Segments

12 Months Ended

Dec. 31, 2011

Segments [Abstract]

SEGMENTS

NOTE 15 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 our current management’s operating philosophies and methods. In addition, our current segments or assets within such segments 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 which is consistent with how we manage the business. Further, 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 – 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. In prior years this segment included certain commercial properties and other ownership interests owned by The Woodlands. For the years ending December 31, 2011, 2010 and 2009 we have reclassified the operations of The Woodlands commercial properties and other ownership interests to the Operating Assets segment. Furthermore, for segment reporting, we disclosed The Woodlands historical financial information at 100% so that operating performance between periods is comparable.

• Operating Assets – includes commercial, mixed-use and retail properties currently generating revenues, many of which we believe there is an opportunity to redevelop or reposition the asset to increase operating performance.

• Strategic Developments – includes all properties held for development and redevelopment, including the current rental property operations (primarily retail and other interests in real estate at such locations), as well as our one residential condominium project located in Natick (Boston), Massachusetts.

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

EBT as it relates to our business is defined as net income (loss) from continuing operations excluding general and administrative expenses, corporate interest income and depreciation expense, investment in real estate basis adjustment, benefit from income taxes, warrant liability gain (loss), reorganization items and the effects of the previously mentioned items within our equity in earnings (loss) from Real Estate Affiliates. We present 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) from continuing operations to calculate EBT is appropriate to provide additional information to investors because EBT excludes certain non-recurring and non-cash items, including reorganization items related to the bankruptcy, which we believe are not indicative of our core operating performance. EBT should not be considered as an alternative to GAAP net income (loss) attributable to common stockholders or GAAP net income (loss) from continuing operations, it has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP.

As more fully discussed in this report, on July 1, 2011, we acquired our partner’s interest in The Woodlands Master planned community, we now own 100% of The Woodlands and consolidate its operations. As such, The Woodlands operating results for historical periods when this investment was a Real Estate Affiliate are now analyzed internally on a non-GAAP consolidation basis by management in order to provide management comparability between periods for analyzing operating results. Segment information presented herein has also been restated for all periods presented to reflect The Woodlands on a consolidation basis and provide comparability for all periods. Prior to July 1, 2011, we presented the operations of our equity method Real Estate Affiliates using the non-GAAP proportionate share method for segment reporting purposes. Under this method we presented our share of the revenues and expenses of these Real Estate Affiliates aggregated with the revenues and expenses of consolidated or combined properties. We previously reported the proportionate method because our 52.5% economic interest in The Woodlands represented a significant portion of our Master Planned Community segment. We now own 100% of The Woodlands and consolidate its operations. Now our segment operating results for the year ended December 31, 2011 includes results of The Woodlands from July 1, 2011 to December 31, 2011 under Consolidated Properties and results of The Woodlands from January 1, 2011 to June 30, 2011 and for the years ended December 31, 2010 and 2009 under Real Estate Affiliates on a consolidation basis. The remaining Real Estate Affiliates, including equity investments owned by the Woodlands, primarily represent entities that own single assets rather than a large business such as The Woodlands; therefore, we no longer use the proportionate share method for any Real Estate Affiliates. Rather, we will include the results of our Real Estate Affiliates other than The Woodlands using the equity or cost method, as appropriate.

The total cash expenditures for additions to long-lived assets for the Master Planned Communities and condominiums was $90.1 million, $57.1 million and $61.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. Similarly, total cash expenditures for long-lived assets for the Operating Assets and Strategic Developments segments were $44.4 million, $111.8 million and $27.7 million for the years ended December 31, 2011 2010 and 2009, respectively.

Segment operating results are as follows:

	Year Ended December 31, 2011
	Consolidated Properties			Real Estate Affiliates			Segment Basis
	(In thousands)
Master Planned Communities
Land sales	$	113,502		$	47,880		$	161,382
Builder price participation		3,816			1,108			4,924
Minimum rents		659			14			673
Other land revenues		14,140			2,817			16,957
Other rental and property revenues		102			—			102
Total revenues		132,219			51,819			184,038
Cost of sales - land		70,108			23,932			94,040
Land sales operations		17,776			2,992			20,768
Land sales real estate and business taxes		7,713			1,906			9,619
Rental property real estate taxes		1			—			1
Rental property maintenance costs		412			329			741
Other property operating costs		3,308			2,068			5,376
Provisions for impairment		—			—			—
Depreciation and amortization		2			46			48
Interest income		(144	)		(364	)		(508	)
Interest expense (*)		(10,908	)		7,854			(3,054	)
Total expenses		88,268			38,763			127,031
Venture partner share of The Woodlands EBT		—			(6,202	)		(6,202	)
MPC EBT		43,951			6,854			50,805
Operating Assets
Minimum rents		69,602			2,803			72,405
Tenant recoveries		19,193			1,061			20,254
Resort and conference center revenues		15,744			19,106			34,850
Other rental and property revenues		14,072			6,992			21,064
Total revenues		118,611			29,962			148,573
Rental property real estate taxes		10,952			972			11,924
Rental property maintenance costs		6,315			443			6,758
Resort and conference center operations		13,108			13,904			27,012
Other property operating costs		45,576			9,172			54,748
Depreciation and amortization		16,341			3,968			20,309
Interest income		(125	)		(2	)		(127	)
Interest expense		10,586			391			10,977
Early extinguishment of debt		11,305			—			11,305
Equity in Earnings from Real Estate Affiliates		—			(3,926	)		(3,926	)
Total expenses		114,058			24,922			138,980
Venture partner share of The Woodlands EBT		—			(91	)		(91	)
Operating Assets EBT		4,553			4,949			9,502
Strategic Developments
Minimum rents		917			—			917
Tenant recoveries		130			—			130
Condominium unit sales		22,067			—			22,067
Other rental and property revenues		1,747			—			1,747
Total revenues		24,861			—			24,861
Condominium unit cost of sales		14,465			—			14,465
Real estate taxes		604			—			604
Rental property maintenance costs		671			—			671
Other property operating costs		5,253			—			5,253
Depreciation and amortization		234			—			234
Interest expense		323			—			323
Total expenses		21,550			—			21,550
Strategic Developments EBT		3,311			—			3,311
EBT	$	51,815		$	11,803		$	63,618

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

	Year Ended December 31, 2010
	Consolidated Properties			Real Estate Affiliates			Segment Basis
	(In thousands)
Master Planned Communities
Land sales	$	38,058		$	90,986		$	129,044
Builder price participation		4,124			2,777			6,901
Minimum rents		—			27			27
Other land revenues		5,384			8,827			14,211
Other rental and property revenues		948			—			948
Total revenues		48,514			102,617			151,131
Cost of sales - land		23,388			49,745			73,133
CSA participation expense		—			—			—
Land sales operations		17,153			5,801			22,954
Land sales real estate and business taxes		11,887			4,882			16,769
Rental property real estate taxes		812			—			812
Rental property maintenance costs		—			623			623
Other property operating costs		(1	)		4,035			4,034
Provisions for impairment		405,331			—			405,331
Depreciation and amortization		17			111			128
Interest income		—			(824	)		(824	)
Interest expense (*)		(14,127	)		7,857			(6,270	)
Total expenses		444,460			72,230			516,690
Venture partner share of The Woodlands EBT		—			(14,434	)		(14,434	)
MPC EBT		(395,946	)		15,953			(379,993	)
Operating Assets
Minimum rents		65,911			4,026			69,937
Tenant recoveries		18,220			1,484			19,704
Resort and conference center revenues		—			28,850			28,850
Other rental and property revenues		7,557			14,613			22,170
Total revenues		91,688			48,973			140,661
Rental property real estate taxes		9,963			2,185			12,148
Rental property maintenance costs		5,812			1,413			7,225
Resort and conference center operations		—			24,471			24,471
Other property operating costs		30,970			16,521			47,491
Provision for doubtful accounts		1,606			154			1,760
Provisions for impairment		80,923			—			80,923
Depreciation and amortization		16,313			7,148			23,461
Interest income		(170	)		2			(168	)
Interest expense		16,515			836			17,351
Equity in Earnings from Real Estate Affiliates		—			338			338
Total expenses		161,932			53,068			215,000
Venture partner share of The Woodlands EBT		—			1,945			1,945
Operating Assets EBT		(70,244	)		(2,150	)		(72,394	)
Strategic Developments
Minimum rents		1,015			—			1,015
Tenant recoveries		347			—			347
Condominium unit sales		1,139			—			1,139
Other rental and property revenues		16			—			16
Total revenues		2,517			—			2,517
Condominium unit cost of sales		1,000			—			1,000
Real estate taxes		3,756			—			3,756
Rental property maintenance costs		684			—			684
Other property operating costs		5,925			—			5,925
Provision for doubtful accounts		175			—			175
Provisions for impairment		17,101			—			17,101
Depreciation and amortization		212			—			212
Interest expense		34			—			34
Total expenses		28,887			—			28,887
Strategic Developments EBT		(26,370	)		—			(26,370	)
EBT	$	(492,560	)	$	13,803		$	(478,757	)

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

	Year Ended December 31, 2009
	Consolidated Properties			Real Estate Affiliates			Segment Basis
	(In thousands)
Master Planned Communities
Land sales	$	34,564		$	62,723		$	97,287
Builder price participation		5,687			3,289			8,976
Minimum rents		—			28			28
Other land revenues		5,747			8,920			14,667
Other rental and property revenues		825			—			825
Total revenues		46,823			74,960			121,783
Cost of sales - land		22,019			34,560			56,579
CSA participation expense		(5,344	)		—			(5,344	)
Land sales operations		15,643			4,504			20,147
Land sales real estate and business taxes		16,743			5,706			22,449
Rental property real estate taxes		811			—			811
Rental property maintenance costs		—			643			643
Other property operating costs		(1	)		3,411			3,410
Provisions for impairment		52,766			—			52,766
Depreciation and amortization		33			113			146
Interest income		(9	)		(1,072	)		(1,081	)
Interest expense (*)		(11,932	)		8,491			(3,441	)
Total expenses		90,729			56,356			147,085
Venture partner share of The Woodlands EBT		—			(8,837	)		(8,837	)
MPC EBT		(43,906	)		9,767			(34,139	)
Operating Assets
Minimum rents		63,735			6,532			70,267
Tenant recoveries		18,741			1,054			19,795
Resort and conference center revenues		—			29,314			29,314
Other rental and property revenues		7,409			12,077			19,486
Total revenues		89,885			48,977			138,862
Rental property real estate taxes		10,001			1,266			11,267
Rental property maintenance costs		4,653			1,174			5,827
Resort and conference center operations		—			23,842			23,842
Other property operating costs		30,697			20,516			51,213
Provision for doubtful accounts		2,189			107			2,296
Provisions for impairment		50,964			—			50,964
Depreciation and amortization		17,687			8,795			26,482
Interest income		(1,680	)		—			(1,680	)
Interest expense		15,634			192			15,826
Equity in Earnings from Real Estate Affiliates		—			(2,172	)		(2,172	)
Total expenses		130,145			53,720			183,865
Venture partner share of The Woodlands EBT		—			2,864			2,864
Operating Assets EBT		(40,260	)		(1,879	)		(42,139	)
Strategic Developments
Minimum rents		1,902			—			1,902
Tenant recoveries		900			—			900
Other rental and property revenues		(3,162	)		—			(3,162	)
Total revenues		(360	)		—			(360	)
Condominium unit cost of sales		—			—			—
Real estate taxes		2,973			—			2,973
Rental property maintenance costs		722			—			722
Other property operating costs		4,355			—			4,355
Provision for doubtful accounts		350			—			350
Provisions for impairment		576,618			—			576,618
Depreciation and amortization		2,104			—			2,104
Interest expense		(2,725	)		—			(2,725	)
Equity in Earnings from Real Estate Affiliates		—			19,046			19,046
Total expenses		584,397			19,046			603,443
Strategic Developments EBT		(584,757	)		(19,046	)		(603,803	)
EBT	$	(668,923	)	$	(11,158	)	$	(680,081	)

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

The following reconciles EBT to GAAP-basis income (loss) from continuing operations:

Reconciliation of EBT to GAAP-basis income (loss) from continuing operations	Year Ended December 31,
	2011			2010			2009
	(In thousands)
Real estate property EBT:
Segment EBT	$	63,618		$	(478,757	)	$	(680,081	)
Real Estate Affiliates		(11,803	)		(13,803	)		11,158
		51,815			(492,560	)		(668,923	)
General and administrative		(35,182	)		(21,538	)		(23,023	)
Interest income		9,607			199			—
Warrant liability gain (loss)		101,584			(140,900	)		—
Benefit from income taxes		18,325			633,459			23,969
Equity in Earnings from Real Estate Affiliates		8,578			9,413			(28,209	)
Investment in real estate affiliates basis adjustment		(6,053	)		—			—
Reorganization items		—			(57,282	)		(6,674	)
Corporate depreciation		(204	)		(21	)		(17	)
Net income (loss) from continuing operations	$	148,470		$	(69,230	)	$	(702,877	)

The following reconciles segment revenues to GAAP-basis consolidated and combined revenues:

Reconciliation of Segment Basis Revenues to GAAP Revenues	Year Ended December 31,
	2011			2010			2009
	(In thousands)
Master Planned Communities - Total Segment	$	184,038		$	151,131		$	121,783
Operating Assets - Total Segment		148,573			140,661			138,862
Strategic Developments - Total Segment		24,861			2,517			(360	)
Total Segment revenues		357,472			294,309			260,285
Less: The Woodlands Partnerships revenues, at our ownership share		(81,781	)		(151,590	)		(123,937	)
Total revenues - GAAP basis	$	275,691		$	142,719		$	136,348

The assets by segment and the reconciliation of total segment assets to the total assets in the combined financial statements at December 31, 2011, 2010 and 2009 are summarized as follows:

	Year Ended December 31,
	2011		2010			2009
	(In thousands)
Master Planned Communities	$	1,755,797	$	1,765,487		$	2,196,971
Operating Assets		871,549		812,646			879,736
Strategic Developments		189,807		206,037			248,183
Total segment assets		2,817,153		2,784,170			3,324,890
Corporate and other		577,996		730,741			47,529
Real Estate Affiliates		—		(492,204	)		(467,192	)
Total assets	$	3,395,149	$	3,022,707		$	2,905,227