Reportable Segments

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS

The Company's segments are based on the method of internal reporting, which classifies operations by property type and geographical region. The segments by property type are Office and Non-Office. The segments by geographical region are Atlanta, Austin, Charlotte, Dallas, Phoenix, Tampa, and other markets. Included in other markets are properties located in Chapel Hill (sold in September 2022), Houston, Nashville, and Fort Worth (sold in April 2021). Included in Non-Office are retail and apartments in Chapel Hill (sold in September 2022) and Atlanta, as well as the College Street Garage in Charlotte. In the third quarter of 2021, with the sale of the Company's One South at the Plaza office property, the Company reassessed the segment for the College Street Garage and began to treat it as Non-Office for all periods presented. 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 property and the geographical location. Each segment includes both consolidated operations and the Company's share of joint venture operations.

Company management evaluates the performance of its reportable segments based in part on net operating income (“NOI”). NOI represents rental property revenues, less termination fees, less rental property operating expenses. NOI is not a measure of cash flows or operating results as measured by GAAP, 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. All companies may not calculate NOI in the same manner. The Company considers NOI to be an appropriate supplemental measure to net income as it helps both management and investors understand the core operations of the Company's operating assets. NOI excludes fee income, other revenue, corporate general and administrative expenses, reimbursed expenses, interest expense, depreciation and amortization, impairments, gains/loss on sales of real estate, gain/loss on extinguishment of debt, transaction costs, and other non-operating items.

Segment net income, amount of capital expenditures, and total assets are not presented in the following tables because management does not utilize these measures when analyzing its segments or when making resource allocation decisions. Information on the Company's segments along with a reconciliation of NOI to net income for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands):

Three Months Ended September 30, 2022	Office		Non-Office		Total
Revenues:
Atlanta	$	70,708	$	461	$	71,169
Austin	64,522		—		64,522
Charlotte	14,343		1,316		15,659
Dallas	4,240		—		4,240
Phoenix	15,135		—		15,135
Tampa	18,229		—		18,229
Other markets	7,476		1,419		8,895
Total segment revenues	194,653		3,196		197,849
Less: Company's share of rental property revenues from unconsolidated joint ventures	(2,514)		(1,880)		(4,394)
Total rental property revenues	$	192,139	$	1,316	$	193,455

Three Months Ended September 30, 2021	Office		Non-Office		Total
Revenues:
Atlanta	$	67,959	$	369	$	68,328
Austin	65,448		—		65,448
Charlotte	17,527		721		18,248
Dallas	4,337		—		4,337
Phoenix	12,847		—		12,847
Tampa	14,444		—		14,444
Other markets	8,702		1,155		9,857
Total segment revenues	191,264		2,245		193,509
Less: Company's share of rental property revenues from unconsolidated joint ventures	(6,470)		(1,524)		(7,994)
Total rental property revenues	$	184,794	$	721	$	185,515

Nine Months Ended September 30, 2022	Office		Non-Office		Total
Revenues:
Atlanta	$	207,582	$	1,323	$	208,905
Austin	184,800		—		184,800
Charlotte	41,776		3,604		45,380
Dallas	12,568		—		12,568
Phoenix	42,098		—		42,098
Tampa	52,369		—		52,369
Other markets	22,423		3,957		26,380
Total segment revenues	563,616		8,884		572,500
Less: Company's share of rental property revenues from unconsolidated joint ventures	(7,364)		(5,280)		(12,644)
Total rental property revenues	$	556,252	$	3,604	$	559,856

Nine Months Ended September 30, 2021	Office		Non-Office		Total
Revenues:
Atlanta	$	198,461	$	1,039	$	199,500
Austin	183,158		—		183,158
Charlotte	60,578		1,873		62,451
Dallas	13,351		—		13,351
Phoenix	38,067		—		38,067
Tampa	43,180		—		43,180
Other markets	31,825		3,930		35,755
Total segment revenues	568,620		6,842		575,462
Less: Company's share of rental property revenues from unconsolidated joint ventures	(18,405)		(4,969)		(23,374)
Total rental property revenues	$	550,215	$	1,873	$	552,088

NOI by reportable segment for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands):

Three Months Ended September 30, 2022	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	46,678	$	280	$	46,958
Austin	39,564		—		39,564
Charlotte	10,587		935		11,522
Dallas	3,197		—		3,197
Phoenix	11,145		—		11,145
Tampa	11,254		—		11,254
Other markets	4,879		881		5,760
Total Net Operating Income	$	127,304	$	2,096	$	129,400

Three Months Ended September 30, 2021	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	44,333	$	180	$	44,513
Austin	38,532		—		38,532
Charlotte	12,491		361		12,852
Dallas	3,424		—		3,424
Phoenix	9,299		—		9,299
Tampa	9,434		—		9,434
Other markets	5,347		747		6,094
Total Net Operating Income	$	122,860	$	1,288	$	124,148

Nine Months Ended September 30, 2022	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	137,357	$	765	$	138,122
Austin	112,496		—		112,496
Charlotte	30,845		2,549		33,394
Dallas	9,696		—		9,696
Phoenix	29,988		—		29,988
Tampa	32,588		—		32,588
Other markets	13,319		2,455		15,774
Total Net Operating Income	$	366,289	$	5,769	$	372,058

Nine Months Ended September 30, 2021	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	130,551	$	433	$	130,984
Austin	108,764		—		108,764
Charlotte	43,176		796		43,972
Dallas	10,546		—		10,546
Phoenix	27,252		—		27,252
Tampa	27,755		—		27,755
Other markets	18,142		2,562		20,704
Total Net Operating Income	$	366,186	$	3,791	$	369,977

The following reconciles Net Operating Income to net income for each of the periods presented (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net Operating Income	$	129,400	$	124,148	$	372,058	$	369,977
Net operating income from unconsolidated joint ventures	(2,819)		(5,762)		(8,080)		(15,953)
Fee income	1,677		3,094		5,370		12,426
Termination fees	242		1,775		2,153		2,599
Other income	38		123		2,522		405
Reimbursed expenses	(418)		(383)		(1,455)		(1,149)
General and administrative expenses	(6,498)		(7,968)		(21,557)		(22,014)
Interest expense	(18,380)		(16,709)		(50,454)		(50,573)
Depreciation and amortization	(79,116)		(72,073)		(219,721)		(214,399)
Other expenses	(231)		(421)		(877)		(1,835)
Income from unconsolidated joint ventures	634		2,128		7,038		5,826
Gain on sales of investments in unconsolidated joint ventures	56,260		13,121		56,260		13,160
Gain (loss) on investment property transactions	(20)		13,063		(61)		13,037
Loss on extinguishment of debt	—		—		(100)		—
Net income	$	80,769	$	54,136	$	143,096	$	111,507