SEGMENT DISCLOSURE

9 Months Ended

Sep. 30, 2015

SEGMENT DISCLOSURE

SEGMENT DISCLOSURE

18. SEGMENT DISCLOSURE

        In accordance with ASC Topic 280,Segment Reporting, our reportable segments consist of three types of commercial real estate properties, namely, office, hotel and multifamily properties, as well as a segment for our lending operations, which is held for sale as of September 30, 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 real estate segments based on net operating income, which is 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 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)
Office:
Revenues	$	46,427	$	44,378	$	140,126	$	132,833
Property expenses:
Operating		19,832		18,644		59,283		54,230
General and administrative		226		413		652		805
Total property expenses		20,058		19,057		59,935		55,035
Segment net operating income—office		26,369		25,321		80,191		77,798
Hotel:
Revenues		15,350		13,504		46,891		42,641
Property expenses:
Operating		10,623		9,867		31,287		29,636
General and administrative		205		61		284		134
Total property expenses		10,828		9,928		31,571		29,770
Segment net operating income—hotel		4,522		3,576		15,320		12,871
Multifamily:
Revenues		4,618		5,235		13,536		15,427
Property expenses:
Operating		2,906		2,485		8,485		7,155
General and administrative		145		553		318		632
Total property expenses		3,051		3,038		8,803		7,787
Segment net operating income—multifamily		1,567		2,197		4,733		7,640
Total segment net operating income	$	32,458	$	31,094	$	100,244	$	98,309

        A reconciliation of segment net operating income to net income is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)
Total segment net operating income	$	32,458		$	31,094		$	100,244		$	98,309
Interest		(5,551	)		(5,053	)		(16,540	)		(13,655	)
General and administrative		(1,274	)		(867	)		(5,143	)		(3,454	)
Asset management and other fees to related parties		(7,290	)		(6,476	)		(21,955	)		(18,551	)
Transaction costs		(237	)		(46	)		(1,038	)		(546	)
Depreciation and amortization		(17,873	)		(17,677	)		(54,567	)		(51,592	)
Bargain purchase gain		—			—			—			4,918
Income from continuing operations		233			975			1,001			15,429
Discontinued operations
Income from operations of assets held for sale		5,008			3,305			11,954			8,582
Net income from discontinued operations		5,008			3,305			11,954			8,582
Net income		5,241			4,280			12,955			24,011
Net loss (income) attributable to noncontrolling interests		1			5			(5	)		(108	)
Net income attributable to stockholders	$	5,242		$	4,285		$	12,950		$	23,903

        The condensed assets for each of the segments as of September 30, 2015 and December 31, 2014, along with capital expenditures and loan originations for the nine months ended September 30, 2015 and 2014, are as follows:

	September 30, 2015		December 31, 2014
	(in thousands)
Condensed assets:
Office	$	1,524,264	$	1,534,610
Hotel		178,195		174,679
Multifamily		170,861		171,226
Lending assets held for sale		204,975		208,799
Non-segment assets		14,215		5,368
Total assets	$	2,092,510	$	2,094,682

	Nine Months Ended September 30,
	2015		2014
	(in thousands)
Capital expenditures(1):
Office	$	19,216	$	15,658
Hotel		1,001		1,068
Multifamily		1,486		546
Total capital expenditures		21,703		17,272
Loan originations included in assets held for sale		49,319		36,557
Total capital expenditures and loan originations	$	71,022	$	53,829

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