Business Segments

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Business Segments

NOTE 11. BUSINESS SEGMENTS

Our current business strategy includes two operating segments: Real Estate (Rental Operations and Development) and Strategic Capital. We generate revenues, earnings, net operating income and cash flows through our segments, as follows:

•Real Estate Segment. This operating segment represents the ownership and development of operating properties and is the largest component of our revenue and earnings. We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. Each operating property is considered to be an individual operating segment with similar economic characteristics; these properties are combined within the reportable business segment based on geographic location. The Real Estate Segment also includes development activities that lead to rental operations, including land held for development and properties currently under development, and other real estate investments. Within this line of business, we utilize the following: (i) our land bank; (ii) the development and leasing expertise of our local teams; and (iii) our customer relationships.

•Strategic Capital Segment. This operating segment represents the management of unconsolidated co-investment ventures. We generate strategic capital revenues primarily from our unconsolidated co-investment ventures through asset management and property management services and we earn additional revenues by providing leasing, acquisition, construction, development, financing and disposition services. Depending on the structure of the venture and the returns provided to our partners, we also earn revenues through promotes periodically during the life of a venture or upon liquidation. Each unconsolidated co-investment venture we manage is considered to be an individual operating segment with similar economic characteristics; these ventures are combined within the reportable business segment based on geographic location.

Below we present: (i) each reportable business segment’s revenues from external customers to Total Revenues; (ii) each reportable business segment’s net operating income from external customers to Operating Income and Earnings Before Income Taxes; and (iii) each reportable business segment’s assets to Total Assets. Our chief operating decision makers rely principally on net operating income and similar measures to make decisions about allocating resources and assessing segment performance. The applicable components of Total Revenues, Operating Income, Earnings Before Income Taxes and Total Assets in the Consolidated Financial Statements are allocated to each reportable business segment’s revenues, net operating income and assets. Items that are not directly assignable to a segment, such as certain corporate income and expenses, are not allocated but reflected as non-segment items.

The following reportable business segment revenues, net operating income and assets are presented in thousands:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Real estate segment:
U.S.	$	1,705,656		$	1,102,418		$	4,866,508		$	3,187,756
Other Americas		29,442			23,774			81,576			69,136
Europe		29,101			13,437			69,368			37,145
Asia		13,617			16,511			46,186			43,147
Total real estate segment		1,777,816			1,156,140			5,063,638			3,337,184
Strategic capital segment:
U.S.		53,077			53,973			786,222			155,474
Other Americas		14,054			13,344			74,139			57,809
Europe		45,457			503,764			135,267			599,076
Asia		24,260			23,671			74,956			72,557
Total strategic capital segment		136,848			594,752			1,070,584			884,916
Total revenues		1,914,664			1,750,892			6,134,222			4,222,100
Segment net operating income: (1)
Real estate segment:
U.S. (2)		1,295,042			828,144			3,671,766			2,384,060
Other Americas		23,184			17,068			62,429			50,010
Europe		22,235			7,758			51,493			13,592
Asia		8,937			11,459			29,696			30,462
Total real estate segment		1,349,398			864,429			3,815,384			2,478,124
Strategic capital segment:
U.S. (2)		6,302			(16,055	)		622,802			33,930
Other Americas		7,147			7,410			53,962			43,657
Europe		27,187			461,701			53,288			528,323
Asia		12,143			11,141			33,848			39,588
Total strategic capital segment		52,779			464,197			763,900			645,498
Non-segment items:
General and administrative expenses		(96,673	)		(87,903	)		(292,097	)		(245,663	)
Depreciation and amortization expenses		(642,010	)		(401,450	)		(1,846,545	)		(1,200,410	)
Gains on dispositions of development properties and land, net		89,030			74,678			273,907			390,686
Gains on other dispositions of investments in real estate, net		129,584			1,019			158,392			585,854
Operating income		882,108			914,970			2,872,941			2,654,089
Earnings from unconsolidated entities, net		71,365			84,925			217,786			241,481
Interest expense		(181,053	)		(63,884	)		(466,882	)		(188,241	)
Foreign currency and derivative gains and other income, net		67,964			171,832			102,682			364,623
Gains (losses) on early extinguishment of debt, net		-			-			3,275			(18,895	)
Earnings before income taxes	$	840,384		$	1,107,843		$	2,729,802		$	3,053,057

	September 30, 2023		December 31, 2022
Segment assets:
Real estate segment:
U.S.	$	75,749,288	$	71,858,560
Other Americas		1,873,732		1,831,956
Europe		2,280,004		1,952,160
Asia		697,222		1,031,135
Total real estate segment		80,600,246		76,673,811
Strategic capital segment: (3)
U.S.		10,499		10,817
Europe		25,280		25,280
Asia		192		231
Total strategic capital segment		35,971		36,328
Total segment assets		80,636,217		76,710,139
Non-segment items:
Investments in and advances to unconsolidated entities		9,091,824		9,698,898
Assets held for sale or contribution		797,758		531,257
Cash and cash equivalents		740,841		278,483
Other assets		682,769		678,671
Total non-segment items		11,313,192		11,187,309
Total assets	$	91,949,409	$	87,897,448

(1)Net Operating Income ("NOI") from the Real Estate Segment is calculated directly from the Consolidated Financial Statements as Rental Revenues and Development Management and Other Revenues less Rental Expenses and Other Expenses. NOI from the Strategic Capital Segment is calculated directly from the Consolidated Financial Statements as Strategic Capital Revenues less Strategic Capital Expenses.

(2)This includes compensation and personnel costs for employees who were located in the U.S. but also support other geographies.

(3)Represents management contracts and goodwill recorded in connection with business combinations associated with the Strategic Capital Segment. Goodwill was $25.3 million at September 30, 2023 and December 31, 2022.