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Segment Information | 9 Months Ended
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Sep. 30, 2015
Segment Reporting [Abstract] |
SEGMENT INFORMATION | SEGMENT INFORMATION During the quarter ended September 30, 2015, the Company was managing its portfolio within seven segments: (1) Pennsylvania Suburbs, (2) Philadelphia Central Business District (CBD), (3) Metropolitan Washington, D.C., (4) New Jersey/Delaware, (5) Richmond, Virginia, (6) Austin, Texas and (7) California. The Pennsylvania Suburbs segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania. The Metropolitan Washington, D.C. segment includes properties in Northern Virginia, Washington, D.C. and southern Maryland. The New Jersey/Delaware segment includes properties in Burlington and Camden counties in New Jersey and in New Castle county in the state of Delaware. The Richmond, Virginia segment includes properties primarily in Albemarle, Chesterfield, Goochland and Henrico counties and one property in Durham, North Carolina. The Austin, Texas segment includes properties in the City of Austin, Texas. The California segment includes properties in Oakland, Concord and Carlsbad. The corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. The following tables provide selected asset information and results of operations of the Company's reportable segments (in thousands):
Real estate investments, at cost: |  |  |  |
|  | September 30, 2015 |  | December 31, 2014
Philadelphia CBD |  | $ | 1,394,267 |  |  | $ | 1,338,655 |
Pennsylvania Suburbs |  | 1,126,611 |  |  | 1,178,470 |
Metropolitan Washington, D.C. |  | 1,216,161 |  |  | 1,183,652 |
New Jersey/Delaware (a) |  | 239,235 |  |  | 392,581 |
Richmond, Virginia |  | 311,642 |  |  | 317,076 |
California |  | 111,587 |  |  | 193,258 |
Austin, Texas (c) |  | 229,720 |  |  | — |
|  | $ | 4,629,223 |  |  | $ | 4,603,692 |
Less: Assets held for sale (a) (b) |  | 74,706 |  |  | 27,436 |
Operating Properties |  | $ | 4,703,929 |  |  | $ | 4,631,128 |
Corporate |  |  |  |
Construction-in-progress |  | $ | 242,246 |  |  | $ | 201,360 |
Land inventory |  | $ | 135,917 |  |  | $ | 90,603 |
(a) | As of September 30, 2015, the Company categorized six properties in the New Jersey/Delaware segment as held for sale in accordance with applicable accounting standards for long lived assets. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.
(b) | On December 31, 2014, the Company was actively marketing for sale its Atrium I and Libertyview properties, comprised of two office properties located in the New Jersey/Delaware segment. As of December 31, 2014 the properties were classified as held for sale on the consolidated balance sheet. The properties were sold on January 8, 2015. See Note 3, "Real Estate Investments," for further information. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.
(c) | On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. As such, the Company has seven wholly owned properties in its Austin, Texas business segment at September 30, 2015. See Note 3, "Real Estate Investments," for further information regarding this transaction.
Net operating income: |  |  |  |  |  |  |  |  |  |  |
| Three-month periods ended
| September 30,
| 2015 |  | 2014
| Total revenue |  | Operating expenses (a) |  | Net operating income |  | Total revenue |  | Operating expenses (a) |  | Net operating income (loss)
Philadelphia CBD | $ | 52,203 |  |  | $ | (18,750 | ) |  | $ | 33,453 |  |  | $ | 49,469 |  |  | $ | (18,168 | ) |  | $ | 31,301 |
Pennsylvania Suburbs | 39,507 |  |  | (14,004 | ) |  | 25,503 |  |  | 39,996 |  |  | (13,409 | ) |  | 26,587 |
