Business Segments

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Business Segments

Note 8 — 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. As of March 31, 2023, our Development and Redevelopment segment consists of 12 properties: three residential apartment communities with 1,185 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel with 106 planned rooms, and 18,000 square feet of event space, which we are actively developing or redeveloping; and, land parcels held for development.

Our Operating segment includes 21 residential apartment communities with 5,600 apartment homes that have achieved stabilized level of operations as of January 1, 2022 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment.

During the three months ended March 31, 2023, we reclassified one residential apartment community from the Other segment to the Operating segment because it reached stabilization. Prior period segment information has been recast based upon our current segment population, and is consistent with how our chief operating decision maker ("CODM") evaluates the business. The recast conforms with our reportable segment classification as of March 31, 2023.

Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or Operating segments. Our Other segment includes 1001 Brickell Bay Drive, our only office building, and St. George Villas.

Our 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, less direct property operating expenses, but

•excluding utility reimbursements, for the consolidated communities. In our Condensed Consolidated Statements of Operations, utility reimbursements are included in Rental and other property revenues, in accordance with GAAP;

•excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ and the Mezzanine Investment; and

•excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended March 31, 2023 and 2022, (in thousands):

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three Months Ended March 31, 2023:
Rental and other property revenues	$	2,201	$	36,672	$	3,694	$	1,701	$	—		$	44,268
Property operating expenses		2,025		11,186		1,192		1,677		1,424			17,504
Other operating expenses not allocated    to segments (3)		—		—		—		—		24,674			24,674
Total operating expenses		2,025		11,186		1,192		1,677		26,098			42,178
Proportionate property net operating    income (loss)		176		25,486		2,502		24		(26,098	)		2,090
Other items included in income before    income tax (4)		—		—		—		—		(12,039	)		(12,039	)
Income (loss) before income tax	$	176	$	25,486	$	2,502	$	24	$	(38,137	)	$	(9,949	)

	Development and Redevelopment			Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Three Months Ended March 31, 2022:
Rental and other property revenues	$	48		$	32,930	$	4,354	$	1,663	$	10,999		$	49,994
Property operating expenses		209			10,396		1,439		1,639		5,538			19,221
Other operating expenses not allocated    to segments (3)		—			—		—		—		32,590			32,590
Total operating expenses		209			10,396		1,439		1,639		38,128			51,811
Proportionate property net operating    income (loss)		(161	)		22,534		2,915		24		(27,129	)		(1,817	)
Other items included in income before    income tax (4)		—			—		—		—		7,873			7,873
Income (loss) before income tax	$	(161	)	$	22,534	$	2,915	$	24	$	(19,256	)	$	6,056

(1)Represents adjustments for 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.

(2)Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.

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

(4)Other items included in Income before income tax benefit consist primarily of interest expense, mezzanine investment income (loss), net realized and unrealized gains (losses) on interest rate options, and realized and unrealized gains (losses) on equity investments.

Net real estate and non-recourse property debt, net, of our segments as of March 31, 2023 and December 31, 2022, were as follows (in thousands):

	Development and Redevelopment			Operating			Other			Total
As of March 31, 2023:
Buildings and improvements	$	515,493		$	711,275		$	165,195		$	1,391,963
Land		228,358			262,409			150,125			640,892
Total real estate		743,851			973,684			315,320			2,032,855
Accumulated depreciation		(4,403	)		(477,044	)		(64,157	)		(545,604	)
Net real estate	$	739,448		$	496,640		$	251,163		$	1,487,251
Non-recourse property debt and construction loans, net	$	237,361		$	766,981		$	80,640		$	1,084,982

	Development and Redevelopment			Operating			Other			Total
As of December 31, 2022:
Buildings and improvements	$	449,316		$	708,665		$	164,400		$	1,322,381
Land		228,568			262,409			150,125		$	641,102
Total real estate		677,884			971,074			314,525			1,963,483
Accumulated depreciation		(2,378	)		(468,428	)		(59,916	)	$	(530,722	)
Net real estate	$	675,506		$	502,646		$	254,609		$	1,432,761
Non-recourse property debt and construction loans, net	$	200,135		$	767,514		$	80,550		$	1,048,199

In addition to the amounts disclosed in the tables above, as of March 31, 2023 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $110.6 million and $116.2 million, respectively, and as of December 31, 2022, aggregated to $110.3 million and $114.6 million, respectively. As of March 31, 2023, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.