SEGMENT INFORMATION

During the quarter ended September 30, 2015, the Company was managing its portfolio within seven segments: (1) Pennsylvania Suburbs, (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 Suburbs 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, Washington, D.C. 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 the City of Austin, Texas. 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.

The following tables provide selected asset information and results of operations of the Company's reportable segments (in thousands):



Real estate investments, at cost:
	September 30, 2015		December 31, 2014
Philadelphia CBD	$	1,394,267	$	1,338,655
Pennsylvania Suburbs	1,126,611		1,178,470
Metropolitan Washington, D.C.	1,216,161		1,183,652
New Jersey/Delaware (a)	239,235		392,581
Richmond, Virginia	311,642		317,076
California	111,587		193,258
Austin, Texas (c)	229,720		—
	$	4,629,223	$	4,603,692
Less: Assets held for sale (a) (b)	74,706		27,436
Operating Properties	$	4,703,929	$	4,631,128

Corporate
Construction-in-progress	$	242,246	$	201,360
Land inventory	$	135,917	$	90,603


(a)	As of September 30, 2015, the Company categorized six properties in the New Jersey/Delaware segment as held for sale in accordance with applicable accounting standards for long lived assets. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.

(b)

On December 31, 2014, the Company was actively marketing for sale its Atrium I and Libertyview properties, comprised of two office properties located in the New Jersey/Delaware segment. As of December 31, 2014 the properties were classified as held for sale on the consolidated balance sheet. The properties were sold on January 8, 2015. See Note 3, "Real Estate Investments," for further information. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.


(c)	On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. As such, the Company has seven wholly owned properties in its Austin, Texas business segment at September 30, 2015. See Note 3, "Real Estate Investments," for further information regarding this transaction.



Net operating income:
	Three-month periods ended
	September 30,
	2015							2014
	Total revenue		Operating expenses (a)			Net operating income		Total revenue		Operating expenses (a)			Net operating income (loss)
Philadelphia CBD	$	52,203	$	(18,750	)	$	33,453	$	49,469	$	(18,168	)	$	31,301
Pennsylvania Suburbs	39,507		(14,004		)	25,503		39,996		(13,409		)	26,587
Metropolitan Washington, D.C.	27,587		(10,792		)	16,795		27,764		(10,672		)	17,092
New Jersey/Delaware	11,922		(6,594		)	5,328		14,975		(7,506		)	7,469
Richmond, Virginia	9,130		(3,700		)	5,430		8,354		(3,724		)	4,630
Austin, Texas (b)	8,533		(2,625		)	5,908		843		(569		)	274
California	3,223		(1,767		)	1,456		4,902		(2,711		)	2,191
Corporate	480		(386		)	94		255		(472		)	(217		)
Operating Properties	$	152,585	$	(58,618	)	$	93,967	$	146,558	$	(57,231	)	$	89,327

	Nine-month periods ended
	September 30,
	2015							2014
	Total revenue		Operating expenses (a)			Net operating income		Total revenue		Operating expenses (a)			Net operating income (loss)
Philadelphia CBD	$	157,595	$	(56,587	)	$	101,008	$	150,303	$	(55,399	)	$	94,904
Pennsylvania Suburbs	118,407		(41,286		)	77,121		121,313		(41,542		)	79,771
Metropolitan Washington, D.C.	81,947		(33,197		)	48,750		87,403		(33,134		)	54,269
New Jersey/Delaware	37,149		(20,857		)	16,292		45,440		(23,728		)	21,712
Richmond, Virginia	27,381		(11,603		)	15,778		25,543		(11,629		)	13,914
Austin, Texas (b)	11,999		(4,993		)	7,006		3,900		(2,362		)	1,538
California	11,599		(5,778		)	5,821		14,399		(7,634		)	6,765
Corporate	2,562		(1,364		)	1,198		871		(1,484		)	(613		)
Operating Properties	$	448,639	$	(175,665	)	$	272,974	$	449,172	$	(176,912	)	$	272,260


(a)	Includes property operating expense, real estate taxes and third party management expense.

(b)

On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. See Note 3, "Real Estate Investments," for further information regarding this transaction. On April 3, 2014, the Company contributed Four Points Centre to an unconsolidated real estate venture. See Note 3, "Real Estate Investments," in notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.



Unconsolidated real estate ventures (in thousands):
	Investment in real estate ventures, at equity				Equity in income (loss) of real estate ventures
	As of				Three-month periods ended September 30,						Nine-month periods ended September 30,
	September 30, 2015		December 31, 2014		2015			2014			2015			2014
Philadelphia CBD (a)	$	43,236	$	27,137	$	(186	)	$	32		$	(636	)	$	13
Pennsylvania Suburbs	16,796		17,385		(120		)	(578		)	(142		)	(937		)
Metropolitan Washington, D.C. (b)	113,222		73,127		(343		)	(142		)	(572		)	(117		)
New Jersey/Delaware	—		—		67			82			231			204
Richmond, Virginia	1,512		1,574		106			184			438			253
Austin, Texas (c) (d)	37,005		105,781		(617		)	(64		)	(1,154		)	(149		)
Total	$	211,771	$	225,004	$	(1,093	)	$	(486	)	$	(1,835	)	$	(733	)


(a)	evo at Cira was placed into service during the third quarter ended September 30, 2014.


(b)	Investment in real estate ventures as of September 30, 2015 includes the JBG Ventures, which were formed on May 29, 2015.


(c)	Investment in real estate ventures does not include the $1.1 million and $1.2 million negative investment balance in one real estate venture as of September 30, 2015 and December 31, 2014, respectively, which is included in other liabilities.


(d)	On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. As such, equity method investment at June 30, 2015 related to the Austin Venture only. See Note 3, "Real Estate Investments," for further information regarding the purchase of Broadmoor Austin Associates.

Net operating income (“NOI”) is a non-GAAP financial measure 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:



	Three-month periods ended September 30,						Nine-month periods ended September 30,
	2015			2014			2015			2014
	(amounts in thousands)
Consolidated net operating income	$	93,967		$	89,327		$	272,974		$	272,260
Other income (expense):
Depreciation and amortization	(58,314		)	(52,616		)	(160,355		)	(157,773		)
General and administrative expenses	(6,127		)	(5,900		)	(21,554		)	(20,086		)
Interest income	126			528			1,189			1,298
Interest expense	(27,900		)	(31,481		)	(83,971		)	(94,837		)
Recognized hedge activity	—			(828		)	—			(828		)
Interest expense - amortization of deferred financing costs	(1,010		)	(1,566		)	(3,377		)	(3,952		)
Interest expense - financing obligation	(296		)	(273		)	(906		)	(861		)
Equity in loss of Real Estate Ventures	(1,093		)	(486		)	(1,835		)	(733		)
Net gain on disposition of real estate	6,083			4,698			16,673			4,698
Net gain on sale of undepreciated real estate	3,019			—			3,019			1,184
Net gain from remeasurement of investment in a real estate venture	—			—			758			458
Loss on real estate venture transactions	—			—			—			(417		)
Loss on early extinguishment of debt	—			(2,606		)	—			(2,606		)
Provision for impairment on assets held for sale/sold	—			(1,765		)	(2,508		)	(1,765		)
Tax credit transaction income	11,853			11,853			11,853			11,853
Income from continuing operations	20,308			8,885			31,960			7,893
Income from discontinued operations	—			(3		)	—			918
Net income	$	20,308		$	8,882		$	31,960		$	8,811