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Segment Reporting | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting The Company's reportable operating segments include Established Communities, Other Stabilized Communities, and Development/Redevelopment Communities. Annually as of January 1, 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. 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 property revenue less direct property operating expenses (including property taxes), and excluding corporate-level income (including management, development and other fees), corporate-level property management and other indirect operating expenses, investments and investment management expenses, expensed transaction, development and other pursuit costs, net of recoveries, interest expense, net, loss on extinguishment of debt, net, general and administrative expense, equity in income of unconsolidated real estate entities, depreciation expense, corporate income tax expense, casualty and impairment (gain) loss, net, gain on sale of communities, gain on other real estate transactions, net and net operating income from real estate assets sold or held for sale. 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 nine months ended September 30, 2018 and 2017 is as follows (dollars in thousands):
| For the three months ended |  | For the nine months ended
| 9/30/2018 |  | 9/30/2017 |  | 9/30/2018 |  | 9/30/2017
Net income | $ | 192,407 |  |  | $ | 238,199 |  |  | $ | 588,540 |  |  | $ | 639,174 |
Indirect operating expenses, net of corporate income | 18,855 |  |  | 15,752 |  |  | 55,850 |  |  | 48,472 |
Investments and investment management expense | 1,726 |  |  | 1,501 |  |  | 4,898 |  |  | 4,277 |
Expensed transaction, development and other pursuit costs, net of recoveries | 1,020 |  |  | 789 |  |  | 2,709 |  |  | 2,087 |
Interest expense, net | 54,097 |  |  | 47,741 |  |  | 165,795 |  |  | 147,138 |
Loss on extinguishment of debt, net | 1,678 |  |  | — |  |  | 2,717 |  |  | 24,162 |
General and administrative expense | 13,905 |  |  | 11,655 |  |  | 42,013 |  |  | 38,808 |
Equity in income of unconsolidated real estate entities | (10,031 | ) |  | (52,568 | ) |  | (12,560 | ) |  | (70,386 | )
Depreciation expense | 156,538 |  |  | 144,990 |  |  | 472,282 |  |  | 427,050 |
Income tax expense | 29 |  |  | 24 |  |  | 87 |  |  | 102 |
Casualty and impairment (gain) loss, net | (554 | ) |  | — |  |  | (612 | ) |  | 11,688 |
Gain on sale of communities | (27,243 | ) |  | (27,738 | ) |  | (132,444 | ) |  | (159,754 | )
(Gain) loss on other real estate transactions, net | (12 | ) |  | 120 |  |  | (335 | ) |  | (246 | )
Net operating income from real estate assets sold or held for sale | (2,545 | ) |  | (10,340 | ) |  | (15,913 | ) |  | (35,162 | )
Net operating income | $ | 399,870 |  |  | $ | 370,125 |  |  | $ | 1,173,027 |  |  | $ | 1,077,410 |
The following is a summary of NOI from real estate assets sold or held for sale for the periods presented (dollars in thousands):
| For the three months ended |  | For the nine months ended
| 9/30/2018 |  | 9/30/2017 |  | 9/30/2018 |  | 9/30/2017
Rental income from real estate assets sold or held for sale | $ | 4,006 |  |  | $ | 16,280 |  |  | $ | 24,747 |  |  | $ | 54,803 |
Operating expenses from real estate assets sold or held for sale | (1,461 | ) |  | (5,940 | ) |  | (8,834 | ) |  | (19,641 | )
Net operating income from real estate assets sold or held for sale | $ | 2,545 |  |  | $ | 10,340 |  |  | $ | 15,913 |  |  | $ | 35,162 |
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 at January 1, 2018. Segment information for the three and nine months ended September 30, 2018 and 2017 has been adjusted to exclude the real estate assets that were sold from January 1, 2017 through September 30, 2018, or otherwise qualify as held for sale as of September 30, 2018, as described in Note 6, "Real Estate Disposition Activities."
