Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information [Abstract]

SEGMENT INFORMATION

16. SEGMENT INFORMATION

As of September 30, 2011, 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 suburban Maryland. The New Jersey/Delaware segment includes properties in Burlington, Camden and Mercer 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 Durham, North Carolina. The Austin, Texas segment includes properties in Austin. The California segment includes properties in Oakland, Concord, Carlsbad and Rancho Bernardo. 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 is as follows (in thousands):

	Pennsylvania		Philadelphia				New Jersey		Richmond,
	Suburbs		CBD		Metropolitan, D.C.		/Delaware		Virginia		Austin, Texas		California		Corporate			Total
As of September 30, 2011:
Real estate investments, at cost:
Operating properties	$	1,214,060	$	951,790	$	1,369,899	$	570,804	$	306,039	$	257,208	$	250,928	$	—		$	4,920,728
Construction-in-progress		—		—		—		—		—		—		—		36,246			36,246
Land inventory		—		—		—		—		—		—		—		120,470			120,470
As of December 31, 2010:
Real estate investments, at cost:
Operating properties	$	1,199,957	$	911,354	$	1,359,776	$	568,413	$	294,406	$	254,019	$	246,186	$	—		$	4,834,111
Construction-in-progress		—		—		—		—		—		—		—		33,322			33,322
Land inventory		—		—		—		—		—		—		—		110,055			110,055
For the three-months ended September 30, 2011:
Total revenue	$	38,864	$	31,098	$	31,554	$	22,096	$	9,334	$	7,453	$	5,567	$	(302	)	$	145,664
Property operating expenses, real estate taxes and third party management expenses		14,224		11,541		11,526		10,576		3,664		3,233		3,262		(421	)		57,605
Net operating income	$	24,640	$	19,557	$	20,028	$	11,520	$	5,670	$	4,220	$	2,305	$	119		$	88,059
For the three-months ended September 30, 2010:
Total revenue	$	36,809	$	24,617	$	33,881	$	23,944	$	8,919	$	8,014	$	5,503	$	(195	)	$	141,492
Property operating expenses, real estate taxes and third party management expenses		14,591		9,859		11,665		11,930		3,287		3,204		3,171		(232	)		57,475
Net operating income	$	22,218	$	14,758	$	22,216	$	12,014	$	5,632	$	4,810	$	2,332	$	37		$	84,017
For the nine-months ended September 30, 2011:
Total revenue	$	118,295	$	93,520	$	96,813	$	64,526	$	27,409	$	23,202	$	16,359	$	(849	)	$	439,275
Property operating expenses, real estate taxes and third party management expenses		44,554		34,954		36,012		32,302		10,667		9,740		8,772		(895	)		176,106
Net operating income	$	73,741	$	58,566	$	60,801	$	32,224	$	16,742	$	13,462	$	7,587	$	46		$	263,169
For the nine-months ended September 30, 2010:
Total revenue	$	113,622	$	61,579	$	103,285	$	71,884	$	27,087	$	23,979	$	17,374	$	(821	)	$	417,989
Property operating expenses, real estate taxes and third party management expenses		44,218		25,643		36,041		34,716		10,111		9,968		8,853		(713	)		168,837
Net operating income	$	69,404	$	35,936	$	67,244	$	37,168	$	16,976	$	14,011	$	8,521	$	(108	)	$	249,152

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 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. NOI does not also reflect general and administrative expenses, interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact the Company’s results from operations. All companies may not also calculate NOI in the same manner. The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. Below is a reconciliation of consolidated net operating income to consolidated income from continuing operations:

	Three-month periods						Nine-month periods
	ended September 30,						ended September 30,
	2011			2010			2011			2010
	(amounts in thousands)						(amounts in thousands)
Consolidated net operating income	$	88,059		$	84,017		$	263,169		$	249,152
Less:
Interest expense		(32,346	)		(34,488	)		(99,477	)		(97,222	)
Deferred financing costs		(1,846	)		(827	)		(3,844	)		(2,700	)
Depreciation and amortization		(54,252	)		(51,644	)		(163,940	)		(154,962	)
Administrative expenses		(6,177	)		(5,753	)		(18,311	)		(18,498	)
Plus:
Interest income		523			726			1,385			2,554
Historic tax credit transaction income		12,026			—			12,026			—
Equity in income of real estate ventures		418			1,035			2,739			3,356
Net gain on sales of interests in real estate		—			—			2,791			—
Gain (loss) on early extinguishment of debt		176			(64	)		(580	)		(1,701	)
Loss from continuing operations		6,581			(6,998	)		(4,042	)		(20,021	)
Income from discontinued operations		30			382			3,929			7,406
Net income (loss)	$	6,611		$	(6,616	)	$	(113	)	$	(12,615	)