Segment Reporting

The Company has determined that it has four reportable segments based on how management reviews and manages its business. These reportable segments include: Real Estate Finance, Net Lease, Operating Properties and Land. The Real Estate Finance segment includes all of the Company's activities related to senior and mezzanine real estate loans and real estate related securities. The Net Lease segment includes all of the Company's activities related to the ownership and leasing of corporate facilities. The Operating Properties segment includes all of the Company's activities and operations related to its commercial and residential properties. The Land segment includes the Company's activities related to its developable land portfolio.

The Company evaluates performance based on the following financial measures for each segment, and has conformed the prior periods' presentation for the change in composition of its business segments ($ in thousands):



	Real Estate Finance			Net Lease			Operating Properties			Land			Corporate/ Other(1)			Company Total
For the Three Months Ended September 30, 2013
Operating lease income	$	—		$	36,142		$	24,164		$	—		$	—		$	60,306
Interest income	24,235			—			—			—			—			24,235
Other income	1,731			—			8,072			333			1,125			11,261
Total revenue	$	25,966		$	36,142		$	32,236		$	333		$	1,125		$	95,802
Earnings (loss) from equity method investments	—			679			533			(2,178		)	5,311			4,345
Income from sales of residential property	—			—			14,075			—			—			14,075
Net operating income from discontinued operations(2)	—			303			485			—			—			788
Gain from discontinued operations	—			—			9,166			—			—			9,166
Revenue and other earnings	$	25,966		$	37,124		$	56,495		$	(1,845	)	$	6,436		$	124,176
Real estate expense	—			(5,223		)	(25,178		)	(7,203		)	—			(37,604		)
Other expense	(253		)	—			—			—			(1,242		)	(1,495		)
Direct expenses	$	(253	)	$	(5,223	)	$	(25,178	)	$	(7,203	)	$	(1,242	)	$	(39,099	)
Direct segment profit (loss)	$	25,713		$	31,901		$	31,317		$	(9,048	)	$	5,194		$	85,077
Allocated interest expense(2)	(16,172		)	(19,066		)	(11,082		)	(7,541		)	(9,932		)	(63,793		)
Allocated general and administrative(3)	(3,610		)	(4,282		)	(2,735		)	(2,487		)	(6,608		)	(19,722		)
Segment profit (loss)(4)	$	5,931		$	8,553		$	17,500		$	(19,076	)	$	(11,346	)	$	1,562



	Real Estate Finance			Net Lease			Operating Properties			Land			Corporate/ Other(1)			Company Total
Other significant non-cash items:
Provision for loan losses	$	(9,834	)	$	—		$	—		$	—		$	—		$	(9,834	)
Impairment of assets(2)	$	—		$	494		$	6,291		$	—		$	—		$	6,785
Depreciation and amortization(2)	$	—		$	9,556		$	8,884		$	288		$	291		$	19,019
Capitalized expenditures	$	—		$	4,322		$	11,906		$	8,877		$	—		$	25,105
For the Nine Months Ended September 30, 2013
Operating lease income	$	—		$	108,781		$	66,857		$	—		$	—		$	175,638
Interest income	78,584			—			—			—			—			78,584
Other income	4,229			—			27,623			833			3,093			35,778
Total revenue	$	82,813		$	108,781		$	94,480		$	833		$	3,093		$	290,000
Earnings (loss) from equity method investments	—			2,017			5,006			(5,268		)	32,591			34,346
Income from sales of residential property	—			—			68,615			3,477			—			72,092
Net operating income from discontinued operations(2)	—			1,145			1,328			—			—			2,473
Gain from discontinued operations	—			3,395			19,093			—			—			22,488
Revenue and other earnings	$	82,813		$	115,338		$	188,522		$	(958	)	$	35,684		$	421,399
Real estate expense	—			(16,508		)	(75,695		)	(20,234		)	—			(112,437		)
Other expense	(1,586		)	—			—			—			(5,680		)	(7,266		)
Direct expenses	$	(1,586	)	$	(16,508	)	$	(75,695	)	$	(20,234	)	$	(5,680	)	$	(119,703	)
Direct segment profit (loss)	$	81,227		$	98,830		$	112,827		$	(21,192	)	$	30,004		$	301,696
Allocated interest expense(2)	(55,500		)	(59,296		)	(37,259		)	(23,226		)	(29,235		)	(204,516		)
Allocated general and administrative(3)	(9,661		)	(10,353		)	(7,140		)	(6,122		)	(19,248		)	(52,524		)
Segment profit (loss)(4)	$	16,066		$	29,181		$	68,428		$	(50,540	)	$	(18,479	)	$	44,656
Other significant non-cash items:
Provision for loan losses	$	5,392		$	—		$	—		$	—		$	—		$	5,392
Impairment of assets(2)	$	—		$	494		$	6,687		$	—		$	—		$	7,181
Depreciation and amortization(2)	$	—		$	28,787		$	23,321		$	817		$	948		$	53,873
Capitalized expenditures	$	—		$	21,977		$	26,312		$	24,476		$	—		$	72,765
For the Three Months Ended September 30, 2012
Operating lease income	$	—		$	37,378		$	15,651		$	—		$	—		$	53,029
Interest income	31,171			—			—			—			—			31,171
Other income	1,300			—			7,116			—			918			9,334
Total revenue	$	32,471		$	37,378		$	22,767		$	—		$	918		$	93,534
Earnings (loss) from equity method investments	—			667			3,467			(1,914		)	20,499			22,719
Income from sales of residential property	—			—			15,584			—			—			15,584
Net operating income from discontinued operations(2)	—			608			(98		)	—			—			510
Gain from discontinued operations	—			—			—			—			—			—
Revenue and other earnings	$	32,471		$	38,653		$	41,720		$	(1,914	)	$	21,417		$	132,347
Real estate expense	—			(6,676		)	(24,439		)	(6,682		)	—			(37,797		)
Other expense	(1,478		)	—			—			—			(916		)	(2,394		)
Direct expenses	$	(1,478	)	$	(6,676	)	$	(24,439	)	$	(6,682	)	$	(916	)	$	(40,191	)
Direct segment profit (loss)	$	30,993		$	31,977		$	17,281		$	(8,596	)	$	20,501		$	92,156



	Real Estate Finance			Net Lease			Operating Properties			Land			Corporate/ Other(1)			Company Total
Allocated interest expense(2)	(28,118		)	(21,426		)	(15,342		)	(8,495		)	(18,396		)	(91,777		)
Allocated general and administrative(3)	(3,324		)	(2,521		)	(1,970		)	(2,167		)	(5,543		)	(15,525		)
Segment profit (loss)(4)	$	(449	)	$	8,030		$	(31	)	$	(19,258	)	$	(3,438	)	$	(15,146	)
Other significant non-cash items:
Provision for loan losses	$	16,834		$	—		$	—		$	—		$	—		$	16,834
Impairment of assets(2)	$	—		$	—		$	4,808		$	205		$	1,529		$	6,542
Depreciation and amortization(2)	$	—		$	9,795		$	6,330		$	319		$	343		$	16,787
Capitalized expenditures	$	—		$	770		$	6,142		$	6,110		$	—		$	13,022
For the Nine Months Ended September 30, 2012
Operating lease income	$	—		$	111,343		$	48,327		$	—		$	—		$	159,670
Interest income	104,822			—			—			—			—			104,822
Other income	8,162			—			24,997			—			3,537			36,696
Total revenue	$	112,984		$	111,343		$	73,324		$	—		$	3,537		$	301,188
Earnings (loss) from equity method investments	—			1,962			20,764			(5,016		)	58,215			75,925
Income from sales of residential property	—			—			35,583			—			—			35,583
Net operating income from discontinued operations(2)	—			5,890			337			—			—			6,227
Gain from discontinued operations	—			27,257			—			—			—			27,257
Revenue and other earnings	$	112,984		$	146,452		$	130,008		$	(5,016	)	$	61,752		$	446,180
Real estate expense	—			(18,674		)	(76,114		)	(16,260		)	—			(111,048		)
Other expense	(3,906		)	—			—			—			(2,848		)	(6,754		)
Direct expenses	$	(3,906	)	$	(18,674	)	$	(76,114	)	$	(16,260	)	$	(2,848	)	$	(117,802	)
Direct segment profit (loss)	$	109,078		$	127,778		$	53,894		$	(21,276	)	$	58,904		$	328,378
Allocated interest expense(2)	(90,273		)	(65,656		)	(42,507		)	(24,552		)	(49,671		)	(272,659		)
Allocated general and administrative(3)	(11,456		)	(8,236		)	(5,817		)	(5,604		)	(18,936		)	(50,049		)
Segment profit (loss)(4)	$	7,349		$	53,886		$	5,570		$	(51,432	)	$	(9,703	)	$	5,670
Other significant non-cash items:
Provision for loan losses	$	60,865		$	—		$	—		$	—		$	—		$	60,865
Impairment of assets(2)	$	—		$	6,670		$	22,209		$	205		$	977		$	30,061
Depreciation and amortization(2)	$	—		$	30,822		$	18,966		$	1,012		$	405		$	51,205
Capitalized expenditures	$	—		$	2,826		$	31,073		$	11,837		$	—		$	45,736
As of September 30, 2013
Real estate
Real estate, at cost	$	—		$	1,631,017		$	777,848		$	815,302		$	—		$	3,224,167
Less: accumulated depreciation	—			(335,301		)	(100,325		)	(3,106		)	—			(438,732		)
Real estate, net	$	—		$	1,295,716		$	677,523		$	812,196		$	—		$	2,785,435
Real estate available and held for sale	—			—			262,332			147,748			—			410,080
Total real estate	$	—		$	1,295,716		$	939,855		$	959,944		$	—		$	3,195,515
Loans receivable and other lending investments, net	1,362,752			—			—			—			—			1,362,752
Other investments	—			16,426			16,693			12,809			141,582			187,510
Total portfolio assets	$	1,362,752		$	1,312,142		$	956,548		$	972,753		$	141,582		$	4,745,777
Cash and other assets																1,027,563
Total assets																$	5,773,340



