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Information by Business Segment | 6 Months Ended
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Jun. 30, 2011
Information by Business Segment |
Information by Business Segment |
10. Information by Business Segment As of June 30, 2011, we had nine primary office property segments (comprised of: the Baltimore/Washington Corridor; Greater Baltimore; Northern Virginia; Colorado Springs; Suburban Maryland; San Antonio; Washington, DC — Capitol Riverfront; Greater Philadelphia; and St. Mary’s and King George Counties). We also had a wholesale data center segment. The table below reports segment financial information for our real estate operations (in thousands). Our segment entitled “Other” includes assets and operations not specifically associated with the other defined segments, including certain properties as well as corporate assets and investments in unconsolidated entities. We measure the performance of our segments through a measure we define as net operating income from real estate operations (“NOI from real estate operations”), which is derived by subtracting property expenses from revenues from real estate operations. We believe that NOI from real estate operations is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations that is unaffected by depreciation, amortization, impairment losses, financing and general and administrative expenses; this measure is particularly useful in our opinion in evaluating the performance of geographic segments, same-office property groupings and individual properties.
|  | Baltimore/ Washington Corridor |  | Greater Baltimore |  | Northern Virginia |  | Colorado Springs |  | Suburban Maryland |  | San Antonio |  | Washington, DC - Capitol Riverfront |  | Greater Philadelphia |  | St. Mary’s & King George Counties |  | Wholesale Data Center |  | Other |  | Total |
Three Months Ended June 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues from real estate operations |  | $ | 52,860 |  | $ | 17,846 |  | $ | 18,445 |  | $ | 5,912 |  | $ | 5,325 |  | $ | 7,089 |  | $ | 4,252 |  | $ | 1,675 |  | $ | 3,564 |  | $ | 1,276 |  | $ | 2,562 |  | $ | 120,806 |
Property operating expenses |  | 18,325 |  | 7,269 |  | 7,374 |  | 2,077 |  | 2,234 |  | 3,208 |  | 1,657 |  | 375 |  | 970 |  | 831 |  | 1,134 |  | 45,454 |
NOI from real estate operations |  | $ | 34,535 |  | $ | 10,577 |  | $ | 11,071 |  | $ | 3,835 |  | $ | 3,091 |  | $ | 3,881 |  | $ | 2,595 |  | $ | 1,300 |  | $ | 2,594 |  | $ | 445 |  | $ | 1,428 |  | $ | 75,352 |
Additions to properties, net |  | $ | 18,588 |  | $ | 5,858 |  | $ | 17,177 |  | $ | 998 |  | $ | 2,388 |  | $ | 2,399 |  | $ | 632 |  | $ | 3,800 |  | $ | 3,894 |  | $ | 15,311 |  | $ | 4,951 |  | $ | 75,996 |
Three Months Ended June 30, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues from real estate operations |  | $ | 50,623 |  | $ | 16,827 |  | $ | 18,172 |  | $ | 6,154 |  | $ | 5,452 |  | $ | 4,228 |  | $ | — |  | $ | 1,510 |  | $ | 3,530 |  | $ | — |  | $ | 3,495 |  | $ | 109,991 |
Property operating expenses |  | 16,853 |  | 7,311 |  | 6,706 |  | 2,239 |  | 2,199 |  | 2,100 |  | — |  | 800 |  | 1,041 |  | — |  | 895 |  | 40,144 |
NOI from real estate operations |  | $ | 33,770 |  | $ | 9,516 |  | $ | 11,466 |  | $ | 3,915 |  | $ | 3,253 |  | $ | 2,128 |  | $ | — |  | $ | 710 |  | $ | 2,489 |  | $ | — |  | $ | 2,600 |  | $ | 69,847 |
Additions to properties, net |  | $ | 32,257 |  | $ | 7,919 |  | $ | 32,684 |  | $ | 700 |  | $ | 540 |  | $ | 5,559 |  | $ | — |  | $ | 6,273 |  | $ | 132 |  | $ | — |  | $ | 1,311 |  | $ | 87,375 |
Six Months Ended June 30, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues from real estate operations |  | $ | 106,112 |  | $ | 35,458 |  | $ | 36,719 |  | $ | 11,832 |  | $ | 10,934 |  | $ | 14,752 |  | $ | 8,842 |  | $ | 3,614 |  | $ | 7,098 |  | $ | 2,486 |  | $ | 5,400 |  | $ | 243,247 |
Property operating expenses |  | 39,715 |  | 15,809 |  | 15,045 |  | 4,513 |  | 4,952 |  | 7,077 |  | 3,284 |  | 821 |  | 1,986 |  | 1,537 |  | 1,620 |  | 96,359 |
NOI from real estate operations |  | $ | 66,397 |  | $ | 19,649 |  | $ | 21,674 |  | $ | 7,319 |  | $ | 5,982 |  | $ | 7,675 |  | $ | 5,558 |  | $ | 2,793 |  | $ | 5,112 |  | $ | 949 |  | $ | 3,780 |  | $ | 146,888 |
Additions to properties, net |  | $ | 43,343 |  | $ | 17,684 |  | $ | 19,314 |  | $ | 1,419 |  | $ | 3,563 |  | $ | 4,689 |  | $ | 695 |  | $ | 6,033 |  | $ | 7,144 |  | $ | 39,381 |  | $ | 8,082 |  | $ | 151,347 |
Segment assets at June 30, 2011 |  | $ | 1,389,667 |  | $ | 566,900 |  | $ | 556,037 |  | $ | 261,813 |  | $ | 171,418 |  | $ | 159,350 |  | $ | 115,949 |  | $ | 127,685 |  | $ | 102,402 |  | $ | 168,986 |  | $ | 248,023 |  | $ | 3,868,230 |
Six Months Ended June 30, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues from real estate operations |  | $ | 102,681 |  | $ | 34,692 |  | $ | 36,831 |  | $ | 12,486 |  | $ | 11,281 |  | $ | 8,166 |  | $ | — |  | $ | 2,712 |  | $ | 7,119 |  | $ | — |  | $ | 7,019 |  | $ | 222,987 |
Property operating expenses |  | 39,008 |  | 16,321 |  | 14,019 |  | 4,548 |  | 4,900 |  | 3,729 |  | — |  | 1,563 |  | 2,148 |  | — |  | 2,204 |  | 88,440 |
NOI from real estate operations |  | $ | 63,673 |  | $ | 18,371 |  | $ | 22,812 |  | $ | 7,938 |  | $ | 6,381 |  | $ | 4,437 |  | $ | — |  | $ | 1,149 |  | $ | 4,971 |  | $ | — |  | $ | 4,815 |  | $ | 134,547 |
