18. SEGMENT INFORMATION

During the year ended December 31, 2015, the Company managed 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 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 the District of Columbia, 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 the City of Austin, Texas. The California segment includes properties in Oakland and Concord, California. 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.

The following tables provide selected asset information and results of operations of the Company’s reportable segments for the three years ended December 31, 2015, 2014 and 2013 (in thousands):

Real estate investments, at cost:
	December 31, 2015		December 31, 2014		December 31, 2013
Philadelphia CBD (a)	$	1,157,667	$	1,338,655	$	1,300,666
Pennsylvania Suburbs (b)		1,019,280		1,178,470		1,199,105
Metropolitan Washington, D.C. (b)		1,129,206		1,183,652		1,214,965
New Jersey/Delaware (b)		154,326		392,581		414,716
Richmond, Virginia (b)		-		317,076		310,397
California		68,003		193,258		192,584
Austin, Texas (c)		164,518		-		36,856
	$	3,693,000	$	4,603,692	$	4,669,289
Assets held for sale (a), (b)		794,588		27,436		-
Operating Properties	$	4,487,588	$	4,631,128	$	4,669,289

Corporate
Construction-in-progress	$	268,983	$	201,360	$	74,174
Land inventory	$	130,479	$	90,603	$	93,351

(a)

As of December 31, 2015, 2970 Market Street was classified as held for sale on the consolidated balance sheets. The property was sold on February 5, 2016. See Note 21, "Subsequent Events," for further information. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.

(b)

As of December 31, 2015, the 58 properties associated with the transaction with Och Ziff Real Estate were classified as held for sale on the consolidated balance sheets. On February 4, 2016, the Company completed a series of transactions resulting in the disposition of the properties. See Note 21, “Subsequent Events,” for further information regarding the disposition. 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 December 31, 2015. See Note 3, "Real Estate Investments," for further information regarding this transaction.

	Years ended
	December 31,
	2015							2014								2013
	Total revenue		Operating expenses (a)			Net operating income		Total revenue		Operating expenses (a)			Net operating income			Total revenue		Operating expenses (a)			Net Operating income
Philadelphia CBD	$	209,298	$	(77,352	)	$	131,946	$	201,809	$	(75,262	)	$	126,547		$	146,081	$	(55,702	)	$	90,379
Pennsylvania Suburbs		158,398		(57,319	)		101,079		160,630		(55,062	)		105,568			153,426		(54,506	)		98,920
Metropolitan Washington, D.C.		110,657		(44,294	)		66,363		113,834		(43,399	)		70,435			116,048		(42,641	)		73,407
New Jersey/Delaware		47,726		(26,854	)		20,872		60,403		(31,650	)		28,753			60,262		(29,981	)		30,281
Richmond, Virginia		36,486		(15,073	)		21,413		34,180		(15,399	)		18,781			35,058		(14,916	)		20,142
California		14,587		(7,677	)		6,910		19,388		(10,165	)		9,223			18,369		(9,411	)		8,958
Austin, Texas (b)		20,910		(8,010	)		12,900		5,610		(3,223	)		2,387			31,451		(13,298	)		18,153
Corporate		4,569		(1,508	)		3,061		1,128		(1,805	)		(677	)		1,515		(1,314	)		201
Operating Properties	$	602,631	$	(238,087	)	$	364,544	$	596,982	$	(235,965	)	$	361,017		$	562,210	$	(221,769	)	$	340,441

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

(b)

Unconsolidated real estate ventures:
	Investment in real estate ventures, at equity						Equity in income (loss) of real estate ventures
	As of						Years ended December 31,
	December 31, 2015		December 31, 2014		December 31, 2013		2015			2014			2013
Philadelphia CBD (a)	$	44,089	$	27,137	$	19,975	$	(188	)	$	46		$	1,547
Pennsylvania Suburbs		16,408		17,385		17,272		310			(777	)		925
Metropolitan Washington, D.C. (b)		118,422		73,127		59,905		(336	)		(317	)		130
New Jersey/Delaware		-		-		-		348			989			1,245
Richmond, Virginia		1,657		1,574		1,400		582			349			381
Austin, Texas (c) (d)		60,428		105,781		81,960		(1,527	)		(1,080	)		(564	)
Total	$	241,004	$	225,004	$	180,512	$	(811	)	$	(790	)	$	3,664

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

(b)	Investment in real estate ventures as of December 31, 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 December 31, 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, the equity method investment at December 31, 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 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 and development 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 capitalized 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 an appropriate earnings measure. The following is a reconciliation of consolidated NOI to consolidated net income, as defined by GAAP:

	Years Ended December 31,
	2015			2014			2013

Consolidated net operating income	$	364,544		$	361,017		$	340,441
Less:
Interest expense		(110,717	)		(124,329	)		(121,937	)
Interest expense - amortization of deferred financing costs		(4,557	)		(5,148	)		(4,676	)
Interest expense - financing obligation		(1,237	)		(1,144	)		(972	)
Depreciation and amortization		(219,029	)		(208,569	)		(197,021	)
General and administrative expenses		(29,406	)		(26,779	)		(27,628	)
Equity in income (loss) of real estate ventures		(811	)		(790	)		3,664
Provision for impairment		(82,208	)		(1,765	)		-
Plus:
Interest income		1,224			3,974			1,044
Tax credit transaction income		19,955			11,853			11,853
Recognized hedge activity		-			(828	)		-
Net gain from remeasurement of investments in real estate ventures		758			458			6,866
Net gain on sales of interests in real estate		20,496			4,901			-
Net gain (loss) on sale of undepreciated real estate		3,019			1,184			(137	)
Net gain (loss) on real estate venture transactions		7,229			(417	)		29,604
Loss on early extinguishment of debt		-			(7,594	)		(2,119	)
Income (loss) from continuing operations		(30,740	)		6,024			38,982
Income from discontinued operations		-			918			4,207
Net income (loss)	$	(30,740	)	$	6,942		$	43,189