13. SEGMENT INFORMATION

As of March 31, 2018, the Company owns and manages properties within five segments: (1) Philadelphia Central Business District (Philadelphia CBD), (2) Pennsylvania Suburbs, (3) Metropolitan Washington, D.C., (4) Austin, Texas and (5) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Metropolitan Washington, D.C. segment includes properties in the District of Columbia, Northern Virginia and southern Maryland. The Austin, Texas segment includes properties in the City of Austin, Texas. The Other segment includes properties located in Camden County in New Jersey and properties in New Castle County in Delaware. In addition to the five 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 following tables provide selected asset information and results of operations of the Company's reportable segments (in thousands):

Real estate investments, at cost:
	March 31, 2018		December 31, 2017
Philadelphia CBD	$	1,653,373	$	1,643,296
Pennsylvania Suburbs		978,838		958,796
Metropolitan Washington, D.C.		979,041		978,257
Austin, Texas		163,788		163,653
Other		89,666		88,346
	$	3,864,706	$	3,832,348

Corporate
Construction-in-progress	$	129,413	$	121,188
Land held for development (a)	$	99,436	$	98,242

(a)	As of December 31, 2017, the Company categorized 13.1 acres of land held for development, located in the Other segment, as held for sale in accordance with applicable accounting standards for long lived assets.

The above aforementioned sale was not considered a significant disposition under the accounting guidance for discontinued operations.

Net operating income (in thousands):

	Three-month periods ended
	March 31,
	2018								2017
	Total revenue		Operating expenses (a)			Net operating income (loss)			Total revenue		Operating expenses (a)			Net operating income
Philadelphia CBD	$	62,602	$	(24,327	)	$	38,275		$	54,449	$	(20,837	)	$	33,612
Pennsylvania Suburbs		34,882		(12,964	)		21,918			35,655		(12,584	)		23,071
Metropolitan Washington, D.C.		23,059		(8,759	)		14,300			23,362		(9,383	)		13,979
Austin, Texas		8,364		(3,523	)		4,841			9,123		(3,573	)		5,550
Other		6,141		(4,965	)		1,176			6,362		(3,856	)		2,506
Corporate		1,310		(1,966	)		(656	)		1,969		(848	)		1,121
Operating properties	$	136,358	$	(56,504	)	$	79,854		$	130,920	$	(51,081	)	$	79,839

(a) Includes property operating expenses, real estate taxes and third party management expense.

Unconsolidated real estate ventures (in thousands):
	Investment in real estate ventures, at equity				Equity in income (loss) of real estate ventures
	As of				Three-month periods ended March 31,
	March 31, 2018		December 31, 2017		2018			2017
Philadelphia CBD	$	21,641	$	39,939	$	(236	)	$	(67	)
Pennsylvania Suburbs		-		3,503		-			276
Metropolitan Washington, D.C.		120,041		119,817		(37	)		467
Austin, Texas		14,069		15,450		80			(1,117	)
MAP Venture (a)		13,713		1,939		(736	)		58
Other		1,919		13,973		104			(365	)
Total	$	171,383	$	194,621	$	(825	)	$	(748	)

(a)

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. 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.

Net operating income (“NOI”) is a non-GAAP financial measure defined 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, management fees and bad debt expense. 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. 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 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, as defined by GAAP, to consolidated NOI, (in thousands):

	Three-month periods ended March 31,
	2018			2017

Net income	$	44,705		$	21,271
Plus:
Interest expense		19,533			21,437
Interest expense - amortization of deferred financing costs		627			634
Depreciation and amortization		43,291			45,892
General and administrative expenses		8,723			9,325
Equity in loss of Real Estate Ventures		825			748
Provision for impairment		-			2,730

Less:
Interest income		703			393
Income tax provision		(138	)		(100	)
Net gain on disposition of real estate		-			7,323
Net gain on sale of undepreciated real estate		22			-
Net gain on Real Estate Venture transactions		37,263			14,582
Consolidated net operating income	$	79,854		$	79,839