real estate, net, depreciable real estate reserves, and gain on sale of investment in marketable securities
Three months ended:
March 31, 2018	$	14,024	$	33,425	$	47,449
March 31, 2017	13,807		37,513		51,320
Total assets
As of:
March 31, 2018	$	11,144,740	$	2,236,130	$	13,380,870
December 31, 2017	11,643,261		2,339,643		13,982,904

Net income before equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, purchase price and other fair value adjustments, gain on sale of real estate, net, depreciable real estate reserves, and gain on sale of investment in marketable securities represents total revenues less total expenses for the real estate segment and total investment income less allocated interest expense for the debt and preferred equity segment. Interest costs for the debt and preferred equity segment includes actual costs incurred for borrowings on the 2016 MRA and 2017 MRA. Interest is imputed on the investments that do not collateralize the 2016 MRA or 2017 MRA using our corporate borrowing cost. We also allocate loan loss reserves, net of recoveries, and transaction related costs to the debt and preferred equity segment. We do not allocate marketing, general and administrative expenses to the debt and preferred equity segment since the use of personnel and resources is dependent on transaction volume between the two segments and varies period over period. In addition, we base performance on the individual segments prior to allocating marketing, general and administrative expenses. For the three months ended March 31, 2018, and 2017, marketing, general and administrative expenses totaled $23.5 million, and $24.1 million respectively. All other expenses, except interest, relate entirely to the real estate assets.

There were no transactions between the above two segments.

The table below reconciles net income before equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, purchase price and other fair value adjustments, gain on sale of real estate, net, depreciable real estate reserves, and gain on sale of investment in marketable securities to net income for the three months ended March 31, 2018 and 2017 (in thousands):



	Three Months Ended March 31,
	2018			2017
Net income before equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate, purchase price and other fair value adjustments, gain on sale of real estate, net, depreciable real estate reserves, and gain on sale of investment in marketable securities	$	47,449		$	51,320
Equity in net (loss) gain on sale of interest in unconsolidated joint venture/real estate	(6,440		)	2,047
Purchase price and other fair value adjustments	49,293			—
Gain on sale of real estate, net	23,521			567
Depreciable real estate reserves	—			(56,272		)
Gain on sale of investment in marketable securities	—			3,262
Net income	$	113,823		$	924