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Segments
 9 Months Ended
Sep. 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 nine months ended September 30, 2021 and 2020 was as follows (in thousands): 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Office real estate  
Rental revenues$11,933 $11,456 $35,324 $32,142 
Rental expenses3,409 3,042 9,222 7,879 
Real estate taxes1,547 1,375 4,318 3,749 
Segment net operating income6,977 7,039 21,784 20,514 
Retail real estate  
Rental revenues20,223 15,669 57,682 54,794 
Rental expenses3,270 2,618 9,119 8,096 
Real estate taxes2,100 1,808 6,307 5,981 
Segment net operating income14,853 11,243 42,256 40,717 
Multifamily residential real estate  
Rental revenues17,404 12,511 49,673 34,904 
Rental expenses6,038 4,563 16,500 11,932 
Real estate taxes1,896 1,577 5,689 3,596 
Segment net operating income9,470 6,371 27,484 19,376 
General contracting and real estate services  
Segment revenues17,502 58,617 71,473 163,283 
Segment expenses15,944 56,509 68,350 157,401 
Segment gross profit1,558 2,108 3,123 5,882 
Net operating income$32,858 $26,761 $94,647 $86,489 
 
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 September 30, 2021 and 2020 exclude revenue related to intercompany construction contracts of $8.6 million and $3.2 million, respectively, as it is eliminated in consolidation. General contracting and real estate services revenues for the nine months ended September 30, 2021 and 2020 exclude revenue related to intercompany construction contracts of $16.0 million and $24.7 million, respectively.

General contracting and real estate services expenses for the three months ended September 30, 2021 and 2020 exclude expenses related to intercompany construction contracts of $8.6 million and $3.2 million, respectively. General contracting and real estate services expenses for the nine months ended September 30, 2021 and 2020 exclude expenses related to intercompany construction contracts of $16.0 million and $24.5 million, respectively.
The following table reconciles net operating income to net income, the most directly comparable GAAP measure, for the three and nine months ended September 30, 2021 and 2020 (in thousands): 
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net operating income$32,858 $26,761 $94,647 $86,489 
Depreciation and amortization(16,886)(14,176)(52,237)(42,232)
Amortization of right-of-use assets - finance leases(278)(147)(745)(440)
General and administrative expenses(3,449)(2,601)(10,957)(9,382)
Acquisition, development and other pursuit costs(8)(26)(111)(555)
Impairment charges— (47)(3,122)(205)
Gain (loss) on real estate dispositions, net(113)3,612 3,604 6,388 
Interest income3,766 4,417 14,628 16,055 
Interest expense (8,827)(7,523)(25,220)(22,938)
Change in fair value of derivatives and other131 318 838 (1,424)
Unrealized credit loss release (provision)617 33 284 (227)
Other income (expense), net(105)177 81 521 
Income tax benefit42 28 522 220 
Net income$7,748 $10,826 $22,212 $32,270 
 
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.