XML 22 R11.htm IDEA: XBRL DOCUMENT v3.21.2
Segments
 6 Months Ended
Jun. 30, 2021
Segment Reporting [Abstract]  
Segments Segments
 
Net operating income (segment revenues minus segment expenses) is the measure used by the Company’s chief operating decision-maker to assess segment performance. Net operating income is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, net operating income should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate net operating income in the same manner. The Company considers net operating income to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of the Company’s real estate and construction businesses.
Net operating income of the Company’s reportable segments for the three and six months ended June 30, 2021 and 2020 was as follows (in thousands): 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Office real estate  
Rental revenues$11,756 $10,494 $23,391 $20,686 
Rental expenses2,938 2,291 5,813 4,837 
Real estate taxes1,413 1,228 2,771 2,374 
Segment net operating income7,405 6,975 14,807 13,475 
Retail real estate  
Rental revenues19,204 18,714 37,459 39,125 
Rental expenses3,013 2,458 5,849 5,478 
Real estate taxes2,180 2,007 4,207 4,173 
Segment net operating income14,011 14,249 27,403 29,474 
Multifamily residential real estate  
Rental revenues16,418 10,707 32,269 22,393 
Rental expenses5,341 3,560 10,462 7,369 
Real estate taxes1,872 998 3,793 2,019 
Segment net operating income9,205 6,149 18,014 13,005 
General contracting and real estate services  
Segment revenues18,408 57,398 53,971 104,666 
Segment expenses18,131 55,342 52,406 100,892 
Segment gross profit277 2,056 1,565 3,774 
Net operating income$30,898 $29,429 $61,789 $59,728 
 
Rental expenses represent costs directly associated with the operation and management of the Company’s real estate properties. Rental expenses include asset management expenses, property management fees, repairs and maintenance, insurance, and utilities.

General contracting and real estate services revenues for the three months ended June 30, 2021 and 2020 exclude revenue related to intercompany construction contracts of $5.4 million and $8.4 million, respectively, as it is eliminated in consolidation. General contracting and real estate services revenues for the six months ended June 30, 2021 and 2020 exclude revenue related to intercompany construction contracts of $7.4 million and $21.5 million, respectively.

General contracting and real estate services expenses for the three months ended June 30, 2021 and 2020 exclude expenses related to intercompany construction contracts of $5.4 million and $8.3 million, respectively. General contracting and real estate services expenses for the six months ended June 30, 2021 and 2020 exclude expenses related to intercompany construction contracts of $7.4 million and $21.3 million, respectively.
The following table reconciles net operating income to net income, the most directly comparable GAAP measure, for the three and six months ended June 30, 2021 and 2020 (in thousands): 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net operating income$30,898 $29,429 $61,789 $59,728 
Depreciation and amortization(17,285)(13,777)(35,351)(28,056)
Amortization of right-of-use assets - finance leases(278)(146)(467)(293)
General and administrative expenses(3,487)(2,988)(7,508)(6,781)
Acquisition, development and other pursuit costs(32)(502)(103)(529)
Impairment charges(83)— (3,122)(158)
Gain on real estate dispositions — 2,776 3,717 2,776 
Interest income6,746 4,412 10,862 11,638 
Interest expense (8,418)(7,227)(16,393)(15,415)
Change in fair value of derivatives and other314 (6)707 (1,742)
Unrealized credit loss release (provision)(388)117 (333)(260)
Other income (expense), net7 286 186 344 
Income tax benefit (provision)461 (65)480 192 
Net income$8,455 $12,309 $14,464 $21,444 
 
General and administrative expenses represent costs not directly associated with the operation and management of the Company’s real estate properties and general contracting and real estate services businesses, including corporate office personnel salaries and benefits, bank fees, accounting fees, legal fees, and other corporate office expenses.