Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

As of December 31, 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 for the three years ended December 31, 2012, 2011 and 2010 are as follows (in thousands):

	Pennsylvania Suburbs		Philadelphia CBD		Metropolitan, D.C.		New Jersey/Delaware		Richmond, Virginia		Austin, Texas		California		Corporate			Total
2012:
Real estate investments, at cost:
Operating properties	$	1,178,730	$	988,590	$	1,193,200	$	546,644	$	309,923	$	285,346	$	223,736	$	—		$	4,726,169
Construction-in-progress															48,950			48,950
Land inventory															102,439			102,439
Total revenue	$	151,784	$	131,594	$	107,656	$	82,395	$	35,701	$	32,380	$	20,005	$	(1,682	)	$	559,833
Property operating expenses, real estate taxes and third party management expenses	53,392		50,790		41,487		37,968		14,485		13,952		10,050		(1,732		)	220,392
Net operating income	$	98,392	$	80,804	$	66,169	$	44,427	$	21,216	$	18,428	$	9,955	$	50		$	339,441
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
Total revenue	$	150,611	$	125,366	$	119,255	$	80,894	$	36,789	$	30,894	$	19,192	$	(1,248	)	$	561,753
Property operating expenses, real estate taxes and third party management expenses	55,558		48,832		45,136		40,218		14,739		13,058		10,483		(1,186		)	226,838
Net operating income	$	95,053	$	76,534	$	74,119	$	40,676	$	22,050	$	17,836	$	8,709	$	(62	)	$	334,915
2010:
Operating properties	$	1,199,957	$	911,354	$	1,359,776	$	568,413	$	294,406	$	254,019	$	246,186	$	—		$	4,834,111
Construction-in-progress															33,322			33,322
Land inventory															110,055			110,055
Total revenue	$	144,792	$	92,110	$	128,823	$	87,011	$	36,032	$	32,050	$	20,414	$	(800	)	$	540,432
Property operating expenses, real estate taxes and third party management expenses	59,537		37,890		46,104		43,780		14,008		13,399		10,827		(4,458		)	221,087
Net operating income	$	85,255	$	54,220	$	82,719	$	43,231	$	22,024	$	18,651	$	9,587	$	3,658		$	319,345

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. The following is a reconciliation of consolidated NOI to consolidated net income (loss), as defined by GAAP:

	Year Ended December 31,
	2012			2011			2010
	(amounts in thousands)
Consolidated net operating income	$	339,441		$	334,915		$	319,345
Less:
Interest expense	(132,939		)	(131,405		)	(132,640		)
Deferred financing costs	(6,208		)	(4,991		)	(3,770		)
Depreciation and amortization	(195,841		)	(210,334		)	(203,345		)
Administrative expenses	(25,413		)	(24,602		)	(23,306		)
Plus:
Interest income	3,012			1,813			3,218
Historic tax credit transaction income	11,840			12,026			—
Recognized hedge activity	(2,985		)	—			—
Interest expense - financing obligation	(850		)	—			—
Equity in income of real estate ventures	2,741			3,775			5,305
Net gain (loss) on sales of interests in real estate	—			2,791			(22		)
Net gain on sale of undepreciated real estate	—			45			—
Loss on real estate venture formation	(950		)	(222		)	—
Loss on early extinguishment of debt	(22,002		)	(2,776		)	(2,110		)
Income (loss) from continuing operations	(30,154		)	(18,965		)	(37,325		)
Income from discontinued operations	36,683			14,250			19,719
Net income (loss)	$	6,529		$	(4,715	)	$	(17,606	)