Business Segments

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Business Segments

NOTE 10 — Business Segments

We have two reportable segments: conventional real estate operations and affordable real estate operations. Our conventional real estate operations consist of market-rate apartments with rents paid by the residents and included 176 properties with 55,965 units at June 30, 2013. Our affordable real estate operations consisted of 82 properties with 11,212 units at June 30, 2013, with rents that are generally paid, in whole or part, by a government agency.

Our chief executive officer, who is our chief operating decision maker, uses various generally accepted industry financial measures to assess the performance and financial condition of the business, including: Net Asset Value, which is the estimated fair value of our assets, net of liabilities and preferred equity; Funds From Operations, which represents net income or loss computed in accordance with GAAP, excluding gains from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures; Pro forma Funds From Operations, which is Funds From Operations excluding preferred equity redemption related amounts; Adjusted Funds From Operations, which is Pro forma Funds From Operations less spending for Capital Replacements, which represents our estimation of the capital additions required to maintain the value of our portfolio during our ownership period; property net operating income, which is rental and other property revenues less direct property operating expenses, including real estate taxes; proportionate property net operating income, which reflects our share of property net operating income of the consolidated and unconsolidated properties that we own and manage; same store property operating results; Free Cash Flow, which is net operating income less spending for Capital Replacements; Free Cash Flow internal rate of return; financial coverage ratios; and leverage as shown on our balance sheet. Our chief operating decision maker emphasizes proportionate property net operating income as a key measurement of segment profit or loss.

The following tables present the revenues, net operating income (loss) and income (loss) from continuing operations of our conventional and affordable real estate operations segments on a proportionate basis for the three months ended June 30, 2013 and 2012 (in thousands):

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three Months Ended June 30, 2013:
Rental and other property revenues (2)	$	213,331	$	25,494	$	13,008	$	20		$	251,853
Tax credit and asset management revenues	—		—		—		7,809			7,809
Total revenues	213,331		25,494		13,008		7,829			259,662
Property operating expenses (2)	77,606		10,123		4,806		9,182			101,717
Investment management expenses	—		—		—		1,697			1,697
Depreciation and amortization (2)	—		—		—		78,345			78,345
General and administrative expenses	—		—		—		11,153			11,153
Other expenses, net	—		—		—		2,226			2,226
Total operating expenses	77,606		10,123		4,806		102,603			195,138
Net operating income (loss)	135,725		15,371		8,202		(94,774		)	64,524
Other items included in continuing operations	—		—		—		(60,336		)	(60,336		)
Income (loss) from continuing operations	$	135,725	$	15,371	$	8,202	$	(155,110	)	$	4,188

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three Months Ended June 30, 2012:
Rental and other property revenues (2)	$	200,795	$	25,162	$	18,301	$	116		$	244,374
Tax credit and asset management revenues	—		—		—		8,914			8,914
Total revenues	200,795		25,162		18,301		9,030			253,288
Property operating expenses (2)	72,947		9,808		8,355		8,697			99,807
Investment management expenses	—		—		—		3,240			3,240
Depreciation and amortization (2)	—		—		—		87,229			87,229
Provision for real estate impairment losses (2)	—		—		—		2,275			2,275
General and administrative expenses	—		—		—		13,556			13,556
Other expenses, net	—		—		—		(957		)	(957		)
Total operating expenses	72,947		9,808		8,355		114,040			205,150
Net operating income (loss)	127,848		15,354		9,946		(105,010		)	48,138
Other items included in continuing operations	—		—		—		(55,619		)	(55,619		)
Income (loss) from continuing operations	$	127,848	$	15,354	$	9,946	$	(160,629	)	$	(7,481	)

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Six Months Ended June 30, 2013:
Rental and other property revenues (2)	$	422,830	$	50,876	$	25,951	$	43		$	499,700
Tax credit and asset management revenues	—		—		—		15,061			15,061
Total revenues	422,830		50,876		25,951		15,104			514,761
Property operating expenses (2)	154,933		20,682		9,706		18,099			203,420
Investment management expenses	—		—		—		3,130			3,130
Depreciation and amortization (2)	—		—		—		158,618			158,618
General and administrative expenses	—		—		—		22,932			22,932
Other expenses, net	—		—		—		4,436			4,436
Total operating expenses	154,933		20,682		9,706		207,215			392,536
Net operating income (loss)	267,897		30,194		16,245		(192,111		)	122,225
Other items included in continuing operations	—		—		—		(117,394		)	(117,394		)
Income (loss) from continuing operations	$	267,897	$	30,194	$	16,245	$	(309,505	)	$	4,831

	Conventional Real Estate Operations		Affordable Real Estate Operations		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Six Months Ended June 30, 2012:
Rental and other property revenues (2)	$	398,360	$	50,092	$	39,576	$	251		$	488,279
Tax credit and asset management revenues	—		—		—		16,985			16,985
Total revenues	398,360		50,092		39,576		17,236			505,264
Property operating expenses (2)	145,564		19,751		15,386		17,717			198,418
Investment management expenses	—		—		—		6,628			6,628
Depreciation and amortization (2)	—		—		—		173,795			173,795
Provision for real estate impairment losses (2)	—		—		—		8,349			8,349
General and administrative expenses	—		—		—		25,181			25,181
Other expenses, net	—		—		—		4,772			4,772
Total operating expenses	145,564		19,751		15,386		236,442			417,143
Net operating income (loss)	252,796		30,341		24,190		(219,206		)	88,121
Other items included in continuing operations	—		—		—		(118,219		)	(118,219		)
Income (loss) from continuing operations	$	252,796	$	30,341	$	24,190	$	(337,425	)	$	(30,098	)

(1) Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of our consolidated properties and the results of consolidated properties that we do not manage, which are excluded from our measurement of segment performance but included in the related consolidated amounts, and our share of the results of operations of our unconsolidated real estate partnerships that we manage, which are included in our measurement of segment performance but excluded from the related consolidated amounts.

(2) Proportionate property net operating income, our key measurement of segment profit or loss excludes property management revenues (which are included in rental and other property revenues), property management expenses and casualty gains and losses (which are included in property operating expenses) and depreciation and amortization and provision for real estate impairment losses. Accordingly, we do not allocate these amounts to our segments.

For the six months ended June 30, 2013 and 2012, capital additions related to our conventional segment totaled $149.0 million and $103.7 million, respectively, and capital additions related to our affordable segment totaled $4.8 million and $7.8 million, respectively.