XML 52 R29.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Segment Information | 12 Months Ended
--- | ---
Dec. 31, 2016
Segment Reporting [Abstract] |
SEGMENT INFORMATION | 18. SEGMENT INFORMATION During the year ended December 31, 2015, the Company managed 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. As a result of the Och-Ziff Sale that occurred on February 4, 2016, the Company has narrowed its segments to five segments located in: (1) Pennsylvania Suburbs, (2) Philadelphia Central Business District (“CBD”), (3) Metropolitan Washington, D.C. and (4) Austin, Texas. The Och-Ziff Sale disposed of the entire Richmond, Virginia segment. Subsequent to the Och-Ziff Sale, the segments previously defined as New Jersey/Delaware and California are now being managed as a consolidated segment entitled (5) “Other,” as these geographies no longer provide a significant revenue contribution. 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 the District of Columbia, Northern Virginia and southern Maryland. The Austin, Texas segment includes properties in the City of Austin, Texas. 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. Land held for development and construction in progress are transferred to operating properties by region upon completion of the associated construction or project. The following tables provide selected asset information and results of operations of the Company’s reportable segments for the three years ended December 31, 2016, 2015 and 2014 (in thousands):
Real estate investments, at cost: |  |  |  |  |  |  |  |  |  |  |  |
|  | December 31, 2016 |  |  | December 31, 2015 |  |  | December 31, 2014 |
Philadelphia CBD |  | $ | 1,320,974 |  |  | $ | 1,157,667 |  |  | $ | 1,338,655 |
Pennsylvania Suburbs |  |  | 1,005,446 |  |  |  | 1,019,280 |  |  |  | 1,178,470 |
Metropolitan Washington, D.C. |  |  | 975,987 |  |  |  | 1,129,206 |  |  |  | 1,183,652 |
Austin, Texas |  |  | 146,794 |  |  |  | 164,518 |  |  |  | - |
Other (a) |  |  | 137,094 |  |  |  | 222,329 |  |  |  | 902,915 |
|  | $ | 3,586,295 |  |  | $ | 3,693,000 |  |  | $ | 4,603,692 |
Assets held for sale (b), (c) |  |  | 73,591 |  |  |  | 794,588 |  |  |  | 27,436 |
Operating Properties |  | $ | 3,659,886 |  |  | $ | 4,487,588 |  |  | $ | 4,631,128 |
Corporate |  |  |  |  |  |  |  |  |  |  |  |
Construction-in-progress |  | $ | 297,462 |  |  | $ | 268,983 |  |  | $ | 201,360 |
Land inventory |  | $ | 150,970 |  |  | $ | 130,479 |  |  | $ | 90,603 |
(a) | As a result of the Och-Ziff Sale that occurred on February 4, 2016, the Company narrowed its segments to five segments: (1) Pennsylvania Suburbs, (2) Philadelphia Central Business District (“CBD”), (3) Metropolitan Washington, D.C. and (4) Austin, Texas and (5) Other. The Och-Ziff Sale disposed of the entire Richmond, Virginia segment. Subsequent to the Och-Ziff Sale, the segments previously defined as New Jersey/Delaware and California are now being managed as a consolidated segment entitled “Other,” as these geographies no longer provide a significant revenue contribution. Accordingly, the chief operating decision maker revised the management structure, reallocated resources, and is assessing business operations of the five segments as of January 1, 2016.
(b) | As of December 31, 2015, 2970 Market Street was classified as held for sale on the consolidated balance sheets. The property was sold on February 5, 2016. See Note 21, "Subsequent Events," for further information. The sale is not classified as a significant disposition under the accounting guidance for discontinued operations.
(c) | As of December 31, 2015, the 58 properties associated with the series of related transactions with Och-Ziff Real Estate were classified as held for sale on the consolidated balance sheets. On February 4, 2016, the Company completed a series of transactions, resulting in the disposition of the properties. See Note 3, “Real Estate Investments,” for further information regarding the disposition. Additionally, as of December 31, 2016, the Company categorized three office properties located in the Metropolitan Washington, D.C. segment and two properties in the Other segment as held for sale in accordance with applicable accounting standards for long lived assets. See Note 3, “Real Estate Investments,” for further information.
