Segment Reporting

3 Months Ended

Mar. 31, 2016

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, 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 of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, equity in income of unconsolidated real estate entities, depreciation expense, corporate income tax expense, casualty and impairment (gain) loss, net, gain on sale of real estate assets and net operating income from real estate assets sold or held for sale. 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, 2016 and 2015 is as follows (dollars in thousands):

	For the three months ended
	3/31/2016			3/31/2015
Net income	$	237,877		$	208,053
Indirect operating expenses, net of corporate income	16,537			15,399
Investments and investment management expense	1,145			1,034
Expensed acquisition, development and other pursuit costs, net of recoveries	3,462			1,187
Interest expense, net	43,410			45,573
General and administrative expense	11,404			10,468
Equity in income of unconsolidated real estate entities	(27,969		)	(34,566		)
Depreciation expense	127,216			116,853
Income tax expense	37			15
Casualty and impairment (gain) loss, net	(2,202		)	5,788
Gain on sale of real estate assets	(51,430		)	(70,958		)
Net operating income from real estate assets sold or held for sale (1)	(721		)	(3,219		)
Net operating income	$	358,766		$	295,627

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(1) Represents NOI from real estate assets sold or held for sale that are not otherwise classified as discontinued operations.

The following is a summary of NOI from real estate assets sold or held for sale for the periods presented (dollars in thousands):

	For the three months ended
	3/31/2016			3/31/2015
Rental income from real estate assets sold or held for sale	$	1,193		$	5,398
Operating expenses from real estate assets sold or held for sale	(472		)	(2,179		)
Net operating income from real estate assets sold or held for sale	$	721		$	3,219

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, 2016 and 2015 has been adjusted for the real estate assets that were sold from January 1, 2015 through March 31, 2016, or otherwise qualify as held for sale as of March 31, 2016, 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, 2016
Established
New England	$	58,414	$	37,270	15.9	%	$	1,860,863
Metro NY/NJ	87,789		59,764		3.2	%	2,883,958
Mid-Atlantic	57,530		40,063		1.3	%	2,330,106
Pacific Northwest	21,583		15,745		6.7	%	795,228
Northern California	78,452		60,248		11.5	%	2,651,741
Southern California	71,257		51,041		9.8	%	2,633,553
Total Established	375,025		264,131		7.9	%	13,155,449
Other Stabilized (2)	77,505		59,308		N/A		2,196,700
Development / Redevelopment	53,251		35,327		N/A		3,802,952
Land Held for Future Development	N/A		N/A		N/A		477,072
Non-allocated (3)	1,524		N/A		N/A		89,056
Total	$	507,305	$	358,766	21.4	%	$	19,721,229
For the period ended March 31, 2015
Established
New England	$	46,034	$	26,800	(3.8	)%	$	1,429,727
Metro NY/NJ	93,183		64,366		2.8	%	3,141,136
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	337,249		233,821		5.3	%	12,366,686
Other Stabilized	54,083		34,818		N/A		2,100,918
Development / Redevelopment	43,026		26,988		N/A		3,147,624
Land Held for Future Development	N/A		N/A		N/A		529,069
Non-allocated (3)	2,611		N/A		N/A		29,217
Total	$	436,969	$	295,627	13.4	%	$	18,173,514

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(1) Does not include gross real estate assets held for sale of $20,341 and $201,829 as of March 31, 2016 and 2015, respectively.

(2) Total revenue and NOI for the three months ended March 31, 2016 includes $20,306 in business interruption insurance proceeds.

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