Segment Reporting

The Company's reportable operating segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Annually as of January 1, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change.

•

Established Communities (also known as Same Store Communities) are consolidated communities where a comparison of operating results from the prior year to the current year is meaningful, as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year. The Established Communities for the year ended December 31, 2015, are communities that are consolidated for financial reporting purposes, had stabilized occupancy as of January 1, 2014, are not conducting or planning to conduct substantial redevelopment activities and are not held for sale or planned for disposition within the current year period. A community is considered to have stabilized occupancy at the earlier of (i) attainment of 95% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment.


•	Other Stabilized Communities includes all other completed communities that have stabilized occupancy, as defined above. Other Stabilized Communities do not include communities that are conducting or planning to conduct substantial redevelopment activities within the current year.


•	Development/Redevelopment Communities consists of communities that are under construction and have not received a certificate of occupancy for the entire community, and where substantial redevelopment is in progress or is planned to begin during the current year and communities under lease-up that had not reached stabilized occupancy, as defined above, as of January 1, 2015.

In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.

The Company's segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment's performance. The Company's chief operating decision maker is comprised of several members of its executive management team who use net operating income ("NOI") as the primary financial measure for Established Communities and Other Stabilized Communities. NOI is defined by the Company as total property revenue less direct property operating expenses, including property taxes, and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition, development and other pursuit costs, net interest expense, gain (loss) on extinguishment of debt, loss on interest rate contract, general and administrative expense, joint venture income (loss), depreciation expense, corporate income tax expense, casualty (gain) loss and impairment loss, net, gain on sale of real estate assets, gain on sale of discontinued operations, income from discontinued operations and net operating income from real estate assets sold or held for sale, not classified as discontinued operations. Although the Company considers NOI a useful measure of a community's or communities' operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP. NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income.

A reconciliation of NOI to net income for years ended December 31, 2015, 2014 and 2013 is as follows (dollars in thousands):



	For the year ended
	12/31/15			12/31/14			12/31/13
Net income	$	741,733		$	697,327		$	352,771
Indirect operating expenses, net of corporate income	56,973			49,055			41,554
Investments and investment management expense	4,370			4,485			3,990
Expensed acquisition, development and other pursuit costs, net of recoveries	6,822			(3,717		)	45,050
Interest expense, net (1)	175,615			180,618			172,402
(Gain) loss on extinguishment of debt, net	(26,736		)	412			14,921
Loss on interest rate contract	—			—			51,000
General and administrative expense	42,396			41,425			39,573
Equity in (income) loss of unconsolidated entities	(70,018		)	(148,766		)	11,154
Depreciation expense (1)	477,923			442,682			560,215
Income tax expense	1,861			9,368			—
Casualty (gain) loss and impairment loss, net	(10,542		)	—			—
Gain on sale of real estate assets	(125,272		)	(85,415		)	(240		)
Gain on sale of discontinued operations	—			(37,869		)	(278,231		)
Income from discontinued operations	—			(310		)	(16,713		)
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations	(10,920		)	(27,357		)	(31,388		)
Net operating income	$	1,264,205		$	1,121,938		$	966,058

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(1)	Includes amounts associated with assets sold or held for sale, not classified as discontinued operations.

The following is a summary of NOI from real estate assets sold or held for sale, not classified as discontinued operations, for the periods presented (dollars in thousands):



	For the year ended
	12/31/2015			12/31/2014			12/31/2013

Rental income from real estate assets sold or held for sale, not classified as discontinued operations	$	17,973		$	44,645		$	50,638
Operating expenses real estate assets sold or held for sale, not classified as discontinued operations	(7,053		)	(17,288		)	(19,250		)
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations	$	10,920		$	27,357		$	31,388

The primary performance measure for communities under development or redevelopment depends on the stage of completion. While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.

The following table provides details of the Company's segment information as of the dates specified (dollars in thousands). The segments are classified based on the individual community's status at the beginning of the given calendar year. Therefore, each year the composition of communities within each business segment is adjusted. Accordingly, the amounts between years are not directly comparable. Segment information for the years ended December 31, 2015, 2014 and 2013 have been adjusted for the real estate assets that were sold from January 1, 2013 through December 31, 2015, or otherwise qualify as held for sale and/or discontinued operations as of December 31, 2015, as described in Note 6, "Real Estate Disposition Activities."



	Total revenue		NOI		% NOI change from prior year		Gross real estate (1)
For the year ended December 31, 2015
Established
New England	$	190,802	$	120,026	2.8	%	$	1,460,746
Metro NY/NJ	382,457		268,986		3.3	%	3,152,361
Mid-Atlantic	209,013		145,497		0.2	%	2,177,823
Pacific Northwest	76,589		54,751		8.2	%	721,040
Northern California	273,432		210,226		11.9	%	2,414,184
Southern California	252,530		173,919		9.4	%	2,465,432
Total Established (2)	1,384,823		973,405		5.8	%	12,391,586

Other Stabilized	221,063		145,170		N/A		2,040,269
Development / Redevelopment	222,222		145,630		N/A		4,238,967
Land Held for Future Development	N/A		N/A		N/A		484,377
Non-allocated (3)	9,947		N/A		N/A		73,372
Total	$	1,838,055	$	1,264,205	12.7	%	$	19,228,571

For the year ended December 31, 2014 (4)
Established
New England	$	172,153	$	109,745	0.8	%	$	1,333,854
Metro NY/NJ	305,496		215,239		3.1	%	2,251,697
Mid-Atlantic	98,590		69,498		(2.5	)%	647,374
Pacific Northwest	54,230		37,637		7.0	%	500,247
Northern California	174,527		132,899		8.2	%	1,402,444
Southern California	139,841		95,626		5.2	%	1,225,328
Total Established (2)	944,837		660,644		3.6	%	7,360,944

Other Stabilized	497,677		343,415		N/A		6,057,783
Development / Redevelopment	186,852		117,879		N/A		3,972,180
Land Held for Future Development	N/A		N/A		N/A		180,516
Non-allocated (3)	11,050		N/A		N/A		32,444
Total	$	1,640,416	$	1,121,938	16.1	%	$	17,603,867

For the year ended December 31, 2013
Established
New England	$	152,800	$	99,484	2.4	%	$	1,189,040
Metro NY/NJ	236,920		164,827		4.6	%	1,793,902
Mid-Atlantic	100,548		71,851		0.1	%	633,598
Pacific Northwest	46,564		31,283		5.3	%	444,825
Northern California	141,038		106,745		11.7	%	1,233,851
Southern California	119,024		81,182		5.1	%	1,058,883
Total Established (2)	796,894		555,372		5.0	%	6,354,099

Other Stabilized	486,701		331,338		N/A		6,621,825
Development / Redevelopment	117,186		79,348		N/A		3,024,035
Land Held for Future Development	N/A		N/A		N/A		300,364
Non-allocated (3)	11,502		N/A		N/A		10,279
Total	$	1,412,283	$	966,058	47.2	%	$	16,310,602

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(1)	Does not include gross real estate assets held for sale of $39,528, $245,449 and $489,720 as of December 31, 2015, 2014 and 2013, respectively.


(2)	Gross real estate for the Company's Established Communities includes capitalized additions of approximately $74,982, $52,635 and $33,553 in 2015, 2014 and 2013, respectively.


(3)	Revenue represents third-party management, accounting, and developer fees and miscellaneous income which are not allocated to a reportable segment.


(4)	Results for the year ended December 31, 2014 reflect the operating segments determined as of January 1, 2014, which include stabilized communities acquired as part of the Archstone Acquisition in the Other Stabilized segment.