Segment Reporting

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Reporting

Segment ReportingIn the fourth quarter of 2022, the Company evolved the management strategy of its real estate portfolio to focus on three different property types in order to provide clarity as to the value and operations associated with the assets within each group. As a result, the Company changed to three reportable segments: Industrial, Office, and Other. The Industrial segment consists of high-quality, well-located industrial properties with modern specifications. The Office segment consists of newer, high-quality, and business-essential office properties. The Other segment consists of vacant and non-core properties, together with other properties in the same cross-collateralized loan pools. This segment includes properties that are either non-stabilized, leased to tenants with shorter lease terms or are being evaluated for repositioning, re-leasing or potential sale. The Company recast its segment results for all prior periods presented to show the three reportable segments.

The Company evaluates performance of each segment based on segment net operating income (“NOI”), which is defined as property revenue less property expenses. The Company excludes the following from Segment NOI because they are addressed on a corporate level: (i) the Office Joint Venture, (ii) interest expense, and (iii) general and administrative expenses. Segment NOI is not a measure of operating income or cash flows from operating activities, is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate segment profit measures in the same manner. The Company considers segment NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our properties.

The following table presents segment NOI for the three and nine months ended September 30, 2023 and September 30, 2022 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Industrial NOI
Total Industrial revenues	$	13,934	$	15,095	$	42,508	$	45,401
Industrial operating expenses	(1,884)		(1,706)		(5,510)		(5,489)
Industrial NOI	12,050		13,389		36,998		39,912
Office NOI
Total Office revenues	34,022		72,128		108,210		251,467
Office operating expenses	(6,102)		(17,762)		(18,518)		(57,832)
Office NOI	27,920		54,366		89,692		193,635
Other NOI
Total Other revenues	13,757		14,107		40,508		43,724
Other operating expenses	(5,360)		(4,808)		(15,666)		(13,932)
Other NOI	8,397		9,299		24,842		29,792
Total NOI	$	48,367	$	77,054	$	151,532	$	263,339

A reconciliation of net loss to NOI for the three and nine months ended September 30, 2023 and September 30, 2022 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Reconciliation of Net Loss to Total NOI
Net loss	$	(139,948)	$	(119,373)	$	(583,332)	$	(193,240)
General and administrative expenses	9,653		9,521		31,411		27,463
Corporate operating expenses to related parties	257		140		975		1,065
Real estate impairment provision	—		10,697		397,373		86,254
Depreciation and amortization	25,003		42,628		86,830		155,470
Interest expense	16,126		24,283		49,208		68,315
Other (income) expense, net	(3,654)		162		(7,613)		588
Net loss from investment in unconsolidated entity	144,598		—		176,767		—
(Gain) loss from disposition of assets	(3,748)		95,513		(24,657)		95,513
Debt breakage costs	—		13,249		—		13,249
Transaction expenses	80		234		24,570		8,662
Total NOI	$	48,367	$	77,054	$	151,532	$	263,339

The following table presents the Company’s goodwill for each of the segments as of September 30, 2023 and December 31, 2022:

	September 30,		December 31,
	2023		2022
Goodwill
Industrial	$	68,373	$	68,373
Office	—		—
Other	26,305		26,305
Total Goodwill	$	94,678	$	94,678

The following table presents the Company’s total real estate assets, net, which includes accumulated depreciation and amortization and excludes intangibles, for each segment as of the September 30, 2023 and December 31, 2022:

	September 30,		December 31,
	2023		2022
Industrial Real Estate, net
Total real estate	$	740,790	$	761,757
Accumulated depreciation and amortization	(146,047)		(137,738)
Industrial real estate, net	594,743		624,019
Office Real Estate, net
Total real estate	1,567,724		2,020,463
Accumulated depreciation and amortization	(279,852)		(305,829)
Office real estate, net	1,287,872		1,714,634
Other Real Estate, net
Total real estate	399,295		715,036
Accumulated depreciation and amortization	(120,833)		(201,072)
Other real estate, net	278,462		513,964
Total Real Estate, net	$	2,161,077	$	2,852,617

Total asset information by segment is not reported because the Company does not use this measure to assess performance or to make resource allocation decisions.