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 ("CODM") 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, 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) loss 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 months ended March 31, 2019 and 2018 is as follows (dollars in thousands):



	For the three months ended
	3/31/2019			3/31/2018
Net income	$	170,418		$	141,590
Indirect operating expenses, net of corporate income	19,722			18,958
Expensed transaction, development and other pursuit costs, net of recoveries	1,095			800
Interest expense, net	47,892			55,113
Loss on extinguishment of debt, net	280			397
General and administrative expense	13,688			14,431
Equity in loss (income) of unconsolidated real estate entities	1,060			(1,740		)
Depreciation expense	162,057			159,059
Income tax expense	12			—
Casualty and impairment gain, net	—			(58		)
Gain on sale of communities	(14,835		)	—
(Gain) loss on other real estate transactions, net	(267		)	47
Net operating income from real estate assets sold or held for sale	(1,238		)	(19,311		)
Net operating income	$	399,884		$	369,286

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
	3/31/2019			3/31/2018
Rental income from real estate assets sold or held for sale	$	2,394		$	29,647
Operating expenses from real estate assets sold or held for sale	(1,156		)	(10,336		)
Net operating income from real estate assets sold or held for sale	$	1,238		$	19,311

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, 2019. Segment information for the three months ended March 31, 2019 and 2018 has been adjusted to exclude the real estate assets that were sold from January 1, 2018 through March 31, 2019, or otherwise qualify as held for sale as of March 31, 2019, as described in Note 6, "Real Estate Disposition Activities."

In addition to NOI, the Company's CODM considers total revenue in assessing each segment's performance. As discussed in Note 1, "Organization, Basis of Presentation and Significant Accounting Policies," the Company changed its presentation of charges for uncollectible lease revenue beginning with the three months ended March 31, 2019, including it as an adjustment to revenue and not as a component of operating expenses, as it is presented for prior periods on the accompanying Condensed Consolidated Statement of Comprehensive Income. Consistent with how the Company's CODM evaluates total revenue, and to provide comparability between periods presented in the Company's segment reporting, the Company has included charges for uncollectible lease revenue for its segment results as a component of revenue for all periods presented in the following table. Total revenue for the three months ended March 31, 2018 as presented in the following table includes $4,035,000 of uncollectible lease revenue.



	For the three months ended
	Total revenue		NOI		Gross real estate (1)
For the period ended March 31, 2019
Established
New England	$	65,481	$	43,152	$	2,188,523
Metro NY/NJ	101,202		71,843		3,527,401
Mid-Atlantic	72,008		51,052		2,671,426
Pacific Northwest	27,802		20,210		986,190
Northern California	93,239		72,501		3,007,739
Southern California	100,541		72,695		3,580,160
Total Established	460,273		331,453		15,961,439

Other Stabilized	66,798		44,948		3,026,411
Development / Redevelopment	35,580		23,483		3,360,656
Land Held for Development	N/A		N/A		104,963
Non-allocated (2)	1,139		N/A		94,837

Total	$	563,790	$	399,884	$	22,548,306

For the period ended March 31, 2018
Established
New England	$	63,395	$	41,077	$	2,181,597
Metro NY/NJ	98,029		69,017		3,513,387
Mid-Atlantic	69,769		48,855		2,659,288
Pacific Northwest	26,488		18,623		981,609
Northern California	90,086		68,916		2,994,116
Southern California	96,914		69,600		3,556,516
Total Established	444,681		316,088		15,886,513

Other Stabilized	50,097		32,121		2,476,331
Development / Redevelopment	31,446		21,077		2,365,808
Land Held for Development	N/A		N/A		136,771
Non-allocated (2)	886		N/A		80,011

Total	$	527,110	$	369,286	$	20,945,434

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(1)	Does not include gross real estate assets held for sale of $90,153 as of March 31, 2019 and gross real estate sold or classified as held for sale subsequent to March 31, 2018 of $1,316,472.


(2)	Revenue represents third-party management, asset management and developer fees and miscellaneous income which are not allocated to a reportable segment.