Business Segments

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Business Segments

Business Segments

During the three months ended March 31, 2017, we revised the information regularly reviewed by our chief executive officer, who is our chief operating decision maker, to assess our operating performance. As of March 31, 2017, apartment communities are classified as either part of our Real Estate portfolio or those owned through partnerships served by our Asset Management business.

Our Real Estate portfolio consisted of 141 apartment communities with 39,173 apartment homes at March 31, 2017. This portfolio is diversified by both price point and geography and consists primarily of market rate apartment communities.

As discussed in Note 8, as of March 31, 2017, 19 of these communities with 6,110 apartment homes are owned through partnerships in which we do not own all of the economic interests. Due to this diversity of our economic ownership interests in apartment communities in our Real Estate portfolio, our chief operating decision maker uses proportionate property net operating income to assess the operating performance of our apartment communities. Proportionate property net operating income reflects our share of rental and other property revenues less direct property operating expenses, including real estate taxes, for consolidated apartment communities we own and manage. As of March 31, 2017, for segment performance evaluation, our Real Estate segment included 137 consolidated apartment communities with 39,031 apartment homes and excluded four apartment communities with 142 apartment homes that we neither manage nor consolidate.

As discussed in Note 1, as of March 31, 2017, we also owned nominal ownership positions in consolidated partnerships for whom we provide asset management services. These partnerships hold 47 low-income housing tax credit apartment communities with 7,098 apartment homes. Neither the results of operations, nor the assets of these partnerships and apartment communities are quantitatively material; therefore, we have one reportable segment, Real Estate. The results of operations for the three months ended March 31, 2016, and the segment assets as of December 31, 2016, shown below have been revised to reflect this change in reportable segments.

The following tables present the revenues, net operating income and income before gain on dispositions of our Real Estate segment on a proportionate basis (excluding amounts related to apartment communities sold or classified as held for sale) for the three months ended March 31, 2017 and 2016 (in thousands):

	Real Estate		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Reportable Segment (2)			Consolidated
Three Months Ended March 31, 2017
Rental and other property revenues attributable to Real Estate	$	216,975	$	7,296	$	957		$	225,228
Rental and other property revenues of partnerships served by Asset Management business	—		—		18,562			18,562
Tax credit and transaction revenues	—		—		2,691			2,691
Total revenues	216,975		7,296		22,210			246,481
Property operating expenses attributable to Real Estate	69,463		2,303		7,860			79,626
Property operating expenses of partnerships served by Asset Management business	—		—		8,694			8,694
Investment management expenses	—		—		784			784
Depreciation and amortization	—		—		87,168			87,168
General and administrative expenses	—		—		10,682			10,682
Other expenses, net	—		—		1,738			1,738
Total operating expenses	69,463		2,303		116,926			188,692
Net operating income	147,512		4,993		(94,716		)	57,789
Other items included in income before gain on dispositions (3)	—		—		(40,240		)	(40,240		)
Income before gain on dispositions	$	147,512	$	4,993	$	(134,956	)	$	17,549

	Real Estate		Proportionate Adjustments (1)		Corporate and Amounts Not Allocated to Reportable Segment (2)			Consolidated
Three Months Ended March 31, 2016
Rental and other property revenues attributable to Real Estate	$	202,064	$	7,593	$	12,916		$	222,573
Rental and other property revenues of partnerships served by Asset Management business	—		—		18,908			18,908
Tax credit and transaction revenues	—		—		4,758			4,758
Total revenues	202,064		7,593		36,582			246,239
Property operating expenses attributable to Real Estate	65,247		1,945		12,239			79,431
Property operating expenses of partnerships served by Asset Management business	—		—		8,966			8,966
Investment management expenses	—		—		975			975
Depreciation and amortization	—		—		79,828			79,828
General and administrative expenses	—		—		11,935			11,935
Other expenses, net	—		—		1,570			1,570
Total operating expenses	65,247		1,945		115,513			182,705
Net operating income	136,817		5,648		(78,931		)	63,534
Other items included in income before gain on dispositions (3)	—		—		(39,836		)	(39,836		)
Income before gain on dispositions	$	136,817	$	5,648	$	(118,767	)	$	23,698

(1) Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of consolidated apartment communities in our Real Estate segment, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation.

(2) Includes the operating results of apartment communities sold during 2017 or 2016, or classified as held for sale at March 31, 2017, and the operating results of apartment communities owned by consolidated partnerships served by our Asset Management business. Corporate and Amounts Not Allocated to Reportable Segment also includes property management revenues (which are included in consolidated rental and other property revenues), property management expenses and casualty gains and losses (which are included in consolidated property operating expenses) and depreciation and amortization, which are property related items that are not part of our segment performance measure.

(3) Other items included in income before gain on dispositions primarily consist of interest expense and income tax benefit.

For the three months ended March 31, 2017 and 2016, capital additions related to our Real Estate segment totaled $71.5 million and $69.5 million, respectively.

The assets of our reportable segment and the consolidated assets not allocated to our segment are as follows (in thousands):

	March 31, 2017		December 31, 2016
Real Estate	$	5,559,827	$	5,545,693
Corporate and other assets (1)	627,613		687,125
Total consolidated assets	$	6,187,440	$	6,232,818

(1) Includes the assets of consolidated partnerships served by the Asset Management business and apartment communities sold or classified as held for sale as of March 31, 2017.