None of the above aforementioned sales or properties classified as held for sale are considered significant dispositions under the accounting guidance for discontinued operations.
| Years ended |
| December 31, |
| 2016 |  |  | 2015 |  |  | 2014 |
| Total revenue |  |  | Operating expenses (a) |  |  | Net operating income |  |  | Total revenue |  |  | Operating expenses (a) |  |  | Net operating income |  |  | Total revenue |  |  | Operating expenses (a) |  |  | Net Operating income |
Philadelphia CBD | $ | 200,245 |  |  | $ | (78,708 | ) |  | $ | 121,537 |  |  | $ | 209,298 |  |  | $ | (77,352 | ) |  | $ | 131,946 |  |  | $ | 201,809 |  |  | $ | (75,262 | ) |  | $ | 126,547 |
Pennsylvania Suburbs |  | 144,338 |  |  |  | (49,208 | ) |  |  | 95,130 |  |  |  | 158,398 |  |  |  | (57,319 | ) |  |  | 101,079 |  |  |  | 160,630 |  |  |  | (55,062 | ) |  |  | 105,568 |
Metropolitan Washington, D.C. |  | 99,781 |  |  |  | (39,036 | ) |  |  | 60,745 |  |  |  | 110,657 |  |  |  | (44,294 | ) |  |  | 66,363 |  |  |  | 113,834 |  |  |  | (43,399 | ) |  |  | 70,435 |
Austin, Texas (b) |  | 34,585 |  |  |  | (13,222 | ) |  |  | 21,363 |  |  |  | 20,910 |  |  |  | (8,010 | ) |  |  | 12,900 |  |  |  | 5,610 |  |  |  | (3,223 | ) |  |  | 2,387 |
Other |  | 39,359 |  |  |  | (23,204 | ) |  |  | 16,155 |  |  |  | 98,799 |  |  |  | (49,604 | ) |  |  | 49,195 |  |  |  | 113,971 |  |  |  | (57,214 | ) |  |  | 56,757 |
Corporate |  | 7,155 |  |  |  | (6,070 | ) |  |  | 1,085 |  |  |  | 4,569 |  |  |  | (1,508 | ) |  |  | 3,061 |  |  |  | 1,128 |  |  |  | (1,805 | ) |  |  | (677 | )
Operating Properties | $ | 525,463 |  |  | $ | (209,448 | ) |  | $ | 316,015 |  |  | $ | 602,631 |  |  | $ | (238,087 | ) |  | $ | 364,544 |  |  | $ | 596,982 |  |  | $ | (235,965 | ) |  | $ | 361,017 |
(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. As such, the Company has seven wholly owned properties in its Austin, Texas business segment at December 31, 2016. In addition, net operating income for the years ended December 31, 2016 and 2015 includes management fees and related expenses for services provided by the Company to the Austin Venture. See Note 3, "Real Estate Investments," for further information regarding these transactions.
Unconsolidated real estate ventures: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Investment in real estate ventures, at equity |  |  | Equity in income (loss) of real estate ventures |
| As of |  |  | Years ended December 31, |
| December 31, 2016 |  |  | December 31, 2015 |  |  | December 31, 2014 |  |  | 2016 |  |  | 2015 |  |  | 2014 |
Philadelphia CBD | $ | 48,691 |  |  | $ | 44,089 |  |  | $ | 27,137 |  |  | $ | (686 | ) |  | $ | (188 | ) |  | $ | 46 |
Pennsylvania Suburbs |  | 15,421 |  |  |  | 16,408 |  |  |  | 17,385 |  |  |  | 748 |  |  |  | 310 |  |  |  | (777 | )
Metropolitan Washington, D.C. (a) |  | 141,786 |  |  |  | 118,422 |  |  |  | 73,127 |  |  |  | (6,293 | ) |  |  | (336 | ) |  |  | (317 | )
MAP Venture (b) |  | 20,893 |  |  |  | - |  |  |  | - |  |  |  | (4,218 | ) |  |  | - |  |  |  | - |
Other (c) |  | 1,654 |  |  |  | 1,657 |  |  |  | 1,574 |  |  |  | 814 |  |  |  | 930 |  |  |  | 1,338 |
Austin, Texas (d) |  | 52,886 |  |  |  | 60,428 |  |  |  | 105,781 |  |  |  | (1,868 | ) |  |  | (1,527 | ) |  |  | (1,080 | )
Total | $ | 281,331 |  |  | $ | 241,004 |  |  | $ | 225,004 |  |  | $ | (11,503 | ) |  | $ | (811 | ) |  | $ | (790 | )
(a) | On August 31, 2016, the Company terminated its lease for the regional management and leasing office at 3141 Fairview Park Drive, located in Falls Church, Virginia. Accordingly, the Company no longer has any continuing involvement with 3141 Fairview Park Drive and recorded the partial sale under the full accrual method of accounting. See Note 4, “Investment in Unconsolidated Real Estate Ventures,” for further information.