Metropolitan Washington, D.C. | 27,587 |  |  | (10,792 | ) |  | 16,795 |  |  | 27,764 |  |  | (10,672 | ) |  | 17,092 |
New Jersey/Delaware | 11,922 |  |  | (6,594 | ) |  | 5,328 |  |  | 14,975 |  |  | (7,506 | ) |  | 7,469 |
Richmond, Virginia | 9,130 |  |  | (3,700 | ) |  | 5,430 |  |  | 8,354 |  |  | (3,724 | ) |  | 4,630 |
Austin, Texas (b) | 8,533 |  |  | (2,625 | ) |  | 5,908 |  |  | 843 |  |  | (569 | ) |  | 274 |
California | 3,223 |  |  | (1,767 | ) |  | 1,456 |  |  | 4,902 |  |  | (2,711 | ) |  | 2,191 |
Corporate | 480 |  |  | (386 | ) |  | 94 |  |  | 255 |  |  | (472 | ) |  | (217 | )
Operating Properties | $ | 152,585 |  |  | $ | (58,618 | ) |  | $ | 93,967 |  |  | $ | 146,558 |  |  | $ | (57,231 | ) |  | $ | 89,327 |
| Nine-month periods ended
| September 30,
| 2015 |  | 2014
| Total revenue |  | Operating expenses (a) |  | Net operating income |  | Total revenue |  | Operating expenses (a) |  | Net operating income (loss)
Philadelphia CBD | $ | 157,595 |  |  | $ | (56,587 | ) |  | $ | 101,008 |  |  | $ | 150,303 |  |  | $ | (55,399 | ) |  | $ | 94,904 |
Pennsylvania Suburbs | 118,407 |  |  | (41,286 | ) |  | 77,121 |  |  | 121,313 |  |  | (41,542 | ) |  | 79,771 |
Metropolitan Washington, D.C. | 81,947 |  |  | (33,197 | ) |  | 48,750 |  |  | 87,403 |  |  | (33,134 | ) |  | 54,269 |
New Jersey/Delaware | 37,149 |  |  | (20,857 | ) |  | 16,292 |  |  | 45,440 |  |  | (23,728 | ) |  | 21,712 |
Richmond, Virginia | 27,381 |  |  | (11,603 | ) |  | 15,778 |  |  | 25,543 |  |  | (11,629 | ) |  | 13,914 |
Austin, Texas (b) | 11,999 |  |  | (4,993 | ) |  | 7,006 |  |  | 3,900 |  |  | (2,362 | ) |  | 1,538 |
California | 11,599 |  |  | (5,778 | ) |  | 5,821 |  |  | 14,399 |  |  | (7,634 | ) |  | 6,765 |
Corporate | 2,562 |  |  | (1,364 | ) |  | 1,198 |  |  | 871 |  |  | (1,484 | ) |  | (613 | )
Operating Properties | $ | 448,639 |  |  | $ | (175,665 | ) |  | $ | 272,974 |  |  | $ | 449,172 |  |  | $ | (176,912 | ) |  | $ | 272,260 |
(a) | Includes property operating expense, real estate taxes and third party management expense.
(b) | On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. See Note 3, "Real Estate Investments," for further information regarding this transaction. On April 3, 2014, the Company contributed Four Points Centre to an unconsolidated real estate venture. See Note 3, "Real Estate Investments," in notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
Unconsolidated real estate ventures (in thousands): |  |  |  |  |  |  |  |
| Investment in real estate ventures, at equity |  | Equity in income (loss) of real estate ventures
| As of |  | Three-month periods ended September 30, |  | Nine-month periods ended September 30,
| September 30, 2015 |  | December 31, 2014 |  | 2015 |  | 2014 |  | 2015 |  | 2014
Philadelphia CBD (a) | $ | 43,236 |  |  | $ | 27,137 |  |  | $ | (186 | ) |  | $ | 32 |  |  | $ | (636 | ) |  | $ | 13 |
Pennsylvania Suburbs | 16,796 |  |  | 17,385 |  |  | (120 | ) |  | (578 | ) |  | (142 | ) |  | (937 | )
Metropolitan Washington, D.C. (b) | 113,222 |  |  | 73,127 |  |  | (343 | ) |  | (142 | ) |  | (572 | ) |  | (117 | )
New Jersey/Delaware | — |  |  | — |  |  | 67 |  |  | 82 |  |  | 231 |  |  | 204 |
Richmond, Virginia | 1,512 |  |  | 1,574 |  |  | 106 |  |  | 184 |  |  | 438 |  |  | 253 |
Austin, Texas (c) (d) | 37,005 |  |  | 105,781 |  |  | (617 | ) |  | (64 | ) |  | (1,154 | ) |  | (149 | )
Total | $ | 211,771 |  |  | $ | 225,004 |  |  | $ | (1,093 | ) |  | $ | (486 | ) |  | $ | (1,835 | ) |  | $ | (733 | )
(a) | evo at Cira was placed into service during the third quarter ended September 30, 2014.
