Segment Information

6 Months Ended

Jun. 30, 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 June 30,					Six Months Ended June 30,
	2022		2021		X	2022		2021
	(In thousands)
Property management fees	$	4,976	$	4,776		$	9,784	$	9,718
Asset management fees		1,513		2,229			3,284		4,457
Development fees (1)		2,148		4,392			5,687		18,642
Leasing fees		1,038		1,424			2,877		2,284
Construction management fees		37		234			187		406
Other service revenue		1,499		1,790			2,315		3,488
Third-party real estate services revenue, excluding reimbursements		11,211		14,845			24,134		38,995
Reimbursement revenue (2)		10,946		11,900			21,993		25,857
Third-party real estate services revenue, including reimbursements		22,157		26,745			46,127		64,852
Third-party real estate services expenses		24,143		25,557			51,192		54,493
Third-party real estate services revenue less expenses	$	(1,986)	$	1,188		$	(5,065)	$	10,359

(1) As of June 30, 2022, we had estimated unrecognized development fee revenue totaling $43.2 million, of which $7.1 million, $12.3 million and $6.6 million is expected to be recognized during the remainder of 2022, 2023 and 2024, and $17.2 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 $16.7 million and $19.6 million as of June 30, 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 income (loss) attributable to common shareholders to consolidated NOI:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021		X	2022		2021
	(In thousands)
Net income (loss) attributable to common shareholders	$	123,275	$	(2,973)		$	123,243	$	(23,704)
Add:
Depreciation and amortization expense		49,479		56,678			107,541		121,404
General and administrative expense:
Corporate and other		14,782		13,895			30,597		26,370
Third-party real estate services		24,143		25,557			51,192		54,493
Share-based compensation related to Formation Transaction and special equity awards		1,577		4,441			3,821		9,386
Transaction and other costs		1,987		2,270			2,886		5,960
Interest expense		16,041		16,773			32,319		33,069
Loss on the extinguishment of debt		1,038		—			1,629		—
Income tax expense (benefit)		2,905		(5)			2,434		4,310
Net income (loss) attributable to redeemable noncontrolling interests		18,248		(345)			18,258		(2,575)
Net loss attributable to noncontrolling interests		(29)		—			(84)		(1,108)
Less:
Third-party real estate services, including reimbursements revenue		22,157		26,745			46,127		64,852
Other revenue		1,798		1,904			3,994		4,090
Income (loss) from unconsolidated real estate ventures, net		(2,107)		3,953			1,038		3,010
Interest and other income (loss), net		1,672		(38)			15,918		(29)
Gain on the sale of real estate, net		158,767		11,290			158,631		11,290
Consolidated NOI	$	71,159	$	72,437		$	148,128	$	144,392

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 June 30, 2022
	Commercial		Multifamily		Other		Total
	(In thousands)
Property rental revenue	$	71,903	$	42,939	$	2,194	$	117,036
Parking revenue		4,187		250		77		4,514
Total property revenue		76,090		43,189		2,271		121,550
Property expense:
Property operating		19,624		14,870		951		35,445
Real estate taxes		9,018		5,054		874		14,946
Total property expense		28,642		19,924		1,825		50,391
Consolidated NOI	$	47,448	$	23,265	$	446	$	71,159
	Three Months Ended June 30, 2021
	Commercial		Multifamily		Other		Total
	(In thousands)
Property rental revenue	$	89,189	$	32,718	$	912	$	122,819
Parking revenue		2,959		110		107		3,176
Total property revenue		92,148		32,828		1,019		125,995
Property expense:
Property operating		25,097		12,042		(2,139)		35,000
Real estate taxes		12,148		5,065		1,345		18,558
Total property expense		37,245		17,107		(794)		53,558
Consolidated NOI	$	54,903	$	15,721	$	1,813	$	72,437

	Six Months Ended June 30, 2022
	Commercial		Multifamily		Other		Total
	(In thousands)
Property rental revenue	$	159,524	$	85,047	$	4,063	$	248,634
Parking revenue		8,199		384		132		8,715
Total property revenue		167,723		85,431		4,195		257,349
Property expense:
Property operating		45,826		28,625		1,638		76,089
Real estate taxes		20,795		10,275		2,062		33,132
Total property expense		66,621		38,900		3,700		109,221
Consolidated NOI	$	101,102	$	46,531	$	495	$	148,128
	Six Months Ended June 30, 2021
	Commercial		Multifamily		Other		Total
	(In thousands)
Property rental revenue	$	176,370	$	65,304	$	3,386	$	245,060
Parking revenue		5,649		175		107		5,931
Total property revenue		182,019		65,479		3,493		250,991
Property expense:
Property operating		49,061		24,237		(3,567)		69,731
Real estate taxes		23,920		10,310		2,638		36,868
Total property expense		72,981		34,547		(929)		106,599
Consolidated NOI	$	109,038	$	30,932	$	4,422	$	144,392

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

	Commercial		Multifamily		Other		Total
	(In thousands)
June 30, 2022
Real estate, at cost	$	2,722,907	$	2,481,213	$	402,467	$	5,606,587
Investments in unconsolidated real estate ventures		233,519		96,030		84,800		414,349
Total assets		3,016,911		1,856,493		706,498		5,579,902
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