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v3.24.3

Segments | 9 Months Ended
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Sep. 30, 2024
Segment Reporting [Abstract] |
Segments | Segments The Company operates its business in five reportable segments: (i) retail real estate, (ii) office real estate, (iii) multifamily real estate, (iv) general contracting and real estate services, and (v) real estate financing. Refer to Note 1 for the composition of properties within each property segment. Net operating income ("NOI") is the primary measure used by the Company’s chief operating decision-maker to assess segment performance. NOI is calculated as segment revenues less segment expenses. Segment revenues include rental revenues for the property segments, general contracting and real estate services revenues for the general contracting and real estate services segment, and interest income for the real estate financing segment. Segment expenses include rental expenses and real estate taxes for the property segments, general contracting and real estate services expenses for the general contracting and real estate services segment, and interest expense for the real estate financing segment. Segment NOI for the general contracting and real estate services and real estate financing segments is also referred to as segment gross profit as illustrated in the table below. NOI is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner. The Company considers NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of the Company’s real estate, construction, and real estate financing businesses. Since the Company's Annual Report on Form 10-K for the year ended December 31, 2023, the Company retrospectively reclassified certain components of mixed-use properties between the retail, office, and multifamily real estate segments in order to align the components of those properties with their tenant composition. As a result, NOI for the three months ended September 30, 2023 increased $0.5 million for the retail real estate segment, and decreased less than $0.1 million and $0.4 million for the office and multifamily real estate segments, respectively. NOI for the nine months ended September 30, 2023 increased $1.3 million and less than $0.1 million for the retail and office real estate segments, respectively, and decreased $1.4 million for the multifamily real estate segment. These reclassifications had no effect on total property NOI as previously reported. These reclassifications also had no impact on our general contracting and real estate services or real estate financing segments. The following table presents NOI for the Company's five reportable segments for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Retail real estate |  |  |  |  |  |  |  |
Rental revenues |  | $ | 26,161 |  |  | $ | 26,502 |  |  | $ | 77,905 |  |  | $ | 74,749 |
Rental expenses |  | 5,104 |  |  | 4,227 |  |  | 14,099 |  |  | 11,944 |
Real estate taxes |  | 2,466 |  |  | 2,384 |  |  | 7,300 |  |  | 6,992 |
Segment net operating income |  | 18,591 |  |  | 19,891 |  |  | 56,506 |  |  | 55,813 |
Office real estate |  |  |  |  |  |  |  |
Rental revenues |  | 27,784 |  |  | 22,052 |  |  | 72,532 |  |  | 62,338 |
Rental expenses |  | 6,307 |  |  | 5,950 |  |  | 17,793 |  |  | 16,441 |
Real estate taxes |  | 2,360 |  |  | 2,252 |  |  | 6,710 |  |  | 6,494 |
Segment net operating income |  | 19,117 |  |  | 13,850 |  |  | 48,029 |  |  | 39,403 |
Multifamily real estate |  |  |  |  |  |  |  |
Rental revenues |  | 14,653 |  |  | 14,359 |  |  | 43,307 |  |  | 41,995 |
Rental expenses |  | 5,241 |  |  | 4,579 |  |  | 14,452 |  |  | 13,007 |
Real estate taxes |  | 1,358 |  |  | 1,231 |  |  | 3,985 |  |  | 3,424 |
Segment net operating income |  | 8,054 |  |  | 8,549 |  |  | 24,870 |  |  | 25,564 |
General contracting and real estate services |  |  |  |  |  |  |  |
General contracting and real estate services revenues |  | 114,353 |  |  | 99,408 |  |  | 358,167 |  |  | 286,220 |
General contracting and real estate services expenses |  | 110,987 |  |  | 96,095 |  |  | 346,385 |  |  | 276,336 |
Segment gross profit |  | 3,366 |  |  | 3,313 |  |  | 11,782 |  |  | 9,884 |
Real estate financing |  |  |  |  |  |  |  |
Interest income |  | 4,072 |  |  | 3,496 |  |  | 12,038 |  |  | 10,257 |
Interest expense(a) |  | 1,724 |  |  | 728 |  |  | 4,823 |  |  | 2,634 |
Segment gross profit |  | 2,348 |  |  | 2,768 |  |  | 7,215 |  |  | 7,623 |
Net operating income |  | $ | 51,476 |  |  | $ | 48,371 |  |  | $ | 148,402 |  |  | $ | 138,287 |
________________________________________ (a) Interest expense within the real estate financing segment is allocated based on the average outstanding principal of notes receivable in the real estate financing portfolio and the effective interest rates on the credit facility, the M&T term loan facility, and the TD term loan facility, each as defined in Note 9. The following table reconciles NOI to net (loss) income, the most directly comparable GAAP measure, for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Net operating income |  | $ | 51,476 |  |  | $ | 48,371 |  |  | $ | 148,402 |  |  | $ | 138,287 |
Interest income(a) |  | 629 |  |  | 194 |  |  | 1,921 |  |  | 566 |
Depreciation and amortization |  | (23,289) |  |  | (22,462) |  |  | (64,513) |  |  | (60,808) |
Amortization of right-of-use assets - finance leases |  | (395) |  |  | (425) |  |  | (1,184) |  |  | (1,049) |
General and administrative expenses |  | (5,187) |  |  | (4,286) |  |  | (15,564) |  |  | (13,786) |
