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Segment Reporting

9 Months Ended

Sep. 30, 2022

Note 17—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: Net Lease, Real Estate Finance, Operating Properties and Land and Development. The Net Lease segment (refer to Note 3 - Net Lease Sale and Discontinued Operations) includes the Company’s investments in SAFE and its Ground Lease adjacent businesses (refer to Note 8). 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 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):


	Net		Real Estate		Operating		Land and		Corporate/		Company
	Lease		Finance		Properties		Development		Other⁽¹⁾		Total
Three Months Ended September 30, 2022
Operating lease income	$	—	$	—	$	3,340	$	84	$	—	$	3,424
Interest income		—		2,093		—		—		—		2,093
Interest income from sales-type leases		129		—		—		—		—		129
Other income		5,504		3,147		12,197		2,462		3,714		27,024
Land development revenue		—		—		—		15,087		—		15,087
Earnings (losses) from equity method investments		43,525		1,329		11,515		850		578		57,797
Income from sales of real estate		951		—		—		—		—		951
Total revenue and other earnings		50,109		6,569		27,052		18,483		4,292		106,505
Real estate expense		(726)		—		(11,012)		(4,466)		—		(16,204)
Land development cost of sales		—		—		—		(16,778)		—		(16,778)
Other expense		489		(78)		—		(218)		(4,364)		(4,171)
Allocated interest expense		(13,049)		(1,713)		(1,122)		(1,915)		(4,865)		(22,664)
Allocated general and administrative⁽²⁾		(5,302)		(1,190)		(751)		(2,333)		(5,008)		(14,584)
Segment profit (loss)⁽³⁾	$	31,521	$	3,588	$	14,167	$	(7,227)	$	(9,945)	$	32,104

Other significant items:
Recovery of loan losses	$	—	$	(157)	$	—	$	—	$	—	$	(157)
Recovery of losses on net investment in leases		(380)		—		—		—		—		(380)
Depreciation and amortization		—		—		923		227		140		1,290
Capitalized expenditures		—		—		104		5,301		—		5,405

Three Months Ended September 30, 2021
Operating lease income	$	—	$	—	$	3,636	$	96	$	—	$	3,732
Interest income		651		6,321		—		—		—		6,972
Interest income from sales-type leases		526		—		—		—		—		526
Other income		3,605		1,095		16,869		3,189		14,275		39,033
Land development revenue		—		—		—		93,369		—		93,369
Earnings (losses) from equity method investments		73,475		872		1,129		10,836		1,483		87,795
Income from sales of real estate		—		—		25,611		—		—		25,611
Total revenue and other earnings		78,257		8,288		47,245		107,490		15,758		257,038
Real estate expense		(91)		—		(9,184)		(4,094)		—		(13,369)
Land development cost of sales		—		—		—		(87,380)		—		(87,380)
Other expense		(210)		(270)		—		(64)		(350)		(894)
Allocated interest expense		(15,691)		(3,331)		(1,641)		(3,679)		(4,353)		(28,695)
Allocated general and administrative⁽²⁾		(5,487)		(958)		(473)		(2,173)		(5,029)		(14,120)
Segment profit (loss) ⁽³⁾		56,778	$	3,729	$	35,947	$	10,100	$	6,026	$	112,580
Other significant non-cash items:
Recovery of loan losses	$	—	$	(1,610)	$	—	$	—	$	—	$	(1,610)
Recovery of losses on net investment in leases		(315)		—		—		—		—		(315)
Impairment of assets		—		—		421		—		—		421
Depreciation and amortization		—		—		1,385		228		129		1,742
Capitalized expenditures		—		—		121		7,416		—		7,537


Nine Months Ended September 30, 2022
Operating lease income	$	—	$	—	$	9,396	$	319	$	—	$	9,715
Interest income		75		11,187		—		—		—		11,262
Interest income from sales-type leases		861		—		—		—		—		861
Other income		15,185		3,185		22,452		5,097		5,626		51,545
Land development revenue		—		—		—		54,390		—		54,390
Earnings from equity method investments		76,563		3,112		15,233		4,516		2,798		102,222
Income from sales of real estate		1,443		—		—		—		—		1,443
Total revenue and other earnings		94,127		17,484		47,081		64,322		8,424		231,438
Real estate expense		(1,385)		—		(25,144)		(12,808)		—		(39,337)
Land development cost of sales		—		—		—		(55,369)		—		(55,369)
Other expense		(503)		(237)		—		(538)		(5,346)		(6,624)
Allocated interest expense		(42,426)		(7,049)		(3,602)		(8,903)		(14,076)		(76,056)
Allocated general and administrative⁽³⁾		(14,156)		(3,540)		(1,854)		(6,702)		(14,878)		(41,130)
Segment profit (loss)⁽⁴⁾	$	35,657	$	6,658	$	16,481	$	(19,998)	$	(25,876)	$	12,922
Other significant items:
Provision for loan losses	$	—	$	22,556	$	—	$	—	$	—	$	22,556
Impairment of assets		—		—		1,750		—		18		1,768
Depreciation and amortization		—		—		2,878		683		424		3,985
Capitalized expenditures		—		—		644		15,824		—		16,468

