Business Segments

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Business Segments

Note 10 — Business Segments

We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.

Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land held for development. Our Operating segment includes 21 residential apartment communities that have achieved stabilized level of operations as of January 1, 2021 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments.

Our chief operating decision maker (“CODM”) uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating segment. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding reimbursements, less direct property operating expenses, net of utility reimbursements, for consolidated communities. In our Condensed Consolidated Statements of Operations, utility reimbursements are included in Rental and other property revenues, in accordance with GAAP.

As of June 30, 2022, our Development and Redevelopment segment consists of 14 properties: two residential apartment communities with 965 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, we are actively developing or redeveloping; four residential apartment communities with 865 apartment homes for which we have completed the redevelopment, but have not achieved stabilization; and, land parcels held for development. Our Operating segment includes 21 consolidated apartment communities with 5,582 apartment homes. Our Other segment includes our recent Eldridge Townhomes acquisition, stabilized but not owned for the comparable reporting period, and 1001 Brickell Bay Drive, our only office building.

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended June 30, 2022 and 2021 (in thousands):

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three Months Ended June 30, 2022:
Rental and other property revenues	$	8,899	$	33,122	$	4,333	$	1,867	$	2,476		$	50,697
Property operating expenses		3,212		10,435		1,267		1,846		2,948			19,708
Other operating expenses not allocated    to segments (2)		—		—		—		—		43,824			43,824
Total operating expenses		3,212		10,435		1,267		1,846		46,772			63,532
Proportionate property net operating    income (loss)		5,687		22,687		3,066		21		(44,296	)		(12,835	)
Other items included in income before    income tax (3)		—		—		—		—		312,003			312,003
Income (loss) before income tax	$	5,687	$	22,687	$	3,066	$	21	$	267,707		$	299,168

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Three Months Ended June 30, 2021:
Rental and other property revenues	$	2,489	$	29,782	$	3,138	$	1,255	$	3,754		$	40,418
Property operating expenses		2,101		9,954		1,090		1,239		2,019			16,403
Other operating expenses not allocated    to segments (2)		—		—		—		—		28,022			28,022
Total operating expenses		2,101		9,954		1,090		1,239		30,041			44,425
Proportionate property net operating    income (loss)		388		19,828		2,048		16		(26,287	)		(4,007	)
Other items included in income before    income tax (3)		—		—		—		—		(19,139	)		(19,139	)
Income (loss) before income tax	$	388	$	19,828	$	2,048	$	16	$	(45,426	)	$	(23,146	)

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the six months ended June 30, 2022 and 2021 (in thousands):

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Six Months Ended June 30, 2022:
Rental and other property revenues	$	15,831	$	65,361	$	9,378	$	3,797	$	6,324		$	100,691
Property operating expenses		5,728		20,697		2,822		3,750		5,932			38,929
Other operating expenses not allocated    to segments (2)		—		—		—		—		76,414			76,414
Total operating expenses		5,728		20,697		2,822		3,750		82,346			115,343
Proportionate property net operating    income (loss)		10,103		44,664		6,556		47		(76,022	)		(14,652	)
Other items included in income before    income tax (3)		—		—		—		—		319,876			319,876
Income (loss) before income tax	$	10,103	$	44,664	$	6,556	$	47	$	243,854		$	305,224

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments			Consolidated
Six Months Ended June 30, 2021:
Rental and other property revenues	$	4,746	$	59,051	$	6,324	$	2,712	$	7,389		$	80,222
Property operating expenses		3,968		20,160		2,127		2,680		4,410			33,345
Other operating expenses not allocated    to segments (2)		—		—		—		—		55,050			55,050
Total operating expenses		3,968		20,160		2,127		2,680		59,460			88,395
Proportionate property net operating    income (loss)		778		38,891		4,197		32		(52,071	)		(8,173	)
Other items included in income before    income tax (3)		—		—		—		—		1,361			1,361
Income (loss) before income tax	$	778	$	38,891	$	4,197	$	32	$	(50,710	)	$	(6,812	)

(1)Represents adjustments for redeemable noncontrolling interests in consolidated real estate partnerships' share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in Rental and other property revenues in our Condensed Consolidated Statements of Operations prepared in accordance with GAAP.

(2)Other operating expenses not allocated to segments consist of depreciation and amortization, general and administrative expense, and miscellaneous other expenses.

(3)Other items included in Income before income tax benefit consist primarily of interest expense, gain on our interest rate options, gain on sale of Real Estate, lease modification income and mezzanine investment income, net.

Net real estate and non-recourse property debt, net, of our segments as of June 30, 2022 and December 31, 2021, were as follows (in thousands):

	Development and Redevelopment			Operating			Other			Corporate(1)		Total
As of June 30, 2022:
Buildings and improvements	$	403,803		$	668,510		$	197,311		$	—	$	1,269,624
Land		189,222			259,033			153,502			—		601,757
Total real estate		593,025			927,543			350,813			—		1,871,381
Accumulated depreciation		(18,081	)		(450,643	)		(51,144	)		—		(519,868	)
Net real estate		574,944			476,900			299,669			—		1,351,513
Non-recourse property debt and construction loans, net	$	231,090		$	743,596		$	26,463		$	—	$	1,001,149

	Development and Redevelopment			Operating			Other			Corporate(1)			Total
As of December 31, 2021:
Buildings and improvements	$	277,041		$	675,269		$	196,853		$	108,051		$	1,257,214
Land		82,325			259,033			153,501			39,426		$	534,285
Total real estate		359,366			934,302			350,354			147,477			1,791,499
Accumulated depreciation		(2,252	)		(444,324	)		(41,841	)		(72,698	)		(561,115	)
Net real estate	$	357,114		$	489,978		$	308,513		$	74,779		$	1,230,384
Non-recourse property debt, net	$	163,570		$	428,308		$	—		$	54,829		$	646,707

(1)During the six months ended June 30, 2022, certain properties were sold or reclassified as Held for Sale, and therefore are not included in our segment balance sheets, as of June 30, 2022. We added a new Corporate segment to this table for presentation purposes to display these assets and the associated debt as of December 31, 2021.

In addition to the amounts disclosed in the tables above, as of June 30, 2022 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $130.5 million and $123.8 million, respectively, and as of December 31, 2021, aggregated to $429.8 million and $435.1 million, respectively. As of June 30, 2022, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place and Oak Shore. As described in Note 9, we entered into termination agreements to cancel our leases on North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism on September 1, 2022. Consequently, during the period ended June 30, 2022, we wrote off $326.1 million and $337.3 million right-of-use lease assets and lease liability, respectively. Additionally, we purchased a land parcel for $64.0 million and terminated the certain lease component on Flagler Village and derecognized associated right-of-use lease assets and lease liabilities of $60.5 million and $46.7 million, respectively.