Segment Reporting

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company’s reportable operating segments include Established Communities, Other Stabilized Communities, and Development/Redevelopment Communities.  Annually as of January 1^st, the Company determines which of its communities fall into each of these categories and generally maintains that classification throughout the year for the purpose of reporting segment operations, unless disposition or redevelopment plans regarding a community change.

In addition, the Company owns land for future development and has other corporate assets that are not allocated to an operating segment.

The Company’s segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment’s performance.  The Company’s chief operating decision maker is comprised of several members of its executive management team who use net operating income (“NOI”) as the primary financial measure for Established Communities and Other Stabilized Communities. NOI is defined by the Company as total property revenue less direct property operating expenses, including property taxes, and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed acquisition, development and other pursuit costs, net interest expense, gain (loss) on extinguishment of debt, general and administrative expense, joint venture income (loss), depreciation expense, casualty loss, impairment loss, gain on sale of real estate assets, income from discontinued operations and net operating income from real estate assets sold or held for sale, not classified as discontinued operations. Although the Company considers NOI a useful measure of a community’s or communities’ operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities, as determined in accordance with GAAP.  NOI excludes a number of income and expense categories as detailed in the reconciliation of NOI to net income.

A reconciliation of NOI to net income for the three months ended March 31, 2015 and 2014 is as follows (dollars in thousands):

	For the three months ended
	3/31/2015			3/31/2014
Net income	$	208,053		$	141,599
Indirect operating expenses, net of corporate income	15,271			10,818
Investments and investment management expense	1,034			979
Expensed acquisition, development and other pursuit costs, net of recoveries	1,187			715
Interest expense, net (1)	45,573			42,533
General and administrative expense	10,598			9,236
Equity in income of unconsolidated real estate entities	(34,566		)	(5,223		)
Depreciation expense (1)	116,853			106,367
Casualty and impairment loss	5,788			—
Gain on sale of real estate assets	(70,958		)	—
Gain on sale of discontinued operations	—			(37,869		)
Income from discontinued operations	—			(310		)
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations	(836		)	(4,971		)
Net operating income	$	297,997		$	263,874

__________________________________

(1) Includes amounts associated with assets sold or held for sale, not classified as discontinued operations.

The following is a summary of NOI from real estate assets sold or held for sale, not classified as discontinued operations, for the periods presented (dollars in thousands):

	For the three months ended
	3/31/2015			3/31/2014
Rental income from real estate assets sold or held for sale, not classified as discontinued operations	$	1,709		$	8,266
Operating expenses from real estate assets sold or held for sale, not classified as discontinued operations	(873		)	(3,295		)
Net operating income from real estate assets sold or held for sale, not classified as discontinued operations	$	836		$	4,971

The primary performance measure for communities under development or redevelopment depends on the stage of completion.  While under development, management monitors actual construction costs against budgeted costs as well as lease-up pace and rent levels compared to budget.

The following table provides details of the Company’s segment information as of the dates specified (dollars in thousands). The segments are classified based on the individual community’s status at the beginning of the given calendar year, therefore, each year the composition of communities within each business segment is adjusted. Accordingly, the amounts between years are not directly comparable. Segment information for the three months ended March 31, 2015 and 2014 has been adjusted for the real estate assets that were sold from January 1, 2014 through March 31, 2015, or otherwise qualify as held for sale and/or discontinued operations as of March 31, 2015, as described in Note 6, “Real Estate Disposition Activities.”

	For the three months ended
	Total revenue		NOI		% NOI  change from  prior year		Gross real estate (1)
For the period ended March 31, 2015
Established
New England	$	47,760	$	27,839	(3.8	)%	$	1,469,071
Metro NY/NJ	96,533		66,507		3.0	%	3,268,669
Mid-Atlantic	51,704		36,031		(0.8	)%	2,170,104
Pacific Northwest	18,489		13,373		9.0	%	718,884
Northern California	65,515		49,734		11.5	%	2,405,670
Southern California	62,324		43,517		13.1	%	2,501,165
Total Established	342,325		237,001		5.3	%	12,533,563
Other Stabilized	52,696		34,008		N/A		2,053,692
Development / Redevelopment	43,026		26,988		N/A		3,147,624
Land Held for Future Development	N/A		N/A		N/A		536,538
Non-allocated (2)	2,611		N/A		N/A		43,238
Total	$	440,658	$	297,997	12.9	%	$	18,314,655
For the period ended March 31, 2014
Established
New England	$	46,290	$	28,513	(1.6	)%	$	1,426,168
Metro NY/NJ	72,354		50,019		1.3	%	2,187,554
Mid-Atlantic	24,647		17,455		(3.0	)%	644,657
Pacific Northwest	13,129		9,134		3.2	%	498,710
Northern California	42,219		32,834		11.4	%	1,400,087
Southern California	34,149		23,353		4.2	%	1,217,764
Total Established	232,788		161,308		2.7	%	7,374,940
Other Stabilized	128,565		86,332		N/A		6,315,469
Development / Redevelopment	27,379		16,234		N/A		2,743,725
Land Held for Future Development	N/A		N/A		N/A		250,204
Non-allocated (2)	3,077		N/A		N/A		32,127
Total	$	391,809	$	263,874	29.5	%	$	16,716,465

__________________________________

(1) Does not include gross real estate assets held for sale of $60,686 and $344,068 as of March 31, 2015 and 2014, respectively.

(2) Revenue represents third-party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment.