SEGMENT DISCLOSURE

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

17. SEGMENT DISCLOSURE

The Company’s reportable segments during the years ended December 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 Note 2.

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 years ended December 31, 2022 and 2021 is as follows:

	Year Ended December 31,
	2022		2021
	(in thousands)
Office:
Revenues	$	55,928	$	53,289
Property expenses:
Operating	26,537		23,431
General and administrative	225		347
Total property expenses	26,762		23,778
Income from unconsolidated entity	164		—
Segment net operating income—office	29,330		29,511
Hotel:
Revenues	35,213		17,849
Property expenses:
Operating	23,989		15,841
General and administrative	110		128
Total property expenses	24,099		15,969
Segment net operating income—hotel	11,114		1,880
Lending:
Revenues	10,765		19,787
Lending expenses:
Interest expense	552		408
Expense reimbursements to related parties—lending segment	1,929		1,921
General and administrative	1,904		1,788
Total lending expenses	4,385		4,117
Segment net operating income—lending	6,380		15,670
Total segment net operating income	$	46,824	$	47,061

A reconciliation of the Company’s segment net operating income to net income attributable to the Company for the years ended December 31, 2022 and 2021 is as follows: 

	Year Ended December 31,
	2022		2021
	(in thousands)
Total segment net operating income	$	46,824	$	47,061
Interest and other income	—		1
Asset management and other fees to related parties	(3,570)		(9,030)
Expense reimbursements to related parties—corporate	(1,925)		(2,050)
Interest expense	(9,052)		(9,005)
General and administrative	(4,630)		(4,581)
Transaction costs	(223)		(143)
Depreciation and amortization	(20,348)		(20,112)
Income before provision for income taxes	7,076		2,141
Provision for income taxes	(1,131)		(2,992)
Net income (loss)	5,945		(851)
Net (income) loss attributable to noncontrolling interests	(27)		1
Net income (loss) attributable to the Company	$	5,918	$	(850)

The condensed assets for each of the segments as of December 31, 2022 and 2021, along with capital expenditures and loan originations for the years ended December 31, 2022 and 2021 are as follows:

	December 31,
	2022		2021
	(in thousands)
Condensed assets:
Office	$	471,677	$	449,843
Hotel	99,082		101,308
Lending	76,148		96,729
Non-segment assets(1)	43,341		12,986
Total assets	$	690,248	$	660,866

	Year Ended December 31,
	2022		2021
	(in thousands)
Capital expenditures (2) and loan originations:
Office	$	9,094	$	5,714
Hotel	414		193
Total capital expenditures	9,508		5,907
Loan originations	40,619		133,290
Total capital expenditures and loan originations	$	50,127	$	139,197

(1)Includes investments in real estate of $9.9 million representing three development sites which the Company intends to develop into multifamily assets.

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