SEGMENT DISCLOSURE

3 Months Ended

Mar. 31, 2015

SEGMENT DISCLOSURE

SEGMENT DISCLOSURE

16. SEGMENT DISCLOSURE

        In accordance with ASC Topic 280, Segment Reporting, our reportable segments consist of three types of commercial real estate properties, namely, office properties, hotel properties and multifamily properties, as well as a segment for our lending operations, which is held for sale as of March 31, 2015. Management internally evaluates the operating performance and financial results of the segments based on net operating income. We also have 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 our audited consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2015.

        We evaluate the performance of our segments based on net operating income for our real estate segment, defined as: rental and other property income and tenant reimbursements less property and related expenses, and excludes nonproperty income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, and transaction costs.

        The net operating income of our reportable segments for the three months ended March 31, 2015 and 2014, is as follows:

	March 31,
	2015		2014
	(in thousands)
Office properties:
Revenues	$	46,615	$	43,274
Property expenses:
Operating		19,391		17,653
General and administrative		313		316
Total property expenses		19,704		17,969
Segment net operating income—office		26,911		25,305
Hotel properties:
Revenues		15,719		14,339
Property expenses:
Operating		10,677		9,846
General and administrative		41		37
Total property expenses		10,718		9,883
Segment net operating income—hotel		5,001		4,456
Multifamily properties:
Revenues		4,905		4,984
Property expenses:
Operating		2,641		2,087
General and administrative		83		25
Total property expenses		2,724		2,112
Segment net operating income—multifamily		2,181		2,872
Total segment net operating income	$	34,093	$	32,633

        A reconciliation of segment net operating income to net income for the three months ended March 31, 2015 and 2014, is as follows:

	March 31,
	2015			2014
	(in thousands)
Total segment net operating income	$	34,093		$	32,633
Interest		(5,403	)		(4,037	)
General and administrative		(2,155	)		(396	)
Asset management fees and other fees to related parties		(7,209	)		(5,737	)
Transaction costs		(428	)		(468	)
Depreciation and amortization		(19,128	)		(16,629	)
Bargain purchase gain		—			4,918
Income (loss) from continuing operations		(230	)		10,284
Discontinued operations
Income from operations of assets held for sale		2,962			933
Net income from discontinued operations		2,962			933
Net income		2,732			11,217
Net loss attributable to noncontrolling interests		—			2
Net income attributable to stockholders	$	2,732		$	11,219

        The condensed assets for each of the segments as of March 31, 2015 and December 31, 2014, along with capital expenditures and originations for the three months ended March 31, 2015 and 2014, are as follows:

	March 31, 2015		December 31, 2014
	(in thousands)
Condensed assets:
Office properties	$	1,528,239	$	1,534,610
Hotel properties		175,982		174,679
Multifamily properties		168,942		171,226
Lending assets held for sale		222,224		208,799
Non-segment assets		10,335		5,368
Total assets	$	2,105,722	$	2,094,682

	March 31,
	2015		2014
	(in thousands)
Capital expenditures(1):
Office properties	$	4,164	$	6,055
Hotel properties		457		485
Multifamily properties		130		210
Total capital expenditures		4,751		6,750
Loan originations from assets held for sale		27,403		1,593
Total capital expenditures and loan originations	$	32,154	$	8,343

(1) Represents additions and improvements to real estate investments, excluding acquisitions.