Segment Reporting

3 Months Ended

Mar. 31, 2017

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 (loss) income of unconsolidated real estate entities, depreciation expense, corporate income tax expense, casualty and impairment loss (gain), 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, 2017 and 2016 is as follows (dollars in thousands):

	For the three months ended
	3/31/2017			3/31/2016
Net income	$	235,781		$	237,877
Indirect operating expenses, net of corporate income	16,297			16,537
Investments and investment management expense	1,321			1,145
Expensed acquisition, development and other pursuit costs, net of recoveries	728			3,462
Interest expense, net	49,295			43,410
General and administrative expense	13,206			11,404
Equity in income of unconsolidated real estate entities	(16,672		)	(27,969		)
Depreciation expense	140,621			127,216
Income tax expense	20			37
Casualty and impairment loss (gain), net	11,688			(2,202		)
Gain on sale of real estate	(88,315		)	(51,430		)
Net operating income from real estate assets sold or held for sale	(1,387		)	(8,606		)
Net operating income	$	362,583		$	350,881

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
	3/31/2017			3/31/2016
Rental income from real estate assets sold or held for sale	$	2,650		$	13,916
Operating expenses from real estate assets sold or held for sale	(1,263		)	(5,310		)
Net operating income from real estate assets sold or held for sale	$	1,387		$	8,606

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 months ended March 31, 2017 and 2016 has been adjusted to exclude the real estate assets that were sold from January 1, 2016 through March 31, 2017, or otherwise qualify as held for sale as of March 31, 2017, as described in Note 6, "Real Estate Disposition Activities." Segment information for gross real estate as of March 31, 2017 and 2016 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
	Total revenue		NOI		% NOI  change from  prior year		Gross real estate (1)
For the three months ended March 31, 2017
Established
New England	$	58,607	$	37,816	3.3	%	$	1,875,024
Metro NY/NJ	87,544		60,060		3.8	%	2,903,317
Mid-Atlantic	55,755		39,147		3.7	%	2,062,311
Pacific Northwest	20,454		14,815		5.2	%	731,537
Northern California	83,323		63,717		2.0	%	2,815,589
Southern California	83,225		60,551		6.2	%	3,005,810
Total Established	388,908		276,106		3.9	%	13,393,588
Other Stabilized	74,021		51,571		N/A		3,032,689
Development / Redevelopment	55,547		34,906		N/A		4,276,266
Land Held for Development	N/A		N/A		N/A		103,954
Non-allocated (3)	1,200		N/A		N/A		112,987
Total	$	519,676	$	362,583	3.3	%	$	20,919,484
For the three months ended March 31, 2016
Established
New England	$	57,196	$	36,508	15.9	%	$	1,860,863
Metro NY/NJ	83,079		56,702		3.2	%	2,883,958
Mid-Atlantic	57,530		40,063		1.3	%	2,330,106
Pacific Northwest	19,289		14,078		5.8	%	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	366,803		258,640		7.9	%	13,155,449
Other Stabilized (2)	73,004		56,914		N/A		2,196,700
Development / Redevelopment	53,251		35,327		N/A		3,802,952
Land Held for Development	N/A		N/A		N/A		477,072
Non-allocated (3)	1,524		N/A		N/A		89,056
Total	$	494,582	$	350,881	21.7	%	$	19,721,229

__________________________________

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

(2) Total revenue and NOI for the three months ended March 31, 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.