Business Segments

6 Months Ended

Jun. 30, 2011

Business Segments [Abstract]

Business Segments

NOTE 7 — Business Segments

We have two reportable segments: conventional real estate operations and affordable real estate operations. Our conventional real estate operations consist of market-rate apartments with rents paid by the resident and included 215 properties with 67,049 units at June 30, 2011. Our affordable real estate operations consisted of 205 properties with 24,406 units at June 30, 2011, with rents that are generally paid, in whole or part, by a government agency.

Our chief executive officer, who is our chief operating decision maker, uses various generally accepted industry financial measures to assess the performance and financial condition of the business, including: Net Asset Value, which is the estimated fair value of our assets, net of liabilities and preferred equity; Pro forma Funds From Operations, which is Funds From Operations excluding operating real estate impairment losses and preferred equity redemption related amounts; Adjusted Funds From Operations, which is Pro forma Funds From Operations less spending for Capital Replacements; property net operating income, which is rental and other property revenues less direct property operating expenses, including real estate taxes; proportionate property net operating income, which reflects our share of property net operating income of our consolidated and unconsolidated properties; same store property operating results; Free Cash Flow, which is net operating income less spending for Capital Replacements; Free Cash Flow internal rate of return; financial coverage ratios; and leverage as shown on our balance sheet. Our chief operating decision maker emphasizes proportionate property net operating income as a key measurement of segment profit or loss.

The following tables present the revenues, net operating income (loss) and income (loss) from continuing operations of our conventional and affordable real estate operations segments on a proportionate basis for the three and six months ended June 30, 2011 and 2010 (in thousands):

							Corporate and
	Conventional		Affordable		Proportionate		Amounts Not
	Real Estate		Real Estate		Adjustments		Allocated to
	Operations		Operations		(1)		Segments			Consolidated
Three Months Ended June 30, 2011:
Rental and other property revenues (2)	$	208,253	$	32,826	$	32,029	$	276		$	273,384
Asset management and tax credit revenues		—		—		—		7,651			7,651
Total revenues		208,253		32,826		32,029		7,927			281,035
Property operating expenses (2)		77,323		13,599		13,912		12,545			117,379
Investment management expenses		—		—		—		2,187			2,187
Depreciation and amortization (2)		—		—		—		94,084			94,084
General and administrative expenses		—		—		—		12,372			12,372
Other expenses, net		—		—		—		5,222			5,222
Total operating expenses		77,323		13,599		13,912		126,410			231,244
Net operating income (loss)		130,930		19,227		18,117		(118,483	)		49,791
Other items included in continuing operations		—		—		—		(93,231	)		(93,231	)
Income (loss) from continuing operations	$	130,930	$	19,227	$	18,117	$	(211,714	)	$	(43,440	)
Three Months Ended June 30, 2010:
Rental and other property revenues (2)	$	203,251	$	31,661	$	31,159	$	657		$	266,728
Asset management and tax credit revenues		—		—		—		9,796			9,796
Total revenues		203,251		31,661		31,159		10,453			276,524
Property operating expenses (2)		78,396		13,924		13,978		16,828			123,126
Investment management expenses		—		—		—		5,141			5,141
Depreciation and amortization (2)		—		—		—		102,809			102,809
General and administrative expenses		—		—		—		15,184			15,184
Other income, net		—		—		—		(4,485	)		(4,485	)
Total operating expenses		78,396		13,924		13,978		135,477			241,775
Net operating income (loss)		124,855		17,737		17,181		(125,024	)		34,749
Other items included in continuing operations		—		—		—		(73,015	)		(73,015	)
Income (loss) from continuing operations	$	124,855	$	17,737	$	17,181	$	(198,039	)	$	(38,266	)

							Corporate and
	Conventional		Affordable		Proportionate		Amounts Not
	Real Estate		Real Estate		Adjustments		Allocated to
	Operations		Operations		(1)		Segments			Consolidated
Six Months Ended June 30, 2011:
Rental and other property revenues (2)	$	414,800	$	65,704	$	63,816	$	856		$	545,176
Asset management and tax credit revenues		—		—		—		16,887			16,887
Total revenues		414,800		65,704		63,816		17,743			562,063
Property operating expenses (2)		156,752		27,346		28,332		28,478			240,908
Investment management expenses		—		—		—		5,219			5,219
Depreciation and amortization (2)		—		—		—		193,117			193,117
General and administrative expenses		—		—		—		23,498			23,498
Other expenses, net		—		—		—		9,156			9,156
Total operating expenses		156,752		27,346		28,332		259,468			471,898
Net operating income (loss)		258,048		38,358		35,484		(241,725	)		90,165
Other items included in continuing operations		—		—		—		(164,016	)		(164,016	)
Income (loss) from continuing operations	$	258,048	$	38,358	$	35,484	$	(405,741	)	$	(73,851	)
Six Months Ended June 30, 2010:
Rental and other property revenues (2)	$	407,082	$	62,723	$	62,137	$	1,390		$	533,332
Asset management and tax credit revenues		—		—		—		14,497			14,497
Total revenues		407,082		62,723		62,137		15,887			547,829
Property operating expenses (2)		162,300		28,805		29,025		30,136			250,266
Investment management expenses		—		—		—		8,370			8,370
Depreciation and amortization (2)		—		—		—		206,092			206,092
General and administrative expenses		—		—		—		26,919			26,919
Other income, net		—		—		—		(2,148	)		(2,148	)
Total operating expenses		162,300		28,805		29,025		269,369			489,499
Net operating income (loss)		244,782		33,918		33,112		(253,482	)		58,330
Other items included in continuing operations		—		—		—		(132,288	)		(132,288	)
Income (loss) from continuing operations	$	244,782	$	33,918	$	33,112	$	(385,770	)	$	(73,958	)

(1)

Represents adjustments for the noncontrolling interests in consolidated real estate partnerships’ share of the results of our consolidated properties, which are excluded from our measurement of segment performance but included in the related consolidated amounts, and our share of the results of operations of our unconsolidated real estate partnerships, which are included in our measurement of segment performance but excluded from the related consolidated amounts.

(2)

Proportionate property net operating income, our key measurement of segment profit or loss, excludes provision for operating real estate impairment losses, property management revenues (which are included in rental and other property revenues), property management expenses and casualty gains and losses (which are included in property operating expenses) and depreciation and amortization. Accordingly, we do not allocate these amounts to our segments.

For the six months ended June 30, 2011 and 2010, capital additions related to our conventional segment totaled $58.9 million and $64.0 million, respectively, and capital additions related to our affordable segment totaled $8.3 million and $15.9 million, respectively.