Segment Information

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company is a REIT with in-house capabilities in commercial and residential property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing in the New York Metropolitan area, and has two reportable segments, real estate and debt and preferred equity investments. We evaluate real estate performance and allocate resources based on earnings contribution to income from continuing operations.

The primary sources of revenue are generated from tenant rents and escalations and reimbursement revenue. Real estate property operating expenses consist primarily of security, maintenance, utility costs, insurance, real estate taxes and ground rent expense (at certain applicable properties). See Note 5, "Debt and Preferred Equity Investments," for additional details on our debt and preferred equity investments.

Selected consolidated results of operations for the three and nine months ended September 30, 2017 and 2016, and selected asset information as of September 30, 2017 and December 31, 2016, regarding our operating segments are as follows (in thousands):

	Real Estate Segment			Debt and Preferred Equity Segment		Total Company
Total revenues
Three months ended:
September 30, 2017	$	326,780		$	47,820	$	374,600
September 30, 2016	341,285			75,396		416,681
Nine months ended:
September 30, 2017	1,001,390			148,741		1,150,131
September 30, 2016	1,315,392			174,347		1,489,739
Net income (loss) before equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, net, depreciable real estate reserves, and gain on sale of investment in marketable securities
Three months ended:
September 30, 2017	$	4,873		$	39,892	$	44,765
September 30, 2016	(32,731		)	75,452		42,721
Nine months ended:
September 30, 2017	(504		)	132,402		131,898
September 30, 2016	(187,222		)	168,295		(18,927		)
Total assets
As of:
September 30, 2017	$	12,939,363		$	2,170,507	$	15,109,870
December 31, 2016	13,868,672			1,989,115		15,857,787

Income from continuing operations represents total revenues less total expenses for the real estate segment and total investment income less allocated interest expense for the debt and preferred equity segment. Interest costs for the debt and preferred equity segment includes actual costs incurred for borrowings on the 2016 MRA and 2017 MRA. Interest is imputed on the investments that do not collateralize the 2016 MRA or 2017 MRA using our corporate borrowing cost. We also allocate loan loss reserves, net of recoveries, and transaction related costs to the debt and preferred equity segment. We do not allocate marketing, general and administrative expenses to the debt and preferred equity segment since the use of personnel and resources is dependent on transaction volume between the two segments and varies period over period. In addition, we base performance on the individual segments prior to allocating marketing, general and administrative expenses. For the three and nine months ended September 30, 2017, marketing, general and administrative expenses totaled $24.0 million, and $72.4 million respectively. For the three and nine months ended September 30, 2016, marketing, general and administrative expenses totaled $25.5 million and $74.0 million, respectively. All other expenses, except interest, relate entirely to the real estate assets.

There were no transactions between the above two segments.

The table below reconciles income from continuing operations to net income for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017			2016
Net income (loss) before equity in net gain on sale of interest in unconsolidated joint venture/real estate, gain on sale of real estate, net, depreciable real estate reserves, and gain on sale of investment in marketable securities	$	44,765	$	42,721	$	131,898		$	(18,927	)
Equity in net gain on sale of interest in unconsolidated joint venture/real estate	1,030		225		16,166			43,588
Gain (loss) on sale of real estate, net	—		397		(3,256		)	210,750
Depreciable real estate reserves	—		—		(85,336		)	(10,387		)
Gain (loss) on sale of investment in marketable securities	—		—		3,262			(83		)
Net income	$	45,795	$	43,343	$	62,734		$	224,941