Segment Reporting

6 Months Ended

Jun. 30, 2019

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 and Development. 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 the Company's activities and operations related to the ownership of properties generally leased to single corporate tenants and its investment in SAFE (refer to Note 8). The Operating Properties segment includes the Company's activities and operations related to its commercial and residential properties. The Land and Development 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. The Company's segment information is as follows ($ in thousands):



	Real Estate Finance			Net Lease			Operating Properties			Land and Development			Corporate/Other⁽¹⁾			Company Total
Three Months Ended June 30, 2019:
Operating lease income	$	—		$	48,660		$	6,455		$	70		$	—		$	55,185
Interest income	19,933			408			—			—			—			20,341
Interest income from sales-type leases	—			3,817			—			—			—			3,817
Other income	532			2,937			3,974			1,311			1,296			10,050
Land development revenue	—			—			—			9,075			—			9,075
Earnings (losses) from equity method investments	—			3,582			(2,630		)	2,924			(236		)	3,640
Selling profit from sales-type leases	—			180,416			—			—			—			180,416
Income from sales of real estate	—			219,742			781			—			—			220,523
Total revenue and other earnings	20,465			459,562			8,580			13,380			1,060			503,047
Real estate expense	—			(5,769		)	(8,288		)	(7,981		)	—			(22,038		)
Land development cost of sales	—			—			—			(9,236		)	—			(9,236		)
Other expense	(47		)	—			—			—			(11,836		)	(11,883		)
Allocated interest expense	(7,936		)	(23,606		)	(2,548		)	(5,493		)	(4,169		)	(43,752		)
Allocated general and administrative⁽²⁾	(2,279		)	(6,734		)	(726		)	(2,923		)	(4,936		)	(17,598		)
Segment profit (loss)⁽³⁾	$	10,203		$	423,453		$	(2,982	)	$	(12,253	)	$	(19,881	)	$	398,540
Other significant items:
Provision for loan losses	$	110		$	—		$	—		$	—		$	—		$	110
Impairment of assets	—			—			2			1,100			—			1,102
Depreciation and amortization	—			12,272			900			244			302			13,718
Capitalized expenditures	—			2,105			1,646			29,414			—			33,165

Three Months Ended June 30, 2018:
Operating lease income	$	—		$	29,310		$	15,199		$	100		$	—		$	44,609
Interest income	25,212			—			—			—			—			25,212
Other income	3,133			698			13,351			1,313			2,328			20,823
Land development revenue	—			—			—			80,927			—			80,927
Earnings from equity method investments	—			2,694			(1,316		)	1,023			(9,679		)	(7,278		)
Gain on consolidation of equity method investment	—			67,877			—			—			—			67,877
Income from sales of real estate	—			24,493			32,402			—			—			56,895
Total revenue and other earnings	28,345			125,072			59,636			83,363			(7,351		)	289,065
Real estate expense	—			(3,433		)	(23,818		)	(9,792		)	—			(37,043		)
Land development cost of sales	—			—			—			(83,361		)	—			(83,361		)
Other expense	(290		)	—			—			—			(3,426		)	(3,716		)
Allocated interest expense	(10,648		)	(13,591		)	(4,578		)	(5,308		)	(9,047		)	(43,172		)
Allocated general and administrative⁽²⁾	(3,852		)	(4,853		)	(1,975		)	(3,747		)	(5,298		)	(19,725		)
Segment profit (loss)⁽³⁾	$	13,555		$	103,195		$	29,265		$	(18,845	)	$	(25,122	)	$	102,048
Other significant items:
Provision for loan losses	$	18,892		$	—		$	—		$	—		$	—		$	18,892
Impairment of assets	—			4,342			446			1,300			—			6,088
Depreciation and amortization	—			6,341			3,738			318			370			10,767
Capitalized expenditures	—			720			4,623			42,603			—			47,946



	Real Estate Finance			Net Lease			Operating Properties			Land and Development			Corporate/Other⁽¹⁾			Company Total
Six Months Ended June 30, 2019:
Operating lease income	$	—		$	98,143		$	15,810		$	147		$	—		$	114,100
Interest income	40,308			408			—			—			—			40,716
Interest income from sales-type leases	—			3,817			—			—			—			3,817
Other income	2,721			6,358			6,349			4,755			4,680			24,863
Land development revenue	—			—			—			21,774			—			21,774
Earnings (losses) from equity method investments	—			10,812			(5,040		)	3,211			(34		)	8,949
Selling profit from sales-type leases	—			180,416			—			—			—			180,416
Income from sales of real estate	—			219,742			10,188			—			—			229,930
Total revenue and other earnings	43,029			519,696			27,307			29,887			4,646			624,565
Real estate expense	—			(11,874		)	(19,321		)	(16,783		)	—			(47,978		)
Land development cost of sales	—			—			—			(23,684		)	—			(23,684		)
Other expense	(311		)	—			—			—			(12,080		)	(12,391		)
Allocated interest expense	(16,349		)	(45,372		)	(5,466		)	(10,620		)	(12,522		)	(90,329		)
Allocated general and administrative⁽²⁾	(4,488		)	(12,412		)	(1,487		)	(6,180		)	(9,881		)	(34,448		)
Segment profit (loss)⁽³⁾	$	21,881		$	450,038		$	1,033		$	(27,380	)	$	(29,837	)	$	415,735
Other significant non-cash items:
Provision for loan losses	$	13		$	—		$	—		$	—		$	—		$	13
Impairment of assets	—			—			3,853			1,100			—			4,953
Depreciation and amortization	—			25,832			2,457			490			607			29,386
Capitalized expenditures	—			4,861			2,063			65,493			—			72,417

