Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information

9. SEGMENT INFORMATION

Segment description

In accordance with ASC Topic 280, “Segment Reporting,” the Company presents segment information based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance. The segment information is prepared on the same basis as the internally reported information used by the Company’s chief operating decision makers to manage the business.

The Company’s chief operating decision makers focus on the Company’s primary sources of income from apartment community rental operations. Apartment community rental operations are generally broken down into segments based on the various stages in the apartment community ownership lifecycle. These segments are described below. All commercial properties and other ancillary service and support operations are combined in the line item “other property segments” in the accompanying segment information. The segment information presented below reflects the segment categories based on the lifecycle status of each community as described below.

— Fully stabilized communities – those apartment communities which have been stabilized (the earlier of the point at which a property reaches 95% occupancy or one year after completion of construction) for both 2011 and 2012.

— Communities stabilized during the prior year – those apartment communities which reached stabilized occupancy in 2011.

— Development and lease-up communities – those apartment communities that are under development, rehabilitation and lease-up but were not stabilized by the beginning of 2012, including communities that stabilized during 2012.

— Acquired communities – those communities acquired in 2011 and 2012.

Segment performance measure

Management uses contribution to consolidated property net operating income (“NOI”) as the performance measure for its operating segments. The Company uses NOI, including NOI of stabilized communities, as an operating measure. NOI is defined as rental and other property revenue from real estate operations less total property and maintenance expenses from real estate operations (excluding depreciation and amortization). The Company believes that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs and general and administrative expenses generally incurred at the corporate level. This measure is particularly useful, in the opinion of the Company, in evaluating the performance of operating segment groupings and individual properties. Additionally, the Company believes that NOI, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community. The Company believes that the line on the Company’s consolidated statement of operations entitled “net income (loss)” is the most directly comparable GAAP measure to NOI.

Segment information

The following table reflects each segment’s contribution to consolidated revenues and NOI together with a reconciliation of segment contribution to property NOI to consolidated net income for the three and nine months ended September 30, 2012 and 2011. Additionally, substantially all of the Company’s assets relate to the Company’s property rental operations. Asset cost, depreciation and amortization by segment are not presented because such information at the segment level is not reported internally.

	Three months ended September 30,								Nine months ended September 30,
	2012				2011				2012				2011
Revenues
Fully stabilized communities		$	77,167			$	72,330			$	225,616			$	210,052
Development and lease-up communities			522				-				599				-
Acquired communities			2,291				-				4,440				-
Other property segments			6,185				6,039				17,518				16,829
Other			209				243				637				686
Consolidated revenues		$	86,374			$	78,612			$	248,810			$	227,567
Contribution to Property Net Operating Income
Fully stabilized communities		$	47,185			$	43,271			$	138,453			$	125,748
Development and lease-up communities			(120	)			-				(281	)			-
Acquired communities			1,301				-				2,469				-
Other property segments, including corporate management expenses			458				480				323				692
Consolidated property net operating income			48,824				43,751				140,964				126,440
Interest income			20				374				359				982
Other revenues			209				243				637				686
Depreciation			(20,334	)			(18,823	)			(59,172	)			(56,383	)
Interest expense			(11,816	)			(14,207	)			(34,564	)			(43,119	)
Amortization of deferred financing costs			(667	)			(717	)			(2,026	)			(2,085	)
General and administrative			(3,763	)			(3,970	)			(11,931	)			(12,332	)
Investment and development			(203	)			(239	)			(1,005	)			(1,013	)
Other investment costs			(547	)			(329	)			(1,159	)			(1,278	)
Gains on condominium sales activities, net			10,261				2,581				25,695				8,757
Equity in income of unconsolidated real estate entities, net			475				235				7,416				790
Other income (expense), net			(137	)			(71	)			444				230
Net loss on extinguishment of indebtedness			-				-				(301	)			-
Net income		$	22,322			$	8,828			$	65,357			$	21,675