SEGMENT DISCLOSURE

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

15. SEGMENT DISCLOSURE

The Company’s reportable segments during the three and six months ended June 30, 2021 and 2020 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for the Company’s lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. The Company also has 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 the Company’s audited consolidated financial statements for the year ended December 31, 2020 included in the 2020 Form 10-K.

For the Company’s real estate segments, the Company defines 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 the Company’s lending segment, the Company defines net operating income as interest income net of interest expense and general overhead expenses.

The net operating income (loss) of the Company’s segments for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Office:
Revenues	$	13,356	$	13,763	$	26,883	$	28,660
Property expenses:
Operating	5,687		5,266		11,342		11,312
General and administrative	83		238		168		336
Total property expenses	5,770		5,504		11,510		11,648
Segment net operating income—office	7,586		8,259		15,373		17,012
Hotel:
Revenues	3,477		1,114		5,355		9,367
Property expenses:
Operating	3,428		2,226		6,063		8,695
General and administrative	51		6		101		19
Total property expenses	3,479		2,232		6,164		8,714
Segment net operating (loss) income—hotel	(2)		(1,118)		(809)		653
Lending:
Revenues	5,839		1,598		9,313		3,982
Lending expenses:
Interest expense	182		189		373		480
Expense reimbursements to related parties—lending segment	433		998		1,164		1,680
General and administrative	177		521		623		921
Total lending expenses	792		1,708		2,160		3,081
Segment net operating income (loss)—lending	5,047		(110)		7,153		901
Total segment net operating income	$	12,631	$	7,031	$	21,717	$	18,566

A reconciliation of segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Total segment net operating income	$	12,631	$	7,031	$	21,717	$	18,566
Interest and other income	1		35		1		36
Asset management and other fees to related parties	(2,260)		(2,376)		(4,519)		(5,021)
Expense reimbursements to related parties—corporate	(454)		(615)		(1,059)		(1,427)
Interest expense	(2,491)		(2,707)		(4,932)		(5,583)
General and administrative	(835)		(903)		(2,876)		(2,126)
Depreciation and amortization	(5,069)		(5,197)		(10,106)		(10,455)
Income (loss) before provision for income taxes	1,523		(4,732)		(1,774)		(6,010)
(Provision) benefit for income taxes	(996)		691		(1,370)		713
Net income (loss)	527		(4,041)		(3,144)		(5,297)
Net loss (income) attributable to noncontrolling interests	3		(2)		4		(6)
Net income (loss) attributable to the Company	$	530	$	(4,043)	$	(3,140)	$	(5,303)

The condensed assets for each of the segments as of June 30, 2021 and December 31, 2020, along with capital expenditures and loan originations for the six months ended June 30, 2021 and 2020, are as follows (in thousands):

	June 30, 2021		December 31, 2020
Condensed assets:
Office	$	461,207	$	472,544
Hotel	100,711		100,285
Lending	106,817		94,626
Non-segment assets	36,089		18,162
Total assets	$	704,824	$	685,617

	Six Months Ended June 30,
	2021		2020
Capital expenditures(1) and loan originations:
Office	$	818	$	7,087
Hotel	128		556
Total capital expenditures	946		7,643
Loan originations	65,210		27,870
Total capital expenditures and loan originations	$	66,156	$	35,513

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