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Segment Information (Tables)
 9 Months Ended
Sep. 30, 2018
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 (in thousands):

 

Real estate investments, at cost:

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

 

December 31, 2017

 

Philadelphia CBD

 

$

1,652,819

 

 

$

1,643,296

 

Pennsylvania Suburbs

 

 

979,068

 

 

 

958,796

 

Metropolitan Washington, D.C. (a)

 

 

539,105

 

 

 

978,257

 

Austin, Texas

 

 

170,912

 

 

 

163,653

 

Other

 

 

87,144

 

 

 

88,346

 

 

 

$

3,429,048

 

 

$

3,832,348

 

Assets held for sale (a)

 

 

396,072

 

 

 

-

 

      Operating properties

 

$

3,825,120

 

 

$

3,832,348

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

Construction-in-progress

 

$

157,075

 

 

$

121,188

 

Land held for development (b)

 

$

77,578

 

 

$

98,242

 

Prepaid leasehold interests in land held for development, net (c)

 

$

40,100

 

 

$

-

 

(a)

As of September 30, 2018, eight office properties in the Metropolitan Washington, D.C. segment were classified as held for sale. See Note 3, “Real Estate Investments,” for further information.

(b)

As of September 30, 2018, the Company categorized 37.9 acres of land held for development, comprised of 2.7 acres and 35.2 acres, located in the Pennsylvania Suburbs segment and Other segment, respectively, as held for sale in accordance with applicable accounting standards for long lived assets. 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.

(c)

As of September 30, 2018, this caption comprised leasehold interests in prepaid 99-year ground leases at 3025 and 3001-3003 JFK Boulevard, in Philadelphia, Pennsylvania. See Note 3, “Real Estate Investments,” for further information.

 

 

 

 

 

 

 

Net operating income (in thousands):

  

Three-month periods ended

 

 

September 30,

 

 

2018

 

 

2017

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income (loss)

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

Philadelphia CBD

$

64,352

 

 

$

(24,427

)

 

$

39,925

 

 

$

56,452

 

 

$

(22,010

)

 

$

34,442

 

Pennsylvania Suburbs

 

34,745

 

 

 

(11,937

)

 

 

22,808

 

 

 

34,861

 

 

 

(11,846

)

 

 

23,015

 

Metropolitan Washington, D.C.

 

22,754

 

 

 

(8,548

)

 

 

14,206

 

 

 

23,079

 

 

 

(8,500

)

 

 

14,579

 

Austin, Texas

 

8,641

 

 

 

(3,894

)

 

 

4,747

 

 

 

7,886

 

 

 

(3,929

)

 

 

3,957

 

Other

 

3,707

 

 

 

(2,436

)

 

 

1,271

 

 

 

3,752

 

 

 

(2,647

)

 

 

1,105

 

Corporate

 

799

 

 

 

(1,636

)

 

 

(837

)

 

 

2,408

 

 

 

(1,769

)

 

 

639

 

Operating properties

$

134,998

 

 

$

(52,878

)

 

$

82,120

 

 

$

128,438

 

 

$

(50,701

)

 

$

77,737

 

 

 

Nine-month periods ended

 

 

September 30,

 

 

2018

 

 

2017

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income (loss)

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

Philadelphia CBD

$

190,478

 

 

$

(73,559

)

 

$

116,919

 

 

$

165,352

 

 

$

(64,311

)

 

$

101,041

 

Pennsylvania Suburbs

 

103,960

 

 

 

(37,018

)

 

 

66,942

 

 

 

105,673

 

 

 

(35,670

)

 

 

70,003

 

Metropolitan Washington, D.C.

 

69,012

 

 

 

(25,699

)

 

 

43,313

 

 

 

69,190

 

 

 

(26,347

)

 

 

42,843

 

Austin, Texas

 

25,474

 

 

 

(10,812

)

 

 

14,662

 

 

 

25,772

 

 

 

(11,634

)

 

 

14,138

 

Other

 

13,187

 

 

 

(9,601

)

 

 

3,586

 

 

 

14,274

 

 

 

(9,083

)

 

 

5,191

 

Corporate

 

3,031

 

 

 

(5,240

)

 

 

(2,209

)

 

 

6,888

 

 

 

(5,355

)

 

 

1,533

 

Operating properties

$

405,142

 

 

$

(161,929

)

 

$

243,213

 

 

$

387,149

 

 

$

(152,400

)

 

$

234,749

 

 

(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 venture

 

 

As of

 

 

Three-month periods ended September 30,

 

 

Nine-month periods ended September 30,

 

 

September 30, 2018

 

 

December 31, 2017

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Philadelphia CBD

$

20,544

 

 

$

39,939

 

 

$

(36

)

 

$

134

 

 

$

(183

)

 

$

113

 

Pennsylvania Suburbs

 

-

 

 

 

3,503

 

 

 

-

 

 

 

24

 

 

 

-

 

 

 

448

 

Metropolitan Washington, D.C.

 

119,032

 

 

 

119,817

 

 

 

(31

)

 

 

(5,264

)

 

 

(431

)

 

 

(4,872

)

Austin, Texas

 

14,411

 

 

 

13,973

 

 

 

423

 

 

 

(15

)

 

 

1,156

 

 

 

1,266

 

MAP Venture (a)

 

11,939

 

 

 

15,450

 

 

 

(444

)

 

 

(706

)

 

 

(2,011

)

 

 

(2,610

)

Other

 

1,856

 

 

 

1,939

 

 

 

89

 

 

 

104

 

 

 

287

 

 

 

268

 

Total

$

167,782

 

 

$

194,621

 

 

$

1

 

 

$

(5,723

)

 

$

(1,182

)

 

$

(5,387

)

(a)

The MAP Venture represents a joint venture, formed on February 4, 2016 between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC. 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.
Reconciliation of Consolidated Net Income to Consolidated NOI The following is a reconciliation of consolidated net income, as defined by GAAP, to consolidated NOI, (in thousands):

 

 

Three-month periods ended September 30,

 

 

Nine-month periods ended September 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(43,262

)

 

$

19,046

 

 

$

14,579

 

 

$

48,015

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

19,257

 

 

 

19,732

 

 

 

58,091

 

 

 

61,473

 

Interest expense - amortization of deferred financing costs

 

618

 

 

 

577

 

 

 

1,872

 

 

 

1,807

 

Depreciation and amortization

 

43,900

 

 

 

42,429

 

 

 

130,908

 

 

 

132,584

 

General and administrative expenses

 

5,963

 

 

 

5,813

 

 

 

22,209

 

 

 

21,797

 

Equity in (income) loss of Real Estate Ventures

 

(1

)

 

 

5,723

 

 

 

1,182

 

 

 

5,387

 

Provision for impairment

 

56,865

 

 

 

-

 

 

 

56,865

 

 

 

3,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,220

 

 

 

79

 

 

 

2,564

 

 

 

635

 

Income tax (provision) benefit

 

-

 

 

 

793

 

 

 

(158

)

 

 

1,032

 

Net gain (loss) on disposition of real estate

 

-

 

 

 

-

 

 

 

(35

)

 

 

8,411

 

Net gain on sale of undepreciated real estate

 

-

 

 

 

953

 

 

 

2,859

 

 

 

953

 

Net gain on Real Estate Venture transactions

 

-

 

 

 

13,758

 

 

 

37,263

 

 

 

28,340

 

Consolidated net operating income

$

82,120

 

 

$

77,737

 

 

$

243,213

 

 

$

234,749