Segment Reporting

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Reportable Segments

As of March 31, 2022, we had two reportable operating segments, the first consisting of the ownership and rental of industrial real estate investments. We continue to increase our investments in quality industrial properties largely based on anticipated geographic trends in supply and demand for industrial buildings, as well as the real estate needs of our major tenants that operate on a national level. We treat our industrial properties as a single operating and reportable segment based on our method of internal reporting. Properties not included in our reportable segments, because they are not industrial properties and 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 remaining office properties and medical office property at March 31, 2022. The operations of our industrial properties, as well as our non-reportable Rental Operations, are collectively referred to as "Rental Operations."

Our second reportable segment consists of various real estate services such as development, general contracting, construction management, property management, asset management, maintenance and leasing to third-party property owners, customers and joint ventures, and is collectively referred to as "Service Operations." The Service Operations segment is identified as one single operating segment because the lowest level of financial results reviewed by our chief operating decision maker are the results for the Service Operations segment in total. Further, our reportable segments 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 (in thousands): 

	Three Months Ended March 31,
	2022		2021
Revenues
Rental Operations:
Industrial	$	273,670	$	256,670
Non-reportable Rental Operations	1,373		1,509
Service Operations	2,949		31,113
Total segment revenues	277,992		289,292
Other revenue	171		—
Consolidated revenue	$	278,163	$	289,292

Supplemental Performance Measure

Property-level net operating income on a cash basis ("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 less rental expenses and real estate taxes, 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 most comparable GAAP measure to PNOI is income 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 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.

The following table shows a reconciliation of our segment-level measures of profitability to consolidated income before income taxes (in thousands): 

	Three Months Ended March 31,
	2022		2021
PNOI
Industrial	$	189,528	$	163,006
Non-reportable Rental Operations	3,153		1,273
PNOI, excluding all sold properties	192,681		164,279
PNOI from sold properties	760		13,729
PNOI	$	193,441	$	178,008
Earnings from Service Operations	1,480		1,650
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net	10,255		8,021
Revenues related to lease buyouts	170		310
Amortization of lease concessions and above and below market rents	2,588		2,832
Intercompany rents and other adjusting items	(662)		(418)
Non-Segment Items:
Equity in earnings of unconsolidated joint ventures	3,815		16,268
Interest expense	(19,999)		(22,507)
Depreciation and amortization expense	(94,001)		(93,573)
Gain on sale of properties	210,747		21,360
Interest and other income, net	825		463
General and administrative expenses	(23,913)		(24,217)
Gain on land sales	1,092		1,238
Other operating expenses	(779)		(1,145)
Loss on extinguishment of debt	(21,948)		(70)
Non-incremental costs related to successful leases	(5,512)		(2,958)
Other non-segment revenues and expenses, net	208		126
Income before income taxes	$	257,807	$	85,388