Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information

Segment Information

Note 12. Segment Information

        As of December 31, 2011, we owned 45 Central Business District, or CBD, office properties, 272 suburban office properties and 199 industrial & other properties. We account for all of these properties in geographic operating segments for financial reporting purposes based on our method of internal reporting. We account for our properties by property type (i.e. CBD office, suburban office and industrial & other) and by geographic regions. We define these individual geographic segments as those which currently, or during either of the last two quarters, represent or generate 5% or more of our total square feet, annualized revenues or property net operating income, or NOI, which we define as rental income less operating expenses. Our geographic segments include Metro Philadelphia, PA, Oahu, HI, Metro Chicago, IL, Metro Denver, CO, Australia, Metro Washington, DC and Other Markets, which includes properties located elsewhere throughout the United States. Prior periods have been restated to reflect 12 office properties and one industrial property reclassified to discontinued operations from continuing operations during the third quarter of 2011 and seven office properties and 20 industrial properties reclassified to continuing operations from discontinued operations during the fourth quarter of 2011.

        The following items are accounted for on a corporate level and are not allocated among our segments: depreciation and amortization expense, general and administrative expense, loss on asset impairment, acquisition related costs, interest and other income and expense, (loss) gain on early extinguishment of debt, equity in earnings of investees, gain on issuance of shares by an equity investee, gain on asset acquisition and gain on sale of properties. The accounting policies of our segments are the same as the accounting policies described in our summary of significant accounting policies.

        As of December 31, 2011, we owned 317 office properties and 199 industrial & other properties. Property level information by geographic segment and property type is as follows:

        As of and for the year ended December 31, 2011:

	As of December 31, 2011
	CBD Office		Suburban Office		Industrial & Other		Totals
Property square feet (in thousands):
Metro Philadelphia, PA		4,591		462		—		5,053
Oahu, HI		—		—		17,896		17,896
Metro Chicago, IL		2,581		1,164		104		3,849
Metro Denver, CO		672		789		553		2,014
Australia		314		—		1,442		1,756
Metro Washington, DC		428		1,216		—		1,644
Other Markets		9,233		18,513		12,325		40,071
Totals		17,819		22,144		32,320		72,283

	Year Ended December 31, 2011
	CBD Office		Suburban Office		Industrial & Other		Totals
Property rental income:
Metro Philadelphia, PA	$	114,640	$	5,190	$	—	$	119,830
Oahu, HI		—		—		73,413		73,413
Metro Chicago, IL		38,256		27,837		469		66,562
Metro Denver, CO		20,814		14,740		8,879		44,433
Australia		21,557		—		12,222		33,779
Metro Washington, DC		14,360		27,180		—		41,540
Other Markets		180,915		284,003		67,473		532,391
Totals	$	390,542	$	358,950	$	162,456	$	911,948
Property net operating income:
Metro Philadelphia, PA	$	58,917	$	591	$	—	$	59,508
Oahu, HI		—		—		55,039		55,039
Metro Chicago, IL		21,170		15,710		431		37,311
Metro Denver, CO		13,501		11,502		4,904		29,907
Australia		17,601		—		8,922		26,523
Metro Washington, DC		10,856		16,975		—		27,831
Other Markets		88,106		153,437		42,155		283,698
Totals	$	210,151	$	198,215	$	111,451	$	519,817

        As of December 31, 2011, our investments in office properties, and in industrial & other properties, net of accumulated depreciation were $4,989,157 and $1,320,905, respectively, including $169,399 office properties and $100,588 industrial properties located in Australia.

        As of and for the year ended December 31, 2010:

	As of December 31, 2010
	CBD Office		Suburban Office		Industrial & Other		Totals
Property square feet (in thousands):
Metro Philadelphia, PA		4,592		462		—		5,054
Oahu, HI		—		—		17,914		17,914
Metro Chicago, IL		—		1,164		104		1,268
Metro Denver, CO		672		788		553		2,013
Australia		314		—		1,442		1,756
Metro Washington, DC		428		1,067		—		1,495
Other Markets		6,572		17,483		12,156		36,211
Totals		12,578		20,964		32,169		65,711

	Year Ended December 31, 2010
	CBD Office		Suburban Office		Industrial & Other		Totals
Property rental income:
Metro Philadelphia, PA	$	112,676	$	6,962	$	—	$	119,638
Oahu, HI		—		—		74,150		74,150
Metro Chicago, IL		—		15,966		489		16,455
Metro Denver, CO		21,200		12,817		8,239		42,256
Australia		586		—		2,873		3,459
Metro Washington, DC		17,867		27,945		—		45,812
Other Markets		153,496		254,260		72,937		480,693
Totals	$	305,825	$	317,950	$	158,688	$	782,463
Property net operating income:
Metro Philadelphia, PA	$	58,272	$	1,715	$	—	$	59,987
Oahu, HI		—		—		55,702		55,702
Metro Chicago, IL		—		10,840		404		11,244
Metro Denver, CO		14,086		9,321		4,758		28,165
Australia		153		—		2,150		2,303
Metro Washington, DC		12,166		16,241		—		28,407
Other Markets		73,192		139,013		51,401		263,606
Totals	$	157,869	$	177,130	$	114,415	$	449,414

        As of December 31, 2010, our investments in office properties, and in industrial & other properties, net of accumulated depreciation, excluding properties classified as held for sale, were $4,216,114 and $1,290,883, respectively. As of December 31, 2010, our investments included $172,081 office properties and $100,949 industrial properties located in Australia.

