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SEGMENT INFORMATION | 12 Months Ended
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Dec. 31, 2019
Segment Reporting [Abstract] |
SEGMENT INFORMATION | 18. SEGMENT INFORMATION During the year ended December 31, 2019, the Company owned and managed its portfolio within five segments: (1) Philadelphia Central Business District (Philadelphia CBD), (2) Pennsylvania Suburbs, (3) Austin, Texas (4) Metropolitan Washington, D.C., and (5) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia, Pennsylvania. The Pennsylvania Suburbs segment includes properties in Chester, Delaware, and Montgomery counties in the Philadelphia suburbs. The Austin, Texas segment includes properties in the City of Austin, Texas. The Metropolitan Washington, D.C. segment includes properties in the District of Columbia, Northern Virginia and southern Maryland. The Other segment includes properties located in Camden County, New Jersey and properties in New Castle County, Delaware. In addition to the five segments, 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 is 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 as of and for the three years ended December 31, 2019, 2018 and 2017 (in thousands):
Real estate investments, at cost: |  |  |  |  |  |
|  | December 31, 2019 |  | December 31, 2018 |  | December 31, 2017
Philadelphia CBD |  | $ | 1,726,299 |  |  | $ | 1,670,388 |  |  | $ | 1,643,296 |
Pennsylvania Suburbs |  | 1,003,890 |  |  | 1,002,937 |  |  | 957,272 |
Austin, Texas (a) |  | 721,255 |  |  | 667,698 |  |  | 163,653 |
Metropolitan Washington, D.C. (b) |  | 468,035 |  |  | 524,190 |  |  | 978,257 |
Other |  | 86,980 |  |  | 86,506 |  |  | 88,346 |
Operating Properties |  | $ | 4,006,459 |  |  | $ | 3,951,719 |  |  | $ | 3,830,824 |
Corporate |  |  |  |  |  |
Right of use asset - operating leases, net (c) |  | $ | 21,656 |  |  | $ | — |  |  | $ | — |
Construction-in-progress |  | $ | 180,718 |  |  | $ | 150,263 |  |  | $ | 121,188 |
Land held for development (d) |  | $ | 96,124 |  |  | $ | 86,401 |  |  | $ | 98,242 |
Prepaid leasehold interests in land held for development, net (e) |  | $ | 39,592 |  |  | $ | 39,999 |  |  | $ | — |
(a) | Refer to Note 3, ''Real Estate Investments,” for details related to the Company's acquisition of DRA Advisors' ownership interest in the Austin Venture in December 2018.
(b) | Refer to Note 4, ''Investment in Unconsolidated Real Estate Ventures.” for details of the Company's transaction with the Herndon Innovation Center Metro Portfolio Venture, LLC in December 2018.
(c) | Refer to Note 2, ''Summary of Significant Accounting Policies,” for further information on the impact of adoption of Topic 842.
(d) | Does not include 35.2 acres, 37.9 acres, and 13.1 acres of land classified as held for sale as of December 31, 2019, 2018, and 2017, respectively. Refer to Note 3, ''Real Estate Investments,” for further information.
(e) | Includes leasehold interests in prepaid 99-year ground leases at 3025 and 3001-3003 JFK Boulevard, in Philadelphia, Pennsylvania as of December 31, 2019 and December 31, 2018. Refer to Note 3, ''Real Estate Investments,” for further information.
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
|  | Total revenue |  | Operating expenses (a) |  | Net operating income (loss) |  | Total revenue |  | Operating expenses (a) |  | Net operating income (loss) |  | Total revenue |  | Operating expenses (a) |  | Net operating income
Philadelphia CBD |  | $ | 263,769 |  |  | $ | (100,219 | ) |  | $ | 163,550 |  |  | $ | 256,717 |  |  | $ | (99,449 | ) |  | $ | 157,268 |  |  | $ | 226,673 |  |  | $ | (88,818 | ) |  | $ | 137,855 |
Pennsylvania Suburbs |  | 141,084 |  |  | (47,418 | ) |  | 93,666 |  |  | 138,279 |  |  | (49,433 | ) |  | 88,846 |  |  | 139,785 |  |  | (47,845 | ) |  | 91,940 |
Austin, Texas |  | 104,157 |  |  | (38,285 | ) |  | 65,872 |  |  | 38,665 |  |  | (16,739 | ) |  | 21,926 |  |  | 34,301 |  |  | (15,456 | ) |  | 18,845 |
Metropolitan Washington, D.C. |  | 51,498 |  |  | (23,455 | ) |  | 28,043 |  |  | 90,308 |  |  | (34,072 | ) |  | 56,236 |  |  | 92,024 |  |  | (35,014 | ) |  | 57,010 |
Other |  | 14,558 |  |  | (9,328 | ) |  | 5,230 |  |  | 16,757 |  |  | (11,888 | ) |  | 4,869 |  |  | 18,347 |  |  | (11,749 | ) |  | 6,598 |
Corporate |  | 5,351 |  |  | (7,141 | ) |  | (1,790 | ) |  | 3,619 |  |  | (6,518 | ) |  | (2,899 | ) |  | 9,363 |  |  | (7,193 | ) |  | 2,170 |
Operating properties |  | $ | 580,417 |  |  | $ | (225,846 | ) |  | $ | 354,571 |  |  | $ | 544,345 |  |  | $ | (218,099 | ) |  | $ | 326,246 |  |  | $ | 520,493 |  |  | $ | (206,075 | ) |  | $ | 314,418 |
(a) | Includes property operating expense, real estate taxes and third party management expense.
