Segment Information |
Segment Information
We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. As a result of the Formation Transaction, we redefined our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (office, multifamily, and third-party real estate services) based on the economic characteristics and nature of our assets and services. In connection therewith, we have reclassified the prior period segment financial data to conform to the current period presentation.
The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party real estate services business, based on the net operating income ("NOI") of properties within each segment. NOI includes property rental revenues and tenant reimbursements and deducts property operating expenses and real estate taxes.
With respect to the third-party real estate services business, the CODM reviews revenues streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are disclosed separately in the statements of operations. Management company assets primarily consist of management and leasing contracts with a net book value of $42.1 million and $45.7 million and classified in "Other assets, net" in the balance sheets as of June 30, 2018 and December 31, 2017. Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party real estate services operating results are excluded from the NOI data below.
The following table reflects the reconciliation of net income attributable to common shareholders to consolidated NOI: | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | 2018 | | 2017 | | 2018 | | 2017 | | (In thousands) | Net income attributable to common shareholders | $ | 20,574 |
| | $ | 11,341 |
| | $ | 16,384 |
| | $ | 17,659 |
| Add: | | | | | | | | Depreciation and amortization expense | 48,117 |
| | 31,993 |
| | 97,277 |
| | 65,775 |
| General and administrative expense: | | | | | | | | Corporate and other | 12,651 |
| | 11,552 |
| | 25,362 |
| | 24,944 |
| Third-party real estate services | 21,189 |
| | 4,486 |
| | 43,798 |
| | 9,184 |
| Share-based compensation related to Formation Transaction
| 9,097 |
| | — |
| | 18,525 |
| | — |
| Transaction and other costs | 3,787 |
| | 5,237 |
| | 8,008 |
| | 11,078 |
| Interest expense | 18,027 |
| | 14,586 |
| | 37,284 |
| | 28,504 |
| Loss on extinguishment of debt | 4,457 |
| | — |
| | 4,457 |
| | — |
| Reduction of gain on bargain purchase | 7,606 |
| | — |
| | 7,606 |
| | — |
| Income tax expense (benefit) | 313 |
| | 363 |
| | (595 | ) | | 717 |
| Net income attributable to redeemable noncontrolling interests | 3,574 |
| | — |
| | 2,980 |
| | — |
| Less: | | | | | | | | Third-party real estate services, including reimbursements
| 24,160 |
| | 6,794 |
| | 48,490 |
| | 13,919 |
| Other income | 2,080 |
| | 1,532 |
| | 3,196 |
| | 3,114 |
| Income from unconsolidated real estate ventures, net | 3,836 |
| | 105 |
| | 1,934 |
| | 314 |
| Interest and other income, net | 513 |
| | 970 |
| | 1,086 |
| | 1,745 |
| Gain on sale of real estate | 33,396 |
| | — |
| | 33,851 |
| | — |
| Net loss attributable to noncontrolling interests | 125 |
| | — |
| | 127 |
| | — |
| Consolidated NOI | $ | 85,282 |
| | $ | 70,157 |
| | $ | 172,402 |
| | $ | 138,769 |
|
Below is a summary of NOI by segment:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, 2018 | | Office | | Multifamily | | Other | | Elimination of Intersegment Activity | | Total | | (In thousands) | Rental revenue: | | | | | | | | | | Property rentals | $ | 97,485 |
| | $ | 25,410 |
| | $ | 2,604 |
| | $ | (259 | ) | | $ | 125,240 |
| Tenant reimbursements | 6,370 |
| | 1,491 |
| | 106 |
| | — |
| | 7,967 |
| Total rental revenue | 103,855 |
| | 26,901 |
| | 2,710 |
| | (259 | ) | | 133,207 |
| Rental expense: | | | | | | — |
| | | | Property operating | 26,414 |
| | 7,588 |
| | 1,887 |
| | (5,473 | ) | | 30,416 |
