XML 74 R51.htm IDEA: XBRL DOCUMENT v3.6.0.2
Segment Information (Tables)
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Real Estate Investments, Net Operating Income and Unconsolidated Real Estate Ventures of Reportable Segments

The following tables provide selected asset information and results of operations of the Company’s reportable segments for the three years ended December 31, 2016, 2015 and 2014 (in thousands):

 

Real estate investments, at cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

December 31, 2015

 

 

December 31, 2014

 

Philadelphia CBD

 

$

1,320,974

 

 

$

1,157,667

 

 

$

1,338,655

 

Pennsylvania Suburbs

 

 

1,005,446

 

 

 

1,019,280

 

 

 

1,178,470

 

Metropolitan Washington, D.C.

 

 

975,987

 

 

 

1,129,206

 

 

 

1,183,652

 

Austin, Texas

 

 

146,794

 

 

 

164,518

 

 

 

-

 

Other (a)

 

 

137,094

 

 

 

222,329

 

 

 

902,915

 

 

 

$

3,586,295

 

 

$

3,693,000

 

 

$

4,603,692

 

Assets held for sale (b), (c)

 

 

73,591

 

 

 

794,588

 

 

 

27,436

 

      Operating Properties

 

$

3,659,886

 

 

$

4,487,588

 

 

$

4,631,128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

Construction-in-progress

 

$

297,462

 

 

$

268,983

 

 

$

201,360

 

Land inventory

 

$

150,970

 

 

$

130,479

 

 

$

90,603

 

 

(a)

As a result of the Och-Ziff Sale that occurred on February 4, 2016, the Company narrowed its segments to five segments: (1) Pennsylvania Suburbs, (2) Philadelphia Central Business District (“CBD”), (3) Metropolitan Washington, D.C. and (4) Austin, Texas and (5) Other. The Och-Ziff Sale disposed of the entire Richmond, Virginia segment. Subsequent to the Och-Ziff Sale, the segments previously defined as New Jersey/Delaware and California are now being managed as a consolidated segment entitled “Other,” as these geographies no longer provide a significant revenue contribution. Accordingly, the chief operating decision maker revised the management structure, reallocated resources, and is assessing business operations of the five segments as of January 1, 2016.

(b)

As of December 31, 2015, 2970 Market Street was classified as held for sale on the consolidated balance sheets. The property was sold on February 5, 2016. See Note 21, "Subsequent Events," for further information. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.

(c)

As of December 31, 2015, the 58 properties associated with the series of related transactions with Och-Ziff Real Estate were classified as held for sale on the consolidated balance sheets. On February 4, 2016, the Company completed a series of transactions, resulting in the disposition of the properties. See Note 3, “Real Estate Investments,” for further information regarding the disposition. Additionally, as of December 31, 2016, the Company categorized three office properties located in the Metropolitan Washington, D.C. segment and two properties in the Other segment as held for sale in accordance with applicable accounting standards for long lived assets. See Note 3, “Real Estate Investments,” for further information.

None of the above aforementioned sales or properties classified as held for sale are considered significant dispositions under the accounting guidance for discontinued operations.

 

 

Years ended

 

 

December 31,

 

 

2016

 

 

2015

 

 

2014

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net Operating income

 

Philadelphia CBD

$

200,245

 

 

$

(78,708

)

 

$

121,537

 

 

$

209,298

 

 

$

(77,352

)

 

$

131,946

 

 

$

201,809

 

 

$

(75,262

)

 

$

126,547

 

Pennsylvania Suburbs

 

144,338

 

 

 

(49,208

)

 

 

95,130

 

 

 

158,398

 

 

 

(57,319

)

 

 

101,079

 

 

 

160,630

 

 

 

(55,062

)

 

 

105,568

 

Metropolitan Washington, D.C.

 

99,781

 

 

 

(39,036

)

 

 

60,745

 

 

 

110,657

 

 

 

(44,294

)

 

 

66,363

 

 

 

113,834

 

 

 

(43,399

)

 

 

70,435

 

Austin, Texas (b)

 

34,585

 

 

 

(13,222

)

 

 

21,363

 

 

 

20,910

 

 

 

(8,010

)

 

 

12,900

 

 

 

5,610

 

 

 

(3,223

)

 

 

2,387

 

Other

 

39,359

 

 

 

(23,204

)

 

 

16,155

 

 

 

98,799

 

 

 

(49,604

)

 

 

49,195

 

 

 

113,971

 

 

 

(57,214

)

 

 

56,757

 

Corporate

 

7,155

 

 

 

(6,070

)

 

 

1,085

 

 

 

4,569

 

 

 

(1,508

)

 

 

3,061

 

 

 

1,128

 

 

 

(1,805

)

 

 

(677

)

Operating Properties

$

525,463

 

 

$

(209,448

)

 

$

316,015

 

 

$

602,631

 

 

$

(238,087

)

 

$

364,544

 

 

$

596,982

 

 

$

(235,965

)

 

$

361,017

 

 

(a)

Includes property operating expense, real estate taxes and third party management expense.

(b)

On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. As such, the Company has seven wholly owned properties in its Austin, Texas business segment at December 31, 2016. In addition, net operating income for the years ended December 31, 2016 and 2015 includes management fees and related expenses for services provided by the Company to the Austin Venture. See Note 3, "Real Estate Investments," for further information regarding these transactions.

 

Unconsolidated real estate ventures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in real estate ventures, at equity

 

 

Equity in income (loss) of real estate ventures

 

 

As of

 

 

Years ended December 31,

 

 

December 31, 2016

 

 

December 31, 2015

 

 

December 31, 2014

 

 

2016

 

 

2015

 

 

2014

 

Philadelphia CBD

$

48,691

 

 

$

44,089

 

 

$

27,137

 

 

$

(686

)

 

$

(188

)

 

$

46

 

Pennsylvania Suburbs

 

15,421

 

 

 

16,408

 

 

 

17,385

 

 

 

748

 

 

 

310

 

 

 

(777

)

Metropolitan Washington, D.C. (a)

 

141,786

 

 

 

118,422

 

 

 

73,127

 

 

 

(6,293

)

 

 

(336

)

 

 

(317

)

MAP Venture (b)

 

20,893

 

 

 

-

 

 

 

-

 

 

 

(4,218

)

 

 

-

 

 

 

-

 

Other (c)

 

1,654

 

 

 

1,657

 

 

 

1,574

 

 

 

814

 

 

 

930

 

 

 

1,338

 

Austin, Texas (d)

 

52,886

 

 

 

60,428

 

 

 

105,781

 

 

 

(1,868

)

 

 

(1,527

)

 

 

(1,080

)

Total

$

281,331

 

 

$

241,004

 

 

$

225,004

 

 

$

(11,503

)

 

$

(811

)

 

$

(790

)

 

(a)

On August 31, 2016, the Company terminated its lease for the regional management and leasing office at 3141 Fairview Park Drive, located in Falls Church, Virginia. Accordingly, the Company no longer has any continuing involvement with 3141 Fairview Park Drive and recorded the partial sale under the full accrual method of accounting. See Note 4, “Investment in Unconsolidated Real Estate Ventures,” for further information.

(b)

The MAP Venture represents a joint venture formed between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC, on February 4, 2016. See Note 4 “Investment in Unconsolidated Real Estate Ventures,” for further information. The MAP Venture’s business operations, including properties in Richmond, Virginia; Metropolitan Washington, D.C.; New Jersey/Delaware and Pennsylvania Suburbs, are centrally managed with the results reported to management of the Company on a consolidated basis. As a result, the investment in the MAP Venture is separately presented. All other unconsolidated real estate ventures are managed consistently with the Company’s regional segments.

(c)

See footnote (a) to the “Real estate investments, at cost” table above for further information regarding this segment.

(d)

Investment in real estate ventures does not include the $1.1 million negative investment balance in one real estate venture as of December 31, 2015, which is included in other liabilities. The Company disposed of its interest in this venture during the three-month period ended March 31, 2016. See Note 4, "Investment in Unconsolidated Real Estate Ventures," for further information. The decrease to the Company’s investment balance primarily relates to distributions from the G&I VII Austin Office LLC real estate venture.
Reconciliation of Consolidated NOI to Consolidated Net Income (Loss)

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

 

 

 

 

 

 

Years Ended December 31,

 

 

 

 

 

 

2016

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

Consolidated net operating income

 

 

 

 

$

316,015

 

 

$

364,544

 

 

$

361,017

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

(84,708

)

 

 

(110,717

)

 

 

(124,329

)

Interest expense - amortization of deferred financing costs

 

 

 

 

 

(2,696

)

 

 

(4,557

)

 

 

(5,148

)

Interest expense - financing obligation

 

 

 

 

 

(679

)

 

 

(1,237

)

 

 

(1,144

)

Depreciation and amortization

 

 

 

 

 

(189,676

)

 

 

(219,029

)

 

 

(208,569

)

General and administrative expenses

 

 

 

 

 

(26,596

)

 

 

(29,406

)

 

 

(26,779

)

Equity in loss of real estate ventures

 

 

 

 

 

(11,503

)

 

 

(811

)

 

 

(790

)

Provision for impairment

 

 

 

 

 

(40,517

)

 

 

(82,208

)

 

 

(1,765

)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

1,236

 

 

 

1,224

 

 

 

3,974

 

Tax credit transaction income

 

 

 

 

 

-

 

 

 

19,955

 

 

 

11,853

 

Recognized hedge activity

 

 

 

 

 

-

 

 

 

-

 

 

 

(828

)

Net gain from remeasurement of investments in real estate ventures

 

 

 

 

 

-

 

 

 

758

 

 

 

458

 

Net gain on sales of interests in real estate

 

 

 

 

 

116,983

 

 

 

20,496

 

 

 

4,901

 

Net gain on sale of undepreciated real estate

 

 

 

 

 

9,232

 

 

 

3,019

 

 

 

1,184

 

Net gain (loss) on real estate venture transactions

 

 

 

 

 

20,000

 

 

 

7,229

 

 

 

(417

)

Loss on early extinguishment of debt

 

 

 

 

 

(66,590

)

 

 

-

 

 

 

(7,594

)

Income (loss) from continuing operations

 

 

 

 

 

40,501

 

 

 

(30,740

)

 

 

6,024

 

Income from discontinued operations

 

 

 

 

 

-

 

 

 

-

 

 

 

918

 

Net income (loss)

 

 

 

 

$

40,501

 

 

$

(30,740

)

 

$

6,942