Business Segments

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Business Segments

Note 8 — Business Segments

We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.

Our Development and Redevelopment segment consists of rental communities that are under construction or have not achieved stabilization, as well as land held for development. As of March 31, 2024, our Development and Redevelopment segment consists of 10 rental communities, three of which were under construction.

Our Operating segment includes 21 residential apartment communities with 5,600 apartment homes that have achieved a stabilized level of operations as of January 1, 2023 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment.

During the three months ended March 31, 2024, we revised the information regularly reviewed by our chief operating decision maker ("CODM") to assess our operating performance. As a result, we reclassified The Benson Hotel from the Development and Redevelopment segment to the Other segment. In addition, during the first quarter of 2024, we disposed of St. George Villas, which was previously reported within our Other segment. Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business.

Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or Operating segments. Our Other segment includes 1001 Brickell Bay Drive, our only office building, and The Benson Hotel, our only hotel.

Our CODM uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating segment. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements, for the consolidated communities; but

•excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ and the Mezzanine Investment, and investments in real estate technology funds; and

•excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended March 31, 2024 and 2023 (in thousands):

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)			Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three Months Ended March 31, 2024
Rental and other property revenues	$	4,672	$	38,639	$	4,764	$	2,088		$	40		$	50,203
Property operating expenses		2,597		11,503		2,983		2,152			1,964			21,199
Other operating expenses not allocated    to segments (3)		—		—		—		—			28,017			28,017
Total operating expenses		2,597		11,503		2,983		2,152			29,981			49,216
Proportionate property net operating    income (loss)		2,075		27,136		1,781		(64	)		(29,941	)		987
Other items included in income before    income tax (4)		—		—		—		—			(10,913	)		(10,913	)
Income (loss) before income tax	$	2,075	$	27,136	$	1,781	$	(64	)	$	(40,854	)	$	(9,926	)

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)			Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three Months Ended March 31, 2023
Rental and other property revenues	$	2,201	$	36,672	$	3,671	$	1,656		$	68		$	44,268
Property operating expenses		1,676		11,186		1,529		1,657			1,456			17,504
Other operating expenses not allocated    to segments (3)		—		—		—		—			24,674			24,674
Total operating expenses		1,676		11,186		1,529		1,657			26,130			42,178
Proportionate property net operating    income (loss)		525		25,486		2,142		(1	)		(26,062	)		2,090
Other items included in income before    income tax (4)		—		—		—		—			(12,039	)		(12,039	)
Income (loss) before income tax	$	525	$	25,486	$	2,142	$	(1	)	$	(38,101	)	$	(9,949	)

(1)Represents adjustments for noncontrolling interests in consolidated real estate partnerships' share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements, which are included in Rental and other property revenues in our Condensed Consolidated Statements of Operations, in accordance with GAAP, from revenues to property operating expenses for the purpose of evaluating segment results.

(2)Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.

(3)Other operating expenses not allocated to segments consist of depreciation and amortization and general and administrative expenses.

(4)Other items included in Income before income tax benefit (expense) consist primarily of interest expense, mezzanine investment income (loss), net realized and unrealized gains (losses) on interest rate options, and realized and unrealized gains (losses) on equity investments.

Net real estate and non-recourse property debt, net, of our segments as of March 31, 2024 and December 31, 2023, were as follows (in thousands):

	Development and Redevelopment			Operating			Other			Corporate and Amounts Not Allocated to Segments (1)		Total
As of March 31, 2024
Buildings and improvements	$	687,151		$	711,541		$	239,498		$	—	$	1,638,190
Land		206,558			262,409			151,521			—		620,488
Total real estate		893,709			973,950			391,019			—		2,258,678
Accumulated depreciation		(15,820	)		(497,297	)		(84,263	)		—		(597,380	)
Net real estate	$	877,889		$	476,653		$	306,756		$	—	$	1,661,298
Non-recourse property debt and construction loans, net	$	336,330		$	764,826		$	80,847		$	—	$	1,182,003

	Development and Redevelopment			Operating			Other			Corporate and Amounts Not Allocated to Segments (1)			Total
As of December 31, 2023
Buildings and improvements	$	644,154		$	709,051		$	239,089		$	1,508		$	1,593,802
Land		206,820			262,409			151,521			71			620,821
Total real estate		850,974			971,460			390,610			1,579			2,214,623
Accumulated depreciation		(11,589	)		(489,206	)		(78,612	)		(1,395	)		(580,802	)
Net real estate	$	839,385		$	482,254		$	311,998		$	184		$	1,633,821
Non-recourse property debt and construction loans, net	$	301,424		$	765,372		$	80,739		$	206		$	1,147,741

(1)During the quarter ended March 31, 2024, we disposed of St. George Villas, and therefore it is not included in our segment balance sheets at March 31, 2024. We added a Corporate segment to the tables above for presentation purposes to display these assets and the associated debt as of March 31, 2024 and December 31, 2023, respectively.

In addition to the amounts disclosed in the tables above, as of March 31, 2024 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $108.7 million and $119.3 million, respectively, and as of December 31, 2023, aggregated to $109.0 million and $118.7 million, respectively. As of March 31, 2024, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.