SEGMENT DISCLOSURE

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

SEGMENT DISCLOSURE

In accordance with ASC Topic 280, Segment Reporting, our reportable segments during the three and six months ended June 30, 2020 and 2019 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for our lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. We also have certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments. The reportable segments are accounted for on the same basis of accounting as described in the notes to our audited consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2020.

For our real estate segments, we define net operating income (loss) as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision for income taxes. For our lending segment, we define net operating income as interest income net of interest expense and general overhead expenses.

The net operating income (loss) of our segments for the three and six months ended June 30, 2020 and 2019 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Office:
Revenues	$	13,763	$	22,050	$	28,660	$	55,495
Property expenses:
Operating	5,266		8,913		11,312		22,472
General and administrative	238		202		336		356
Total property expenses	5,504		9,115		11,648		22,828
Segment net operating income—office	8,259		12,935		17,012		32,667
Hotel:
Revenues	1,114		10,330		9,367		20,919
Property expenses:
Operating	2,226		6,745		8,695		13,439
General and administrative	6		63		19		77
Total property expenses	2,232		6,808		8,714		13,516
Segment net operating (loss) income—hotel	(1,118)		3,522		653		7,403
Lending:
Revenues	1,598		2,977		3,982		5,901
Lending expenses:
Interest expense	189		536		480		1,118
Expense reimbursements to related parties	998		551		1,680		1,188
General and administrative	521		335		921		838
Total lending expenses	1,708		1,422		3,081		3,144
Segment net operating (loss) income—lending	(110)		1,555		901		2,757
Total segment net operating income	$	7,031	$	18,012	$	18,566	$	42,827

A reconciliation of our segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2020 and 2019 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands)
Total segment net operating income	$	7,031	$	18,012	$	18,566	$	42,827
Interest and other income	35		1,499		36		1,818
Asset management and other fees to related parties	(2,376)		(3,195)		(5,021)		(7,797)
Expense reimbursements to related parties—corporate	(615)		(542)		(1,427)		(1,189)
Interest expense	(2,707)		(2,014)		(5,583)		(5,477)
General and administrative	(903)		(1,021)		(2,126)		(2,138)
Transaction costs	—		(216)		—		(260)
Depreciation and amortization	(5,197)		(7,185)		(10,455)		(16,815)
Loss on early extinguishment of debt	—		(4,911)		—		(29,982)
Impairment of real estate	—		(2,800)		—		(69,000)
Gain on sale of real estate	—		55,221		—		432,802
(Loss) income before provision for income taxes	(4,732)		52,848		(6,010)		344,789
Provision for income taxes	691		(281)		713		(599)
Net (loss) income	(4,041)		52,567		(5,297)		344,190
Net (income) loss attributable to noncontrolling interests	(2)		(1)		(6)		173
Net (loss) income attributable to the Company	$	(4,043)	$	52,566	$	(5,303)	$	344,363

The condensed assets for each of the segments as of June 30, 2020 and December 31, 2019, along with capital expenditures and loan originations for the six months ended June 30, 2020 and 2019, are as follows:

	June 30, 2020		December 31, 2019
	(in thousands)
Condensed assets:
Office	$	465,554	$	460,951
Hotel	101,335		104,029
Lending	94,391		82,140
Non-segment assets	64,945		20,472
Total assets	$	726,225	$	667,592

	Six Months Ended June 30,
	2020		2019
	(in thousands)
Capital expenditures (1):
Office	$	7,087	$	4,363
Hotel	556		1,157
Total capital expenditures	7,643		5,520
Loan originations	27,870		18,523
Total capital expenditures and loan originations	$	35,513	$	24,043

(1)Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates.