Segment Reporting

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We have four reportable operating segments at December 31, 2015, the first three of which consist of the ownership and rental of (i) industrial, (ii) medical office and (iii) office real estate investments. Properties not included in our reportable segments, which do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment, are generally referred to as non-reportable Rental Operations. The operations of our industrial, medical office and office properties, as well as our non-reportable Rental Operations, are collectively referred to as "Rental Operations." Although our office real estate investment segment did not meet the quantitative thresholds for separate presentation as a reportable segment for the year ended December 31, 2015, we have elected to continue to separately report it when considering that it was significant during the years ended December 31, 2014 and 2013.

The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.

Revenues by Reportable Segment

The following table shows the revenues for each of the reportable segments, as well as a reconciliation to consolidated revenues, for the years ended December 31, 2015, 2014 and 2013 (in thousands):

	2015		2014		2013
Revenues
Rental Operations:
Industrial	$	556,903	$	529,144	$	479,147
Medical Office	160,951		146,530		127,475
Office	90,722		131,722		142,772
Non-reportable Rental Operations	—		8,814		7,206
Service Operations	133,367		224,500		206,596
Total segment revenues	941,943		1,040,710		963,196
Other revenue	7,489		6,141		5,564
Consolidated revenue from continuing operations	949,432		1,046,851		968,760
Discontinued operations	32,549		120,884		159,096
Consolidated revenue	$	981,981	$	1,167,735	$	1,127,856

Supplemental Performance Measure

PNOI is the non-GAAP supplemental performance measure that we use to evaluate the performance of, and to allocate resources among, the real estate investments in the reportable and operating segments that comprise our Rental Operations. PNOI for our Rental Operations segments is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items (collectively referred to as "Rental Operations revenues and expenses excluded from PNOI," as shown in the following table). Additionally, we do not allocate interest expense, depreciation expense and certain other non-property specific revenues and expenses (collectively referred to as "Non-Segment Items," as shown in the following table) to our individual operating segments.

We evaluate the performance of our Service Operations reportable segment using net income or loss, as allocated to that segment ("Earnings from Service Operations").

The following table shows a reconciliation of our segment-level measures of profitability to consolidated income from continuing operations before income taxes, for the years ended December 31, 2015, 2014 and 2013 (in thousands):

	2015			2014			2013
PNOI
Industrial	$	393,909		$	351,955		$	315,846
Medical Office	103,540			91,099			70,844
Office	38,231			39,820			38,977
Non-reportable Rental Operations	—			4,506			(90		)
PNOI, excluding all sold/held for sale properties	535,680			487,380			425,577
PNOI from sold/held-for-sale properties included in continuing operations	27,971			68,451			91,604
PNOI, continuing operations	563,651			555,831			517,181
Earnings from Service Operations	14,197			24,469			22,763
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net	20,669			19,412			11,443
Revenues related to lease buyouts	1,567			5,246			11,151
Amortization of lease concessions and above and below market rents	(3,258		)	(4,789		)	(8,115		)
Intercompany rents and other adjusting items	(2,044		)	(4,219		)	(3,009		)
Non-Segment Items:
Equity in earnings (loss) of unconsolidated companies	(3,304		)	94,317			54,116
Interest expense	(173,574		)	(196,186		)	(202,174		)
Depreciation expense	(317,329		)	(346,275		)	(353,456		)
Gain on sale of properties	229,702			162,715			59,179
Impairment charges	(22,932		)	(49,106		)	(3,777		)
Interest and other income, net	4,667			1,246			1,887
General and administrative expenses	(58,565		)	(49,362		)	(42,673		)
Gain on land sales	35,054			10,441			9,547
Other operating expenses	(5,947		)	(7,191		)	(8,144		)
Loss on extinguishment of debt	(85,713		)	(283		)	(9,433		)
Acquisition-related activity	(8,499		)	(1,099		)	(3,093		)
Other non-segment revenues and expenses, net	(3,065		)	(421		)	1,029
Income from continuing operations before income taxes	$	185,277		$	214,746		$	54,422

The assets for each of the reportable segments at December 31, 2015 and 2014 were as follows (in thousands):

	December 31, 2015		December 31, 2014
Assets
Rental Operations:
Industrial	$	4,552,107	$	4,677,047
Medical Office	1,269,546		1,229,632
Office	367,469		1,252,627
Non-reportable Rental Operations	—		71,741
Service Operations	137,257		158,762
Total segment assets	6,326,379		7,389,809
Non-segment assets	590,734		365,030
Consolidated assets	$	6,917,113	$	7,754,839

Tenant improvements and leasing costs to re-let rental space that we previously leased to tenants are referred to as second generation expenditures. Building improvements that are not specific to any tenant but serve to improve integral components of our real estate properties are also second generation expenditures. In addition to revenues and FFO, we also review our second generation capital expenditures in measuring the performance of our individual Rental Operations segments. We review these expenditures to determine the costs associated with re-leasing vacant space and maintaining the condition of our properties. Our second generation capital expenditures by segment are summarized as follows for the years ended December 31, 2015, 2014 and 2013 (in thousands):

	2015		2014		2013
Second Generation Capital Expenditures
Industrial	$	45,716	$	53,840	$	41,971
Medical Office	4,711		3,131		3,106
Office	11,443		41,124		46,600
Non-reportable Rental Operations segments	30		726		121
Total	$	61,900	$	98,821	$	91,798

Both our first and second generation expenditures vary significantly between leases on a per square foot basis, dependent upon several factors including the product type, the nature of a tenant's operations, the specific physical characteristics of each individual property as well as the market in which the property is located.