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Segment Reporting | 3 Months Ended
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Mar. 31, 2014
Segment Reporting |
Segment Reporting | 8. Segment Reporting The Company’s reportable operating segments include Established Communities, Other Stabilized Communities, and Development/Redevelopment Communities. Annually as of January 1 st, 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. The Company expects to update its operating segments on April 1, 2014, primarily to include communities acquired as part of the Archstone Acquisition, as described in Note 5, “Archstone Acquisition,” in its Established Community portfolio. 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 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 months ended March 31, 2014 and 2013 is as follows (dollars in thousands):
|  | For the three months ended |
|  | 3-31-14 |  | 3-31-13 |
Net income |  | $ | 141,599 |  | $ | 75,469 |
Indirect operating expenses, net of corporate income |  | 10,818 |  | 9,041 |
Investments and investment management expense |  | 979 |  | 1,015 |
Expensed acquisition, development and other pursuit costs |  | 715 |  | 40,059 |
Interest expense, net |  | 42,533 |  | 38,174 |
General and administrative expense |  | 9,236 |  | 10,039 |
Equity in loss (income) of unconsolidated entities |  | (5,223 | ) | 18,564 |
Depreciation expense |  | 106,367 |  | 105,559 |
Gain on sale of real estate assets |  | (37,869 | ) | (84,491 | )
Income from discontinued operations |  | (310 | ) | (5,746 | )
Net operating income |  | $ | 268,845 |  | $ | 207,683 |
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 months ended March 31, 2014 and 2013 has been adjusted for the real estate assets that were both sold between January 1, 2013 and March 31, 2014, and qualified as discontinued operations as of December 31, 2013, as described in Note 7, “Real Estate Disposition Activities.”
|  | For the three months ended |
|  | Total |  |  |  | % NOI change |  | Gross |
|  | revenue |  | NOI |  | from prior year |  | real estate (1) |
For the period ended March 31, 2014 |  |  |  |  |  |  |  |  |
Established |  |  |  |  |  |  |  |  |
New England |  | $ | 48,630 |  | $ | 29,904 |  | (2.0 | )% | $ | 1,489,948 |
Metro NY/NJ |  | 72,354 |  | 50,019 |  | 1.3 | % | 2,187,554 |
Mid-Atlantic |  | 24,647 |  | 17,455 |  | (3.0 | )% | 644,657 |
Pacific Northwest |  | 13,129 |  | 9,134 |  | 3.2 | % | 498,710 |
Northern California |  | 42,219 |  | 32,834 |  | 11.4 | % | 1,400,087 |
Southern California |  | 34,149 |  | 23,352 |  | 4.2 | % | 1,217,764 |
Total Established |  | 235,128 |  | 162,698 |  | 2.6 | % | 7,438,720 |
Other Stabilized |  | 132,320 |  | 90,071 |  | N/A |  | 6,543,948 |
Development / Redevelopment |  | 29,550 |  | 16,076 |  | N/A |  | 2,786,334 |
Land Held for Future Development |  | N/A |  | N/A |  | N/A |  | 250,204 |
Non-allocated (2) |  | 3,077 |  | N/A |  | N/A |  | 41,327 |
Total |  | $ | 400,075 |  | $ | 268,845 |  | 29.3 | % | $ | 17,060,533 |
For the period ended March 31, 2013 |  |  |  |  |  |  |  |  |
Established |  |  |  |  |  |  |  |  |
New England |  | $ | 43,350 |  | $ | 27,712 |  | 1.7 | % | $ | 1,360,858 |
Metro NY/NJ |  | 61,244 |  | 42,439 |  | 5.5 | % | 1,915,890 |
Mid-Atlantic |  | 25,035 |  | 18,188 |  | 1.6 | % | 631,207 |
Pacific Northwest |  | 11,376 |  | 7,850 |  | 10.5 | % | 443,564 |
Northern California |  | 34,064 |  | 25,609 |  | 11.4 | % | 1,231,893 |
Southern California |  | 26,910 |  | 18,463 |  | 5.9 | % | 987,209 |
Total Established |  | 201,979 |  | 140,261 |  | 5.5 | % | 6,570,621 |
Other Stabilized |  | 73,932 |  | 51,433 |  | N/A |  | 6,733,024 |
Development / Redevelopment |  | 23,174 |  | 15,989 |  | N/A |  | 1,915,146 |
Land Held for Future Development |  | N/A |  | N/A |  | N/A |  | 359,029 |
Non-allocated (2) |  | 2,272 |  | N/A |  | N/A |  | 69,318 |
Total |  | $ | 301,357 |  | $ | 207,683 |  | 29.1 | % | $ | 15,647,138 |
(1) Does not include gross real estate assets held for sale of $510,623 as of March 31, 2013. (2) Revenue represents third party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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