SEGMENT DISCLOSURE

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

17. SEGMENT DISCLOSURE

The Company’s reportable segments during the three months ended March 31, 2023 consist of four types of commercial real estate properties, namely, office, hotel and multifamily, as well as a segment for the Company’s lending business. The Company’s reportable segments during the three months ended March 31, 2022 consist of three 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, 2022 included in the 2022 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, 2023 and 2022 is as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Office:
Revenues	$	13,487	$	14,105
Property expenses:
Operating	6,523		6,121
General and administrative	100		90
Total property expenses	6,623		6,211
(Loss) income from unconsolidated entities	(64)		120
Segment net operating income—office	6,800		8,014
Hotel:
Revenues	11,492		7,793
Property expenses:
Operating	7,339		5,371
General and administrative	8		28
Total property expenses	7,347		5,399
Segment net operating income—hotel	4,145		2,394
Multifamily:
Revenues	1,223		—
Property expenses:
Operating	1,363		—
General and administrative	17		—
Total property expenses	1,380		—
Income from unconsolidated entity	832		—
Segment net operating income—multifamily	675		—
Lending:
Revenues	2,710		2,884
Lending expenses:
Interest expense	245		107
Expense reimbursements to related parties—lending segment	608		469
General and administrative	499		560
Total lending expenses	1,352		1,136
Segment net operating income—lending	1,358		1,748
Total segment net operating income	$	12,978	$	12,156

A reconciliation of segment net operating income to net income attributable to the Company for the three months ended March 31, 2023 and 2022 is as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Total segment net operating income	$	12,978	$	12,156
Asset management and other fees to related parties	(720)		(921)
Expense reimbursements to related parties—corporate	(528)		(422)
Interest expense	(5,991)		(2,063)
General and administrative	(1,301)		(1,137)
Transaction-related costs	(3,360)		—
Depreciation and amortization	(9,502)		(5,004)
Gain on sale of real estate	1,104		—
(Loss) income before provision for income taxes	(7,320)		2,609
Provision for income taxes	(256)		(307)
Net (loss) income	(7,576)		2,302
Net loss (income) attributable to noncontrolling interests	625		(5)
Net (loss) income attributable to the Company	$	(6,951)	$	2,297

The condensed assets for each of the segments as of March 31, 2023 and December 31, 2022, along with capital expenditures and loan originations for the three months ended March 31, 2023 and 2022, are as follows (in thousands):

	March 31, 2023		December 31, 2022
Condensed assets:
Office	$	458,936	$	471,677
Hotel	99,151		99,082
Multifamily	310,990		—
Lending	84,812		76,148
Non-segment assets	3,667		43,341
Total assets	$	957,556	$	690,248

	Three Months Ended March 31,
	2023		2022
Capital expenditures(1) and loan originations:
Office	$	2,156	$	1,392
Hotel	1,629		8
Multifamily	5,327		—
Total capital expenditures	9,112		1,400
Loan originations	10,781		22,776
Total capital expenditures and loan originations	$	19,893	$	24,176

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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.