| For the three months ended |  | For the nine months ended |  |
| Total revenue |  | NOI |  | Total revenue |  | NOI |  | Gross real estate (1)
For the period ended September 30, 2018 |  |  |  |  |  |  |
Established |  |  |  |  |  |  |  |  |  |  |  |
New England | $ | 60,690 |  |  | $ | 40,005 |  |  | $ | 178,841 |  |  | $ | 117,008 |  |  | $ | 2,006,671 |
Metro NY/NJ | 106,341 |  |  | 74,562 |  |  | 315,683 |  |  | 219,396 |  |  | 3,729,612 |
Mid-Atlantic | 59,752 |  |  | 41,432 |  |  | 177,342 |  |  | 123,056 |  |  | 2,223,386 |
Pacific Northwest | 22,014 |  |  | 15,681 |  |  | 64,609 |  |  | 45,753 |  |  | 726,752 |
Northern California | 92,292 |  |  | 70,465 |  |  | 274,206 |  |  | 209,866 |  |  | 2,983,019 |
Southern California | 85,934 |  |  | 60,931 |  |  | 255,385 |  |  | 182,875 |  |  | 2,916,530 |
Total Established | 427,023 |  |  | 303,076 |  |  | 1,266,066 |  |  | 897,954 |  |  | 14,585,970 |
Other Stabilized | 66,542 |  |  | 45,196 |  |  | 195,034 |  |  | 132,498 |  |  | 2,740,944 |
Development / Redevelopment | 77,499 |  |  | 51,598 |  |  | 217,416 |  |  | 142,575 |  |  | 4,895,487 |
Land Held for Development | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |  | 116,582 |
Non-allocated (2) | 912 |  |  | N/A |  |  | 2,752 |  |  | N/A |  |  | 96,876 |
Total | $ | 571,976 |  |  | $ | 399,870 |  |  | $ | 1,681,268 |  |  | $ | 1,173,027 |  |  | $ | 22,435,859 |
For the period ended September 30, 2017 |  |  |  |  |  |  |
Established |  |  |  |  |  |  |  |  |  |  |  |
New England | $ | 58,872 |  |  | $ | 38,635 |  |  | $ | 174,018 |  |  | $ | 113,423 |  |  | $ | 1,988,987 |
Metro NY/NJ | 105,225 |  |  | 71,864 |  |  | 311,301 |  |  | 215,187 |  |  | 3,617,773 |
Mid-Atlantic | 58,561 |  |  | 40,020 |  |  | 174,653 |  |  | 120,186 |  |  | 2,213,522 |
Pacific Northwest | 21,531 |  |  | 15,692 |  |  | 62,833 |  |  | 45,632 |  |  | 723,674 |
Northern California | 89,798 |  |  | 68,731 |  |  | 267,316 |  |  | 205,168 |  |  | 2,966,133 |
Southern California | 83,343 |  |  | 59,013 |  |  | 246,087 |  |  | 177,326 |  |  | 2,901,525 |
Total Established | 417,330 |  |  | 293,955 |  |  | 1,236,208 |  |  | 876,922 |  |  | 14,411,614 |
Other Stabilized | 52,885 |  |  | 34,746 |  |  | 137,739 |  |  | 88,946 |  |  | 2,477,846 |
Development / Redevelopment (3) | 63,012 |  |  | 41,424 |  |  | 171,297 |  |  | 111,542 |  |  | 3,847,578 |
Land Held for Development | N/A |  |  | N/A |  |  | N/A |  |  | N/A |  |  | 85,863 |
Non-allocated (2) | 993 |  |  | N/A |  |  | 3,290 |  |  | N/A |  |  | 93,778 |
Real estate disposed or held for sale (4) |  |  |  |  |  |  |  |  | 629,970 |
Total | $ | 534,220 |  |  | $ | 370,125 |  |  | $ | 1,548,534 |  |  | $ | 1,077,410 |  |  | $ | 21,546,649 |
__________________________________
(1) | Does not include gross real estate assets held for sale of $109,900 and $53,723 as of September 30, 2018 and 2017, respectively.
(2) | Revenue represents third-party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment.
(3) | Total revenue and NOI for the three and nine months ended September 30, 2017 includes $3,495 in business interruption insurance proceeds related to the Maplewood casualty loss.
(4) | Represents real estate sold or held for sale during the period of September 30, 2017 to September 30, 2018, which is 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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