Unconsolidated real estate ventures: |  |  |  |  |  |  |  |  |  |
|  | Investment in real estate ventures, at equity |  | Equity in income (loss) of real estate venture
|  | As of |  | Years ended December 31,
|  | December 31, 2019 |  | December 31, 2018 |  | December 31, 2017 |  | 2019 |  | 2018 |  | 2017
Philadelphia CBD |  | $ | 17,524 |  |  | $ | 19,897 |  |  | $ | 39,939 |  |  | $ | 328 |  |  | $ | (105 | ) |  | $ | 255 |
Pennsylvania Suburbs |  | — |  |  | — |  |  | 3,503 |  |  | — |  |  | — |  |  | 631 |
Metropolitan Washington, D.C. (a) |  | 102,840 |  |  | 136,142 |  |  | 119,817 |  |  | (4,234 | ) |  | (15,065 | ) |  | (5,044 | )
MAP Venture |  | (70 | ) |  | 11,173 |  |  | 15,450 |  |  | (6,102 | ) |  | (2,155 | ) |  | (3,443 | )
Other |  | — |  |  | 1,888 |  |  | 1,939 |  |  | 86 |  |  | 407 |  |  | 285 |
Austin, Texas (b) |  | — |  |  | — |  |  | 13,973 |  |  | — |  |  | 1,687 |  |  | (990 | )
Total |  | $ | 120,294 |  |  | $ | 169,100 |  |  | $ | 194,621 |  |  | $ | (9,922 | ) |  | $ | (15,231 | ) |  | $ | (8,306 | )
(a) | Refer to Note 4, ''Investment in Unconsolidated Real Estate Ventures," for details of the Company's transaction with the Herndon Innovation Center Metro Portfolio Venture, LLC in December 2018.
(b) | Refer to Note 3, ''Real Estate Investments," for details related to the Company's acquisition of DRA Advisors' ownership interest in the Austin Venture in December 2018.
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. Property operating expenses that are included in determining NOI consist of costs that are necessary and allocable to our operating properties such as utilities, property-level salaries, repairs and maintenance, property insurance, management fees, and bad debt expense. General and administrative expenses that are not reflected in NOI primarily consist of corporate-level salaries, amortization of share awards and professional fees that are incurred as part of corporate office management. 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 believes NOI provides useful information to investors regarding the financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. While NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. NOI does not reflect interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs. The Company believes that net income (loss), as defined by GAAP, is the most appropriate earnings measure. The following is a reconciliation of consolidated net income (loss), as defined by GAAP, to consolidated NOI, (in thousands):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Net income |  | $ | 34,529 |  |  | $ | 135,472 |  |  | $ | 121,177 |
Plus: |  |  |  |  |  |
Interest expense |  | 81,512 |  |  | 78,199 |  |  | 81,886 |
Interest expense - amortization of deferred financing costs |  | 2,768 |  |  | 2,498 |  |  | 2,435 |
Depreciation and amortization |  | 210,005 |  |  | 176,000 |  |  | 180,323 |
General and administrative expenses |  | 32,156 |  |  | 27,802 |  |  | 28,538 |
Equity in loss of Real Estate Ventures |  | 9,922 |  |  | 15,231 |  |  | 8,306 |
Provision for impairment |  | — |  |  | 71,707 |  |  | 3,057 |
Loss on early extinguishment of debt |  | — |  |  | 105 |  |  | 3,933 |
Less: |  |  |  |  |  |
Interest income |  | 2,318 |  |  | 4,703 |  |  | 1,113 |
Income tax (provision) benefit |  | (12 | ) |  | (423 | ) |  | 628 |
Net gain on disposition of real estate |  | 356 |  |  | 2,932 |  |  | 32,017 |
Net gain on sale of undepreciated real estate |  | 2,020 |  |  | 3,040 |  |  | 953 |
Net gain on real estate venture transactions |  | 11,639 |  |  | 142,233 |  |  | 80,526 |
Gain on promoted interest in unconsolidated real estate venture |  | — |  |  | 28,283 |  |  | — |
Consolidated net operating income |  | $ | 354,571 |  |  | $ | 326,246 |  |  | $ | 314,418 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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