(b) | The MAP Venture represents a joint venture formed between the Company and MAP Ground Lease Holdings LLC, an affiliate of Och-Ziff Capital Management Group, LLC, on February 4, 2016. See Note 4 “Investment in Unconsolidated Real Estate Ventures,” for further information. The MAP Venture’s business operations, including properties in Richmond, Virginia; Metropolitan Washington, D.C.; New Jersey/Delaware and Pennsylvania Suburbs, are centrally managed with the results reported to management of the Company on a consolidated basis. As a result, the investment in the MAP Venture is separately presented. All other unconsolidated real estate ventures are managed consistently with the Company’s regional segments.
(c) | See footnote (a) to the “Real estate investments, at cost” table above for further information regarding this segment.
(d) | Investment in real estate ventures does not include the $1.1 million negative investment balance in one real estate venture as of December 31, 2015, which is included in other liabilities. The Company disposed of its interest in this venture during the three-month period ended March 31, 2016. See Note 4, "Investment in Unconsolidated Real Estate Ventures," for further information. The decrease to the Company’s investment balance primarily relates to distributions from the G&I VII Austin Office LLC real estate venture.
Net operating income (“NOI”) is 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 and development 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 capitalized 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, as well as the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and development activity on an unlevered basis. The Company believes that net income, as defined by GAAP, is an appropriate earnings measure. The following is a reconciliation of consolidated NOI to consolidated net income (loss), as defined by GAAP:
|  |  |  |  | Years Ended December 31, |
|  |  |  |  | 2016 |  |  | 2015 |  |  | 2014 |
Consolidated net operating income |  |  |  |  | $ | 316,015 |  |  | $ | 364,544 |  |  | $ | 361,017 |
Less: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  |  |  |  | (84,708 | ) |  |  | (110,717 | ) |  |  | (124,329 | )
Interest expense - amortization of deferred financing costs |  |  |  |  |  | (2,696 | ) |  |  | (4,557 | ) |  |  | (5,148 | )
Interest expense - financing obligation |  |  |  |  |  | (679 | ) |  |  | (1,237 | ) |  |  | (1,144 | )
Depreciation and amortization |  |  |  |  |  | (189,676 | ) |  |  | (219,029 | ) |  |  | (208,569 | )
General and administrative expenses |  |  |  |  |  | (26,596 | ) |  |  | (29,406 | ) |  |  | (26,779 | )
Equity in loss of real estate ventures |  |  |  |  |  | (11,503 | ) |  |  | (811 | ) |  |  | (790 | )
Provision for impairment |  |  |  |  |  | (40,517 | ) |  |  | (82,208 | ) |  |  | (1,765 | )
Plus: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  |  |  |  | 1,236 |  |  |  | 1,224 |  |  |  | 3,974 |
Tax credit transaction income |  |  |  |  |  | - |  |  |  | 19,955 |  |  |  | 11,853 |
Recognized hedge activity |  |  |  |  |  | - |  |  |  | - |  |  |  | (828 | )
Net gain from remeasurement of investments in real estate ventures |  |  |  |  |  | - |  |  |  | 758 |  |  |  | 458 |
Net gain on sales of interests in real estate |  |  |  |  |  | 116,983 |  |  |  | 20,496 |  |  |  | 4,901 |
Net gain on sale of undepreciated real estate |  |  |  |  |  | 9,232 |  |  |  | 3,019 |  |  |  | 1,184 |
Net gain (loss) on real estate venture transactions |  |  |  |  |  | 20,000 |  |  |  | 7,229 |  |  |  | (417 | )
Loss on early extinguishment of debt |  |  |  |  |  | (66,590 | ) |  |  | - |  |  |  | (7,594 | )
Income (loss) from continuing operations |  |  |  |  |  | 40,501 |  |  |  | (30,740 | ) |  |  | 6,024 |
Income from discontinued operations |  |  |  |  |  | - |  |  |  | - |  |  |  | 918 |
Net income (loss) |  |  |  |  | $ | 40,501 |  |  | $ | (30,740 | ) |  | $ | 6,942 |

X
- References No definition available. + Details
Name: | us-gaap_SegmentReportingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&loc=d3e8906-108599 + Details
Name: | us-gaap_SegmentReportingDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration