SEGMENT DISCLOSURE

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

17. SEGMENT DISCLOSURE

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Office:
Revenues	$	14,049	$	14,043	$	41,511	$	42,225
Property expenses:
Operating	6,267		7,249		19,159		19,772
General and administrative	75		71		232		196
Total property expenses	6,342		7,320		19,391		19,968
Income (loss) from unconsolidated entities	1,611		(204)		837		176
Segment net operating income—office	9,318		6,519		22,957		22,433
Hotel:
Revenues	7,948		8,456		31,108		25,825
Property expenses:
Operating	6,030		6,052		20,912		17,728
General and administrative	(3)		27		17		79
Total property expenses	6,027		6,079		20,929		17,807
Segment net operating income—hotel	1,921		2,377		10,179		8,018
Multifamily:
Revenues	3,331		—		8,632		—
Property expenses:
Operating	3,212		—		7,642		—
General and administrative	88		—		400		—
Total property expenses	3,300		—		8,042		—
(Loss) income from unconsolidated entity	(422)		—		216		—
Segment net operating (loss) income—multifamily	(391)		—		806		—
Lending:
Revenues	2,570		2,353		8,243		7,987
Lending expenses:
Interest expense	1,177		134		2,737		360
Expense reimbursements to related parties—lending segment	648		539		2,166		1,612
General and administrative	379		489		1,092		1,387
Total lending expenses	2,204		1,162		5,995		3,359
Segment net operating income—lending	366		1,191		2,248		4,628
Total segment net operating income	$	11,214	$	10,087	$	36,190	$	35,079

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Total segment net operating income	$	11,214	$	10,087	$	36,190	$	35,079
Interest and other income	220		1		296		1
Asset management and other fees to related parties	(724)		(916)		(2,071)		(2,757)
Expense reimbursements to related parties—corporate	(524)		(511)		(1,729)		(1,459)
Interest expense	(8,556)		(2,059)		(21,941)		(6,406)
General and administrative	(1,603)		(1,353)		(4,010)		(3,370)
Transaction-related costs	(38)		(201)		(3,398)		(201)
Depreciation and amortization	(16,082)		(5,093)		(46,056)		(15,071)
Gain on sale of real estate	—		—		1,104		—
(Loss) income before provision for income taxes	(16,093)		(45)		(41,615)		5,816
Provision for income taxes	(554)		(187)		(969)		(815)
Net (loss) income	(16,647)		(232)		(42,584)		5,001
Net loss (income) attributable to noncontrolling interests	874		(5)		2,501		(19)
Net (loss) income attributable to the Company	$	(15,773)	$	(237)	$	(40,083)	$	4,982

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

	September 30, 2023		December 31, 2022
Condensed assets:
Office	$	417,307	$	471,677
Hotel	97,805		99,082
Multifamily	284,303		—
Lending	79,329		76,148
Non-segment assets	19,312		43,341
Total assets	$	898,056	$	690,248

	Nine Months Ended September 30,
	2023		2022
Capital expenditures(1) and loan originations:
Office	$	5,236	$	7,008
Hotel	1,939		197
Multifamily	6,075		—
Total capital expenditures	13,250		7,205
Loan originations	22,018		35,956
Total capital expenditures and loan originations	$	35,268	$	43,161

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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.