| Real estate taxes | 12,201 |
| | 3,557 |
| | 1,751 |
| | — |
| | 17,509 |
| Total rental expense | 38,615 |
| | 11,145 |
| | 3,638 |
| | (5,473 | ) | | 47,925 |
| Consolidated NOI | $ | 65,240 |
| | $ | 15,756 |
| | $ | (928 | ) | | $ | 5,214 |
| | $ | 85,282 |
|
| | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, 2017 | | Office | | Multifamily | | Other | | Elimination of Intersegment Activity | | Total | | (In thousands) | Rental revenue: | | | | | | | | | | Property rentals | $ | 78,624 |
| | $ | 19,974 |
| | $ | 2,975 |
| | $ | (826 | ) | | $ | 100,747 |
| Tenant reimbursements | 7,562 |
| | 1,133 |
| | 252 |
| | — |
| | 8,947 |
| Total rental revenue | 86,186 |
| | 21,107 |
| | 3,227 |
| | (826 | ) | | 109,694 |
| Rental expense: | | | | | | | | | | Property operating | 22,022 |
| | 4,868 |
| | 482 |
| | (3,417 | ) | | 23,955 |
| Real estate taxes | 12,273 |
| | 2,528 |
| | 781 |
| | — |
| | 15,582 |
| Total rental expense | 34,295 |
| | 7,396 |
| | 1,263 |
| | (3,417 | ) | | 39,537 |
| Consolidated NOI | $ | 51,891 |
| | $ | 13,711 |
| | $ | 1,964 |
| | $ | 2,591 |
| | $ | 70,157 |
|
| | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2018 | | Office | | Multifamily | | Other | | Elimination of Intersegment Activity | | Total | | (In thousands) | Rental revenue: | | | | | | | | | | Property rentals | $ | 198,800 |
| | $ | 49,477 |
| | $ | 4,112 |
| | $ | (498 | ) | | $ | 251,891 |
| Tenant reimbursements | 15,444 |
| | 3,215 |
| | 248 |
| | — |
| | 18,907 |
| Total rental revenue | 214,244 |
| | 52,692 |
| | 4,360 |
| | (498 | ) | | 270,798 |
| Rental expense: | | | | | | — |
| | | | Property operating | 54,580 |
| | 14,682 |
| | 2,743 |
| | (10,728 | ) | | 61,277 |
| Real estate taxes | 26,966 |
| | 7,055 |
| | 3,098 |
| | — |
| | 37,119 |
| Total rental expense | 81,546 |
| | 21,737 |
| | 5,841 |
| | (10,728 | ) | | 98,396 |
| Consolidated NOI | $ | 132,698 |
| | $ | 30,955 |
| | $ | (1,481 | ) | | $ | 10,230 |
| | $ | 172,402 |
|
| | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2017 | | Office | | Multifamily | | Other | | Elimination of Intersegment Activity | | Total | | (In thousands) | Rental revenue: | | | | | | | | | | Property rentals | $ | 157,920 |
| | $ | 38,633 |
| | $ | 4,880 |
| | $ | (1,662 | ) | | $ | 199,771 |
| Tenant reimbursements | 14,821 |
| | 2,223 |
| | 444 |
| | — |
| | 17,488 |
| Total rental revenue | 172,741 |
| | 40,856 |
| | 5,324 |
| | (1,662 | ) | | 217,259 |
| Rental expense: | | | | | | — |
| | | | Property operating | 43,409 |
| | 9,921 |
| | 1,150 |
| | (6,744 | ) | | 47,736 |
| Real estate taxes | 24,120 |
| | 5,021 |
| | 1,613 |
| | — |
| | 30,754 |
| Total rental expense | 67,529 |
| | 14,942 |
| | 2,763 |
| | (6,744 | ) | | 78,490 |
| Consolidated NOI | $ | 105,212 |
| | $ | 25,914 |
| | $ | 2,561 |
| | $ | 5,082 |
| | $ | 138,769 |
|
The following is a summary of certain balance sheet data by segment: | | | | | | | | | | | | | | | | | | | | | | Office | | Multifamily | | Other | | Elimination of Intersegment Activity | | Total | June 30, 2018 | (In thousands) | Real estate, at cost | $ | 3,657,696 |
| | $ | 1,548,770 |
| | $ | 665,482 |
| | $ | — |
| | $ | 5,871,948 |
| Investments in and advances to unconsolidated real estate ventures | 221,077 |
| | 101,105 |
| | 46,126 |
| | — |
| | 368,308 |
| Total assets | 3,533,869 |
| | 1,435,384 |
| | 1,138,597 |
| | (192,901 | ) | | 5,914,949 |
| December 31, 2017 | | | | | | | | | | Real estate, at cost | $ | 3,953,314 |
| | $ | 1,476,423 |
| | $ | 587,767 |
| | $ | — |
| | $ | 6,017,504 |
| Investments in and advances to unconsolidated real estate ventures | 124,659 |
| | 98,835 |
| | 38,317 |
| | — |
| | 261,811 |
| Total assets | 3,542,977 |
| | 1,434,999 |
| | 1,299,085 |
| | (205,254 | ) | | 6,071,807 |
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