SEGMENT DISCLOSURE

In accordance with ASC Topic 280, Segment Reporting, our reportable segments during the three and nine months ended September 30, 2019 and 2018 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for our lending business. 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, 2018 included in our Annual Report on Form 10-K filed with the SEC on March 18, 2019.

For our real estate segments, we define net operating income 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 for income taxes. For our 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 for the three and nine months ended September 30, 2019 and 2018 is as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands)
Office:
Revenues	$	16,885	$	36,440	$	72,380	$	109,141
Property expenses:
Operating	7,205		14,459		29,677		39,770
General and administrative	41		83		397		1,062
Total property expenses	7,246		14,542		30,074		40,832
Segment net operating income—office	9,639		21,898		42,306		68,309
Hotel:
Revenues	8,511		8,542		29,430		29,980
Property expenses:
Operating	6,081		5,946		19,520		19,316
General and administrative	31		—		108		18
Total property expenses	6,112		5,946		19,628		19,334
Segment net operating income—hotel	2,399		2,596		9,802		10,646
Lending:
Revenues	2,411		2,625		8,312		8,324
Lending expenses:
Interest expense	365		633		1,483		1,117
Fees to related party	652		740		1,840		1,980
General and administrative	505		414		1,343		1,273
Total lending expenses	1,522		1,787		4,666		4,370
Segment net operating income—lending	889		838		3,646		3,954
Total segment net operating income	$	12,927	$	25,332	$	55,754	$	82,909

A reconciliation of our segment net operating income to net income attributable to the Company for the three and nine months ended September 30, 2019 and 2018 is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(in thousands)
Total segment net operating income	$	12,927		$	25,332		$	55,754		$	82,909
Interest and other income	1,408			—			3,226			—
Asset management and other fees to related parties	(3,329		)	(5,381		)	(12,315		)	(16,495		)
Interest expense	(2,038		)	(6,332		)	(7,515		)	(19,292		)
General and administrative	(807		)	(708		)	(2,945		)	(4,143		)
Transaction costs	(340		)	(15		)	(600		)	(359		)
Depreciation and amortization	(5,180		)	(13,310		)	(21,995		)	(39,783		)
Loss on early extinguishment of debt	—			—			(29,982		)	—
Impairment of real estate	—			—			(69,000		)	—
Gain on sale of real estate	302			—			433,104			—
Income (loss) before provision for income taxes	2,943			(414		)	347,732			2,837
Provision for income taxes	(87		)	(115		)	(686		)	(795		)
Net income (loss)	2,856			(529		)	347,046			2,042
Net (income) loss attributable to noncontrolling interests	(8		)	1			165			(15		)
Net income (loss) attributable to the Company	$	2,848		$	(528	)	$	347,211		$	2,027

The condensed assets for each of the segments as of September 30, 2019 and December 31, 2018, along with capital expenditures and loan originations for the nine months ended September 30, 2019 and 2018, are as follows:



	September 30, 2019		December 31, 2018
	(in thousands)
Condensed assets:
Office (1)	$	458,979	$	1,094,269
Hotel	105,478		105,845
Lending	84,588		97,465
Non-segment assets	10,807		44,822
Total assets	$	659,852	$	1,342,401



	Nine Months Ended September 30,
	2019		2018
	(in thousands)
Capital expenditures (2):
Office (1)	$	9,500	$	11,462
Hotel	1,846		1,343
Total capital expenditures	11,346		12,805
Loan originations	27,421		53,320
Total capital expenditures and loan originations	$	38,767	$	66,125


(1)	The December 31, 2018 balances include the assets of 260 Townsend Street, which was classified as held for sale on our consolidated balance sheet at December 31, 2018 and sold in March 2019 (Note 3).


(2)	Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates.