REPORTABLE SEGMENTS

The Company has four reportable segments: Office, Retail, Land, 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. The Other segment includes:


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


•	compensation for corporate employees;


•	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.

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, 2014	Office		Retail		Land		Other			Total
Net operating income	$	52,691	$	1,221	$	—	$	1,200		$	55,112
Sales less costs of sales	—		—		82		—			82
Fee income	—		—		—		1,802			1,802
Other income	—		—		—		399			399
General and administrative expenses	—		—		—		(5,021		)	(5,021		)
Reimbursed expenses	—		—		—		(783		)	(783		)
Interest expense	—		—		—		(8,660		)	(8,660		)
Other expenses	—		—		—		(1,255		)	(1,255		)
Preferred stock dividends and original issuance costs	—		—		—		—			—
Funds from operations available to common stockholders	$	52,691	$	1,221	$	82	$	(12,318	)	41,676
Real estate depreciation and amortization, including Company's share of joint ventures										(35,347		)
Gain on sale of depreciated investment properties, including Company's share of joint ventures										12,993
Net income available to common stockholders										$	19,322



Three Months Ended September 30, 2013	Office		Retail		Land		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
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	—		—		—		(8,326		)	(8,326		)
Preferred stock dividends and original issuance costs	—		—		—		(1,777		)	(1,777		)
Funds from operations available to common stockholders	$	30,308	$	3,663	$	725	$	(17,470	)	17,226
Real estate depreciation and amortization, including Company's share of joint ventures										(21,890		)
Gain on sale of depreciated investment properties including the Company's share of joint ventures										67,435
Noncontrolling interest related to sale of depreciated properties										(3,390		)
Net income available to common stockholders										$	59,381



Nine Months Ended September 30, 2014	Office		Retail		Land		Other			Total
Net operating income	$	149,110	$	3,813	$	—	$	3,496		$	156,419
Sales less costs of sales	—		—		1,573		42			1,615
Fee income	—		—		—		6,165			6,165
Other income	—		—		—		4,563			4,563
Separation expenses	—		—		—		(84		)	(84		)
General and administrative expenses	—		—		—		(16,388		)	(16,388		)
Reimbursed expenses	—		—		—		(2,703		)	(2,703		)
Interest expense	—		—		—		(26,485		)	(26,485		)
Other expenses	—		—		—		(2,974		)	(2,974		)
Preferred stock dividends and original issuance costs	—		—		—		(6,485		)	(6,485		)
Funds from operations available to common stockholders	$	149,110	$	3,813	$	1,573	$	(40,853	)	113,643
Real estate depreciation and amortization, including Company's share of joint ventures										(110,319		)
Gain on sale of depreciated investment properties, including Company's share of joint ventures										18,975
Net income available to common stockholders										$	22,299



Nine Months Ended September 30, 2013	Office		Retail		Land		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	—		—		—		9,007			9,007
Other income	—		—		—		2,649			2,649
Gain on sale of third party management and leasing business	—		—		—		4,531			4,531
Separation expenses	—		—		—		(520		)	(520		)
General and administrative expenses	—		—		—		(17,257		)	(17,257		)
Reimbursed expenses	—		—		—		(4,365		)	(4,365		)
Interest expense	—		—		—		(20,442		)	(20,442		)
Other expenses	—		—		—		(10,843		)	(10,843		)
Preferred stock dividends and original issuance costs	—		—		—		(10,887		)	(10,887		)
Funds from operations available to common stockholders	$	76,039	$	12,255	$	1,244	$	(46,693	)	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
Noncontrolling interest related to sale of depreciated properties										(3,390		)
Net income available to common stockholders										$	106,975

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,
	2014			2013			2014			2013
Net operating income	$	55,112		$	34,832		$	156,419		$	89,574
Sales less cost of sales	82			719			1,615			1,398
Fee income	1,802			2,420			6,165			9,007
Other income	399			303			4,563			2,649
Rental property operating expenses	38,685			22,035			109,501			55,112
Cost of sales	55			147			325			1,725
Net operating income in joint ventures	(6,601		)	(7,538		)	(19,748		)	(21,567		)
Sales less cost of sales in joint ventures	—			(109		)	(47		)	(111		)
Net operating income in discontinued operations	(341		)	(1,752		)	(1,798		)	(5,318		)
Fee income in discontinued operations	—			—			—			(76		)
Other income in discontinued operations	(14		)	(18		)	(29		)	(33		)
Termination fees in discontinued operations and in joint ventures	—			—			(74		)	(19		)
Gain on land sales (included in gain on investment properties)	(81		)	(605		)	(1,566		)	(1,122		)
Total consolidated revenues	$	89,098		$	50,434		$	255,326		$	131,219