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Segment Information (Tables)
 9 Months Ended
Sep. 30, 2017
Segment Reporting [Abstract]  
Real Estate Investments, Net Operating Income and Unconsolidated Real Estate Ventures of Reportable Segments

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, 2017

 

 

December 31, 2016

 

Philadelphia CBD

 

$

1,591,828

 

 

$

1,320,974

 

Pennsylvania Suburbs (a)

 

 

966,128

 

 

 

1,005,446

 

Metropolitan Washington, D.C.

 

 

976,286

 

 

 

975,987

 

Austin, Texas

 

 

146,859

 

 

 

146,794

 

Other

 

 

87,966

 

 

 

137,094

 

 

 

$

3,769,067

 

 

$

3,586,295

 

Assets held for sale (b)

 

 

47,291

 

 

 

73,591

 

      Operating properties

 

$

3,816,358

 

 

$

3,659,886

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

Construction-in-progress

 

$

127,141

 

 

$

297,462

 

Land held for development

 

$

120,696

 

 

$

150,970

 

 

(a)

As of September 30, 2017, the Company categorized six office properties in its Pennsylvania Suburbs segment as held for sale in accordance with applicable accounting standards for long lived assets. See Note 3, “Real Estate Investments,” for further information.

(b)

Real estate investments related to assets held for sale above represents gross real estate assets and does not include accumulated depreciation, land held for development or other assets on the balance sheet of the property held for sale. See Note 3, “Real Estate Investments,” for further information.

 

None of the above aforementioned sales or properties classified as held for sale are considered significant dispositions under the accounting guidance for discontinued operations.

Net operating income (in thousands):

 

Three-month periods ended

 

 

September 30,

 

 

2017

 

 

2016

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income (loss)

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

Philadelphia CBD

$

56,452

 

 

$

(22,010

)

 

$

34,442

 

 

$

50,744

 

 

$

(19,071

)

 

$

31,673

 

Pennsylvania Suburbs

 

34,861

 

 

 

(11,846

)

 

 

23,015

 

 

 

35,763

 

 

 

(11,247

)

 

 

24,516

 

Metropolitan Washington, D.C.

 

23,079

 

 

 

(8,500

)

 

 

14,579

 

 

 

24,251

 

 

 

(9,900

)

 

 

14,351

 

Austin, Texas

 

7,886

 

 

 

(3,929

)

 

 

3,957

 

 

 

8,726

 

 

 

(3,523

)

 

 

5,203

 

Other

 

3,752

 

 

 

(2,647

)

 

 

1,105

 

 

 

8,526

 

 

 

(4,837

)

 

 

3,689

 

Corporate

 

2,408

 

 

 

(1,769

)

 

 

639

 

 

 

1,684

 

 

 

(2,739

)

 

 

(1,055

)

Operating properties

$

128,438

 

 

$

(50,701

)

 

$

77,737

 

 

$

129,694

 

 

$

(51,317

)

 

$

78,377

 

 

 

Nine-month periods ended

 

 

September 30,

 

 

2017

 

 

2016

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

Philadelphia CBD

$

165,352

 

 

$

(64,311

)

 

$

101,041

 

 

$

148,496

 

 

$

(58,102

)

 

$

90,394

 

Pennsylvania Suburbs

 

105,673

 

 

 

(35,670

)

 

 

70,003

 

 

 

107,971

 

 

 

(36,982

)

 

 

70,989

 

Metropolitan Washington, D.C.