Additions to properties, net |  | $ | 48,216 |  | $ | 15,159 |  | $ | 37,594 |  | $ | 1,513 |  | $ | 2,081 |  | $ | 10,498 |  | $ | — |  | $ | 16,331 |  | $ | 543 |  | $ | — |  | $ | 13,787 |  | $ | 145,722 |
Segment assets at June 30, 2010 |  | $ | 1,358,956 |  | $ | 570,889 |  | $ | 485,307 |  | $ | 267,356 |  | $ | 172,321 |  | $ | 144,275 |  | $ | — |  | $ | 120,432 |  | $ | 93,333 |  | $ | — |  | $ | 254,414 |  | $ | 3,467,283 |
The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
|  | For the Three Months |  | For the Six Months |
|  | Ended June 30, |  | Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Segment revenues from real estate operations |  | $ | 120,806 |  | $ | 109,991 |  | $ | 243,247 |  | $ | 222,987 |
Construction contract and other service revenues |  | 28,097 |  | 26,065 |  | 49,125 |  | 63,430 |
Less: Revenues from discontinued operations (Note 13) |  | (2,263 | ) | (3,262 | ) | (4,546 | ) | (6,627 | )
Total revenues |  | $ | 146,640 |  | $ | 132,794 |  | $ | 287,826 |  | $ | 279,790 |
The following table reconciles our segment property operating expenses to property operating expenses as reported on our consolidated statements of operations (in thousands):
|  | For the Three Months |  | For the Six Months |
|  | Ended June 30, |  | Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Segment property operating expenses |  | $ | 45,454 |  | $ | 40,144 |  | $ | 96,359 |  | $ | 88,440 |
Less: Property operating expenses from discontinued operations (Note 13) |  | (733 | ) | (884 | ) | (1,928 | ) | (2,234 | )
Total property operating expenses |  | $ | 44,721 |  | $ | 39,260 |  | $ | 94,431 |  | $ | 86,206 |
As previously discussed, we provide real estate services such as property management, construction and development and heating and air conditioning services primarily for our properties but also for third parties. The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities. Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue. We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):
|  | For the Three Months |  | For the Six Months |
|  | Ended June 30, |  | Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Construction contract and other service revenues |  | $ | 28,097 |  | $ | 26,065 |  | $ | 49,125 |  | $ | 63,430 |
Construction contract and other service expenses |  | (26,909 | ) | (25,402 | ) | (47,527 | ) | (61,801 | )
NOI from service operations |  | $ | 1,188 |  | $ | 663 |  | $ | 1,598 |  | $ | 1,629 |
The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to (loss) income from continuing operations as reported on our consolidated statements of operations (in thousands):
|  | For the Three Months |  | For the Six Months |
|  | Ended June 30, |  | Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
NOI from real estate operations |  | $ | 75,352 |  | $ | 69,847 |  | $ | 146,888 |  | $ | 134,547 |
NOI from service operations |  | 1,188 |  | 663 |  | 1,598 |  | 1,629 |
Interest and other income |  | 2,756 |  | 245 |  | 3,924 |  | 1,547 |
Equity in loss of unconsolidated entities |  | (94 | ) | (72 | ) | (64 | ) | (277 | )
Income tax benefit (expense) |  | 5,042 |  | (7 | ) | 5,586 |  | (48 | )
Other adjustments: |  |  |  |  |  |  |  |  |
Depreciation and other amortization associated with real estate operations |  | (31,440 | ) | (28,720 | ) | (62,830 | ) | (55,531 | )
Impairment losses |  | (38,290 | ) | — |  | (66,032 | ) | — |
General and administrative expenses |  | (6,320 | ) | (5,926 | ) | (13,097 | ) | (11,826 | )
Business development expenses |  | (588 | ) | (465 | ) | (1,076 | ) | (620 | )
Interest expense on continuing operations |  | (26,607 | ) | (25,576 | ) | (53,246 | ) | (48,068 | )
NOI from discontinued operations |  | (1,530 | ) | (2,378 | ) | (2,618 | ) | (4,393 | )
Loss on early extinguishment of debt |  | (25 | ) | — |  | (25 | ) | — |
(Loss) income from continuing operations |  | $ | (20,556 | ) | $ | 7,611 |  | $ | (40,992 | ) | $ | 16,960 |
The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that discontinued operations are not presented separately for segment purposes. We did not allocate interest expense, depreciation and amortization and impairment losses to our real estate segments since they are not included in the measure of segment profit reviewed by management. We also did not allocate general and administrative expenses, business development expenses, interest and other income, equity in loss of unconsolidated entities, income taxes and noncontrolling interests because these items represent general corporate items not attributable to segments.

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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 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 Reference 2: 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 3: 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 4: 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 5: 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 6: 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 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 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 131 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: 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 12: 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 13: 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 14: 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 15: 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 + Details
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