Segment Information

3 Months Ended

Mar. 31, 2022

Segment Information

Segment Information

16.Segment Information

We review operating and financial data for each property on an individual basis; therefore, each of our individual properties is a separate operating segment. We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into three reportable segments (commercial, multifamily, and third-party asset management and real estate services) based on the economic characteristics and nature of our assets and services. To conform to the current period presentation, we have reclassified the prior period segment financial data for 1700 M Street, for which we are the ground lessor, that had been classified as part of the commercial segment to other to better align with our internal reporting.

The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ("NOI") of properties within each segment. NOI includes property rental revenue and parking revenue, and deducts property operating expenses and real estate taxes.

With respect to the third-party asset management and real estate services business, the CODM reviews revenue streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative: third-party real estate services"), which are both disclosed separately in our statements of operations. The following represents the components of revenue from our third-party asset management and real estate services business:

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Property management fees	$	4,808	$	4,942
Asset management fees		1,771		2,228
Development fees (1)		3,539		14,250
Leasing fees		1,839		860
Construction management fees		150		172
Other service revenue		816		1,698
Third-party real estate services revenue, excluding reimbursements		12,923		24,150
Reimbursement revenue (2)		11,047		13,957
Third-party real estate services revenue, including reimbursements		23,970		38,107
Third-party real estate services expenses		27,049		28,936
Third-party real estate services revenue less expenses	$	(3,079)	$	9,171

(1) As of March 31, 2022, we had estimated unrecognized development fee revenue totaling $45.2 million, of which $10.4 million, $12.0 million and $6.3 million is expected to be recognized during the remainder of 2022, 2023 and 2024, and $16.5 million is expected to be recognized thereafter through 2027 as unsatisfied performance obligations are completed.

(2) Represents reimbursement of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for construction management projects.

Management company assets primarily consist of management and leasing contracts with a net book value of $18.1 million and $19.6 million as of March 31, 2022 and December 31, 2021, which are classified in "Intangible assets, net" in our balance sheets. Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below.

The following is the reconciliation of net loss attributable to common shareholders to consolidated NOI:

	Three Months Ended March 31,
	2022		2021
	(In thousands)
Net loss attributable to common shareholders	$	(32)	$	(20,731)
Add:
Depreciation and amortization expense		58,062		64,726
General and administrative expense:
Corporate and other		15,815		12,475
Third-party real estate services		27,049		28,936
Share-based compensation related to Formation Transaction and special equity awards		2,244		4,945
Transaction and other costs		899		3,690
Interest expense		16,278		16,296
Loss on the extinguishment of debt		591		—
Income tax expense (benefit)		(471)		4,315
Net income (loss) attributable to redeemable noncontrolling interests		10		(2,230)
Net loss attributable to noncontrolling interests		(55)		(1,108)
Less:
Third-party real estate services, including reimbursements revenue		23,970		38,107
Other revenue		2,196		2,186
Income (loss) from unconsolidated real estate ventures, net		3,145		(943)
Interest and other income, net		14,246		9
Loss on the sale of real estate		(136)		—
Consolidated NOI	$	76,969	$	71,955

The following is a summary of NOI by segment. Items classified in the Other column include future development assets, assets ground leased to third parties, corporate entities and the elimination of inter-segment activity.

	Three Months Ended March 31, 2022
	Commercial		Multifamily		Other		Total
	(In thousands)
Property rental revenue	$	87,621	$	42,108	$	1,869	$	131,598
Parking revenue		4,012		134		55		4,201
Total property revenue		91,633		42,242		1,924		135,799
Property expense:
Property operating		26,202		13,755		687		40,644
Real estate taxes		11,777		5,221		1,188		18,186
Total property expense		37,979		18,976		1,875		58,830
Consolidated NOI	$	53,654	$	23,266	$	49	$	76,969
	Three Months Ended March 31, 2021
	Commercial		Multifamily		Other		Total
	(In thousands)
Property rental revenue	$	87,181	$	32,586	$	2,474	$	122,241
Parking revenue		2,690		65		—		2,755
Total property revenue		89,871		32,651		2,474		124,996
Property expense:
Property operating		23,964		12,195		(1,428)		34,731
Real estate taxes		11,772		5,245		1,293		18,310
Total property expense		35,736		17,440		(135)		53,041
Consolidated NOI	$	54,135	$	15,211	$	2,609	$	71,955

The following is a summary of certain balance sheet data by segment:

	Commercial		Multifamily		Other		Total
	(In thousands)
March 31, 2022
Real estate, at cost	$	2,674,939	$	2,434,441	$	420,245	$	5,529,625
Investments in unconsolidated real estate ventures		280,913		111,920		68,611		461,444
Total assets		3,594,436		1,836,526		884,918		6,315,880
December 31, 2021
Real estate, at cost	$	3,422,278	$	2,367,712	$	446,486	$	6,236,476
Investments in unconsolidated real estate ventures		281,515		103,389		77,981		462,885
Total assets		3,591,839		1,797,807		996,560		6,386,206