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Business Segments
 9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
Business Segments

Note 8 — Business Segments

We have three segments: (i) Development and Redevelopment; (ii) Operating; and (iii) Other.

Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land held for development. As of September 30, 2023, our Development and Redevelopment segment consists of 12 properties: three residential apartment communities with 1,185 apartment homes, of which 276 have been completed and an additional 909 are planned, a single family rental community with 16 planned homes plus eight accessory dwelling units, which we are actively developing or redeveloping; one hotel with 106 rooms and 18,000 square feet of event space completed in April 2023, and land parcels held for development.

Our Operating segment includes 21 residential apartment communities with 5,600 apartment homes that have achieved a stabilized level of operations as of January 1, 2022 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment.

During the first quarter of 2023, we reclassified one residential apartment community from the Other segment to the Operating segment because it reached stabilization. Prior period segment information has been recast based upon our current segment population, and is consistent with how our chief operating decision maker ("CODM") evaluates the business. The recast conforms with our reportable segment classification as of September 30, 2023.

Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or Operating segments. Our Other segment includes 1001 Brickell Bay Drive, our only office building, and St. George Villas.

Our CODM uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating segment. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding utility reimbursements, less direct property operating expenses, including utility reimbursements, for the consolidated communities; but

•
excluding the results of four apartment communities with an aggregate 142 apartment homes that we neither manage nor consolidate, our investment in IQHQ and the Mezzanine Investment; and
•
excluding property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.

 

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the three months ended September 30, 2023 and 2022 (in thousands):

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Proportionate
and Other Adjustments(1)

 

 

Corporate and Amounts Not Allocated to Segments (2)

 

 

Consolidated

 

Three Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

4,691

 

 

$

37,722

 

 

$

3,542

 

 

$

1,746

 

 

$

—

 

 

$

47,701

 

Property operating expenses

 

2,609

 

 

 

10,745

 

 

 

1,526

 

 

 

1,762

 

 

 

1,686

 

 

 

18,328

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

26,002

 

 

 

26,002

 

Total operating expenses

 

2,609

 

 

 

10,745

 

 

 

1,526

 

 

 

1,762

 

 

 

27,688

 

 

 

44,330

 

Proportionate property net operating
   income (loss)

 

2,082

 

 

 

26,977

 

 

 

2,016

 

 

 

(16

)

 

 

(27,688

)

 

 

3,371

 

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,907

)

 

 

(7,907

)

Income (loss) before income tax

$

2,082

 

 

$

26,977

 

 

$

2,016

 

 

$

(16

)

 

$

(35,595

)

 

$

(4,536

)

 

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Proportionate
and Other Adjustments(1)

 

 

Corporate and Amounts Not Allocated to Segments (2)

 

 

Consolidated

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

123

 

 

$

35,466

 

 

$

3,466

 

 

$

1,344

 

 

$

7,284

 

 

$

47,683

 

Property operating expenses

 

325

 

 

 

10,386

 

 

 

1,099

 

 

 

1,376

 

 

 

4,269

 

 

 

17,455

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

96,247

 

 

 

96,247

 

Total operating expenses

 

325

 

 

 

10,386

 

 

 

1,099

 

 

 

1,376

 

 

 

100,516

 

 

 

113,702

 

Proportionate property net operating
   income (loss)

 

(202

)

 

 

25,080

 

 

 

2,367

 

 

 

(32

)

 

 

(93,232

)

 

 

(66,019

)

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

82,629

 

 

 

82,629

 

Income (loss) before income tax

$

(202

)

 

$

25,080

 

 

$

2,367

 

 

$

(32

)

 

$

(10,603

)

 

$

16,610

 

 

 

The following tables present the results of operations of consolidated properties with our segments reported on a proportionate basis for the nine months ended September 30, 2023 and 2022 (in thousands):

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Proportionate
and Other Adjustments(1)

 

 

Corporate and Amounts Not Allocated to Segments (2)

 

 

Consolidated

 

Nine Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

10,539

 

 

$

111,404

 

 

$

10,664

 

 

$

5,036

 

 

$

—

 

 

$

137,643

 

Property operating expenses

 

7,326

 

 

 

33,426

 

 

 

4,237

 

 

 

5,068

 

 

 

4,591

 

 

 

54,648

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

75,593

 

 

 

75,593

 

Total operating expenses

 

7,326

 

 

 

33,426

 

 

 

4,237

 

 

 

5,068

 

 

 

80,184

 

 

 

130,241

 

Proportionate property net operating
   income (loss)

 

3,213

 

 

 

77,978

 

 

 

6,427

 

 

 

(32

)

 

 

(80,184

)

 

 

7,402

 

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(22,177

)

 

 

(22,177

)

Income (loss) before income tax

$

3,213

 

 

$

77,978

 

 

$

6,427

 

 

$

(32

)

 

$

(102,361

)

 

$

(14,775

)

 

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Proportionate
and Other Adjustments(1)

 

 

Corporate and Amounts Not Allocated to Segments (2)

 

 

Consolidated

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

204

 

 

$

102,206

 

 

$

11,466

 

 

$

4,466

 

 

$

30,033

 

 

$

148,375

 

Property operating expenses

 

901

 

 

 

31,345

 

 

 

3,656

 

 

 

4,448

 

 

 

16,034

 

 

 

56,384

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

172,663

 

 

 

172,663

 

Total operating expenses

 

901

 

 

 

31,345

 

 

 

3,656

 

 

 

4,448

 

 

 

188,697

 

 

 

229,047

 

Proportionate property net operating
   income (loss)

 

(697

)

 

 

70,861

 

 

 

7,810

 

 

 

18

 

 

 

(158,664

)

 

 

(80,672

)

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

402,506

 

 

 

402,506

 

Income (loss) before income tax

$

(697

)

 

$

70,861

 

 

$

7,810

 

 

$

18

 

 

$

243,842

 

 

$

321,834

 
(1)
Represents adjustments for noncontrolling interests in consolidated real estate partnerships' share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also includes the reclassification of utility reimbursements, which are included in Rental and other property revenues in our Condensed Consolidated Statements of Operations, in accordance with GAAP, from revenues to property operating expenses for the purpose of evaluating segment results.
(2)
Includes the operating results of apartment communities sold during the periods shown or held for sale at the end of the period, if any. Also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of our segment performance measure.
(3)
Other operating expenses not allocated to segments consist of depreciation and amortization and general and administrative expense.
(4)
Other items included in Income before income tax benefit consist primarily of lease modification income, gain on dispositions of real estate, interest expense, mezzanine investment income (loss), net realized and unrealized gains (losses) on interest rate options, and realized and unrealized gains (losses) on equity investments.

 

Net real estate and non-recourse property debt, net, of our segments as of September 30, 2023 and December 31, 2022, were as follows (in thousands):

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Total

 

As of September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

$

675,020

 

 

$

706,569

 

 

$

164,914

 

 

$

1,546,503

 

Land

 

225,508

 

 

 

262,409

 

 

 

150,090

 

 

 

638,007

 

Total real estate

 

900,528

 

 

 

968,978

 

 

 

315,004

 

 

 

2,184,510

 

Accumulated depreciation

 

(11,098

)

 

 

(480,983

)

 

 

(72,605

)

 

 

(564,686

)

Net real estate

$

889,430

 

 

$

487,995

 

 

$

242,399

 

 

$

1,619,824

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt and construction loans, net

$

273,454

 

 

$

765,919

 

 

$

80,843

 

 

$

1,120,216

 

 

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Total

 

As of December 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

$

449,316

 

 

$

708,665

 

 

$

164,400

 

 

$

1,322,381

 

Land

 

228,568

 

 

 

262,409

 

 

 

150,125

 

 

 

641,102

 

Total real estate

 

677,884

 

 

 

971,074

 

 

 

314,525

 

 

 

1,963,483

 

Accumulated depreciation

 

(2,378

)

 

 

(468,428

)

 

 

(59,916

)

 

 

(530,722

)

Net real estate

$

675,506

 

 

$

502,646

 

 

$

254,609

 

 

$

1,432,761

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt and construction loans, net

$

200,135

 

 

$

767,513

 

 

$

80,551

 

 

$

1,048,199

 

In addition to the amounts disclosed in the tables above, as of September 30, 2023 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $109.3 million and $117.7 million, respectively, and as of December 31, 2022, aggregated to $110.3 million and $114.6 million, respectively. As of September 30, 2023 and December 31, 2022, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.