SEGMENT DISCLOSURE

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

SEGMENT DISCLOSURE

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, as well as a segment for our lending business that is included in our continuing operations. The lending business that is held for sale for the three months ended March 31, 2016 is not included in our reportable segments. 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, 2016 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2017.

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, transaction costs, and provision for income taxes. For the lending segment, we define net operating income as interest income net of interest expense and general overhead expenses.

The net operating income of our segments included in continuing operations for the three months ended March 31, 2017 and 2016 is as follows:

	Three Months Ended March 31,
	2017		2016
	(in thousands)
Office:
Revenues	$	49,093	$	46,049
Property expenses:
Operating	13,753		18,487
General and administrative	288		354
Total property expenses	14,041		18,841
Segment net operating income—office	35,052		27,208
Hotel:
Revenues	10,518		15,283
Property expenses:
Operating	6,439		9,955
General and administrative	4		87
Total property expenses	6,443		10,042
Segment net operating income—hotel	4,075		5,241
Multifamily:
Revenues	5,003		5,058
Property expenses:
Operating	2,768		2,836
General and administrative	229		258
Total property expenses	2,997		3,094
Segment net operating income—multifamily	2,006		1,964
Lending:
Revenues	2,335		2,227
Lending expenses:
Interest expense	142		189
Fees to related party	844		930
General and administrative	367		179
Total lending expenses	1,353		1,298
Segment net operating income—lending	982		929
Total segment net operating income	$	42,115	$	35,342

A reconciliation of our segment net operating income to net income attributable to the Company for the three months ended March 31, 2017 and 2016 is as follows:

	Three Months Ended March 31,
	2017			2016
	(in thousands)
Total segment net operating income	$	42,115		$	35,342
Asset management and other fees to related parties	(7,856		)	(7,701		)
Interest expense	(9,631		)	(6,626		)
General and administrative	(791		)	(1,064		)
Transaction costs	(13		)	(149		)
Depreciation and amortization	(17,231		)	(18,058		)
Gain on sale of real estate	187,734			24,739
Income from continuing operations before provision for income taxes	194,327			26,483
Provision for income taxes	(392		)	(190		)
Net income from continuing operations	193,935			26,293
Discontinued operations:
Income from operations of assets held for sale	—			690
Net income from discontinued operations	—			690
Net income	193,935			26,983
Net income attributable to noncontrolling interests	(5		)	(3		)
Net income attributable to the Company	$	193,930		$	26,980

The condensed assets for each of the segments as of March 31, 2017 and December 31, 2016, along with capital expenditures and loan originations for the three months ended March 31, 2017 and 2016, are as follows:

	March 31, 2017		December 31, 2016
	(in thousands)
Condensed assets:
Office	$	1,453,857	$	1,568,702
Hotel	110,816		115,955
Multifamily	166,707		170,159
Lending assets	89,904		91,191
Non-segment assets	344,546		76,877
Total assets	$	2,165,830	$	2,022,884

	Three Months Ended March 31,
	2017		2016
	(in thousands)
Capital expenditures (1):
Office	$	6,805	$	6,653
Hotel	46		150
Multifamily	130		131
Total capital expenditures	6,981		6,934
Loan originations	8,404		33,777
Total capital expenditures and loan originations	$	15,385	$	40,711

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