Business Segments

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Business Segments

NOTE 11. BUSINESS SEGMENTS

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

• Real Estate Operations. 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. Our Real Estate Operations 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 expertise of our local teams; and (iii) our customer relationships. Land we own and lease to customers under land leases, along with land and buildings we lease, is also included in this segment.

• Strategic Capital. 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.

Reconciliations are presented below for: (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 primarily 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 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 reconciling items.

The following reconciliations are presented in thousands:

	Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020
Revenues:
Real estate operations segment:
U.S.	$	992,583		$	933,916		$	2,939,364		$	2,660,178
Other Americas		24,791			21,132			74,179			66,947
Europe		11,912			19,558			44,140			53,048
Asia		12,315			9,174			33,728			30,723
Total real estate operations segment		1,041,601			983,780			3,091,411			2,810,896
Strategic capital segment:
U.S.		60,319			29,322			130,172			320,181
Other Americas		10,679			8,851			40,817			27,558
Europe		45,325			36,959			136,589			101,081
Asia		25,125			23,861			83,218			67,422
Total strategic capital segment		141,448			98,993			390,796			516,242
Total revenues		1,183,049			1,082,773			3,482,207			3,327,138
Segment net operating income:
Real estate operations segment:
U.S. (1)		746,710			699,255			2,190,308			1,976,985
Other Americas		18,341			15,288			55,165			48,561
Europe		6,089			14,207			26,754			33,017
Asia		9,441			6,520			24,509			21,543
Total real estate operations segment		780,581			735,270			2,296,736			2,080,106
Strategic capital segment:
U.S. (1)		31,397			5,184			55,051			222,390
Other Americas		7,518			6,276			32,072			17,803
Europe		34,088			26,775			102,537			66,483
Asia		16,056			14,967			54,198			35,656
Total strategic capital segment		89,059			53,202			243,858			342,332
Total segment net operating income		869,640			788,472			2,540,594			2,422,438
Reconciling items:
General and administrative expenses		(66,970	)		(74,348	)		(219,344	)		(208,701	)
Depreciation and amortization expenses		(390,806	)		(400,738	)		(1,181,117	)		(1,144,903	)
Gains on dispositions of development properties and land, net		139,406			134,207			500,410			383,373
Gains on other dispositions of investments in real estate, net		214,390			108,927			358,180			184,357
Operating income		765,660			556,520			1,998,723			1,636,564
Earnings from unconsolidated entities, net		91,818			73,972			231,286			216,844
Interest expense		(63,638	)		(80,711	)		(203,331	)		(237,651	)
Interest and other income (expense), net		(846	)		(5,866	)		4,615			(4,469	)
Foreign currency and derivative gains (losses), net		64,172			(100,974	)		138,244			(48,481	)
Losses on early extinguishment of debt, net		-			(98,266	)		(187,453	)		(164,606	)
Earnings before income taxes	$	857,166		$	344,675		$	1,982,084		$	1,398,201

	September 30, 2021		December 31, 2020
Segment assets:
Real estate operations segment:
U.S.	$	43,812,656	$	42,559,023
Other Americas		1,218,015		1,145,699
Europe		1,495,595		1,604,393
Asia		1,138,653		1,081,876
Total real estate operations segment		47,664,919		46,390,991
Strategic capital segment: (2)
U.S.		12,302		13,257
Europe		25,280		25,280
Asia		312		354
Total strategic capital segment		37,894		38,891
Total segment assets		47,702,813		46,429,882
Reconciling items:
Investments in and advances to unconsolidated entities		7,652,323		7,602,014
Assets held for sale or contribution		571,671		1,070,724
Cash and cash equivalents		585,071		598,086
Other assets		504,792		364,299
Total reconciling items		9,313,857		9,635,123
Total assets	$	57,016,670	$	56,065,005

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

(2) 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, 2021 and December 31, 2020.