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Segment Information (Tables)
 6 Months Ended
Jun. 30, 2018
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:

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

 

December 31, 2017

 

Philadelphia CBD

 

$

1,647,843

 

 

$

1,643,296

 

Pennsylvania Suburbs

 

 

979,720

 

 

 

958,796

 

Metropolitan Washington, D.C.

 

 

979,573

 

 

 

978,257

 

Austin, Texas

 

 

170,912

 

 

 

163,653

 

Other

 

 

86,581

 

 

 

88,346

 

 

 

$

3,864,629

 

 

$

3,832,348

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

Construction-in-progress

 

$

120,593

 

 

$

121,188

 

Land held for development (a)

 

$

95,658

 

 

$

98,242

 

Prepaid leasehold interests in land held for development (b)

 

$

40,177

 

 

$

-

 

 

(a)

As of June 30, 2018, the Company categorized 2.7 acres of land held for development, located in the Pennsylvania Suburbs segment, as held for sale in accordance with applicable accounting standards for long lived assets. As of December 31, 2017, the Company categorized 13.1 acres of land held for development, located in the Other segment, as held for sale in accordance with applicable accounting standards for long lived assets.

(b)

As of June 30, 2018, this caption comprised leasehold interests in prepaid 99-year ground leases at 3025 and 3001-3003 JFK Boulevard, in Philadelphia, Pennsylvania. See Note 3, “Real Estate Investments,” for further information.

 

 

 

 

 

 

 

 

 

Net operating income (in thousands):

 

Three-month periods ended

 

 

June 30,

 

 

2018

 

 

2017

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income (loss)

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income (loss)

 

Philadelphia CBD

$

63,524

 

 

$

(24,805

)

 

$

38,719

 

 

$

54,451

 

 

$

(21,464

)

 

$

32,987

 

Pennsylvania Suburbs

 

34,333

 

 

 

(12,117

)

 

 

22,216

 

 

 

35,157

 

 

 

(11,240

)

 

$

23,917

 

Metropolitan Washington, D.C.

 

23,199

 

 

 

(8,392

)

 

 

14,807

 

 

 

22,749

 

 

 

(8,464

)

 

$

14,285

 

Austin, Texas

 

8,469

 

 

 

(3,395

)

 

 

5,074

 

 

 

8,763

 

 

 

(4,132

)

 

$

4,631

 

Other

 

3,339

 

 

 

(2,200

)

 

 

1,139

 

 

 

4,160

 

 

 

(2,580

)

 

$

1,580

 

Corporate

 

922

 

 

 

(1,638

)

 

 

(716

)

 

 

2,511

 

 

 

(2,738

)

 

$

(227

)

Operating properties

$

133,786

 

 

$

(52,547

)

 

$

81,239

 

 

$

127,791

 

 

$

(50,618

)

 

$

77,173

 

 

 

Six-month periods ended

 

 

June 30,

 

 

2018

 

 

2017

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income (loss)

 

 

Total revenue

 

 

Operating expenses (a)

 

 

Net operating income

 

Philadelphia CBD

$

126,126

 

 

$

(49,132

)

 

$

76,994

 

 

$

108,900

 

 

$

(42,301

)

 

$

66,599

 

Pennsylvania Suburbs

 

69,215

 

 

 

(25,081

)

 

 

44,134

 

 

 

70,812

 

 

 

(23,824

)

 

 

46,988

 

Metropolitan Washington, D.C.

 

46,258

 

 

 

(17,151

)

 

 

29,107

 

 

 

46,111

 

 

 

(17,847

)

 

 

28,264

 

Austin, Texas

 

16,833

 

 

 

(6,918

)

 

 

9,915

 

 

 

17,886

 

 

 

(7,705

)

 

 

10,181

 

Other

 

9,480

 

 

 

(7,165

)

 

 

2,315

 

 

 

10,522

 

 

 

(6,436

)

 

 

4,086

 

Corporate

 

2,232

 

 

 

(3,604

)

 

 

(1,372

)

 

 

4,480

 

 

 

(3,586

)

 

 

894

 

Operating properties

$

270,144

 

 

$

(109,051

)

 

$

161,093

 

 

$

258,711

 

 

$

(101,699

)

 

$

157,012

 

 

(a)  Includes property operating expenses, 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 June 30,

 

 

Six-month periods ended June 30,

 

 

June 30, 2018

 

 

December 31, 2017

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Philadelphia CBD

$

21,230

 

 

$

39,939

 

 

$

89

 

 

$

45

 

 

$

(147

)

 

$

(21

)

Pennsylvania Suburbs

 

-

 

 

 

3,503

 

 

 

-

 

 

 

148

 

 

 

-

 

 

 

424

 

Metropolitan Washington, D.C.

 

119,678

 

 

 

119,817

 

 

 

(363

)

 

 

(75

)

 

 

(400

)

 

 

392

 

Austin, Texas

 

14,684

 

 

 

13,973

 

 

 

653

 

 

 

1,646

 

 

 

734

 

 

 

1,281

 

MAP Venture (a)

 

12,883

 

 

 

15,450

 

 

 

(830

)

 

 

(787

)

 

 

(1,567

)

 

 

(1,904

)

Other

 

1,886

 

 

 

1,939

 

 

 

93

 

 

 

107

 

 

 

197

 

 

 

164

 

Total

$

170,361

 

 

$

194,621

 

 

$

(358

)

 

$

1,084

 

 

$

(1,183

)

 

$

336

 

(a)

The MAP Venture represents a joint venture, formed on February 4, 2016 between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC. 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 June 30,

 

 

Six-month periods ended June 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

13,136

 

 

$

7,698

 

 

$

57,841

 

 

$

28,969

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

19,301

 

 

 

20,304

 

 

 

38,834

 

 

 

41,741

 

Interest expense - amortization of deferred financing costs

 

627

 

 

 

596

 

 

 

1,254

 

 

 

1,230

 

Depreciation and amortization

 

43,717

 

 

 

44,263

 

 

 

87,008

 

 

 

90,155

 

General and administrative expenses

 

7,523

 

 

 

6,659

 

 

 

16,246

 

 

 

15,984

 

Equity in (income) loss of Real Estate Ventures

 

358

 

 

 

(1,084

)

 

 

1,183

 

 

 

(336

)

Provision for impairment

 

-

 

 

 

327

 

 

 

-

 

 

 

3,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

641

 

 

 

163

 

 

 

1,344

 

 

 

556

 

Income tax (provision) benefit

 

(20

)

 

 

339

 

 

 

(158

)

 

 

239

 

Net gain (loss) on disposition of real estate

 

(35

)

 

 

1,088

 

 

 

(35

)

 

 

8,411

 

Net gain on sale of undepreciated real estate

 

2,837

 

 

 

 

 

 

 

2,859

 

 

 

-

 

Net gain on Real Estate Venture transactions

 

-

 

 

 

-

 

 

 

37,263

 

 

 

14,582

 

Consolidated net operating income

$

81,239

 

 

$

77,173

 

 

$

161,093

 

 

$

157,012