(b) | Investment in real estate ventures as of September 30, 2015 includes the JBG Ventures, which were formed on May 29, 2015.
(c) | Investment in real estate ventures does not include the $1.1 million and $1.2 million negative investment balance in one real estate venture as of September 30, 2015 and December 31, 2014, respectively, which is included in other liabilities.
(d) | On June 22, 2015 the Company acquired the remaining 50.0% of the common interest in Broadmoor Austin Associates. As such, equity method investment at June 30, 2015 related to the Austin Venture only. See Note 3, "Real Estate Investments," for further information regarding the purchase of Broadmoor Austin Associates.
Net operating income (“NOI”) is a non-GAAP financial measure defined as total revenue less property operating expenses, real estate taxes and third party management expenses. Segment NOI includes revenue, real estate taxes and property operating expenses directly related to operation and management of the properties owned and managed within the respective geographical region. Segment NOI excludes property level depreciation and amortization, revenue and expenses directly associated with third party real estate management services, expenses associated with corporate administrative support services, and inter-company eliminations. NOI also does not reflect general and administrative expenses, interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. Trends in development and construction activities that could materially impact the Company’s results from operations are also not reflected in NOI. All companies may not calculate NOI in the same manner. NOI is the measure that is used by the Company to evaluate the operating performance of its real estate assets by segment. The Company also believes that NOI provides useful information to investors regarding its financial condition and results of operations because it reflects only those income and expenses recorded at the property level. The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The following is a reconciliation of consolidated NOI to consolidated net income (loss), as defined by GAAP:
| Three-month periods ended September 30, |  | Nine-month periods ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
| (amounts in thousands)
Consolidated net operating income | $ | 93,967 |  |  | $ | 89,327 |  |  | $ | 272,974 |  |  | $ | 272,260 |
Other income (expense): |  |  |  |  |  |  |
Depreciation and amortization | (58,314 | ) |  | (52,616 | ) |  | (160,355 | ) |  | (157,773 | )
General and administrative expenses | (6,127 | ) |  | (5,900 | ) |  | (21,554 | ) |  | (20,086 | )
Interest income | 126 |  |  | 528 |  |  | 1,189 |  |  | 1,298 |
Interest expense | (27,900 | ) |  | (31,481 | ) |  | (83,971 | ) |  | (94,837 | )
Recognized hedge activity | — |  |  | (828 | ) |  | — |  |  | (828 | )
Interest expense - amortization of deferred financing costs | (1,010 | ) |  | (1,566 | ) |  | (3,377 | ) |  | (3,952 | )
Interest expense - financing obligation | (296 | ) |  | (273 | ) |  | (906 | ) |  | (861 | )
Equity in loss of Real Estate Ventures | (1,093 | ) |  | (486 | ) |  | (1,835 | ) |  | (733 | )
Net gain on disposition of real estate | 6,083 |  |  | 4,698 |  |  | 16,673 |  |  | 4,698 |
Net gain on sale of undepreciated real estate | 3,019 |  |  | — |  |  | 3,019 |  |  | 1,184 |
Net gain from remeasurement of investment in a real estate venture | — |  |  | — |  |  | 758 |  |  | 458 |
Loss on real estate venture transactions | — |  |  | — |  |  | — |  |  | (417 | )
Loss on early extinguishment of debt | — |  |  | (2,606 | ) |  | — |  |  | (2,606 | )
Provision for impairment on assets held for sale/sold | — |  |  | (1,765 | ) |  | (2,508 | ) |  | (1,765 | )
Tax credit transaction income | 11,853 |  |  | 11,853 |  |  | 11,853 |  |  | 11,853 |
Income from continuing operations | 20,308 |  |  | 8,885 |  |  | 31,960 |  |  | 7,893 |
Income from discontinued operations | — |  |  | (3 | ) |  | — |  |  | 918 |
Net income | $ | 20,308 |  |  | $ | 8,882 |  |  | $ | 31,960 |  |  | $ | 8,811 |

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- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8906-108599 + Details
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