Acquisition, development, and other pursuit costs |  | (2) |  |  | — |  |  | (5,530) |  |  | (18) |
Impairment charges |  | — |  |  | (5) |  |  | (1,494) |  |  | (107) |
Gain on real estate dispositions, net |  | — |  |  | 227 |  |  | — |  |  | 738 |
Interest expense(b) |  | (19,663) |  |  | (14,716) |  |  | (55,766) |  |  | (38,741) |
Loss on extinguishment of debt |  | (113) |  |  | — |  |  | (113) |  |  | — |
Change in fair value of derivatives and other |  | (10,308) |  |  | 2,466 |  |  | 6,978 |  |  | 5,024 |
Unrealized credit loss provision |  | (198) |  |  | (694) |  |  | (53) |  |  | (871) |
Other income (expense), net |  | 96 |  |  | 63 |  |  | 254 |  |  | 324 |
Income tax (provision) benefit |  | (592) |  |  | (310) |  |  | 120 |  |  | (834) |
Net (loss) income |  | $ | (7,546) |  |  | $ | 8,423 |  |  | $ | 13,458 |  |  | $ | 28,725 |
________________________________________ (a) Excludes real estate financing segment interest income of $4.1 million and $3.5 million for the three months ended September 30, 2024 and 2023, respectively, and $12.0 million and $10.3 million for the nine months ended September 30, 2024 and 2023, respectively. (b) Excludes real estate financing segment interest expense of $1.7 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively, and $4.8 million and $2.6 million for the nine months ended September 30, 2024 and 2023, respectively. Rental expenses represent costs directly associated with the operation and management of the Company’s real estate properties. Rental expenses include asset management expenses, property management fees, repairs and maintenance, insurance, and utilities. General contracting and real estate services revenues for the three months ended September 30, 2024 and 2023 exclude revenues related to intercompany construction contracts of $2.3 million and $13.4 million, respectively, which are eliminated in consolidation. General contracting and real estate services revenues for the nine months ended September 30, 2024 and 2023 exclude revenues related to intercompany construction contracts of $15.0 million and $40.0 million, respectively, which are eliminated in consolidation. General contracting and real estate services expenses for the three months ended September 30, 2024 and 2023 exclude expenses related to intercompany construction contracts of $2.3 million and $13.3 million, respectively, which are eliminated in consolidation. General contracting and real estate services expenses for the nine months ended September 30, 2024 and 2023 exclude expenses related to intercompany construction contracts of $14.9 million and $39.6 million, respectively, which are eliminated in consolidation. Depreciation and amortization expense for the three months ended September 30, 2024 was $8.4 million, $10.6 million, and $4.1 million for the retail, office, and multifamily real estate segments, respectively. Depreciation and amortization expense for the nine months ended September 30, 2024 was $25.7 million, $26.9 million, and $11.5 million for the retail, office, and multifamily real estate segments, respectively. Depreciation and amortization expense for the three months ended September 30, 2023 was $9.9 million, $8.1 million, and $4.3 million for the retail, office, and multifamily real estate segments, respectively. Depreciation and amortization expense for the nine months ended September 30, 2023 was $25.0 million, $22.6 million, and $12.8 million for the retail, office, and multifamily real estate segments, respectively. General and administrative expenses represent costs not directly associated with the operation and management of the Company’s real estate properties, general contracting and real estate services, and real estate financing businesses. These costs include corporate office personnel compensation and benefits, bank fees, accounting fees, legal fees, and other corporate office expenses. Interest expense on secured property debt for the three months ended September 30, 2024 was $2.8 million, $3.7 million, and $3.9 million for the retail, office, and multifamily real estate segments, respectively. Interest expense on secured property debt for the nine months ended September 30, 2024 was $8.5 million, $10.5 million, and $11.3 million for the retail, office, and multifamily real estate segments, respectively. Interest expense on secured property debt and finance leases for the three months ended September 30, 2023 was $2.4 million, $2.8 million, and $2.9 million for the retail, office, and multifamily real estate segments, respectively. Interest expense on secured property debt for the nine months ended September 30, 2023 was $6.9 million, $7.5 million, and $8.1 million for the retail, office, and multifamily real estate segments, respectively. As of September 30, 2024, the net carrying amount of consolidated real estate investments was $696.8 million, $645.4 million, and $444.5 million for the retail, office, and multifamily real estate segments, respectively, which excludes $26.1 million attributable to our mixed-use development projects. Assets attributable to the general contracting and real estate services segment are presented in Note 8 of these financial statements. Assets attributable to the real estate financing segment are presented in Note 7 of these financial statements.

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- Definition The entire disclosure for reporting segments including data and tables. 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