Business Segments

3 Months Ended

Mar. 31, 2020

Note 7 — Business Segments

We have four segments: Same Store, Redevelopment and Development, Acquisition, and Other Real Estate.

Our Same Store segment includes communities that have reached a stabilized level of operations as of the beginning of a two-year comparable period and maintained it throughout the current and comparable prior year and are not expected to be sold within 12 months. Our Redevelopment and Development segment includes apartment communities that are currently under construction, and those that have been completed in recent years that have not achieved and maintained stabilized operations for both the current and comparable prior year. Our Acquisition segment includes communities that we have acquired since the beginning of a two-year comparable period. Our Other Real Estate segment primarily includes communities that are subject to limitations on rent increases, communities that we expect to sell within 12 months but do not yet meet the criteria to be classified as held for sale, communities that we expect to redevelop, and certain commercial spaces.

Our chief operating decision maker uses proportionate property net operating income to assess the operating performance of our communities. Proportionate property net operating income reflects our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, net of utility reimbursements, for consolidated

communities. In our condensed consolidated statements of operations, utility reimbursements are included in rental and other property revenues, in accordance with GAAP.

As of March 31, 2020, our Same Store segment included 95 consolidated apartment communities with 28,095 apartment homes; our Redevelopment and Development segment included six consolidated communities with 2,210 homes; our Acquisition segment included one consolidated community with 110 homes, and one consolidated community with 136 homes under construction; and our Other Real Estate segment included 18 communities with 2,289 homes and one office building.

The following tables present the rental and other property revenues, property operating expenses, proportionate property net operating income, and income before income tax benefit (expense) of our segments on a proportionate basis, excluding amounts related to sold communities and our proportionate share of four apartment communities with 142 apartment homes that we neither manage nor consolidate, for the three months ended March 31, 2020 and 2019 (in thousands):

	Same Store		Redevelopment and Development		Acquisition		Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended March 31, 2020:
Rental and other property revenues	$	187,956	$	11,913	$	884	$	17,875	$	8,812	$	(2,888	)	$	224,552
Property operating expenses		48,782		4,687		401		6,174		8,175		7,261			75,480
Other operating expenses not allocated to segments (3)		—		—		—		—		—		113,410			113,410
Total operating expenses		48,782		4,687		401		6,174		8,175		120,671			188,890
Proportionate property net operating income (loss)		139,174		7,226		483		11,701		637		(123,559	)		35,662
Other items included in income before income tax benefit (4)		—		—		—		—		—		(29,918	)		(29,918	)
Income before income tax benefit	$	139,174	$	7,226	$	483	$	11,701	$	637	$	(153,477	)	$	5,744

	Same Store		Redevelopment and Development		Acquisition			Other Real Estate		Proportionate and Other Adjustments (1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three months ended March 31, 2019:
Rental and other property revenues	$	181,523	$	14,012	$	—		$	14,113	$	8,292	$	12,295		$	230,235
Property operating expenses		48,990		5,255		127			4,991		7,733		11,863			78,959
Other operating expenses not allocated to segments (3)		—		—		—			—		—		109,862			109,862
Total operating expenses		48,990		5,255		127			4,991		7,733		121,725			188,821
Proportionate property net operating income (loss)		132,533		8,757		(127	)		9,122		559		(109,430	)		41,414
Other items included in income before income tax expense (4)		—		—		—			—		—		252,862			252,862
Income before income tax expense	$	132,533	$	8,757	$	(127	)	$	9,122	$	559	$	143,432		$	294,276

(1)

Represents adjustments for the 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 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. 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. Write-off of straight-line rent receivables, which was recognized due to the impact of COVID-19 and the resulting economic impact on our commercial tenants, is included in consolidated rental and other property revenues. The write-off of straight-line rent is not included in our measurement of segment performance.

(3)	Includes depreciation and amortization, general and administrative expenses, and other operating expenses including provision for real estate impairment loss, which are not included in our measure of segment performance.

(4)	Includes gain (loss) on dispositions of real estate, mezzanine investment income, interest income, and interest expense.

The assets of our segments and the consolidated assets not allocated to our segments were as follows (in thousands):

	March 31, 2020		December 31, 2019
Same Store	$	4,643,371	$	4,679,211
Redevelopment and Development		731,811		694,188
Acquisition		102,217		89,405
Other Real Estate		733,138		736,934
Corporate and other assets (1)		837,708		629,001
Total consolidated assets	$	7,048,245	$	6,828,739

(1)	Includes the assets not allocated to our segments, primarily corporate assets and assets of sold apartment communities.

For the three months ended March 31, 2020 and 2019, capital additions related to our segments were as follows (in thousands):

	2020		2019
Same Store	$	27,526	$	35,379
Redevelopment and Development		44,596		36,458
Acquisition		15,343		76
Other Real Estate		6,419		3,477
Total capital additions	$	93,884	$	75,390