SEGMENT DISCLOSURE

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

16. SEGMENT DISCLOSURE

The Company’s reportable segments during the three months ended March 31, 2022 and 2021 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, 2021 included in the 2021 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 months ended March 31, 2022 and 2021 is as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Office:
Revenues	$	14,105	$	13,527
Property expenses:
Operating	6,121		5,655
General and administrative	90		85
Total property expenses	6,211		5,740
Income from unconsolidated entity	120		—
Segment net operating income—office	8,014		7,787
Hotel:
Revenues	7,793		1,878
Property expenses:
Operating	5,371		2,635
General and administrative	28		50
Total property expenses	5,399		2,685
Segment net operating income (loss)—hotel	2,394		(807)
Lending:
Revenues	2,884		3,474
Lending expenses:
Interest expense	107		191
Expense reimbursements to related parties—lending segment	469		731
General and administrative	560		446
Total lending expenses	1,136		1,368
Segment net operating income—lending	1,748		2,106
Total segment net operating income	$	12,156	$	9,086

A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Total segment net operating income	$	12,156	$	9,086
Interest and other income	—		—
Asset management and other fees to related parties	(921)		(2,259)
Expense reimbursements to related parties—corporate	(422)		(605)
Interest expense	(2,063)		(2,441)
General and administrative	(1,137)		(2,041)
Depreciation and amortization	(5,004)		(5,037)
Income (loss) before provision for income taxes	2,609		(3,297)
Provision for income taxes	(307)		(374)
Net income (loss)	2,302		(3,671)
Net (income) loss attributable to noncontrolling interests	(5)		1
Net income (loss) attributable to the Company	$	2,297	$	(3,670)

The condensed assets for each of the segments as of March 31, 2022 and December 31, 2021, along with capital expenditures and loan originations for the three months ended March 31, 2022 and 2021, are as follows (in thousands):

	March 31, 2022		December 31, 2021
Condensed assets:
Office	$	472,820	$	449,843
Hotel	101,149		101,308
Lending	96,836		96,729
Non-segment assets	17,460		12,986
Total assets	$	688,265	$	660,866

	Three Months Ended March 31,
	2022		2021
Capital expenditures(1) and loan originations:
Office	$	1,392	$	292
Hotel	8		28
Total capital expenditures	1,400		320
Loan originations	22,776		25,593
Total capital expenditures and loan originations	$	24,176	$	25,913

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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.