Segment Information

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

As of September 30, 2012, the Company was managing its portfolio within seven segments: (1) Pennsylvania, (2) Philadelphia Central Business District (CBD), (3) Metropolitan Washington D.C, (4) New Jersey/Delaware, (5) Richmond, Virginia, (6) Austin, Texas and (7) California. The Pennsylvania segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and southern Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer counties in New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and one property in Durham, North Carolina. The Austin, Texas segment includes properties in Austin. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project.

Segment information is as follows (in thousands):

	Pennsylvania Suburbs		Philadelphia CBD		Metropolitan, D.C.		New Jersey/Delaware		Richmond, Virginia		Austin, Texas		California		Corporate			Total
As of September 30, 2012:
Real estate investments, at cost:
Operating properties	$	1,174,597	$	962,235	$	1,189,014	$	545,104	$	308,371	$	259,304	$	221,664	$	—		$	4,660,289
Construction-in-progress															43,449			43,449
Land inventory															95,500			95,500
As of December 31, 2011:
Real estate investments, at cost:
Operating properties	$	1,218,071	$	953,870	$	1,255,803	$	545,657	$	307,698	$	257,694	$	254,287	$	—		$	4,793,080
Construction-in-progress															25,083			25,083
Land inventory															109,008			109,008
For the three-months ended September 30, 2012:
Total revenue	$	38,526	$	33,025	$	26,516	$	20,553	$	8,826	$	8,275	$	5,141	$	(479	)	$	140,383
Property operating expenses, real estate taxes and third party management expenses	13,588		12,431		10,637		10,030		3,762		3,484		2,639		(504		)	56,067
Net operating income	$	24,938	$	20,594	$	15,879	$	10,523	$	5,064	$	4,791	$	2,502	$	25		$	84,316
For the three-months ended September 30, 2011:
Total revenue	$	36,812	$	31,097	$	29,296	$	20,743	$	9,334	$	7,453	$	4,968	$	(302	)	$	139,401
Property operating expenses, real estate taxes and third party management expenses	13,493		11,539		10,868		10,008		3,664		3,233		3,009		(443		)	55,371
Net operating income	$	23,319	$	19,558	$	18,428	$	10,735	$	5,670	$	4,220	$	1,959	$	141		$	84,030
For the nine-months ended September 30, 2012:
Total revenue	$	113,565	$	98,086	$	79,919	$	61,442	$	26,762	$	23,959	$	14,942	$	(1,305	)	$	417,370
Property operating expenses, real estate taxes and third party management expenses	39,643		37,082		31,158		28,697		10,875		10,497		7,498		(1,278		)	164,172
Net operating income	$	73,922	$	61,004	$	48,761	$	32,745	$	15,887	$	13,462	$	7,444	$	(27	)	$	253,198
For the nine-months ended September 30, 2011:
Total revenue	$	111,949	$	93,520	$	89,936	$	60,554	$	27,409	$	23,203	$	14,551	$	(855	)	$	420,267
Property operating expenses, real estate taxes and third party management expenses	42,112		34,962		34,002		30,611		10,666		9,740		8,015		(991		)	169,117
Net operating income	$	69,837	$	58,558	$	55,934	$	29,943	$	16,743	$	13,463	$	6,536	$	136		$	251,150

Net operating income (“NOI”) is defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Segment NOI includes revenue, real estate taxes and property operating expenses directly related to operation and management of the properties owned and managed within the respective geographical region. Segment NOI excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. NOI also does not reflect general and administrative expenses, interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. Trends in development and construction activities that could materially impact the Company’s results from operations are also not reflected in NOI. All companies may not calculate NOI in the same manner. NOI is the measure that is used by the Company to evaluate the operating performance of its real estate assets by segment. The Company also believes that NOI provides useful information to investors regarding its financial condition and results of operations because it reflects only those income and expenses recorded at the property level. The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. Below is a reconciliation of consolidated NOI to consolidated net income (loss), as defined by GAAP:

	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2012			2011			2012			2011
	(amounts in thousands)						(amounts in thousands)
Consolidated net operating income	$	84,316		$	84,030		$	253,198		$	251,150
Less:
Interest expense	(32,620		)	(32,346		)	(99,745		)	(99,477		)
Deferred financing costs	(1,218		)	(1,846		)	(3,790		)	(3,844		)
Depreciation and amortization	(48,738		)	(51,943		)	(147,618		)	(157,157		)
Administrative expenses	(6,080		)	(6,177		)	(18,209		)	(18,311		)
Plus:
Interest income	311			523			2,635			1,385
Historic tax credit transaction income	11,840			12,026			11,840			12,026
Interest expense - financing obligation	(230		)	—			(608		)	—
Equity in income of real estate ventures	500			418			1,382			2,739
Net gain on sales of interests in real estate	—			—			—			2,791
Loss on real estate venture formation	(950		)	—			(950		)	—
Gain (loss) on early extinguishment of debt	(51		)	176			(1,549		)	(580		)
Income (loss) from continuing operations	7,080			4,861			(3,414		)	(9,278		)
Income from discontinued operations	10,009			1,750			36,641			9,165
Net income (loss)	$	17,089		$	6,611		$	33,227		$	(113	)