REPORTABLE SEGMENTS

The Company has five reportable segments: Office, Retail, Land, CPS Third Party Management and Leasing, and Other. In 2012, the Company sold its third party management and leasing business. See note 9 for detailed information. These reportable segments represent an aggregation of operating segments reported to the Chief Operating Decision Maker based on similar economic characteristics that include the type of product and the nature of service. Each segment includes both consolidated operations and joint ventures. The Office and Retail segments show the results for that product type. The Land segment includes results of operations for certain land holdings and single-family residential communities that are sold as developed lots to homebuilders. Fee income and related expenses for the third party-owned properties which are managed or leased by the Company are included in the Third Party Management and Leasing segment. In 2010, the Company had an additional segment, the For-Sale Multi-Family Residential Unit, segment which included results of operations for the development and sale of multi-family real estate projects. The Company has sold substantially all of its multi-family residential units, and this line of business is no longer considered to be a separate reporting segment. The Other segment includes:


•	fee income for third party owned and joint venture properties for which the Company performs management, development and leasing services;


•	compensation for corporate employees, other than those in the Third Party Management and Leasing segment;


•	general corporate overhead costs, interest expense for consolidated and unconsolidated entities;


•	income attributable to noncontrolling interests;


•	income taxes;


•	depreciation;


•	preferred dividends; and


•	operations of the industrial buildings, which were sold in 2011.

Company management evaluates the performance of its reportable segments in part based on funds from operations available to common stockholders (“FFO”). FFO is a supplemental operating performance measure used in the real estate industry. The Company calculated FFO using the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of FFO, which is net income (loss) available to common stockholders (computed in accordance with GAAP), excluding extraordinary items, cumulative effect of change in accounting principle and gains on sale or impairment losses on depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis.

During 2012, the Company changed the format of the information presented to the Chief Operating Decision Maker about its segments and revised its presentation of the segment information included in the following tables. These changes did not result in a change in the number of reportable segments. Prior years' amounts were changed to be consistent with the current year's presentation.

FFO is used by industry analysts, investors and the Company as a supplemental measure of a REIT’s operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of a REIT’s operating performance that excludes historical cost depreciation, among other items, from GAAP net income. Management believes the use of FFO, combined with the required primary GAAP presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. Company management evaluates operating performance in part based on FFO. Additionally, the Company uses FFO, along with other measures, to assess performance in connection with evaluating and granting incentive compensation to its officers and other key employees.

Segment net income, the balance of the Company’s investment in joint ventures and the amount of capital expenditures are not presented in the following tables. Management does not utilize these measures when analyzing its segments or when making resource allocation decisions, and therefore this information is not provided. FFO is reconciled to net income (loss) on a total Company basis (in thousands):



Year ended December 31, 2012	Office		Retail		Land		Third Party Management and Leasing			Other			Total
Net operating income	$	80,907	$	29,429	$	—	$	—		$	121		$	110,457
Sales less costs of sales	—		—		4,915		—			309			5,224
Fee income	—		—		—		16,365			17,797			34,162
Other income	3,037		603		—		—			1,513			5,153
Third party management and leasing expenses	—		—		—		(13,675		)	—			(13,675		)
Separation expenses	—		—		—		—			(1,984		)	(1,984		)
General and administrative expenses	—		—		—		—			(23,208		)	(23,208		)
Reimbursed expenses	—		—		—		—			(7,063		)	(7,063		)
Interest expense	—		—		—		—			(28,154		)	(28,154		)
Impairment loss	—		—		—		—			(488		)	(488		)
Other expenses	—		—		—		—			(8,484		)	(8,484		)
Gain on sale of third party management and leasing business	—		—		—		7,459			—			7,459
Preferred stock dividends	—		—		—		—			(12,907		)	(12,907		)
Funds from operations available to common stockholders	$	83,944	$	30,032	$	4,915	$	10,149		$	(62,548	)	66,492

Real estate depreciation and amortization, including Company's share of joint ventures													(62,043		)
Impairment loss on depreciable investment property, net of amounts attributable to noncontrolling interests													(11,748		)
Gain on sale of depreciated investment properties including Company's share of joint ventures													40,120
Net income available to common stockholders													$	32,821
Total Assets	$	736,867	$	151,417	$	50,520	$	—		$	185,438		$	1,124,242



Year ended December 31, 2011	Office		Retail		Land			Third Party Management and Leasing			Other			Total
Net operating income	$	75,387	$	31,583	$	—		$	—		$	3,583		$	110,553
Sales less costs of sales	—		—		5,236			—			2,250			7,486
Fee income	—		—		—			19,359			13,821			33,180
Other income	1,475		151		—			—			578			2,204
Third party management and leasing expenses	—		—		—			(16,585		)	—			(16,585		)
Separation expenses	—		—		—			—			(197		)	(197		)
General and administrative expenses	—		—		—			—			(24,166		)	(24,166		)
Reimbursed expenses	—		—		—			—			(6,208		)	(6,208		)
Interest expense	—		—		—			—			(32,515		)	(32,515		)
Impairment losses	—		—		(125,526		)	—			(3,608		)	(129,134		)
Other expenses	—		—		—			—			(8,586		)	(8,586		)
Preferred stock dividends	—		—		—			—			(12,907		)	(12,907		)
Funds from operations available to common stockholders	$	76,862	$	31,734	$	(120,290	)	$	2,774		$	(67,955	)	(76,875		)

Real estate depreciation and amortization, including Company's share of joint ventures														(62,709		)
Impairment losses on depreciable investment properties, net of amounts attributable to noncontrolling interests														(7,632		)
Gain on sale of depreciated investment properties including the Company's share of joint ventures														5,884
Net loss available to common stockholders														$	(141,332	)
Total Assets	$	732,857	$	375,923	$	108,172		$	4,302		$	14,281		$	1,235,535



Year ended December 31, 2010	Office		Retail		Land			Third Party Management and Leasing			Other			Total
Net operating income	$	72,792	$	31,729	$	—		$	—		$	3,721		$	108,242
Sales less costs of sales	—		—		12,502			—			7,898			20,400
Fee income	—		—		—			18,977			14,443			33,420
Other income	416		146		—			—			750			1,312
Third party management and leasing expenses	—		—		—			(17,393		)	—			(17,393		)
Separation expenses	—		—		—			—			(1,045		)	(1,045		)
General and administrative expenses	—		—		—			—			(28,517		)	(28,517		)
Reimbursed expenses	—		—		—			—			(6,297		)	(6,297		)
Interest expense	—		—		—			—			(41,432		)	(41,432		)
Impairment losses	—		—		(5,714		)	—			(586		)	(6,300		)
Other expenses	—		—		—			—			(16,702		)	(16,702		)
Preferred stock dividends	—		—		—			—			(12,907		)	(12,907		)
Funds from operations available to common stockholders	$	73,208	$	31,875	$	6,788		$	1,584		$	(80,674	)	32,781

Real estate depreciation and amortization, including Company's share of joint ventures														(67,728)
Gain on sale of depreciated investment properties														7,467
Net loss available to common stockholders														$	(27,480	)
Total Assets	671,540		348,470		261,323			4,050			85,899			1,371,282

When reviewing the results of operations for the Company, management analyzes the following revenue and income items net of their related costs:


•	Rental property operations;


•	Land sales; and


•	Gains on sales of investment properties.

These amounts are shown in the segment tables above in the same “net” manner as shown to management. In addition, management reviews the operations of discontinued operations and its share of the operations of its joint ventures in the same manner as the operations of its wholly-owned properties included in the continuing operations. Therefore, the information in the tables above includes the operations of discontinued operations and its share of joint ventures in the same categories as the operations of the properties included in continuing operations. Certain adjustments are required to reconcile the above segment information to the Company’s consolidated revenues. The following table reconciles information presented in the tables above to the Company’s consolidated revenues (in thousands):



	2012			2011			2010
Net operating income	$	110,457		$	110,553		$	108,242
Sales less cost of sales	5,224			7,486			20,400
Fee income	34,162			33,180			33,420
Other income	5,153			2,204			1,312
Plus rental property operating expenses	54,518			44,912			43,441
Cost of sales	1,833			5,378			28,956
Net operating income in joint ventures	(23,596		)	(24,258		)	(20,179		)
Sales less cost of sales in joint ventures	(28		)	(1,927		)	(6,034		)
Net operating income in discontinued operations	(15,770		)	(25,611		)	(29,788		)
Fee income in discontinued operations	(16,365		)	(19,359		)	(18,977		)
Other income in discontinued operations	(3,591		)	(254		)	(193		)
Gain on tract sales (included in gain on investment properties)	(3,719		)	(3,258		)	(6,366		)
Total consolidated revenues	$	148,278		$	129,046		$	154,234