	Real Estate Finance		Net Lease			Operating Properties			Land			Corporate/ Other(1)		Company Total
As of December 31, 2012
Real estate
Real estate, at cost	$	—	$	1,639,320		$	801,214		$	786,114		$	—	$	3,226,648
Less: accumulated depreciation	—		(315,699		)	(109,634		)	(2,292		)	—		(427,625		)
Real estate, net	$	—	$	1,323,621		$	691,580		$	783,822		$	—	$	2,799,023
Real estate available and held for sale	—		—			454,587			181,278			—		635,865
Total real estate	$	—	$	1,323,621		$	1,146,167		$	965,100		$	—	$	3,434,888
Loans receivable and other lending investments, net	1,829,985		—			—			—			—		1,829,985
Other investments	—		16,380			25,745			5,493			351,225		398,843
Total portfolio assets	$	1,829,985	$	1,340,001		$	1,171,912		$	970,593		$	351,225	$	5,663,716
Cash and other assets														487,073
Total assets														$	6,150,789

Explanatory Notes:

_______________________________________________________________________________

(1)

Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to consolidated Company totals. This caption also includes the Company's joint venture investments and strategic investments that are not related to the other reportable segments above, including the Company's equity investment in LNR of $205.8 million as of December 31, 2012 and the Company's share of equity in earnings from LNR of $0.0 million and $15.2 million for the three months ended September 30, 2013 and 2012, respectively, and $16.5 million and $36.0 million for the nine months ended September 30, 2013 and 2012, respectively. See Note 6 for further details on the Company's accounting policy and summarized financial information for its investment in LNR.


(2)	Includes related amounts reclassified to discontinued operations on the Company's Consolidated Statements of Operations.


(3)	General and administrative excludes stock-based compensation expense of $4.6 million and $3.5 million for the three months ended September 30, 2013 and 2012, respectively, and $14.5 million and $11.6 million for the nine months ended September 30, 2013 and 2012, respectively.


(4)	The following is a reconciliation of segment profit (loss) to net income (loss) ($ in thousands):



	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
Segment profit (loss)	$	1,562		$	(15,146	)	$	44,656		$	5,670
Less: Provision for loan losses	9,834			(16,834		)	(5,392		)	(60,865		)
Less: Impairment of assets(2)	(6,785		)	(6,542		)	(7,181		)	(30,061		)
Less: Stock-based compensation expense	(4,563		)	(3,512		)	(14,484		)	(11,625		)
Less: Depreciation and amortization(2)	(19,019		)	(16,787		)	(53,873		)	(51,205		)
Less: Income tax (expense) benefit(2)	3,879			(1,791		)	(688		)	(6,540		)
Add: Gain (loss) on early extinguishment of debt, net	(3,498		)	(3,694		)	(28,282		)	(6,858		)
Net income (loss)	$	(18,590	)	$	(64,306	)	$	(65,244	)	$	(161,484	)