SEGMENT DISCLOSURE

6 Months Ended

Jun. 30, 2016

SEGMENT DISCLOSURE

SEGMENT DISCLOSURE

17. 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 June 30, 2016 and 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, 2015 included in our Annual Report on Form 10-K filed with the SEC on March 15, 2016.

        We evaluate the performance of our real estate segments based on net operating income, which is defined 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, and transaction costs.

        The net operating income of our reportable segments included in continuing operations for the three and six months ended June 30, 2016 and 2015 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
	(in thousands)
Office:
Revenues	$	45,770	$	47,084	$	91,819	$	93,699
Property expenses:
Operating		19,930		20,060		38,417		39,451
General and administrative		91		113		445		426
Total property expenses		20,021		20,173		38,862		39,877
Segment net operating income—office		25,749		26,911		52,957		53,822
Hotel:
Revenues		14,496		15,822		29,779		31,541
Property expenses:
Operating		9,431		9,987		19,386		20,664
General and administrative		306		38		393		79
Total property expenses		9,737		10,025		19,779		20,743
Segment net operating income—hotel		4,759		5,797		10,000		10,798
Multifamily:
Revenues		5,172		4,013		10,230		8,918
Property expenses:
Operating		2,938		2,938		5,774		5,579
General and administrative		97		90		355		173
Total property expenses		3,035		3,028		6,129		5,752
Segment net operating income—multifamily		2,137		985		4,101		3,166
Total segment net operating income	$	32,645	$	33,693	$	67,058	$	67,786

        A reconciliation of segment net operating income to net income for the three and six months ended June 30, 2016 and 2015 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(in thousands)
Total segment net operating income	$	32,645		$	33,693		$	67,058		$	67,786
Asset management and other fees to related parties		(7,492	)		(7,456	)		(15,193	)		(14,665	)
Interest expense		(7,302	)		(5,586	)		(13,928	)		(10,989	)
General and administrative		(1,218	)		(1,714	)		(2,282	)		(3,869	)
Transaction costs		(118	)		(373	)		(267	)		(801	)
Depreciation and amortization		(18,480	)		(17,566	)		(36,538	)		(36,694	)
Gain on sale of real estate		—			—			24,739			—
Income (loss) from continuing operations		(1,965	)		998			23,589			768
Discontinued operations
Income from operations of assets held for sale		2,823			3,984			4,252			6,946
Net income from discontinued operations		2,823			3,984			4,252			6,946
Net income		858			4,982			27,841			7,714
Net income attributable to noncontrolling interests		(9	)		(6	)		(12	)		(6	)
Net income attributable to stockholders	$	849		$	4,976		$	27,829		$	7,708

        The condensed assets for each of the segments as of June 30, 2016 and December 31, 2015, along with capital expenditures and loan originations for the six months ended June 30, 2016 and 2015, are as follows:

	June 30, 2016		December 31, 2015
	(in thousands)
Condensed assets:
Office	$	1,553,454	$	1,520,339
Hotel(1)		154,162		176,735
Multifamily		168,426		171,429
Lending assets held for sale		138,409		128,992
Non-segment assets		136,646		94,565
Total assets	$	2,151,097	$	2,092,060

	Six Months Ended June 30,
	2016		2015
	(in thousands)
Capital expenditures(2):
Office	$	18,839	$	14,200
Hotel		336		738
Multifamily		241		882
Total capital expenditures		19,416		15,820
Loan originations included in assets held for sale		49,976		41,121
Total capital expenditures and loan originations	$	69,392	$	56,941

(1)	Includes the assets of LAX Holiday Inn that were held for sale at June 30, 2016 (see Note 3).
(2)	Represents additions and improvements to real estate investments, excluding acquisitions.