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Business Segments
 3 Months Ended
Mar. 31, 2025
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 March 31, 2025, our Development and Redevelopment segment consists of 9 properties, including one under construction and three substantially completed and in lease-up.

Our Operating segment includes 20 residential apartment communities with 5,243 apartment homes that have achieved a stabilized level of operations as of January 1, 2024 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment.

Our Other segment consists of properties currently owned that are not included in our Development and Redevelopment or Operating segments. Our Other segment includes The Benson Hotel, our only hotel.

Prior period segment information has been recast based upon our current segment population, and is consistent with how our President and Chief Executive Officer, the chief operating decision maker (“CODM”) evaluates the business.

Our CODM evaluates performance and allocates resources for all of our segments using historical and projected property net operating income (“PNOI”), which is our measure of segment profit or loss. PNOI is defined as 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, the Mezzanine Investment, and investments in real estate technology funds; and
•
property management costs and casualty gains or losses, reported in consolidated amounts, in our assessment of segment performance.

Our CODM uses historical and projected PNOI to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget process. PNOI is used to review operating trends, perform analytical comparisons between periods, and to monitor budget-to-actual variances on at least a quarterly basis in order to assess performance and allocate resources. The corporate goals, which impact short term incentive compensation for employees, also include consideration of PNOI.

The accounting policies of segments are the same as those described in the summary of significant accounting policies in Note 2.

The following tables present the results of operations of consolidated properties within our segments for the three months ended March 31, 2025 and 2024 (in thousands):

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Adjustments(1)

 

 

Corporate and Amounts Not Allocated to Segments(2)

 

 

Consolidated

 

Three Months Ended March 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

5,209

 

 

$

35,573

 

 

$

1,446

 

 

$

2,067

 

 

$

8,057

 

 

$

52,352

 

Controllable operating expenses(3)

 

1,428

 

 

 

4,411

 

 

 

1,716

 

 

 

—

 

 

 

730

 

 

 

8,285

 

Real estate taxes, net of capitalized amounts

 

1,099

 

 

 

4,445

 

 

 

269

 

 

 

—

 

 

 

2,066

 

 

 

7,879

 

Utilities expense, net of utility reimbursements

 

600

 

 

 

996

 

 

 

72

 

 

 

2,067

 

 

 

256

 

 

 

3,991

 

Property insurance expense, net of capitalized amounts

 

359

 

 

 

658

 

 

 

33

 

 

 

—

 

 

 

380

 

 

 

1,430

 

Other property operating expenses(4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,480

 

 

 

1,480

 

Property operating expenses

 

3,486

 

 

 

10,510

 

 

 

2,090

 

 

 

2,067

 

 

 

4,912

 

 

 

23,065

 

Property net operating income (loss)

 

1,723

 

 

 

25,063

 

 

 

(644

)

 

 

—

 

 

 

3,145

 

 

 

29,287

 

Other operating expenses not allocated to segments(5)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(24,601

)

 

 

(24,601

)

Other items included in income before
   income tax(6)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(16,483

)

 

 

(16,483

)

Income (loss) before income tax

$

1,723

 

 

$

25,063

 

 

$

(644

)

 

$

—

 

 

$

(37,939

)

 

$

(11,797

)

 

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Adjustments(1)

 

 

Corporate and Amounts Not Allocated to Segments(2)

 

 

Consolidated

 

Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental and other property revenues

$

781

 

 

$

34,635

 

 

$

1,187

 

 

$

2,021

 

 

$

11,579

 

 

$

50,203

 

Controllable operating expenses(3)

 

525

 

 

 

4,291

 

 

 

1,530

 

 

 

—

 

 

 

1,325

 

 

 

7,671

 

Real estate taxes, net of capitalized amounts

 

268

 

 

 

4,257

 

 

 

146

 

 

 

—

 

 

 

1,721

 

 

 

6,392

 

Utilities expense, net of utility reimbursements

 

355

 

 

 

985

 

 

 

64

 

 

 

2,021

 

 

 

330

 

 

 

3,755

 

