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Segments
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segments Segments
 
The Company operates its business in five reportable segments: (i) retail real estate, (ii) office real estate, (iii) multifamily real estate, (iv) general contracting and real estate services, and (v) real estate financing. Refer to Note 1 for the composition of properties within each property segment.

Net operating income ("NOI") is the primary measure used by the Company’s chief operating decision-maker to assess segment performance. NOI is calculated as segment revenues less segment expenses. Segment revenues include rental revenues for the property segments, general contracting and real estate services revenues for the general contracting and real estate services segment, and interest income for the real estate financing segment. Segment expenses include rental expenses and real estate taxes for the property segments, general contracting and real estate services expenses for the general contracting and real estate services segment, and interest expense for the real estate financing segment. Segment NOI for the general contracting and real estate services and real estate financing segments is also referred to as segment gross profit as illustrated in the table below. NOI 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, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner. The Company considers NOI 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, construction, and real estate financing businesses.

Since the Company's Annual Report on Form 10-K for the year ended December 31, 2023, the Company retrospectively reclassified certain components of mixed-use properties between the retail, office, and multifamily real estate segments in order to align the components of those properties with their tenant composition. As a result, NOI for the three months ended September 30, 2023 increased $0.5 million for the retail real estate segment, and decreased less than $0.1 million and $0.4 million for the office and multifamily real estate segments, respectively. NOI for the nine months ended September 30, 2023 increased $1.3 million and less than $0.1 million for the retail and office real estate segments, respectively, and decreased $1.4 million for the multifamily real estate segment. These reclassifications had no effect on total property NOI as previously reported. These reclassifications also had no impact on our general contracting and real estate services or real estate financing segments.
The following table presents NOI for the Company's five reportable segments for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Retail real estate
Rental revenues$26,161 $26,502 $77,905 $74,749 
Rental expenses5,104 4,227 14,099 11,944 
Real estate taxes2,466 2,384 7,300 6,992 
Segment net operating income18,591 19,891 56,506 55,813 
Office real estate
Rental revenues27,784 22,052 72,532 62,338 
Rental expenses6,307 5,950 17,793 16,441 
Real estate taxes2,360 2,252 6,710 6,494 
Segment net operating income19,117 13,850 48,029 39,403 
Multifamily real estate
Rental revenues14,653 14,359 43,307 41,995 
Rental expenses5,241 4,579 14,452 13,007 
Real estate taxes1,358 1,231 3,985 3,424 
Segment net operating income8,054 8,549 24,870 25,564 
General contracting and real estate services
General contracting and real estate services revenues114,353 99,408 358,167 286,220 
General contracting and real estate services expenses110,987 96,095 346,385 276,336 
Segment gross profit3,366 3,313 11,782 9,884 
Real estate financing
Interest income4,072 3,496 12,038 10,257 
Interest expense(a)
1,724 728 4,823 2,634 
Segment gross profit2,348 2,768 7,215 7,623 
Net operating income$51,476 $48,371 $148,402 $138,287 
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(a) Interest expense within the real estate financing segment is allocated based on the average outstanding principal of notes receivable in the real estate financing portfolio and the effective interest rates on the credit facility, the M&T term loan facility, and the TD term loan facility, each as defined in Note 9.
The following table reconciles NOI to net (loss) income, the most directly comparable GAAP measure, for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net operating income$51,476 $48,371 $148,402 $138,287 
Interest income(a)
629 194 1,921 566 
Depreciation and amortization(23,289)(22,462)(64,513)(60,808)
Amortization of right-of-use assets - finance leases(395)(425)(1,184)(1,049)
General and administrative expenses(5,187)(4,286)(15,564)(13,786)
Acquisition, development, and other pursuit costs(2)— (5,530)(18)
Impairment charges— (5)(1,494)(107)
Gain on real estate dispositions, net— 227 — 738 
Interest expense(b)
(19,663)(14,716)(55,766)(38,741)
Loss on extinguishment of debt(113)— (113)— 
Change in fair value of derivatives and other(10,308)2,466 6,978 5,024 
Unrealized credit loss provision(198)(694)(53)(871)
Other income (expense), net96 63 254 324 
Income tax (provision) benefit(592)(310)120 (834)
Net (loss) income$(7,546)$8,423 $13,458 $28,725 
________________________________________
(a) Excludes real estate financing segment interest income of $4.1 million and $3.5 million for the three months ended September 30, 2024 and 2023, respectively, and $12.0 million and $10.3 million for the nine months ended September 30, 2024 and 2023, respectively.
(b) Excludes real estate financing segment interest expense of $1.7 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively, and $4.8 million and $2.6 million for the nine months ended September 30, 2024 and 2023, respectively.
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, 2024 and 2023 exclude revenues related to intercompany construction contracts of $2.3 million and $13.4 million, respectively, which are eliminated in consolidation. General contracting and real estate services revenues for the nine months ended September 30, 2024 and 2023 exclude revenues related to intercompany construction contracts of $15.0 million and $40.0 million, respectively, which are eliminated in consolidation.

General contracting and real estate services expenses for the three months ended September 30, 2024 and 2023 exclude expenses related to intercompany construction contracts of $2.3 million and $13.3 million, respectively, which are eliminated in consolidation. General contracting and real estate services expenses for the nine months ended September 30, 2024 and 2023 exclude expenses related to intercompany construction contracts of $14.9 million and $39.6 million, respectively, which are eliminated in consolidation.
 
Depreciation and amortization expense for the three months ended September 30, 2024 was $8.4 million, $10.6 million, and $4.1 million for the retail, office, and multifamily real estate segments, respectively. Depreciation and amortization expense for the nine months ended September 30, 2024 was $25.7 million, $26.9 million, and $11.5 million for the retail, office, and multifamily real estate segments, respectively.

Depreciation and amortization expense for the three months ended September 30, 2023 was $9.9 million, $8.1 million, and $4.3 million for the retail, office, and multifamily real estate segments, respectively. Depreciation and amortization expense for the nine months ended September 30, 2023 was $25.0 million, $22.6 million, and $12.8 million for the retail, office, and multifamily real estate segments, respectively.

General and administrative expenses represent costs not directly associated with the operation and management of the Company’s real estate properties, general contracting and real estate services, and real estate financing businesses. These costs include corporate office personnel compensation and benefits, bank fees, accounting fees, legal fees, and other corporate office expenses.
Interest expense on secured property debt for the three months ended September 30, 2024 was $2.8 million, $3.7 million, and $3.9 million for the retail, office, and multifamily real estate segments, respectively. Interest expense on secured property debt for the nine months ended September 30, 2024 was $8.5 million, $10.5 million, and $11.3 million for the retail, office, and multifamily real estate segments, respectively.

Interest expense on secured property debt and finance leases for the three months ended September 30, 2023 was $2.4 million, $2.8 million, and $2.9 million for the retail, office, and multifamily real estate segments, respectively. Interest expense on secured property debt for the nine months ended September 30, 2023 was $6.9 million, $7.5 million, and $8.1 million for the retail, office, and multifamily real estate segments, respectively.

As of September 30, 2024, the net carrying amount of consolidated real estate investments was $696.8 million, $645.4 million, and $444.5 million for the retail, office, and multifamily real estate segments, respectively, which excludes $26.1 million attributable to our mixed-use development projects. Assets attributable to the general contracting and real estate services segment are presented in Note 8 of these financial statements. Assets attributable to the real estate financing segment are presented in Note 7 of these financial statements.