Segment Information

12 Months Ended

Dec. 31, 2024

Segment Information

Segment Information

20.          Segment Information

We own, operate and develop mixed-use properties concentrated in and around Washington, D.C. We derive our revenue primarily from leases with multifamily and commercial tenants. In addition, our third-party real estate services business provides fee-based real estate services. Our operating segments are aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our CODM, makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, our three operating and reportable segments are multifamily, commercial, and third-party real estate services.

The CODM measures and evaluates the performance of our operating segments based on only the following measures at our share pertaining to each of our segments:

● Net operating income ("NOI") (multifamily and commercial) - which includes our proportionate share of revenue and expenses attributable to real estate ventures. NOI includes property rental revenue and other property revenue, and deducts property expenses. NOI excludes deferred rent, commercial lease termination revenue, related party management fees, interest expense, and certain other non-cash adjustments, including the accretion of acquired below-market leases and the amortization of acquired above-market leases and below-market ground lease intangibles.

● Net third-party real estate services, excluding reimbursements - which includes revenue streams generated by this segment, excluding reimbursement revenue, as well as the expenses attributable to this segment at our proportionate share, calculated by excluding real estate services revenue from our interests in such real estate ventures.

The CODM uses these measures predominantly in the annual budget and forecasting process as well as in his review of our quarterly financial results when making decisions about the allocation of operating and capital resources to each segment.

We have included disclosure of NOI and the results of our third-party real estate services business at our share to align with our internal reporting given the repositioning of our portfolio and the information used by our CODM.

The following is a summary of NOI at our share for our multifamily and commercial segments, including a reconciliation to our total NOI at share:

	Year Ended December 31, 2024
	Multifamily		Commercial		Total
	(In thousands, at our share)
Property rental revenue	$	214,431	$	230,039	$	444,470
Other property revenue		3,677		17,517		21,194
Total property revenue		218,108		247,556		465,664
Property expense:
Real estate taxes		22,197		27,103		49,300
Payroll		16,347		13,293		29,640
Utilities		15,337		14,311		29,648
Repairs and maintenance		22,396		22,088		44,484
Other property operating		11,612		17,733		29,345
Total property expense		87,889		94,528		182,417
NOI from reportable segments	$	130,219	$	153,028		283,247
Other NOI (1)						(5,968)
NOI					$	277,279

	Year Ended December 31, 2023
	Multifamily		Commercial		Total
	(In thousands, at our share)
Property rental revenue	$	205,061	$	285,652	$	490,713
Other property revenue		8,068		19,106		27,174
Total property revenue		213,129		304,758		517,887
Property expense:
Real estate taxes		21,924		37,698		59,622
Payroll		19,060		15,245		34,305
Utilities		14,905		16,949		31,854
Repairs and maintenance		15,978		24,043		40,021
Other property operating		11,862		20,616		32,478
Total property expense		83,729		114,551		198,280
NOI from reportable segments	$	129,400	$	190,207		319,607
Other NOI (1)						(1,115)
NOI					$	318,492

	Year Ended December 31, 2022
	Multifamily		Commercial		Total
	(In thousands, at our share)
Property rental revenue	$	185,727	$	340,207	$	525,934
Other property revenue		6,070		19,381		25,451
Total property revenue		191,797		359,588		551,385
Property expense:
Real estate taxes		21,582		44,654		66,236
Payroll		17,710		17,823		35,533
Utilities		14,305		20,181		34,486
Repairs and maintenance		14,395		30,842		45,237
Other property operating		10,692		22,286		32,978
Total property expense		78,684		135,786		214,470
NOI from reportable segments	$	113,113	$	223,802		336,915
Other NOI (1)						(2,547)
NOI					$	334,368

(1) Includes activity related to development assets and land assets for which we are the ground lessor.

The following is a summary of our third-party real estate services business at our share:

	Year Ended December 31,
	2024		2023		2022
	(In thousands, at our share)
Property management fees	$	16,138	$	18,983	$	18,001
Asset management fees		4,088		4,925		5,994
Development fees		2,573		10,253		8,325
Leasing fees		3,757		5,538		6,001
Construction management fees		1,210		1,383		521
Other service revenue		5,038		4,840		4,862
Third-party real estate services revenue, excluding reimbursements		32,804		45,922		43,704
Third-party real estate services expenses, excluding reimbursements		36,836		42,403		47,334
Net third-party real estate services, excluding reimbursements	$	(4,032)	$	3,519	$	(3,630)

The following is a reconciliation of revenue at our share to total revenue per the consolidated statements of operations:

	Year Ended December 31,
	2024		2023		2022
	(In thousands)
Total property revenue at our share	$	465,664	$	517,887	$	551,385
Third-party real estate services revenue, excluding reimbursements, at our share		32,804		45,922		43,704
Reimbursement revenue (1)		35,332		43,520		39,638
Our share of revenue attributable to unconsolidated real estate ventures		(10,807)		(27,893)		(43,613)
Other property revenue		4,889		(835)		(3,193)
Other adjustments (2)		19,430		25,597		17,903
Total revenue per consolidated statements of operations	$	547,312	$	604,198	$	605,824

(1) Represents reimbursements 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

(2) Adjustment to include deferred rent, above/below market lease amortization, commercial lease termination revenue, and lease incentive amortization.

The following is the reconciliation of NOI at our share to net income (loss) before income tax (expense) benefit:

	Year Ended December 31,
	2024		2023		2022
	(In thousands)
NOI at our share	$	277,279	$	318,492	$	334,368
Net third-party real estate services, excluding reimbursements, at our share		(4,032)		3,519		(3,630)
Add:
Loss from unconsolidated real estate ventures, net		(7,122)		(26,999)		(17,429)
Interest and other income, net		11,598		15,781		18,617
Gain (loss) on the sale of real estate, net		(2,753)		79,335		161,894
Less:
Depreciation and amortization expense		208,180		210,195		213,771
General and administrative expense:
Corporate and other		58,790		54,838		58,280
Share-based compensation related to Formation Transaction and special equity awards		—		549		5,391
Transaction and other costs		5,317		8,737		5,511
Interest expense		134,068		108,660		75,930
(Gain) loss on the extinguishment of debt		(9,235)		450		3,073
Impairment loss		55,427		90,226		—
Adjustments:
Our share of net third-party real estate services attributable to unconsolidated real estate ventures		(767)		(416)		(1,877)
NOI attributable to unconsolidated real estate ventures at our share		(6,808)		(19,452)		(26,861)
Non-cash rent adjustments (1)		9,482		23,482		17,442
Other adjustments (2)		(1,321)		(12,092)		(20,318)
Total adjustments		586		(8,478)		(31,614)
Income (loss) before income tax (expense) benefit	$	(176,991)	$	(92,005)	$	100,250

(1) Adjustment to include deferred rent, above/below market lease amortization and lease incentive amortization.

(2) Adjustment to include payments associated with assumed lease liabilities related to operating properties and to exclude commercial lease termination revenue, related party management fees, corporate entity activity and inter-segment activity.