Property insurance expense, net of capitalized amounts

 

251

 

 

 

704

 

 

 

23

 

 

 

—

 

 

 

478

 

 

 

1,456

 

Other property operating expenses(4)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,925

 

 

 

1,925

 

Property operating expenses

 

1,399

 

 

 

10,237

 

 

 

1,763

 

 

 

2,021

 

 

 

5,779

 

 

 

21,199

 

Property net operating income (loss)

 

(618

)

 

 

24,398

 

 

 

(576

)

 

 

—

 

 

 

5,800

 

 

 

29,004

 

Other operating expenses not allocated to segments(5)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(28,017

)

 

 

(28,017

)

Other items included in income before
   income tax(6)

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10,913

)

 

 

(10,913

)

Income (loss) before income tax

$

(618

)

 

$

24,398

 

 

$

(576

)

 

$

—

 

 

$

(33,130

)

 

$

(9,926

)
(1)
Represents 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 period 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)
Controllable operating expenses primarily consist of property personnel costs, marketing, repairs and maintenance, turnover, and contract services.
(4)
Other property operating expenses include property management costs and casualty gains or losses.
(5)
Other operating expenses not allocated to segments consist of depreciation and amortization and general and administrative expenses.
(6)
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, if any.

Net real estate and non-recourse property debt and construction loans, net, of our segments as of March 31, 2025 and December 31, 2024, were as follows (in thousands):

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Total

 

As of March 31, 2025

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

$

640,470

 

 

$

655,881

 

 

$

75,904

 

 

$

1,372,255

 

Land

 

165,418

 

 

 

231,047

 

 

 

1,503

 

 

 

397,968

 

Total real estate

 

805,888

 

 

 

886,928

 

 

 

77,407

 

 

 

1,770,223

 

Accumulated depreciation

 

(27,816

)

 

 

(474,148

)

 

 

(11,904

)

 

 

(513,868

)

Net real estate

$

778,072

 

 

$

412,780

 

 

$

65,503

 

 

$

1,256,355

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt and construction loans, net

$

397,769

 

 

$

685,226

 

 

$

—

 

 

$

1,082,995

 

 

Development and Redevelopment

 

 

Operating

 

 

Other

 

 

Total

 

As of December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

Buildings and improvements

$

620,000

 

 

$

653,184

 

 

$

75,741

 

 

$

1,348,925

 

Land

 

165,633

 

 

 

231,046

 

 

 

1,503

 

 

 

398,182

 

Total real estate

 

785,633

 

 

 

884,230

 

 

 

77,244

 

 

 

1,747,107

 

Accumulated depreciation

 

(20,872

)

 

 

(468,040

)

 

 

(10,362

)

 

 

(499,274

)

Net real estate

$

764,761

 

 

$

416,190

 

 

$

66,882

 

 

$

1,247,833

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt and construction loans, net

$

385,240

 

 

$

685,420

 

 

$

—

 

 

$

1,070,660

 

 

Capital additions within our segments for the three months ended March 31, 2025 and 2024, were as follows (in thousands):

 

Three Months Ended March 31,

 

 

2025

 

 

2024

 

Development and Redevelopment

$

20,259

 

 

$

42,471

 

Operating

 

2,696

 

 

 

2,244

 

Other

 

160

 

 

 

—

 

Corporate amounts not allocated to segments (1)

 

—

 

 

 

919

 

Total capital additions

$

23,115

 

 

$

45,634

 
(1)
During the three months ended March 31, 2024, certain capital additions pertained to properties that were sold or reclassified as held for sale, and therefore are not included in our segments as capital additions at those respective period ends. We added a corporate row to the table above for presentation purposes to display these capital additions for the three months ended March 31, 2024.

In addition to the amounts disclosed in the tables above, as of March 31, 2025 the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $107.4 million and $122.9 million, respectively, and as of December 31, 2024, aggregated to $107.7 million and $121.8 million, respectively. As of March 31, 2025, right-of-use lease assets and lease liabilities primarily relate to our investments in Upton Place, Strathmore, and Oak Shore.