Business Segments

Our chief executive officer, who is 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 is defined as our share of rental and other property revenue less our share of property operating expenses, including real estate taxes, for consolidated apartment communities we own and manage. Beginning in 2018, we exclude from rental and other property revenues the amount of utilities cost reimbursed by residents and reflect such amount as a reduction of the related utility expense within property operating expenses in our evaluation of segment results. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP. The tables below have been revised to conform to this presentation.

Apartment communities are classified as either part of our Real Estate portfolio or those owned through partnerships served by our Asset Management business. As of March 31, 2018, for segment performance evaluation, our Real Estate segment included 130 consolidated apartment communities with 37,086 apartment homes and excluded four apartment communities with 142 apartment homes that we neither manage nor consolidate.

As of March 31, 2018, through our Asset Management business we also held nominal ownership positions in consolidated partnerships that own 46 low-income housing tax credit apartment communities with 6,898 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 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 as of March 31, 2018) for the three months ended March 31, 2018 and 2017 (in thousands):



	Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Reportable Segment (2)			Consolidated
Three Months Ended March 31, 2018:
Rental and other property revenues attributable to Real Estate	$	214,387	$	9,149	$	1,857		$	225,393
Rental and other property revenues of partnerships served by Asset Management business	—		—		18,808			18,808
Tax credit and transaction revenues	—		—		3,519			3,519
Total revenues	214,387		9,149		24,184			247,720
Property operating expenses attributable to Real Estate	61,903		8,631		7,753			78,287
Property operating expenses of partnerships served by Asset Management business	—		—		9,195			9,195
Other operating expenses not allocated to reportable segment (3)	—		—		106,861			106,861
Total operating expenses	61,903		8,631		123,809			194,343
Operating income	152,484		518		(99,625		)	53,377
Other items included in income before gain on dispositions (4)	—		—		(8,011		)	(8,011		)
Income before gain on dispositions	$	152,484	$	518	$	(107,636	)	$	45,366



	Real Estate		Proportionate and Other 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	$	199,400	$	14,174	$	11,654		$	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	199,400		14,174		32,907			246,481
Property operating expenses attributable to Real Estate	58,528		9,402		11,696			79,626
Property operating expenses of partnerships served by Asset Management business	—		—		9,198			9,198
Other operating expenses not allocated to reportable segment (3)	—		—		99,868			99,868
Total operating expenses	58,528		9,402		120,762			188,692
Operating income	140,872		4,772		(87,855		)	57,789
Other items included in income before gain on dispositions (4)	—		—		(40,240		)	(40,240		)
Income before gain on dispositions	$	140,872	$	4,772	$	(128,095	)	$	17,549

(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. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in rental and other property revenues in our condensed consolidated statements of operations prepared in accordance with GAAP.

(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, 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 expenses and casualty gains and losses (which are included in consolidated property operating expenses), which are not part of our segment performance measure.


(3)	Other operating expenses not allocated to reportable segment consists of depreciation and amortization, general and administrative expenses and other operating expenses, which are not included in our measure of segment performance.


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

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



	March 31, 2018		December 31, 2017
Real Estate	$	5,652,016	$	5,495,069
Corporate and other assets (1)	603,274		583,971
Total consolidated assets	$	6,255,290	$	6,079,040


(1)	Includes the assets of consolidated partnerships served by the Asset Management business and apartment communities sold as of March 31, 2018.

For the three months ended March 31, 2018 and 2017, capital additions related to our Real Estate segment totaled $76.7 million and $70.1 million, respectively.