Reportable Segments

6 Months Ended

Jun. 30, 2023

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, and Nashville. 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. 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/losses on sales of real estate, gains/losses 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 six months ended June 30, 2023 and 2022 are as follows ($ in thousands):

Three Months Ended June 30, 2023	Office		Non-Office		Total
Revenues:
Atlanta	$	73,160	$	469	$	73,629
Austin	68,161		—		68,161
Charlotte	14,675		1,781		16,456
Dallas	4,225		—		4,225
Phoenix	18,220		—		18,220
Tampa	18,741		—		18,741
Other markets	6,735		—		6,735
Total segment revenues	203,917		2,250		206,167
Less: Company's share of rental property revenues from unconsolidated joint ventures	(1,744)		(469)		(2,213)
Total rental property revenues	$	202,173	$	1,781	$	203,954

Three Months Ended June 30, 2022	Office		Non-Office		Total
Revenues:
Atlanta	$	68,860	$	439	$	69,299
Austin	59,054		—		59,054
Charlotte	13,929		1,301		15,230
Dallas	4,132		—		4,132
Phoenix	13,533		—		13,533
Tampa	17,216		—		17,216
Other markets	7,622		1,180		8,802
Total segment revenues	184,346		2,920		187,266
Less: Company's share of rental property revenues from unconsolidated joint ventures	(2,473)		(1,619)		(4,092)
Total rental property revenues	$	181,873	$	1,301	$	183,174

Six Months Ended June 30, 2023	Office		Non-Office		Total
Revenues:
Atlanta	$	145,292	$	926	$	146,218
Austin	136,044		—		136,044
Charlotte	29,493		3,542		33,035
Dallas	8,412		—		8,412
Phoenix	33,803		—		33,803
Tampa	37,489		—		37,489
Other markets	13,358		—		13,358
Total segment revenues	403,891		4,468		408,359
Less: Company's share of rental property revenues from unconsolidated joint ventures	(3,403)		(926)		(4,329)
Total rental property revenues	$	400,488	$	3,542	$	404,030

Six Months Ended June 30, 2022	Office		Non-Office		Total
Revenues:
Atlanta	$	136,875	$	861	$	137,736
Austin	120,278		—		120,278
Charlotte	27,433		2,286		29,719
Dallas	8,328		—		8,328
Phoenix	26,963		—		26,963
Tampa	34,140		—		34,140
Other markets	14,949		2,539		17,488
Total segment revenues	368,966		5,686		374,652
Less: Company's share of rental property revenues from unconsolidated joint ventures	(4,851)		(3,400)		(8,251)
Total rental property revenues	$	364,115	$	2,286	$	366,401

NOI by reportable segment for the three and six months ended June 30, 2023 and 2022 are as follows ($ in thousands):

Three Months Ended June 30, 2023	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	48,368	$	284	$	48,652
Austin	42,530		—		42,530
Charlotte	10,764		1,163		11,927
Dallas	3,218		—		3,218
Phoenix	10,250		—		10,250
Tampa	11,661		—		11,661
Other markets	3,606		—		3,606
Total Net Operating Income	$	130,397	$	1,447	$	131,844

Three Months Ended June 30, 2022	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	46,506	$	250	$	46,756
Austin	36,565		—		36,565
Charlotte	10,246		972		11,218
Dallas	3,191		—		3,191
Phoenix	9,868		—		9,868
Tampa	10,643		—		10,643
Other markets	4,145		665		4,810
Total Net Operating Income	$	121,164	$	1,887	$	123,051

Six Months Ended June 30, 2023	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	95,758	$	554	$	96,312
Austin	82,803		—		82,803
Charlotte	21,526		2,325		23,851
Dallas	6,443		—		6,443
Phoenix	22,023		—		22,023
Tampa	23,372		—		23,372
Other markets	7,176		—		7,176
Total Net Operating Income	$	259,101	$	2,879	$	261,980

Six Months Ended June 30, 2022	Office		Non-Office		Total
Net Operating Income:
Atlanta	$	90,679	$	485	$	91,164
Austin	72,932		—		72,932
Charlotte	20,258		1,615		21,873
Dallas	6,498		—		6,498
Phoenix	18,843		—		18,843
Tampa	21,334		—		21,334
Other markets	8,440		1,574		10,014
Total Net Operating Income	$	238,984	$	3,674	$	242,658

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net Income	$	23,077	$	34,164	$	45,433	$	62,327
Fee income	(352)		(2,305)		(726)		(3,693)
Termination fee income	(6,570)		(449)		(6,706)		(1,911)
Other income	(14)		(201)		(2,292)		(2,484)
General and administrative expenses	8,021		6,996		16,459		15,059
Interest expense	25,972		16,549		51,002		32,074
Depreciation and amortization	80,269		69,861		156,039		140,605
Reimbursed expenses	159		677		366		1,037
Other expenses	476		425		861		646
Income from unconsolidated joint ventures	(753)		(5,280)		(1,426)		(6,404)
Net operating income from unconsolidated joint ventures	1,559		2,542		2,968		5,261
Loss (gain) on investment property transactions	—		(28)		2		41
Loss on extinguishment of debt	—		100		—		100
Net Operating Income	$	131,844	$	123,051	$	261,980	$	242,658