
13.	Reportable Segments

Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker decides how resources are allocated and assesses performance on a recurring basis at least quarterly.

The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company's operating performance geographically by market and both on a same store and non-same store basis. The Company’s operating segments located in its core markets represent its reportable segments (with the aggregation of Los Angeles, Orange County and San Diego into the Southern California reportable segment). The Company's operating segments located in its non-core markets that are not material have also been aggregated in the tables presented below.

The Company’s fee and asset management and development (including its partially owned properties) activities are other business activities that do not constitute an operating segment and as such, have been aggregated in the "Other" category in the tables presented below.

All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the nine months and quarters ended September 30, 2014 and 2013, respectively.

The primary financial measure for the Company’s rental real estate segment is net operating income (“NOI”), which represents rental income less: 1) property and maintenance expense; 2) real estate taxes and insurance expense; and 3) property management expense (all as reflected in the accompanying consolidated statements of operations and comprehensive income). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment communities. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The following tables present NOI for each segment from our rental real estate specific to continuing operations for the nine months and quarters ended September 30, 2014 and 2013, respectively, as well as total assets and capital expenditures at September 30, 2014 (amounts in thousands):



	Nine Months Ended September 30, 2014						Nine Months Ended September 30, 2013
	Rental Income		Operating Expenses		NOI		Rental Income			Operating Expenses			NOI
Same store (1)
Boston	$	188,509	$	61,195	$	127,314	$	182,143		$	59,373		$	122,770
Denver	82,392		23,263		59,129		76,796			23,095			53,701
New York	340,374		129,561		210,813		327,884			124,960			202,924
San Francisco	251,812		79,898		171,914		232,062			81,417			150,645
Seattle	116,581		38,649		77,932		108,789			37,108			71,681
South Florida	143,000		53,347		89,653		136,599			52,238			84,361
Southern California	314,247		104,996		209,251		300,788			104,211			196,577
Washington DC	335,154		108,931		226,223		337,270			107,547			229,723
Non-core	92,660		34,236		58,424		89,791			33,349			56,442
Total same store	1,864,729		634,076		1,230,653		1,792,122			623,298			1,168,824

Non-same store/other (2) (3)
Boston	2,749		639		2,110		1,900			430			1,470
Seattle	8,608		3,014		5,594		2,855			813			2,042
South Florida	3,687		2,113		1,574		44			364			(320		)
Southern California	28,005		12,737		15,268		9,824			4,554			5,270
Washington DC	17,324		6,005		11,319		9,109			3,276			5,833
Other (3)	17,390		9,318		8,072		17,738			15,954			1,784
Total non-same store/other	77,763		33,826		43,937		41,470			25,391			16,079

Archstone pre-ownership (4)	—		—		—		(92,423		)	(36,729		)	(55,694		)
Total	$	1,942,492	$	667,902	$	1,274,590	$	1,741,169		$	611,960		$	1,129,209


(1)	Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2013, less properties subsequently sold, which represented 99,686 apartment units. Also includes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.


(2)	Non-same store primarily includes properties acquired after January 1, 2013, plus any properties in lease-up and not stabilized as of January 1, 2013, but excludes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.


(3)	Other includes development, other corporate operations and operations prior to sale for properties sold in 2014 that do not meet the new discontinued operations criteria.


(4)	Represents pro forma Archstone pre-ownership results for the period January 1, 2013 to February 27, 2013 that is included in 2013 same store results.



	Quarter Ended September 30, 2014							Quarter Ended September 30, 2013
	Rental Income		Operating Expenses			NOI		Rental Income		Operating Expenses		NOI
Same store (1)
Boston	$	63,485	$	19,781		$	43,704	$	61,687	$	19,721	$	41,966
Denver	28,269		8,164			20,105		26,303		8,109		18,194
New York	114,968		41,457			73,511		110,588		41,215		69,373
San Francisco	86,468		26,938			59,530		79,602		27,312		52,290
Seattle	41,575		13,428			28,147		38,786		12,992		25,794
South Florida	48,245		17,805			30,440		46,135		17,673		28,462
Southern California	106,974		35,543			71,431		102,422		35,062		67,360
Washington DC	114,478		36,841			77,637		114,793		36,905		77,888
Non-core	31,391		11,387			20,004		30,294		11,092		19,202
Total same store	635,853		211,344			424,509		610,610		210,081		400,529

Non-same store/other (2) (3)
Boston	931		215			716		747		176		571
Seattle	2,464		645			1,819		—		—		—
South Florida	1,645		736			909		21		218		(197		)
Southern California	11,889		4,653			7,236		4,413		1,962		2,451
Washington DC	4,899		1,654			3,245		2,458		1,003		1,455
Other (3)	4,320		(128		)	4,448		5,814		133		5,681
Total non-same store/other	26,148		7,775			18,373		13,453		3,492		9,961

Total	$	662,001	$	219,119		$	442,882	$	624,063	$	213,573	$	410,490


(1)	Same store primarily includes all properties acquired or completed and stabilized prior to July 1, 2013, less properties subsequently sold, which represented 100,196 apartment units. Also includes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.


(2)	Non-same store primarily includes properties acquired after July 1, 2013, plus any properties in lease-up and not stabilized as of July 1, 2013, but excludes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.


(3)	Other includes development, other corporate operations and operations prior to sale for properties sold in 2014 that do not meet the new discontinued operations criteria.



	Nine Months Ended September 30, 2014
	Total Assets		Capital Expenditures
Same store (1)
Boston	$	1,939,055	$	14,656
Denver	525,685		3,900
New York	4,683,104		14,802
San Francisco	2,736,460		20,234
Seattle	1,039,100		9,699
South Florida	1,145,788		11,377
Southern California	2,955,062		19,125
Washington DC	4,252,450		30,477
Non-core	575,000		4,967
Total same store	19,851,704		129,237

Non-same store/other (2) (3)
Boston	48,570		690
Seattle	226,023		396
South Florida	68,528		—
Southern California	754,384		971
Washington DC	303,871		1,290
Other (3)	1,755,014		597
Total non-same store/other	3,156,390		3,944
Total	$	23,008,094	$	133,181


(1)	Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2013, less properties subsequently sold, which represented 99,686 apartment units. Also includes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.


(2)	Non-same store primarily includes properties acquired after January 1, 2013, plus any properties in lease-up and not stabilized as of January 1, 2013, but excludes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.


(3)	Other includes development, other corporate operations and capital expenditures for properties sold.

Note: Markets/Metro Areas aggregated in the above Southern California and Non-core segments are as follows:

(a) Southern California – Los Angeles, Orange County and San Diego.

(b) Non-core – Inland Empire, CA, New England (excluding Boston), Orlando and Phoenix.

The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for the nine months and quarters ended September 30, 2014 and 2013, respectively (amounts in thousands):



	Nine Months Ended September 30,						Quarter Ended September 30,
	2014			2013			2014			2013
Rental income	$	1,942,492		$	1,741,169		$	662,001		$	624,063
Property and maintenance expense	(361,105		)	(330,812		)	(120,144		)	(118,782		)
Real estate taxes and insurance expense	(245,717		)	(217,753		)	(80,568		)	(75,916		)
Property management expense	(61,080		)	(63,395		)	(18,407		)	(18,875		)
Total operating expenses	(667,902		)	(611,960		)	(219,119		)	(213,573		)
Net operating income	$	1,274,590		$	1,129,209		$	442,882		$	410,490