Segment Reporting

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Reportable Segments

We had four reportable operating segments at September 30, 2015, the first three of which consist of the ownership and rental of (i) industrial, (ii) medical office and (iii) office real estate investments. The operations of our industrial, medical office and office properties, along with our retail properties, are collectively referred to as "Rental Operations." Properties not included in our reportable segments, which do not by themselves meet the quantitative thresholds for separate presentation as a reportable segment, are referred to as non-reportable Rental Operations. The fourth reportable segment consists of various real estate services such as property management, asset management, maintenance, leasing, development, general contracting and construction management to third-party property owners and joint ventures, and is collectively referred to as "Service Operations." Our reportable segments offer different products or services and are managed separately because each segment requires different operating strategies and management expertise.

Revenues by Reportable Segment

The following table shows the revenues for each of the reportable segments, as well as a reconciliation to consolidated revenues, for the three and nine months endedSeptember 30, 2015 and 2014, respectively (in thousands): 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenues
Rental Operations:
Industrial	$	136,276	$	130,495	$	419,391	$	392,048
Medical Office	39,911		36,715		120,213		104,979
Office	23,277		32,134		72,103		109,700
Non-reportable Rental Operations	—		1,698		—		5,414
Service Operations	33,599		59,739		110,320		185,072
Total segment revenues	233,063		260,781		722,027		797,213
Other revenue (loss)	1,474		1,025		5,842		3,352
Consolidated revenue from continuing operations	234,537		261,806		727,869		800,565
Discontinued operations	7		29,709		32,171		89,112
Consolidated revenue	$	234,544	$	291,515	$	760,040	$	889,677

Supplemental Performance Measure

Property level net operating income on a cash basis ("PNOI") is the non-GAAP supplemental performance measure that we use to evaluate the performance of, and to allocate resources among, the real estate investments in the reportable and operating segments that comprise our Rental Operations. PNOI for our Rental Operations segments is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items (collectively referred to as "Rental Operations revenues and expenses excluded from PNOI," as shown in the following table). Additionally, we do not allocate interest expense, depreciation expense and certain other non-property specific revenues and expenses (collectively referred to as "Non-Segment Items," as shown in the following table) to our individual operating segments.

We evaluate the performance of our Service Operations reportable segment using net income or loss, as allocated to that segment ("Earnings from Service Operations").

The following table shows a reconciliation of our segment-level measures of profitability to consolidated income from continuing operations before income taxes for the three and nine months endedSeptember 30, 2015 and 2014, respectively (in thousands and excluding discontinued operations): 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
PNOI
Industrial	$	99,236		$	88,654		$	291,987		$	258,863
Medical Office	25,827			23,456			76,878			65,820
Office	11,791			13,688			36,364			37,851
Non-reportable Rental Operations	—			970			—			3,275
PNOI, excluding all sold/held for sale properties	136,854			126,768			405,229			365,809
PNOI from sold/held-for-sale properties included in continuing operations	2,711			13,162			17,471			47,270
PNOI, continuing operations	139,565			139,930			422,700			413,079
Earnings from Service Operations	3,905			7,211			11,865			21,415
Rental Operations revenues and expenses excluded from PNOI:
Straight-line rental income and expense, net	5,723			5,466			16,830			16,183
Revenues related to lease buyouts	408			145			1,366			4,365
Amortization of lease concessions and above and below market rents	(357		)	(919		)	(2,559		)	(4,820		)
Intercompany rents and other adjusting items	(434		)	(1,616		)	(1,306		)	(3,718		)
Non-Segment Items:
Equity in earnings (loss) of unconsolidated companies	(5,088		)	19,178			16,281			82,325
Interest expense	(41,615		)	(47,421		)	(134,576		)	(145,628		)
Depreciation expense	(79,898		)	(85,772		)	(240,135		)	(262,570		)
Gain on sale of properties	71,259			47,143			202,153			133,617
Impairment charges on non-depreciable properties	(2,426		)	(6,368		)	(7,896		)	(8,891		)
Interest and other income, net	1,343			356			3,056			936
General and administrative expenses	(11,340		)	(10,573		)	(47,582		)	(35,632		)
Gain on land sales	1,659			3,167			24,096			7,208
Other operating expenses	(1,467		)	(1,829		)	(4,579		)	(6,032		)
Gain (loss) on extinguishment of debt	64			—			(82,589		)	(139		)
Acquisition-related activity	(5,660		)	(110		)	(6,993		)	(871		)
Other non-segment revenues and expenses, net	(1,806		)	(269		)	(2,065		)	(1,041		)
Income from continuing operations before income taxes	$	73,835		$	67,719		$	168,067		$	209,786

The most comparable GAAP measure to PNOI is income from continuing operations before income taxes. PNOI excludes expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for income from continuing operations before income taxes or any other measures derived in accordance with GAAP. Furthermore, PNOI may not be comparable to other similarly titled measures of other companies.

Assets by Reportable Segment

The assets for each of the reportable segments at September 30, 2015 and December 31, 2014 were as follows (in thousands):

	September 30, 2015		December 31, 2014
Assets
Rental Operations:
Industrial	$	4,501,662	$	4,677,047
Medical Office	1,247,196		1,229,632
Office	483,641		1,252,627
Non-reportable Rental Operations	—		71,741
Service Operations	140,103		158,762
Total segment assets	6,372,602		7,389,809
Non-segment assets	767,307		365,030
Consolidated assets	$	7,139,909	$	7,754,839