        As of and for the year ended December 31, 2009:

	As of December 31, 2009
	CBD Office		Suburban Office		Industrial & Other		Totals
Property square feet (in thousands):
Metro Philadelphia, PA		4,585		462		—		5,047
Oahu, HI		—		—		17,914		17,914
Metro Chicago, IL		—		532		104		636
Metro Denver, CO		672		540		548		1,760
Metro Washington, DC		582		1,286		—		1,868
Other Markets		6,725		16,249		12,140		35,114
Totals		12,564		19,069		30,706		62,339

	Year Ended December 31, 2009
	CBD Office		Suburban Office		Industrial & Other		Totals
Property rental income:
Metro Philadelphia, PA	$	112,615	$	7,106	$	—	$	119,721
Oahu, HI		—		—		72,545		72,545
Metro Chicago, IL		—		13,566		450		14,016
Metro Denver, CO		10,968		9,021		8,025		28,014
Metro Washington, DC		23,369		35,377		—		58,746
Other Markets		142,176		262,346		66,897		471,419
Totals	$	289,128	$	327,416	$	147,917	$	764,461
Property net operating income:
Metro Philadelphia, PA	$	58,631	$	2,711	$	—	$	61,342
Oahu, HI		—		—		54,861		54,861
Metro Chicago, IL		—		9,427		419		9,846
Metro Denver, CO		7,110		5,040		4,668		16,818
Metro Washington, DC		14,671		21,908		—		36,579
Other Markets		68,903		146,700		45,362		260,965
Totals	$	149,315	$	185,786	$	105,310	$	440,411

        The following table reconciles our calculation of NOI to net income, the most directly comparable financial measure under GAAP reported in our consolidated financial statements. We define NOI as rental income from real estate less our property operating expenses. We consider NOI to be appropriate supplemental information to net income because it helps both investors and management to understand the operations of our properties. We use NOI internally to evaluate individual, regional and company wide property level performance and believe NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods. The calculation of NOI excludes certain components of net income in order to provide results that are more closely related to our properties' results of operations. This measure does not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, net income available for common shareholders or cash flow from operating activities determined in accordance with GAAP, or as an indicator of our financial performance or liquidity, nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs. We believe that this data may facilitate an understanding of our consolidated historical operating results. This measure should be considered in conjunction with net income, net income available for common shareholders and cash flow from operating activities as presented in our Consolidated Statements of Income and Consolidated Statements of Cash Flows. Other REITs and real estate companies may calculate NOI differently than we do. A reconciliation of NOI to net income for the years ended December 31, 2011, 2010 and 2009, is as follows:

	Year Ended December 31,
	2011			2010			2009
Rental income	$	911,948		$	782,463		$	764,461
Operating expenses		(392,131	)		(333,049	)		(324,050	)
Property net operating income (NOI)	$	519,817		$	449,414		$	440,411
Property NOI	$	519,817		$	449,414		$	440,411
Depreciation and amortization		(218,688	)		(207,205	)		(178,034	)
General and administrative		(46,758	)		(39,737	)		(36,603	)
Loss on asset impairment		(10,355	)		(127,740	)		(15,179	)
Acquisition related costs		(10,073	)		(21,553	)		(4,082	)
Operating income		233,943			53,179			206,513
Interest and other income		1,718			2,999			1,195
Interest expense		(195,024	)		(179,642	)		(166,855	)
(Loss) gain on early extinguishment of debt		(35	)		(796	)		20,686
Equity in earnings of investees		11,377			8,464			6,546
Gain on issuance of shares by an equity investee		11,177			34,808			—
Gain on asset acquisition		—			20,392			—
Income (loss) from continuing operations before income tax expense		63,156			(60,596	)		68,085
Income tax expense		(1,347	)		(550	)		(735	)
Income (loss) from continuing operations		61,809			(61,146	)		67,350
Income from discontinued operations		5,423			26,223			34,894
Loss on asset impairment from discontinued operations		—			(1,524	)		(16,703	)
Loss on early extinguishment of debt from discontinued operations		—			(248	)		—
Net gain on sale of properties from discontinued operations		42,752			137,768			79,133
Income before gain on sale of properties		109,984			101,073			164,674
Gain on sale of properties		—			34,336			—
Net income	$	109,984		$	135,409		$	164,674