SEGMENT DISCLOSURE

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

17. SEGMENT DISCLOSURE

In accordance with ASC Topic 280, Segment Reporting, our reportable segments during the three and nine months ended September 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 (benefit) 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 nine months ended September 30, 2020 and 2019 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Office:
Revenues	$	13,529	$	16,885	$	42,189	$	72,380
Property expenses:
Operating	6,026		7,205		17,338		29,677
General and administrative	61		41		397		397
Total property expenses	6,087		7,246		17,735		30,074
Segment net operating income—office	7,442		9,639		24,454		42,306
Hotel:
Revenues	1,762		8,511		11,129		29,430
Property expenses:
Operating	2,796		6,081		11,491		19,520
General and administrative	35		31		54		108
Total property expenses	2,831		6,112		11,545		19,628
Segment net operating (loss) income—hotel	(1,069)		2,399		(416)		9,802
Lending:
Revenues	1,981		2,411		5,963		8,312
Lending expenses:
Interest expense	170		365		650		1,483
Expense reimbursements to related parties	901		652		2,581		1,840
General and administrative	641		505		1,562		1,343
Total lending expenses	1,712		1,522		4,793		4,666
Segment net operating income—lending	269		889		1,170		3,646
Total segment net operating income	$	6,642	$	12,927	$	25,208	$	55,754

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Total segment net operating income	$	6,642	$	12,927	$	25,208	$	55,754
Interest and other income	62		1,408		98		3,226
Asset management and other fees to related parties	(2,387)		(2,699)		(7,408)		(10,496)
Expense reimbursements to related parties—corporate	(639)		(630)		(2,066)		(1,819)
Interest expense	(2,473)		(2,038)		(8,056)		(7,515)
General and administrative	(999)		(807)		(3,125)		(2,945)
Transaction costs	—		(340)		—		(600)
Depreciation and amortization	(5,273)		(5,180)		(15,728)		(21,995)
Loss on early extinguishment of debt	(281)		—		(281)		(29,982)
Impairment of real estate	—		—		—		(69,000)
Gain on sale of real estate	—		302		—		433,104
(Loss) income before benefit (provision) for income taxes	(5,348)		2,943		(11,358)		347,732
Benefit (provision) for income taxes	18		(87)		731		(686)
Net (loss) income	(5,330)		2,856		(10,627)		347,046
Net loss (income) attributable to noncontrolling interests	7		(8)		1		165
Net (loss) income attributable to the Company	$	(5,323)	$	2,848	$	(10,626)	$	347,211

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

	September 30, 2020		December 31, 2019
	(in thousands)
Condensed assets:
Office	$	468,858	$	460,951
Hotel	101,234		104,029
Lending	103,577		82,140
Non-segment assets	14,444		20,472
Total assets	$	688,113	$	667,592

	Nine Months Ended September 30,
	2020		2019
	(in thousands)
Capital expenditures (1):
Office	$	7,793	$	9,500
Hotel	801		1,846
Total capital expenditures	8,594		11,346
Loan originations	48,179		27,421
Total capital expenditures and loan originations	$	56,773	$	38,767

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