REPORTABLE SEGMENTS

The Company has five reportable segments: Office, Retail, Land, Third Party Management and Leasing, and Other. 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, where applicable. 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. 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 2012, the Company sold its third party management and leasing business. 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; and


•	preferred dividends.

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 the fourth quarter of 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):



Three Months Ended September 30, 2013	Office		Retail		Land		Third Party Management and Leasing			Other			Total
Net operating income	$	30,308	$	3,663	$	—	$	—		$	861		$	34,832
Sales less costs of sales	—		—		725		—			(6		)	719
Fee income	—		—		—		—			2,420			2,420
Other income	—		—		—		—			303			303
Gain on sale of third party management and leasing business	—		—		—		4,531			—			4,531
Third party management and leasing expenses	—		—		—		(14		)	—			(14		)
Separation expenses	—		—		—		—			(520		)	(520		)
General and administrative expenses	—		—		—		—			(6,635		)	(6,635		)
Reimbursed expenses	—		—		—		—			(1,097		)	(1,097		)
Interest expense	—		—		—		—			(7,224		)	(7,224		)
Other expenses	—		—		—		—			(8,312		)	(8,312		)
Preferred stock dividends	—		—		—		—			(1,777		)	(1,777		)
Funds from operations available to common stockholders	$	30,308	$	3,663	$	725	$	4,517		$	(21,987	)	17,226
Real estate depreciation and amortization, including Company's share of joint ventures													(21,890		)
Gain on sale of depreciated investment properties, including Company's share of joint ventures													67,435
Non-controlling interest related to the sale of depreciated properties													(3,390		)
Net income available to common stockholders													$	59,381



Three Months Ended September 30, 2012	Office		Retail		Land		Third Party Management and Leasing			Other			Total
Net operating income	$	20,451	$	7,168	$	—	$	—		$	—		$	27,619
Sales less costs of sales	—		—		378		—			—			378
Fee income	—		—		—		4,789			7,343			12,132
Other income	—		—		—		—			3,329			3,329
Gain on sale of third party management and leasing business	—		—		—		7,384			—			7,384
Third party management and leasing expenses	—		—		—		(4,260		)	—			(4,260		)
Separation expenses	—		—		—		—			(574		)	(574		)
General and administrative expenses	—		—		—		—			(5,255		)	(5,255		)
Reimbursed expenses	—		—		—		—			(1,235		)	(1,235		)
Interest expense	—		—		—		—			(6,759		)	(6,759		)
Impairment loss	—		—		—		—			(488		)	(488		)
Other expenses	—		—		—		—			(3,360		)	(3,360		)
Preferred stock dividends	—		—		—		—			(3,226		)	(3,226		)
Funds from operations available to common stockholders	$	20,451	$	7,168	$	378	$	7,913		$	(10,225	)	25,685
Real estate depreciation and amortization, including Company's share of joint ventures													(16,361		)
Gain on sale of depreciated investment properties including the Company's share of joint ventures													120
Net loss available to common stockholders													$	9,444



Nine Months Ended September 30, 2013	Office		Retail		Land		Third Party Management and Leasing			Other			Total
Net operating income	$	76,039	$	12,255	$	—	$	—		$	1,280		$	89,574
Sales less costs of sales	—		—		1,244		—			154			1,398
Fee income	—		—		—		76			8,931			9,007
Other income	—		—		—		—			2,649			2,649
Gain on sale of third party management and leasing business	—		—		—		4,531			—			4,531
Third party management and leasing expenses	—		—		—		(94		)	—			(94		)
Separation expenses	—		—		—		—			(520		)	(520		)
General and administrative expenses	—		—		—		—			(17,256		)	(17,256		)
Reimbursed expenses	—		—		—		—			(4,366		)	(4,366		)
Interest expense	—		—		—		—			(20,442		)	(20,442		)
Other expenses	—		—		—		—			(10,749		)	(10,749		)
Preferred stock dividends and original issuance costs	—		—		—		—			(10,887		)	(10,887		)
Funds from operations available to common stockholders	$	76,039	$	12,255	$	1,244	$	4,513		$	(51,206	)	42,845
Real estate depreciation and amortization, including Company's share of joint ventures													(57,162		)
Gain on sale of depreciated investment properties, including Company's share of joint ventures													124,682
Non-controlling interest related to the sale of depreciated properties													(3,390		)
Net loss available to common stockholders													$	106,975



Nine Months Ended September 30, 2012	Office		Retail		Land		Third Party Management and Leasing			Other			Total
Net operating income	$	61,062	$	23,241	$	—	$	—		$	1		$	84,304
Sales less costs of sales	—		—		852		—			52			904
Fee income	—		—		—		15,529			12,985			28,514
Other income	—		—		—		—			4,948			4,948
Gain on sale of third party management and leasing business	—		—		—		7,384			—			7,384
Third party management and leasing expenses	—		—		—		(13,167		)	—			(13,167		)
Separation expenses	—		—		—		—			(866		)	(866		)
General and administrative expenses	—		—		—		—			(17,524		)	(17,524		)
Reimbursed expenses	—		—		—		—			(3,968		)	(3,968		)
Interest expense	—		—		—		—			(21,143		)	(21,143		)
Impairment loss	—		—		—		—			(488		)	(488		)
Loss on extinguishment of debt	—		—		—		—			(94		)	(94		)
Other expenses	—		—		—		—			(6,799		)	(6,799		)
Preferred stock dividends	—		—		—		—			(9,680		)	(9,680		)
Funds from operations available to common stockholders	$	61,062	$	23,241	$	852	$	9,746		$	(42,576	)	52,325
Real estate depreciation and amortization, including Company's share of joint ventures													(47,936		)
Impairment loss on depreciable investment property, net of amounts attributable to noncontrolling interests													(10,190		)
Gain on sale of depreciated investment properties, including Company's share of joint ventures													8,475
Other													59
Net loss available to common stockholders													$	2,733

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):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net operating income	$	34,832		$	27,619		$	89,574		$	84,304
Sales less cost of sales	719			378			1,398			904
Fee income	2,420			12,132			9,007			28,514
Other income	303			3,329			2,649			4,948
Rental property operating expenses	22,730			13,946			57,135			38,317
Cost of sales	147			354			1,543			1,333
Net operating income in joint ventures	(7,547		)	(5,889		)	(21,425		)	(18,069		)
Sales less cost of sales in joint ventures	(109		)	—			(111		)	3
Net operating income in discontinued operations	(814		)	(4,560		)	(2,454		)	(16,188		)
Fee income in discontinued operations	—			(4,789		)	(76		)	(15,529		)
Other income in discontinued operations	(4		)	(3,234		)	9			(3,407		)
(Gain) loss on land sales (included in gain on investment properties)	(602		)	—			(1,120		)	30
Total consolidated revenues	$	52,075		$	39,286		$	136,129		$	105,160