Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

During the year ended December 31, 2013, the Company was managing its portfolio within seven segments: (1) Pennsylvania, (2) Philadelphia Central Business District (CBD), (3) Metropolitan Washington D.C., (4) New Jersey/Delaware, (5) Richmond, Virginia, (6) Austin, Texas and (7) California. The Pennsylvania segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia and southern Maryland. The New Jersey/Delaware segment includes properties in Burlington and Camden counties in New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and one property in Durham, North Carolina. The Austin, Texas segment includes properties in Austin. On October 16, 2013, seven properties within the Austin portfolio were contributed to a newly formed real estate venture. After contributing the properties, the Company wholly owns only one property in Austin, Texas (For additional information, see Note 4). The California segment includes properties in Oakland, Concord, and Carlsbad. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project.

Segment information for the three years ended December 31, 2013, 2012 and 2011 are as follows (in thousands):

	Pennsylvania Suburbs		Philadelphia CBD		Metropolitan Washington, D.C.			New Jersey/Delaware		Richmond, Virginia		Austin, Texas (a)			California		Corporate			Total
2013
Real estate investments, at cost:
Operating properties	$	1,199,105	$	1,300,666	$	1,214,965		$	414,716	$	310,397	$	36,856		$	192,584	$	—		$	4,669,289
Construction-in-progress																	74,174			74,174
Land inventory																	93,351			93,351
Total revenue	$	153,426	$	146,081	$	116,048		$	60,262	$	35,058	$	31,451		$	18,369	$	1,515		$	562,210
Property operating expenses, real estate taxes and third party management expenses	54,506		55,702		42,641			29,981		14,916		13,298			9,411		1,314			221,769
Net operating income	$	98,920	$	90,379	$	73,407		$	30,281	$	20,142	$	18,153		$	8,958	$	201		$	340,441
Investment in real estate ventures, at equity	$	17,272	$	19,975	$	59,905		$	—	$	1,400	$	81,960		$	—	$	—		$	180,512
Equity in income of real estate ventures	$	925	$	1,547	$	130		$	1,245	$	381	$	(564	)	$	—	$	—		$	3,664
2012
Real estate investments, at cost:
Operating properties	$	1,178,730	$	988,590	$	1,193,200		$	546,644	$	309,923	$	285,346		$	223,736	$	—		$	4,726,169
Construction-in-progress																	48,950			48,950
Land inventory																	102,439			102,439
Total revenue	$	150,075	$	131,592	$	107,656		$	59,671	$	35,701	$	32,379		$	17,463	$	1,142		$	535,679
Property operating expenses, real estate taxes and third party management expenses	52,657		50,787		41,485			28,506		14,484		13,951			9,043		(65		)	210,848
Net operating income	$	97,418	$	80,805	$	66,171		$	31,165	$	21,217	$	18,428		$	8,420	$	1,207		$	324,831
Investment in real estate ventures, at equity	$	33,160	$	27,859	$	49,169		$	17,294	$	1,245	$	64,828		$	—	$	—		$	193,555
Equity in income of real estate ventures	$	520	$	1,113	$	(648	)	$	1,803	$	269	$	(316	)	$	—	$	—		$	2,741
2011
Operating properties	$	1,218,071	$	953,870	$	1,255,803		$	545,657	$	307,698	$	257,694		$	254,287	$	—		$	4,793,080
Construction-in-progress																	25,083			25,083
Land inventory																	109,008			109,008
Total revenue	$	148,887	$	125,366	$	119,255		$	58,960	$	36,789	$	30,894		$	16,692	$	1,725		$	538,568
Property operating expenses, real estate taxes and third party management expenses	54,734		48,831		45,135			30,564		14,739		13,034			9,407		347			216,791
Net operating income	$	94,153	$	76,535	$	74,120		$	28,396	$	22,050	$	17,860		$	7,285	$	1,378		$	321,777
Investment in real estate ventures, at equity	$	5,264	$	13,397	$	24,671		$	6,168	$	1,163	$	65,144		$	—	$	—		$	115,807
Equity in income of real estate ventures	$	1,861	$	466	$	(277	)	$	1,157	$	510	$	58		$	—	$	—		$	3,775

(a) On October 16, 2013seven properties from the Austin portfolio were contributed to a newly formed real estate venture. Accordingly, the Company's 50% interest in the financial results of these seven properties for the period subsequent to October 16, 2013 is reported as a component of 'Equity in income of real estate ventures' in the Company's consolidated statements of operations and, as a result, no longer included as a component of net operating income. The Company acquired Four Points Centre in Austin, TX on December 19, 2013 and the financial results for this property are included in net operating income for the period owned. For additional information, see Notes 3 and 4 to our consolidated financial statements.

Net operating income (“NOI”) is defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Segment NOI includes revenue, real estate taxes and property operating expenses directly related to operation and management of the properties owned and managed within the respective geographical region. Segment NOI excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. NOI also does not reflect general and administrative expenses, interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. Trends in development and construction activities that could materially impact the Company’s results from operations are also not reflected in NOI. All companies may not calculate NOI in the same manner. NOI is the measure that is used by the Company to evaluate the operating performance of its real estate assets by segment. The Company also believes that NOI provides useful information to investors regarding its financial condition and results of operations because it reflects only those income and expenses recorded at the property level. The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The following is a reconciliation of consolidated NOI to consolidated net income (loss), as defined by GAAP:

	Years Ended December 31,
	2013			2012			2011
Consolidated net operating income	$	340,441		$	324,831		$	321,777
Less:
Interest expense	(121,937		)	(132,939		)	(131,405		)
Interest expense - amortization of deferred financing costs	(4,676		)	(6,208		)	(4,991		)
Interest expense - financing obligation	(972		)	(850		)	—
Depreciation and amortization	(197,021		)	(188,382		)	(202,933		)
General and administrative expenses	(27,628		)	(25,413		)	(24,602		)
Plus:
Interest income	1,044			3,008			1,810
Historic tax credit transaction income	11,853			11,840			12,026
Recognized hedge activity	—			(2,985		)	—
Equity in income of real estate ventures	3,664			2,741			3,775
Net gain from remeasurement of investments in real estate ventures	6,866			—			—
Net gain on sales of interests in real estate	—			—			2,985
Net loss on sale of undepreciated real estate	(137		)	—			—
Net gain (loss) on real estate venture transactions	29,604			(950		)	(222		)
Loss on early extinguishment of debt	(2,119		)	(22,002		)	(2,776		)
Income (loss) from continuing operations	38,982			(37,309		)	(24,556		)
Income from discontinued operations	4,207			43,838			19,841
Net income (loss)	$	43,189		$	6,529		$	(4,715	)