SEGMENT DISCLOSURE

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

17. SEGMENT DISCLOSURE

The Company’s reportable segments during the three and six months ended June 30, 2023 consist of three 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 and six months ended June 30, 2022 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, 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 and six months ended June 30, 2023 and 2022 is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Office:
Revenues	$	13,975	$	14,077	$	27,462	$	28,182
Property expenses:
Operating	6,369		6,402		12,892		12,523
General and administrative	57		35		157		125
Total property expenses	6,426		6,437		13,049		12,648
(Loss) income from unconsolidated entities	(710)		260		(774)		380
Segment net operating income—office	6,839		7,900		13,639		15,914
Hotel:
Revenues	11,668		9,576		23,160		17,369
Property expenses:
Operating	7,543		6,305		14,882		11,676
General and administrative	12		24		20		52
Total property expenses	7,555		6,329		14,902		11,728
Segment net operating income—hotel	4,113		3,247		8,258		5,641
Multifamily:
Revenues	4,078		—		5,301		—
Property expenses:
Operating	3,067		—		4,430		—
General and administrative	295		—		312		—
Total property expenses	3,362		—		4,742		—
(Loss) income from unconsolidated entity	(194)		—		638		—
Segment net operating income—multifamily	522		—		1,197		—
Lending:
Revenues	2,963		2,750		5,673		5,634
Lending expenses:
Interest expense	1,315		119		1,560		226
Expense reimbursements to related parties—lending segment	910		604		1,518		1,073
General and administrative	214		338		713		898
Total lending expenses	2,439		1,061		3,791		2,197
Segment net operating income—lending	524		1,689		1,882		3,437
Total segment net operating income	$	11,998	$	12,836	$	24,976	$	24,992

A reconciliation of segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2023 and 2022 is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total segment net operating income	$	11,998	$	12,836	$	24,976	$	24,992
Interest and other income	76		—		76		—
Asset management and other fees to related parties	(627)		(920)		(1,347)		(1,841)
Expense reimbursements to related parties—corporate	(677)		(526)		(1,205)		(948)
Interest expense	(7,394)		(2,284)		(13,385)		(4,347)
General and administrative	(1,106)		(880)		(2,407)		(2,017)
Transaction-related costs	—		—		(3,360)		—
Depreciation and amortization	(20,472)		(4,974)		(29,974)		(9,978)
Gain on sale of real estate	—		—		1,104		—
(Loss) income before provision for income taxes	(18,202)		3,252		(25,522)		5,861
Provision for income taxes	(159)		(321)		(415)		(628)
Net (loss) income	(18,361)		2,931		(25,937)		5,233
Net loss (income) attributable to noncontrolling interests	1,002		(9)		1,627		(14)
Net (loss) income attributable to the Company	$	(17,359)	$	2,922	$	(24,310)	$	5,219

The condensed assets for each of the segments as of June 30, 2023 and December 31, 2022, along with capital expenditures and loan originations for the six months ended June 30, 2023 and 2022, are as follows (in thousands):

	June 30, 2023		December 31, 2022
Condensed assets:
Office	$	419,446	$	471,677
Hotel	98,609		99,082
Multifamily	295,410		—
Lending	82,807		76,148
Non-segment assets	23,423		43,341
Total assets	$	919,695	$	690,248

	Six Months Ended June 30,
	2023		2022
Capital expenditures(1) and loan originations:
Office	$	3,414	$	4,304
Hotel	1,842		963
Multifamily	5,814		—
Total capital expenditures	11,070		5,267
Loan originations	18,128		30,682
Total capital expenditures and loan originations	$	29,198	$	35,949

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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.