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SEGMENT DISCLOSURE | 6 Months Ended
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Jun. 30, 2019
Segment Reporting [Abstract] |
SEGMENT DISCLOSURE | SEGMENT DISCLOSURE In accordance with ASC Topic 280, Segment Reporting, our reportable segments during the three and six months ended June 30, 2019 and 2018 consist of two types of commercial real estate properties, namely, office and hotel, as well as a segment for our lending business. Management internally evaluates the operating performance and financial results of the segments based on net operating income. We also have certain general and administrative level activities, including public company expenses, legal, accounting, and tax preparation that are not considered separate operating segments. The reportable segments are accounted for on the same basis of accounting as described in the notes to our audited consolidated financial statements for the year ended December 31, 2018 included in our Annual Report on Form 10-K filed with the SEC on March 18, 2019. For our real estate segments, we define net operating income as rental and other property income and expense reimbursements less property related expenses, and excludes non-property income and expenses, interest expense, depreciation and amortization, corporate related general and administrative expenses, gain (loss) on sale of real estate, gain (loss) on early extinguishment of debt, impairment of real estate, transaction costs, and provision for income taxes. For our lending segment, we define net operating income as interest income net of interest expense and general overhead expenses. The net operating income of our segments for the three and six months ended June 30, 2019 and 2018 is as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
|  | (in thousands)
Office: |  |  |  |  |  |  |  |  |
Revenues |  | $ | 22,050 |  |  | $ | 37,889 |  |  | $ | 55,495 |  |  | $ | 72,701 |
Property expenses: |  |  |  |  |  |  |  |  |  |  |  |
Operating |  | 8,913 |  |  | 13,928 |  |  | 22,472 |  |  | 25,311 |
General and administrative |  | 202 |  |  | 98 |  |  | 356 |  |  | 979 |
Total property expenses |  | 9,115 |  |  | 14,026 |  |  | 22,828 |  |  | 26,290 |
Segment net operating income—office |  | 12,935 |  |  | 23,863 |  |  | 32,667 |  |  | 46,411 |
Hotel: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  | 10,330 |  |  | 10,947 |  |  | 20,919 |  |  | 21,438 |
Property expenses: |  |  |  |  |  |  |  |  |  |  |  |
Operating |  | 6,745 |  |  | 6,837 |  |  | 13,439 |  |  | 13,370 |
General and administrative |  | 63 |  |  | — |  |  | 77 |  |  | 18 |
Total property expenses |  | 6,808 |  |  | 6,837 |  |  | 13,516 |  |  | 13,388 |
Segment net operating income—hotel |  | 3,522 |  |  | 4,110 |  |  | 7,403 |  |  | 8,050 |
Lending: |  |  |  |  |  |  |  |
Revenues |  | 2,977 |  |  | 2,708 |  |  | 5,901 |  |  | 5,699 |
Lending expenses: |  |  |  |  |  |  |  |  |  |
Interest expense |  | 536 |  |  | 300 |  |  | 1,118 |  |  | 484 |
Fees to related party |  | 551 |  |  | 639 |  |  | 1,188 |  |  | 1,240 |
General and administrative |  | 335 |  |  | 390 |  |  | 838 |  |  | 859 |
Total lending expenses |  | 1,422 |  |  | 1,329 |  |  | 3,144 |  |  | 2,583 |
Segment net operating income—lending |  | 1,555 |  |  | 1,379 |  |  | 2,757 |  |  | 3,116 |
Total segment net operating income |  | $ | 18,012 |  |  | $ | 29,352 |  |  | $ | 42,827 |  |  | $ | 57,577 |
A reconciliation of our segment net operating income to net income attributable to the Company for the three and six months ended June 30, 2019 and 2018 is as follows:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
|  | (in thousands)
Total segment net operating income |  | $ | 18,012 |  |  | $ | 29,352 |  |  | $ | 42,827 |  |  | $ | 57,577 |
Interest and other income |  | 1,499 |  |  | — |  |  | 1,818 |  |  | — |
Asset management and other fees to related parties |  | (3,737 | ) |  | (5,504 | ) |  | (8,986 | ) |  | (11,114 | )
Interest expense |  | (2,014 | ) |  | (6,511 | ) |  | (5,477 | ) |  | (12,960 | )
General and administrative |  | (1,021 | ) |  | (1,427 | ) |  | (2,138 | ) |  | (3,435 | )
Transaction costs |  | (216 | ) |  | (344 | ) |  | (260 | ) |  | (344 | )
Depreciation and amortization |  | (7,185 | ) |  | (13,325 | ) |  | (16,815 | ) |  | (26,473 | )
Loss on early extinguishment of debt |  | (4,911 | ) |  | — |  |  | (29,982 | ) |  | — |
Impairment of real estate |  | (2,800 | ) |  | — |  |  | (69,000 | ) |  | — |
Gain on sale of real estate |  | 55,221 |  |  | — |  |  | 432,802 |  |  | — |
Income before provision for income taxes |  | 52,848 |  |  | 2,241 |  |  | 344,789 |  |  | 3,251 |
Provision for income taxes |  | (281 | ) |  | (292 | ) |  | (599 | ) |  | (680 | )
Net income |  | 52,567 |  |  | 1,949 |  |  | 344,190 |  |  | 2,571 |
Net (income) loss attributable to noncontrolling interests |  | (1 | ) |  | (12 | ) |  | 173 |  |  | (16 | )
Net income attributable to the Company |  | $ | 52,566 |  |  | $ | 1,937 |  |  | $ | 344,363 |  |  | $ | 2,555 |
The condensed assets for each of the segments as of June 30, 2019 and December 31, 2018, along with capital expenditures and loan originations for the six months ended June 30, 2019 and 2018, are as follows:
|  | June 30, 2019 |  | December 31, 2018
|  | (in thousands)
Condensed assets: |  |  |  |  |  |
Office (1) |  | $ | 643,226 |  |  | $ | 1,094,269 |
Hotel |  | 107,042 |  |  | 105,845 |
Lending |  | 85,873 |  |  | 97,465 |
Non-segment assets |  | 360,362 |  |  | 44,822 |
Total assets |  | $ | 1,196,503 |  |  | $ | 1,342,401 |
|  | Six Months Ended June 30,
|  | 2019 |  | 2018
|  | (in thousands)
Capital expenditures (2): |  |  |  |  |  |
Office (1) |  | $ | 4,363 |  |  | $ | 10,040 |
Hotel |  | 1,157 |  |  | 824 |
Total capital expenditures |  | 5,520 |  |  | 10,864 |
Loan originations |  | 18,523 |  |  | 28,460 |
Total capital expenditures and loan originations |  | $ | 24,043 |  |  | $ | 39,324 |
(1) | The June 30, 2019 balances include the assets of 899, 999 and 901 N Capitol Street, which are classified as held for sale on our consolidated balance sheet at June 30, 2019 (Note 3). The December 31, 2018 balances include the assets of 260 Townsend Street, which was classified as held for sale on our consolidated balance sheet at December 31, 2018 (Note 3).
(2) | Represents additions and improvements to real estate investments, excluding acquisitions. Includes the activity for dispositions through their respective disposition dates.

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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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