Segment Reporting

6 Months Ended

Jun. 30, 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 (gain) 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 and six months ended June 30, 2016 and 2015 is as follows (dollars in thousands):

	For the three months ended						For the six months ended
	6/30/2016			6/30/2015			6/30/2016			6/30/2015
Net income	$	197,319		$	172,253		$	435,197		$	380,306
Indirect operating expenses, net of corporate income	15,477			14,817			32,015			30,215
Investments and investment management expense	1,194			1,073			2,340			2,107
Expensed acquisition, development and other pursuit costs, net of recoveries	1,436			673			4,897			1,860
Interest expense, net	46,581			44,590			89,991			90,164
Loss (gain) on extinguishment of debt, net	2,461			(7,749		)	2,461			(7,749		)
General and administrative expense	12,011			10,335			23,414			20,803
Equity in income of unconsolidated real estate entities	(27,151		)	(13,806		)	(55,120		)	(48,371		)
Depreciation expense	132,469			118,627			259,685			235,480
Income tax expense	36			1,293			73			1,308
Casualty and impairment (gain) loss, net	(1,732		)	(17,114		)	(3,935		)	(11,326		)
Gain on sale of real estate	(31,133		)	(9,625		)	(82,563		)	(80,583		)
Net operating income from real estate assets sold or held for sale (1)	(1,192		)	(4,377		)	(3,218		)	(8,812		)
Net operating income	$	347,776		$	310,990		$	705,237		$	605,402

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(1) Represents NOI from real estate assets sold or held for sale as of June 30, 2016 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						For the six months ended
	6/30/2016			6/30/2015			6/30/2016			6/30/2015
Rental income from real estate assets sold or held for sale	$	2,016		$	7,292		$	5,365		$	14,726
Operating expenses from real estate assets sold or held for sale	(824		)	(2,915		)	(2,147		)	(5,914		)
Net operating income from real estate assets sold or held for sale	$	1,192		$	4,377		$	3,218		$	8,812

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 total revenue and NOI for the three and six months ended June 30, 2016 and 2015 has been adjusted to exclude the real estate assets that were sold from January 1, 2015 through June 30, 2016, or otherwise qualify as held for sale as of June 30, 2016, as described in Note 6, “Real Estate Disposition Activities.” Segment information for gross real estate as of June 30, 2016 and 2015 has not been adjusted to exclude real estate assets that were sold or otherwise qualified as held for sale subsequent to the respective balance sheet dates.

	For the three months ended						For the six months ended
	Total revenue		NOI		% NOI  change from  prior year		Total revenue		NOI		% NOI  change from  prior year		Gross real estate (1)
For the period ended June 30, 2016
Established
New England	$	58,069	$	37,170	2.7	%	$	115,410	$	73,840	8.9	%	$	1,841,109
Metro NY/NJ	89,895		61,951		2.3	%	177,684		121,715		2.8	%	2,889,770
Mid-Atlantic	58,464		40,530		2.5	%	115,994		80,593		1.9	%	2,331,290
Pacific Northwest	22,181		15,843		5.6	%	43,764		31,588		6.2	%	795,977
Northern California	79,632		60,850		6.8	%	158,084		121,097		9.1	%	2,653,785
Southern California	71,612		50,934		10.3	%	142,869		101,975		10.1	%	2,635,803
Total Established	379,853		267,278		5.0	%	753,805		530,808		6.4	%	13,147,734
Other Stabilized (2)	58,511		38,593		N/A		134,933		97,197		N/A		2,166,893
Development / Redevelopment	60,460		41,905		N/A		113,711		77,232		N/A		4,065,071
Land Held for Future Development	N/A		N/A		N/A		N/A		N/A		N/A		511,797
Non-allocated (3)	1,467		N/A		N/A		2,990		N/A		N/A		81,186
Total	$	500,291	$	347,776	11.8	%	$	1,005,439	$	705,237	16.5	%	$	19,972,681
For the period ended June 30, 2015
Established
New England	$	45,162	$	28,663	2.8	%	$	89,168	$	54,224	(0.5	)%	$	1,477,145
Metro NY/NJ	95,205		67,148		2.9	%	188,389		131,514		2.9	%	3,191,141
Mid-Atlantic	52,263		35,938		(0.9	)%	103,967		71,969		(0.8	)%	2,170,822
Pacific Northwest	19,047		13,657		7.9	%	37,536		27,030		8.4	%	719,366
Northern California	67,144		52,635		11.7	%	132,658		102,369		11.6	%	2,409,781
Southern California	63,169		43,046		6.7	%	125,493		86,564		9.8	%	2,503,327
Total Established	341,990		241,087		5.1	%	677,211		473,670		5.2	%	12,471,582
Other Stabilized	54,679		36,566		N/A		108,755		71,406		N/A		2,028,096
Development / Redevelopment	50,556		33,337		N/A		93,582		60,326		N/A		3,581,408
Land Held for Future Development	N/A		N/A		N/A		N/A		N/A		N/A		487,205
Non-allocated (3)	2,942		N/A		N/A		5,553		N/A		N/A		42,997
Total	$	450,167	$	310,990	13.3	%	$	885,101	$	605,402	13.4	%	$	18,611,288

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(1) Does not include gross real estate assets held for sale of $77,943 and $79,128 as of June 30, 2016 and 2015, respectively.

(2) Total revenue and NOI for the six months ended June 30, 2016 includes $20,306 in business interruption insurance proceeds related to the Edgewater casualty loss.

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