Six Months Ended June 30, 2018:
Operating lease income	$	—		$	59,036		$	31,016		$	355		$	—		$	90,407
Interest income	51,909			—			—			—			—			51,909
Other income	3,516			1,746			25,496			1,784			3,600			36,142
Land development revenue	—			—			—			357,356			—			357,356
Earnings (losses) from equity method investments	—			6,252			(2,591		)	2,566			(10,173		)	(3,946		)
Gain from consolidation of equity method investment	—			67,877			—			—			—			67,877
Income from sales of real estate	—			24,907			49,036			—			—			73,943
Total revenue and other earnings	55,425			159,818			102,957			362,061			(6,573		)	673,688
Real estate expense	—			(7,411		)	(45,443		)	(20,370		)	—			(73,224		)
Land development cost of sales	—			—			—			(306,768		)	—			(306,768		)
Other expense	(690		)	—			—			—			(4,192		)	(4,882		)
Allocated interest expense	(22,413		)	(27,792		)	(10,106		)	(11,781		)	(16,261		)	(88,353		)
Allocated general and administrative⁽²⁾	(7,821		)	(9,439		)	(4,018		)	(7,552		)	(10,618		)	(39,448		)
Segment profit (loss)⁽³⁾	$	24,501		$	115,176		$	43,390		$	15,590		$	(37,644	)	$	161,013
Other significant non-cash items:
Provision for loan losses	$	18,037		$	—		$	—		$	—		$	—		$	18,037
Impairment of assets	—			4,342			4,546			1,300			—			10,188
Depreciation and amortization	—			12,652			7,664			832			730			21,878
Capitalized expenditures	—			1,198			12,324			74,050			—			87,572



	Real Estate Finance		Net Lease		Operating Properties		Land and Development		Corporate/Other⁽¹⁾		Company Total
As of June 30, 2019
Real estate
Real estate, net	$	—	$	1,249,824	$	171,778	$	—	$	—	$	1,421,602
Real estate available and held for sale	—		—		12,770		—		—		12,770
Total real estate	—		1,249,824		184,548		—		—		1,434,372
Net investment in leases	—		421,842		—		—		—		421,842
Land and development, net	—		—		—		668,656		—		668,656
Loans receivable and other lending investments, net	858,061		44,085		—		—		—		902,146
Other investments	—		408,257		69,208		42,750		43,955		564,170
Total portfolio assets	$	858,061	$	2,124,008	$	253,756	$	711,406	$	43,955	3,991,186
Cash and other assets											774,841
Total assets											$	4,766,027

As of December 31, 2018
Real estate
Real estate, net	$	—	$	1,536,494	$	234,525	$	—	$	—	$	1,771,019
Real estate available and held for sale	—		1,055		21,496		—		—		22,551
Total real estate	—		1,537,549		256,021		—		—		1,793,570
Land and development, net	—		—		—		598,218		—		598,218
Loans receivable and other lending investments, net	988,224		—		—		—		—		988,224
Other investments	—		165,804		65,643		65,312		7,516		304,275
Total portfolio assets	$	988,224	$	1,703,353	$	321,664	$	663,530	$	7,516	3,684,287
Cash and other assets											1,329,990
Total assets											$	5,014,277

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(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 included in the other reportable segments above.


(2)	General and administrative excludes stock-based compensation expense of $9.7 million and $14.0 million for the three and six months ended June 30, 2019, respectively, and $3.5 million and $12.6 million for the three and six months ended June 30, 2018, respectively.


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



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Segment profit	$	398,540		$	102,048		$	415,735		$	161,013
Less: Provision for loan losses	(110		)	(18,892		)	(13		)	(18,037		)
Less: Impairment of assets	(1,102		)	(6,088		)	(4,953		)	(10,188		)
Less: Stock-based compensation expense	(9,705		)	(3,503		)	(13,954		)	(12,593		)
Less: Depreciation and amortization	(13,718		)	(10,767		)	(29,386		)	(21,878		)
Less: Income tax expense	(214		)	(128		)	(240		)	(249		)
Less: Loss on early extinguishment of debt, net	—			(2,164		)	(468		)	(2,536		)
Net income	$	373,691		$	60,506		$	366,721		$	95,532