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SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
SEGMENT INFORMATION
13. SEGMENT INFORMATION
As of September 30, 2023, the Company owns and manages properties within four segments: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas and (4) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia, Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Other segment includes properties located in the District of Columbia, Northern Virginia, Southern Maryland, Camden County, New Jersey and New Castle County, Delaware. In addition to the four segments, 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 is transferred to operating properties by region upon completion of the associated construction or project.
The Company’s segments are based on the Company’s method of internal reporting, which classifies the Company's operations by geographic area. Beginning on January 1, 2023, the properties that were historically part of the Metropolitan Washington D.C. segment are reflected in the other reportable segment. The operations for the Metropolitan Washington D.C. segment for the three and nine months ended September 30, 2023 and real estate investments as of September 30, 2023 and December 31, 2022, as detailed below, have been included in the Other reportable segment. The following tables provide selected asset information and results of operations of the Company’s reportable segments (in thousands):
Real estate investments, at cost:
September 30, 2023December 31, 2022
Philadelphia CBD$1,521,723 $1,517,801 
Pennsylvania Suburbs915,659 878,546 
Austin, Texas798,141 851,835 
Total Core Segments3,235,523 3,248,182 
Other460,543 369,058 
Operating properties
$3,696,066 $3,617,240 
Corporate
Right of use asset - operating leases, net$19,188 $19,664 
Construction-in-progress$143,929 $218,869 
Land held for development$76,058 $76,499 
Prepaid leasehold interests in land held for development, net$27,762 $35,576 
Net operating income:
Three Months Ended September 30,
20232022
Total revenueOperating expenses (a)Net operating incomeTotal revenueOperating expenses (a)Net operating income
Philadelphia CBD$56,367 $(18,609)$37,758 $56,105 $(20,080)$36,025 
Pennsylvania Suburbs32,611 (9,770)22,841 32,709 (11,022)21,687 
Austin, Texas24,457 (10,044)14,413 22,509 (8,597)13,912 
Other10,295 (5,526)4,769 8,874 (5,089)3,785 
Corporate5,642 (2,450)3,192 5,372 (2,698)2,674 
Operating properties$129,372 $(46,399)$82,973 $125,569 $(47,486)$78,083 
Nine Months Ended September 30,
20232022
Total revenueOperating expenses (a)Net operating incomeTotal revenueOperating expenses (a)Net operating income
Philadelphia CBD$169,265 $(59,452)$109,813 $165,002 $(60,361)$104,641 
Pennsylvania Suburbs97,484 (29,633)67,851 95,849 (31,438)64,411 
Austin, Texas73,475 (30,021)43,454 71,345 (29,328)42,017 
Other28,572 (15,788)12,784 27,078 (15,985)11,093 
Corporate15,685 (8,359)7,326 17,842 (7,941)9,901 
Operating properties$384,481 $(143,253)$241,228 $377,116 $(145,053)$232,063 
Includes property operating expenses, real estate taxes and third-party management expense.
Unconsolidated real estate ventures:
Investment in real estate venturesEquity in income (loss) of real estate venture
As ofThree Months Ended September 30,Nine Months Ended September 30,
September 30, 2023December 31, 20222023202220232022
Philadelphia CBD$453,917 $387,301 $(6,537)$(3,452)$(14,208)$(8,798)
Metropolitan Washington, D.C.82,350 83,903 (1,306)(706)(3,896)(1,273)
Mid-Atlantic Office JV28,335 31,005 182 (83)595 234 
MAP Venture(45,148)(35,411)(3,078)(2,019)(6,995)(5,967)
Austin, Texas73,494 65,426 — — — — 
Total$592,948 $532,224 $(10,739)$(6,260)$(24,504)$(15,804)
Net operating income (“NOI”) is a non-GAAP financial measure, which we define as total revenue less property operating expenses, real estate taxes and third-party management expenses. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance and management fees. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. NOI presented by the Company may not be comparable to NOI reported by other companies that define NOI differently. NOI is the primary measure that is used by the Company’s management to evaluate the operating performance of the Company’s real estate assets by segment. The Company believes NOI provides useful information to investors regarding the financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. The Company believes that net income (loss), as defined by GAAP, is the most appropriate earnings measure. The following is a reconciliation of consolidated net income (loss), as defined by GAAP, to consolidated NOI, (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income (loss)$(21,636)$13,478 $(39,649)$24,230 
Plus:
Interest expense24,355 17,061 70,677 49,144 
Interest expense - amortization of deferred financing costs1,110 745 3,251 2,259 
Depreciation and amortization48,966 45,134 141,645 132,875 
General and administrative expenses8,069 7,564 26,911 25,892 
Equity in loss of unconsolidated real estate ventures10,739 6,260 24,504 15,804 
Provision for impairment11,666 — 16,134 — 
Less:
Interest income293 498 1,318 1,387 
Income tax benefit (provision)3 9 (35)(66)
Net gain on disposition of real estate— 8,669 — 8,813 
Net gain on sale of undepreciated real estate— 2,983 781 8,007 
Net gain on real estate venture transactions— — 181 — 
Consolidated net operating income$82,973 $78,083 $241,228 $232,063