NOTE 14 SEGMENTS

We have three business segments which offer different products and services. Our three segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. In addition, our segments or assets within such segment could change in the future as development of certain properties commences or other operational or management changes occur. We do not distinguish or group our combined operations on a geographic basis. Furthermore, all operations are within the United States and no customer or tenant comprises more than 10% of revenues. Our reportable segments are as follows:

· Master Planned Communities (“MPCs”) — includes the development and sale of land in large-scale, long-term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Columbia, Maryland.

· Operating Assets — includes retail and office properties, a multi-family property, The Woodlands Resort and Conference Center and other real estate investments. These assets are currently generating revenues, and we believe there is an opportunity to redevelop or reposition many of these assets to improve operating performance.

· Strategic Developments — includes all properties held for development which have no substantial operations.

The assets included in each segment as of March 31, 2013, are contained in the following chart:

“[See the EDGAR filing for referenced graphic (or) image.]”

As our segments are managed separately, different operating measures are utilized to assess operating results and allocate resources among the segments. The one common operating measure used to assess operating results for the business segments is Real Estate Property Earnings Before Taxes (“REP EBT”), which represents the operating revenues of the properties less property operating expenses and adjustments for interest, as further described below. We believe REP EBT provides useful information about the operating performance for all of our assets, projects and properties.

REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate interest income, corporate interest and depreciation expense, provision for income taxes, warrant liability loss and the reduction in tax indemnity receivable. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. We also present this measure because we believe certain investors use it as a measure of a company’s historical operating performance and its ability to service and incur debt. We believe that the inclusion of certain adjustments to net income (loss) to calculate REP EBT is appropriate to provide additional information to investors.

Segment operating results are as follows:

	Three Months Ended March 31,
	2013			2012
	(In thousands)
Master Planned Communities
Land sales	$	47,226		$	36,089
Builder price participation	1,275			813
Minimum rents	195			132
Other land revenues	2,802			3,485
Other rental and property revenues	—			16
Total revenues	51,498			40,535
Cost of sales - land	25,699			18,679
Land sales operations	6,953			8,903
Land sales real estate and business taxes	1,543			2,085
Depreciation and amortization	7			2
Interest income	(15		)	(70		)
Interest expense (*)	(5,960		)	(3,414		)
Total expenses	28,227			26,185
MPC EBT	23,271			14,350

Operating Assets
Minimum rents	18,511			18,522
Tenant recoveries	5,252			5,830
Resort and conference center revenues	11,104			9,657
Other rental and property revenues	3,433			4,726
Total revenues	38,300			38,735
Other property operating costs	14,965			13,804
Rental property real estate taxes	2,983			2,620
Rental property maintenance costs	1,656			1,840
Resort and conference center operations	7,476			7,414
Provision for doubtful accounts	429			—
Depreciation and amortization	6,118			4,857
Interest income	(46		)	(45		)
Interest expense	6,805			3,346
Equity in Earnings from Real Estate Affiliates	(2,733		)	(2,677		)
Total expenses	37,653			31,159
Operating Assets EBT	647			7,576

Strategic Developments
Minimum rents	220			243
Tenant recoveries	73			34
Overage rent revenue	—			52
Condominium unit sales	—			134
Other land revenues	—			32
Total revenues	293			495
Condominium unit cost of sales	—			59
Condominium sales operations	—			58
Other property operating costs	555			408
Real estate taxes	774			1,219
Rental property maintenance costs	149			115
Depreciation and amortization	43			59
Interest expense *	(287		)	74
Total expenses	1,234			1,992
Strategic Developments EBT	(941		)	(1,497		)
REP EBT	$	22,977		$	20,429

(*) Negative interest expense amounts relate to interest capitalized on debt assigned to our Operating Assets Segments.

The following reconciles REP EBT to GAAP-basis income (loss):

Reconciliation of REP EBT to GAAP-net	Three Months Ended March 31,
income (loss)	2013			2012
	(In thousands)

REP EBT	$	22,977		$	20,429
General and administrative	(11,171		)	(8,399		)
Corporate interest income, net	2,710			2,223
Warrant liability loss	(33,027		)	(121,851		)
Provision for income taxes	(2,479		)	(3,784		)
Reduction in tax indemnity receivable	(1,904		)	—
Corporate depreciation	(276		)	(140		)
Net loss	$	(23,170	)	$	(111,522	)

The following reconciles segment revenue to GAAP-basis consolidated revenues:

Reconciliation of Segment Basis Revenues to	Three Months Ended March 31,
GAAP Revenues	2013		2012
	(In thousands)

Master Planned Communities	$	51,498	$	40,535
Operating Assets	38,300		38,735
Strategic Developments	293		495
Total revenues - GAAP basis	$	90,091	$	79,765

The assets by segment and the reconciliation of total segment assets to the total assets in the condensed consolidated balance sheets as of March 31, 2013 and December 31, 2012 are summarized as follows:

	March 31,		December 31,
	2013		2012
	(In thousands)
Master Planned Communities	$	1,781,811	$	1,756,625
Operating Assets	967,088		944,562
Strategic Developments	321,012		288,287
Total segment assets	3,069,911		2,989,474
Corporate and other *	476,501		513,568
Total assets	$	3,546,412	$	3,503,042

* Assets included in Corporate and other consist primarily of the Tax indemnity receivable, including interest, and Cash and cash equivalents.

The increase in the Strategic Development segment’s asset balance as of March 31, 2013 of $32.7 million as compared to December 31, 2012 is primarily due to approximately $9.6 million of costs incurred related to our Woodlands development projects and the collection of an additional $13.7 million of pre-sale condominium deposits from our ONE Ala Moana project. The balance of the increase is due to costs incurred related to our other development projects.