Nine Months Ended September 30, 2021
Operating lease income	$	—	$	—	$	13,177	$	279	$	—	$	13,456
Interest income		968		23,878		—		—		—		24,846
Interest income from sales-type leases		683		—		—		—		—		683
Other income		10,614		1,245		23,159		5,894		20,038		60,950
Land development revenue		—		—		—		157,936		—		157,936
Earnings (losses) from equity method investments		94,590		2,092		(5,553)		15,456		4,076		110,661
Income from sales of real estate		—		—		26,319		—		—		26,319
Total revenue and other earnings		106,855		27,215		57,102		179,565		24,114		394,851
Real estate expense		(562)		—		(19,238)		(13,604)		—		(33,404)
Land development cost of sales		—		—		—		(147,507)		—		(147,507)
Other expense		(210)		(422)		—		(64)		(662)		(1,358)
Allocated interest expense		(44,582)		(11,737)		(5,714)		(11,481)		(12,631)		(86,145)
Allocated general and administrative⁽³⁾		(17,544)		(3,659)		(1,797)		(6,968)		(15,686)		(45,654)
Segment profit (loss)⁽⁴⁾	$	43,957	$	11,397	$	30,353	$	(59)	$	(4,865)	$	80,783

Other significant items:
Recovery of loan losses	$	—	$	(7,411)	$	—	$	—	$	—	$	(7,411)
Provision for losses on net investment in leases		465		—		—		—		—		465
Impairment of assets		—		—		679		—		—		679
Depreciation and amortization		—		—		4,592		674		449		5,715
Capitalized expenditures		—		—		610		16,727		—		17,337

As of September 30, 2022
Real estate, net	$	—	$	—	$	89,144	$	—	$	—	$	89,144
Real estate available and held for sale		—		—		1,283		—		—		1,283
Total real estate		—		—		90,427		—		—		90,427
Real estate and other assets available and held for sale and classified as discontinued operations⁽¹⁾		11,925		—		—		—		—		11,925
Land and development, net		—		—		—		248,246		—		248,246
Loans receivable and other lending investments, net		—		176,623		—		—		—		176,623
Other investments		1,525,270		24,349		33,808		—		21,841		1,605,268
Total portfolio assets		1,537,195		200,972		124,235		248,246		21,841		2,132,489
Cash and other assets												1,389,643
Total assets											$	3,522,132

As of December 31, 2021
Real estate, net	$	—	$	—	$	92,150	$	—	$	—	$	92,150
Real estate available and held for sale		—		—		301		—		—		301
Total real estate		—		—		92,451		—		—		92,451
Real estate and other assets available and held for sale and classified as discontinued operations⁽¹⁾		2,299,711		—		—		—		—		2,299,711
Net investment in leases		43,215		—		—		—		—		43,215
Land and development, net		—		—		—		286,810		—		286,810
Loans receivable and other lending investments, net		—		332,844		—		—		—		332,844
Loan receivable held for sale		43,215		—		—		—		—		43,215
Other investments		1,186,162		48,862		43,252		1,096		17,909		1,297,281
Total portfolio assets	$	3,572,303	$	381,706	$	135,703	$	287,906	$	17,909		4,395,527
Cash and other assets												445,007
Total assets											$	4,840,534

(1)	Refer to Note 3 – Net Lease Sale and Discontinued Operations.

(2)

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.

(3)	General and administrative excludes stock-based compensation of ($0.4) million and $3.0 million for the three months ended September 30, 2022 and 2021, respectively, and ($30.7) million and $23.3 million for the nine months ended September 30, 2022 and 2021, respectively.

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Segment income	$	32,104	$	112,580	$	12,922	$	80,783
Less: (Provision for) recovery of loan losses		157		1,610		(22,556)		7,411
Less: (Provision for) recovery of losses on net investment in leases		380		315		—		(465)
Less: Impairment of assets		—		(421)		(1,768)		(679)
Less: Stock-based compensation income (expense)		374		(3,001)		30,724		(23,300)
Less: Depreciation and amortization		(1,290)		(1,742)		(3,985)		(5,715)
Less: Income tax (expense) benefit		(564)		39		(567)		117
Less: Loss on early extinguishment of debt, net		(13,209)		—		(131,200)		—
Less: Net income from discontinued operations		—		21,614		797,688		69,415
Net income	$	17,952	$	130,994	$	681,258	$	127,567

- 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/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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+ Details