|
7. Segment Reporting
The Company’s reportable operating segments include Established Communities, Other Stabilized Communities, and Development/Redevelopment Communities. Annually as of January 1st, the Company determines which of its communities fall into each of these categories and unless disposition or redevelopment plans regarding a community change, maintains that classification throughout the year for the purpose of reporting segment operations.
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 segments’ 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 revenue less direct property operating expenses. 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, 2012 and 2011 is as follows (dollars in thousands):
|
|
|
For the three months ended |
|
For the six months ended |
|
|
|
|
6-30-12 |
|
6-30-11 |
|
6-30-12 |
|
6-30-11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
156,821 |
|
$ |
43,192 |
|
$ |
214,430 |
|
$ |
73,728 |
|
|
Indirect operating expenses, net of corporate income |
|
8,617 |
|
7,701 |
|
16,653 |
|
14,729 |
|
|
Investments and investment management expense |
|
1,499 |
|
1,341 |
|
2,945 |
|
2,532 |
|
|
Expensed development and other pursuit costs |
|
901 |
|
1,353 |
|
1,141 |
|
2,003 |
|
|
Interest expense, net |
|
33,193 |
|
44,544 |
|
66,819 |
|
87,515 |
|
|
Loss on extinguishment of debt, net |
|
— |
|
— |
|
1,179 |
|
— |
|
|
General and administrative expense |
|
8,316 |
|
8,145 |
|
18,026 |
|
15,437 |
|
|
Equity in income of unconsolidated entities |
|
(2,073 |
) |
(395 |
) |
(4,248 |
) |
(898 |
) |
|
Depreciation expense |
|
64,875 |
|
60,836 |
|
127,436 |
|
120,059 |
|
|
Gain on sale of real estate assets |
|
(95,329 |
) |
(7,675 |
) |
(95,329 |
) |
(7,675 |
) |
|
Income from discontinued operations |
|
(1,152 |
) |
(283 |
) |
(2,870 |
) |
(303 |
) |
|
Net operating income |
|
$ |
175,668 |
|
$ |
158,759 |
|
$ |
346,182 |
|
$ |
307,127 |
|
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 as of 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 the three and six months ended June 30, 2012 and 2011 have been adjusted for the real estate assets that were sold from January 1, 2011 through June 30, 2012, or otherwise qualify as discontinued operations as of June 30, 2012, as described in Note 6, “Real Estate Disposition Activities.”
|
|
|
For the three months ended |
|
For the six months ended |
|
|
|
|
Total |
|
|
|
% NOI change |
|
Total |
|
|
|
% NOI change |
|
Gross |
|
|
|
|
revenue |
|
NOI |
|
from prior year |
|
revenue |
|
NOI |
|
from prior year |
|
real estate (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended June 30, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New England |
|
$ |
41,736 |
|
$ |
27,263 |
|
5.7 |
% |
$ |
82,812 |
|
$ |
53,894 |
|
7.2 |
% |
$ |
1,285,318 |
|
|
Metro NY/NJ |
|
58,169 |
|
40,637 |
|
6.3 |
% |
115,388 |
|
80,228 |
|
8.0 |
% |
1,962,950 |
|
|
Mid-Atlantic |
|
25,829 |
|
18,722 |
|
2.4 |
% |
51,525 |
|
37,538 |
|
4.4 |
% |
591,284 |
|
|
Pacific Northwest |
|
8,119 |
|
5,651 |
|
9.5 |
% |
16,024 |
|
11,223 |
|
10.7 |
% |
303,343 |
|
|
Northern California |
|
31,918 |
|
23,235 |
|
12.8 |
% |
63,030 |
|
46,028 |
|
14.1 |
% |
1,180,167 |
|
|
Southern California |
|
24,508 |
|
17,023 |
|
8.5 |
% |
48,869 |
|
34,002 |
|
10.2 |
% |
946,376 |
|
|
Total Established |
|
190,279 |
|
132,531 |
|
7.1 |
% |
377,648 |
|
262,913 |
|
8.7 |
% |
6,269,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Stabilized |
|
36,194 |
|
23,244 |
|
N/A |
|
70,979 |
|
45,949 |
|
N/A |
|
1,274,461 |
|
|
Development / Redevelopment |
|
29,562 |
|
19,893 |
|
N/A |
|
55,425 |
|
37,320 |
|
N/A |
|
1,656,545 |
|
|
Land Held for Future Development |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
294,116 |
|
|
Non-allocated (2) |
|
2,770 |
|
N/A |
|
N/A |
|
5,319 |
|
N/A |
|
N/A |
|
59,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
258,805 |
|
$ |
175,668 |
|
10.7 |
% |
$ |
509,371 |
|
$ |
346,182 |
|
12.7 |
% |
$ |
9,553,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Established |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New England |
|
$ |
42,083 |
|
$ |
27,006 |
|
10.5 |
% |
$ |
83,110 |
|
$ |
52,488 |
|
8.6 |
% |
$ |
1,297,280 |
|
|
Metro NY/NJ |
|
48,501 |
|
33,153 |
|
6.4 |
% |
96,191 |
|
64,712 |
|
5.9 |
% |
1,530,426 |
|
|
Mid-Atlantic |
|
25,600 |
|
18,711 |
|
6.3 |
% |
50,645 |
|
36,821 |
|
7.3 |
% |
601,967 |
|
|
Pacific Northwest |
|
9,346 |
|
6,349 |
|
6.4 |
% |
18,475 |
|
12,489 |
|
3.6 |
% |
360,995 |
|
|
Northern California |
|
23,451 |
|
16,993 |
|
10.0 |
% |
46,277 |
|
33,201 |
|
7.7 |
% |
867,520 |
|
|
Southern California |
|
18,568 |
|
12,393 |
|
8.7 |
% |
36,962 |
|
24,348 |
|
5.2 |
% |
695,220 |
|
|
Total Established |
|
167,549 |
|
114,605 |
|
8.1 |
% |
331,660 |
|
224,059 |
|
6.8 |
% |
5,353,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Stabilized |
|
34,461 |
|
22,272 |
|
N/A |
|
66,032 |
|
42,296 |
|
N/A |
|
1,578,605 |
|
|
Development / Redevelopment |
|
31,239 |
|
21,882 |
|
N/A |
|
59,960 |
|
40,772 |
|
N/A |
|
1,459,969 |
|
|
Land Held for Future Development |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
225,896 |
|
|
Non-allocated (2) |
|
2,332 |
|
N/A |
|
N/A |
|
4,652 |
|
N/A |
|
N/A |
|
68,827 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
235,581 |
|
$ |
158,759 |
|
15.4 |
% |
$ |
462,304 |
|
$ |
307,127 |
|
13.4 |
% |
$ |
8,686,705 |
|
(1) Does not include gross real estate assets held for sale of $0 and $269,542 as of June 30, 2012 and 2011, respectively.
(2) Revenue represents third party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment. |