Segment Reporting

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We had three reportable operating segments at December 31, 2016, the first two of which consist of the ownership and rental of (i) industrial and (ii) medical 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. Our non-reportable Rental Operations primarily include our office properties. The operations of our industrial and medical office properties, as well as our non-reportable Rental Operations, are collectively referred to as "Rental Operations."

Our third 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, 2016, 2015 and 2014 (in thousands):

	2016		2015		2014
Revenues
Rental Operations:
Industrial	$	583,019	$	556,903	$	529,144
Medical Office	175,437		160,951		146,530
Non-reportable Rental Operations	46,980		90,722		140,536
Service Operations	88,810		133,367		224,500
Total segment revenues	894,246		941,943		1,040,710
Other revenue	7,998		7,489		6,141
Consolidated revenue from continuing operations	902,244		949,432		1,046,851
Discontinued operations	983		32,549		120,884
Consolidated revenue	$	903,227	$	981,981	$	1,167,735

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, 2016, 2015 and 2014 (in thousands and excluding discontinued operations):

	2016			2015			2014
PNOI
Industrial	$	429,239		$	386,153		$	347,672
Medical Office	114,641			103,540			100,846
Non-reportable Rental Operations	6,057			9,527			4,506
PNOI, excluding all sold/held for sale properties	549,937			499,220			453,024
PNOI from sold/held-for-sale properties included in continuing operations	27,562			64,431			102,807
PNOI, continuing operations	577,499			563,651			555,831
Earnings from Service Operations	8,343			14,197			24,469
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net	13,744			20,669			19,412
Revenues related to lease buyouts	1,725			1,567			5,246
Amortization of lease concessions and above and below market rents	(1,526		)	(3,258		)	(4,789		)
Intercompany rents and other adjusting items	(119		)	(2,044		)	(4,219		)
Non-Segment Items:
Equity in earnings (loss) of unconsolidated companies	47,403			(3,304		)	94,317
Gain on dissolution of unconsolidated company	30,697			—			—
Promote income	26,299			—			—
Interest expense	(141,576		)	(173,574		)	(196,186		)
Depreciation and amortization expense	(317,818		)	(317,329		)	(346,275		)
Gain on sale of properties	162,093			229,702			162,715
Impairment charges on non-depreciable properties	(18,018		)	(22,932		)	(49,106		)
Interest and other income, net	4,035			4,667			1,246
General and administrative expenses	(55,389		)	(58,565		)	(49,362		)
Gain on land sales	9,865			35,054			10,441
Other operating expenses	(3,864		)	(5,947		)	(7,191		)
Loss on extinguishment of debt	(33,934		)	(85,713		)	(283		)
Acquisition-related activity	7,176			(8,499		)	(1,099		)
Other non-segment revenues and expenses, net	(3,953		)	(3,065		)	(421		)
Income from continuing operations before income taxes	$	312,682		$	185,277		$	214,746

The most comparable GAAP measure to PNOI is income from continuing operations before income taxes. PNOI excludes expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for income from continuing operations before income taxes or any other measures derived in accordance with GAAP. Furthermore, PNOI may not be comparable to other similarly titled measures of other companies.

Assets by Reportable Segment

The assets for each of the reportable segments at December 31, 2016 and 2015 were as follows (in thousands):

	December 31, 2016		December 31, 2015
Assets
Rental Operations:
Industrial	$	4,828,984	$	4,552,107
Medical Office	1,338,844		1,269,546
Non-reportable Rental Operations	162,893		367,469
Service Operations	127,154		137,257
Total segment assets	6,457,875		6,326,379
Non-segment assets	314,127		569,136
Consolidated assets	$	6,772,002	$	6,895,515

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 PNOI, 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, 2016, 2015 and 2014 (in thousands):

	2016		2015		2014
Second Generation Capital Expenditures
Industrial	$	51,785	$	45,716	$	53,840
Medical Office	2,515		4,711		3,131
Non-reportable Rental Operations	5,049		11,473		41,850
Total	$	59,349	$	61,900	$	98,821

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.