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Business Segments
 9 Months Ended
Sep. 30, 2024
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 rental communities that are under construction or have not achieved stabilization, as well as land held for development. As of September 30, 2024, our Development and Redevelopment segment consists of 10 properties, including two of which were under construction and two substantially completed and in lease-up.

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, 2023 and maintained it throughout the current year and comparable period in the prior year. We aggregate all our apartment communities that have reached stabilization into our Operating segment.

During the first quarter of 2024, we revised the information regularly reviewed by our chief operating decision maker ("CODM") to assess our operating performance. As a result, we reclassified The Benson Hotel from the Development and Redevelopment segment to the Other segment. In addition, during the first quarter of 2024, we disposed of St. George Villas, which was previously reported within our Other segment. Prior period segment information has been recast based upon our current segment population, and is consistent with how our CODM evaluates the business.

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 The Benson Hotel, our only hotel.

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, net of 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, the Mezzanine Investment, and investments in real estate technology funds; 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, 2024 and 2023 (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, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

6,631

 

 

$

39,281

 

 

$

4,979

 

 

$

2,267

 

 

$

—

 

 

$

53,158

 

Property operating expenses

 

3,940

 

 

 

11,883

 

 

 

3,829

 

 

 

2,276

 

 

 

1,409

 

 

 

23,337

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

31,295

 

 

 

31,295

 

Total operating expenses

 

3,940

 

 

 

11,883

 

 

 

3,829

 

 

 

2,276

 

 

 

32,704

 

 

 

54,632

 

Proportionate property net operating
   income (loss)

 

2,691

 

 

 

27,398

 

 

 

1,150

 

 

 

(9

)

 

 

(32,704

)

 

 

(1,474

)

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(22,405

)

 

 

(22,405

)

Income (loss) before income tax

$

2,691

 

 

$

27,398

 

 

$

1,150

 

 

$

(9

)

 

$

(55,109

)

 

$

(23,879

)

 

 

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

$

3,650

 

 

$

37,722

 

 

$

4,567

 

 

$

1,746

 

 

$

16

 

 

$

47,701

 

Property operating expenses

 

1,206

 

 

 

10,745

 

 

 

2,923

 

 

 

1,762

 

 

 

1,692

 

 

 

18,328

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

26,002

 

 

 

26,002

 

Total operating expenses

 

1,206

 

 

 

10,745

 

 

 

2,923

 

 

 

1,762

 

 

 

27,694

 

 

 

44,330

 

Proportionate property net operating
   income (loss)

 

2,444

 

 

 

26,977

 

 

 

1,644

 

 

 

(16

)

 

 

(27,678

)

 

 

3,371

 

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,907

)

 

 

(7,907

)

Income (loss) before income tax

$

2,444

 

 

$

26,977

 

 

$

1,644

 

 

$

(16

)

 

$

(35,585

)

 

$

(4,536

)

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, 2024 and 2023 (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, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

16,799

 

 

$

116,622

 

 

$

14,762

 

 

$

6,314

 

 

$

11

 

 

$

154,508

 

Property operating expenses

 

9,689

 

 

 

35,538

 

 

 

10,087

 

 

 

6,416

 

 

 

5,363

 

 

 

67,093

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

88,999

 

 

 

88,999

 

Total operating expenses

 

9,689

 

 

 

35,538

 

 

 

10,087

 

 

 

6,416

 

 

 

94,362

 

 

 

156,092

 

Proportionate property net operating
   income (loss)

 

7,110

 

 

 

81,084

 

 

 

4,675

 

 

 

(102

)

 

 

(94,351

)

 

 

(1,584

)

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(95,511

)

 

 

(95,511

)

Income (loss) before income tax

$

7,110

 

 

$

81,084

 

 

$

4,675

 

 

$

(102

)

 

$

(189,862

)

 

$

(97,095

)

 

 

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

$

9,092

 

 

$

111,404

 

 

$

12,053

 

 

$

4,958

 

 

$

136

 

 

$

137,643

 

Property operating expenses

 

3,971

 

 

 

33,428

 

 

 

7,554

 

 

 

5,068

 

 

 

4,627

 

 

 

54,648

 

Other operating expenses not allocated
   to segments (3)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

75,593

 

 

 

75,593

 

Total operating expenses

 

3,971

 

 

 

33,428

 

 

 

7,554

 

 

 

5,068

 

 

 

80,220

 

 

 

130,241

 

Proportionate property net operating
   income (loss)

 

5,121

 

 

 

77,976

 

 

 

4,499

 

 

 

(110

)

 

 

(80,084

)

 

 

7,402

 

Other items included in income before
   income tax (4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(22,177

)

 

 

(22,177

)

Income (loss) before income tax

$

5,121

 

 

$

77,976

 

 

$

4,499

 

 

$

(110

)

 

$

(102,261

)

 

$

(14,775

)

 

(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 expenses.
(4)
Other items included in Income before income tax benefit (expense) consist primarily of interest income, interest expense, realized and unrealized gains (losses) on interest rate contracts, realized and unrealized gains (losses) on equity investments, and gain on dispositions of real estate.

 

Net real estate and non-recourse property debt, net, of our segments as of September 30, 2024 and December 31, 2023, were as follows (in thousands):

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Corporate and Amounts Not Allocated to Segments (1)

 

 

Total

 

As of September 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

$

747,797

 

 

$

703,802

 

 

$

240,009

 

 

$

—

 

 

$

1,691,608

 

Land

 

206,099

 

 

 

262,409

 

 

 

151,521

 

 

 

—

 

 

 

620,029

 

Total real estate

 

953,896

 

 

 

966,211

 

 

 

391,530

 

 

 

—

 

 

 

2,311,637

 

Accumulated depreciation

 

(31,412

)

 

 

(496,893

)

 

 

(95,608

)

 

 

—

 

 

 

(623,913

)

Net real estate

$

922,484

 

 

$

469,318

 

 

$

295,922

 

 

$

—

 

 

$

1,687,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt and construction loans, net

$

405,840

 

 

$

763,728

 

 

$

81,051

 

 

$

—

 

 

$

1,250,619

 

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Corporate and Amounts Not Allocated to Segments (1)

 

 

Total

 

As of December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

$

644,154

 

 

$

709,051

 

 

$

239,089

 

 

$

1,508

 

 

$

1,593,802

 

Land

 

206,820

 

 

 

262,409

 

 

 

151,521

 

 

 

71

 

 

 

620,821

 

Total real estate

 

850,974

 

 

 

971,460

 

 

 

390,610

 

 

 

1,579

 

 

 

2,214,623

 

Accumulated depreciation

 

(11,589

)

 

 

(489,206

)

 

 

(78,612

)

 

 

(1,395

)

 

 

(580,802

)

Net real estate

$

839,385

 

 

$

482,254

 

 

$

311,998

 

 

$

184

 

 

$

1,633,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt and construction loans, net

$

301,426

 

 

$

765,372

 

 

$

80,739

 

 

$

204

 

 

$

1,147,741

 

 

(1)
During the first quarter of 2024, we disposed of St. George Villas, and therefore it is not included in our segment balance sheets at September 30, 2024. We added a column to the tables above for presentation purposes to display these assets and the associated debt as of September 30, 2024 and December 31, 2023, respectively.

In addition to the amounts disclosed in the tables above, as of September 30, 2024 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $108.0 million and $121.3 million, respectively, and as of December 31, 2023, aggregated to $109.0 million and $118.7 million, respectively. As of September 30, 2024, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.