 

69,190

 

 

 

(26,347

)

 

 

42,843

 

 

 

76,881

 

 

 

(29,567

)

 

 

47,314

 

Austin, Texas

 

25,772

 

 

 

(11,634

)

 

 

14,138

 

 

 

25,123

 

 

 

(9,689

)

 

 

15,434

 

Other

 

14,274

 

 

 

(9,083

)

 

 

5,191

 

 

 

30,328

 

 

 

(17,513

)

 

 

12,815

 

Corporate

 

6,888

 

 

 

(5,355

)

 

 

1,533

 

 

 

4,578

 

 

 

(4,460

)

 

 

118

 

Operating properties

$

387,149

 

 

$

(152,400

)

 

$

234,749

 

 

$

393,377

 

 

$

(156,313

)

 

$

237,064

 

 

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

 

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, 2017

 

 

December 31, 2016

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Philadelphia CBD

$

42,298

 

 

$

48,691

 

 

$

134

 

 

$

(453

)

 

$

113

 

 

$

(473

)

Pennsylvania Suburbs

 

3,320

 

 

 

15,421

 

 

 

24

 

 

 

(170

)

 

 

448

 

 

 

410

 

Metropolitan Washington, D.C. (a)

 

119,550

 

 

 

141,786

 

 

 

(5,264

)

 

 

(5,287

)

 

 

(4,872

)

 

 

(6,068

)

Austin, Texas

 

52,940

 

 

 

52,886

 

 

 

(15

)

 

 

(561

)

 

 

1,266

 

 

 

(1,299

)

MAP Venture (b)

 

16,283

 

 

 

20,893

 

 

 

(706

)

 

 

(1,010

)

 

 

(2,610

)

 

 

(2,608

)

Other

 

1,922

 

 

 

1,654

 

 

 

104

 

 

 

227

 

 

 

268

 

 

 

715

 

Total

$

236,313

 

 

$

281,331

 

 

$

(5,723

)

 

$

(7,254

)

 

$

(5,387

)

 

$

(9,323

)

(a)

The three- and nine-month periods ended September 30, 2017 include a $4.8 million other than temporary impairment charge related to the BDN - AI Venture that was recorded during the three months ended September 30, 2017.

(b)

The MAP Venture represents a joint venture formed between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC, on February 4, 2016. The MAP Venture’s business operations, including properties in Richmond, Virginia; Metropolitan Washington, D.C.; New Jersey/Delaware and Pennsylvania Suburbs, are centrally managed with the results reported to management of the Company on a consolidated basis. As a result, the investment in the MAP Venture is separately presented. All other unconsolidated real estate ventures are managed consistently with the Company’s regional segments.

Reconciliation of Consolidated Net Income to Consolidated NOI

The following is a reconciliation of consolidated net income, as defined by GAAP, to consolidated NOI, (in thousands):

 

 

Three-month periods ended September 30,

 

 

Nine-month periods ended September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

19,046

 

 

$

7,884

 

 

$

48,015

 

 

$

52,871

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

19,732

 

 

 

20,814

 

 

 

61,473

 

 

 

64,334

 

Interest expense - amortization of deferred financing costs

 

577

 

 

 

645

 

 

 

1,807

 

 

 

2,063

 

Interest expense - financing obligation

 

-

 

 

 

156

 

 

 

-

 

 

 

679

 

Depreciation and amortization

 

42,429

 

 

 

46,956

 

 

 

132,584

 

 

 

142,736

 

General and administrative expenses

 

5,813

 

 

 

5,515

 

 

 

21,797

 

 

 

20,711

 

Equity in loss of Real Estate Ventures

 

5,723

 

 

 

7,254

 

 

 

5,387

 

 

 

9,323

 

Provision for impairment

 

-

 

 

 

-

 

 

 

3,057

 

 

 

13,069

 

Loss on early extinguishment of debt

 

-

 

 

 

-

 

 

 

-

 

 

 

66,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

79

 

 

 

291

 

 

 

635

 

 

 

970

 

Income tax benefit

 

793

 

 

 

-

 

 

 

1,032

 

 

 

-

 

Net gain (loss) on disposition of real estate

 

-

 

 

 

(104

)

 

 

8,411

 

 

 

114,625

 

Net gain on sale of undepreciated real estate

 

953

 

 

 

188

 

 

 

953

 

 

 

188

 

Net gain on Real Estate Venture transactions

 

13,758

 

 

 

10,472

 

 

 

28,340

 

 

 

19,529

 

Consolidated net operating income

$

77,737

 

 

$

78,377

 

 

$

234,749

 

 

$

237,064