Quarterly report pursuant to Section 13 or 15(d)

Information by Business Segment

v2.4.0.8
Information by Business Segment
 6 Months Ended
Jun. 30, 2013
Segment Reporting [Abstract]  
Information by Business Segment
Information by Business Segment
 
We have ten reportable operating office property segments (comprised of: the Baltimore/Washington Corridor; Northern Virginia; San Antonio; Washington, DC — Capitol Riverfront; St. Mary’s and King George Counties; Greater Baltimore; Suburban Maryland; Colorado Springs; Greater Philadelphia; and other). We also have an operating wholesale data center segment. The table below reports segment financial information for our reportable segments (in thousands).  We measure the performance of our segments through the measure we define as NOI from real estate operations, which is derived by subtracting property operating expenses from revenues from real estate operations.
 
Operating Office Property Segments
 
 
 
 
 
Baltimore/
Washington
Corridor
 
Northern
Virginia
 
San
Antonio
 
Washington,
DC - Capitol
Riverfront
 
St. Mary’s & 
King George
Counties
 
Greater
Baltimore
 
Suburban
Maryland
 
Colorado
Springs
 
Greater
Philadelphia
 
Other
 
Operating
Wholesale
Data Center
 
Total
Three Months Ended June 30, 2013
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
57,387

 
$
22,988

 
$
8,364

 
$
4,177

 
$
4,093

 
$
10,824

 
$
2,253

 
$
6,519

 
$
2,784

 
$
3,869

 
$
2,017

 
$
125,275

Property operating expenses
18,984

 
8,204

 
4,478

 
1,874

 
1,223

 
4,097

 
744

 
2,195

 
720

 
617

 
1,518

 
44,654

NOI from real estate operations
$
38,403

 
$
14,784

 
$
3,886

 
$
2,303

 
$
2,870

 
$
6,727

 
$
1,509

 
$
4,324

 
$
2,064

 
$
3,252

 
$
499

 
$
80,621

Additions to long-lived assets
$
4,094

 
$
2,696

 
$
7

 
$
241

 
$
729

 
$
(648
)
 
$
26

 
$
595

 
$
285

 
$
3,581

 
$
176

 
$
11,782

Transfers from non-operating properties
$
5,899

 
$
1,015

 
$
—

 
$
—

 
$
6

 
$
(9
)
 
$
188

 
$
896

 
$
17,567

 
$
(3,281
)
 
$
881

 
$
23,162

Three Months Ended June 30, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
55,677

 
$
19,051

 
$
7,830

 
$
4,232

 
$
4,139

 
$
14,664

 
$
4,560

 
$
6,149

 
$
2,458

 
$
3,770

 
$
1,438

 
$
123,968

Property operating expenses
18,469

 
6,925

 
3,964

 
1,676

 
1,071

 
5,611

 
1,857

 
2,015

 
675

 
714

 
1,071

 
44,048

NOI from real estate operations
$
37,208

 
$
12,126

 
$
3,866

 
$
2,556

 
$
3,068

 
$
9,053

 
$
2,703

 
$
4,134

 
$
1,783

 
$
3,056

 
$
367

 
$
79,920

Additions to long-lived assets
$
3,075

 
$
719

 
$
259

 
$
431

 
$
293

 
$
3,616

 
$
412

 
$
687

 
$
90

 
$
133

 
$
11

 
$
9,726

Transfers from non-operating properties
$
4,463

 
$
—

 
$
102

 
$
—

 
$
(362
)
 
$
29

 
$
546

 
$
1,980

 
$
2,087

 
$
(154
)
 
$
57,680

 
$
66,371

Six Months Ended June 30, 2013
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
113,823

 
$
45,930

 
$
16,121

 
$
8,421

 
$
8,085

 
$
21,543

 
$
4,477

 
$
13,252

 
$
5,271

 
$
7,059

 
$
3,370

 
$
247,352

Property operating expenses
38,250

 
16,021

 
8,366

 
3,823

 
2,416

 
8,265

 
1,531

 
4,643

 
1,558

 
1,013

 
2,834

 
88,720

NOI from real estate operations
$
75,573

 
$
29,909

 
$
7,755

 
$
4,598

 
$
5,669

 
$
13,278

 
$
2,946

 
$
8,609

 
$
3,713

 
$
6,046

 
$
536

 
$
158,632

Additions to long-lived assets
$
6,825

 
$
4,240

 
$
17

 
$
398

 
$
1,004

 
$
54

 
$
55

 
$
910

 
$
285

 
$
3,672

 
$
176

 
$
17,636

Transfers from non-operating properties
$
28,564

 
$
10,854

 
$
—

 
$
—

 
$
12

 
$
104

 
$
520

 
$
2,680

 
$
24,617

 
$
20,958

 
$
66,449

 
$
154,758

Segment assets at June 30, 2013
$
1,218,310

 
$
571,851

 
$
118,827

 
$
101,476

 
$
97,084

 
$
313,788

 
$
53,074

 
$
172,637

 
$
102,098

 
$
132,105

 
$
167,312

 
$
3,048,562

Six Months Ended June 30, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
111,927

 
$
37,611

 
$
15,438

 
$
8,126

 
$
8,351

 
$
30,036

 
$
10,309

 
$
12,602

 
$
4,630

 
$
7,388

 
$
2,854

 
$
249,272

Property operating expenses
38,143

 
14,155

 
7,726

 
3,561

 
2,283

 
11,372

 
4,316

 
4,322

 
1,188

 
1,402

 
2,126

 
90,594

NOI from real estate operations
$
73,784

 
$
23,456

 
$
7,712

 
$
4,565

 
$
6,068

 
$
18,664

 
$
5,993

 
$
8,280

 
$
3,442

 
$
5,986

 
$
728

 
$
158,678

Additions to long-lived assets
$
4,939

 
$
2,380

 
$
259

 
$
(298
)
 
$
460

 
$
4,335

 
$
1,183

 
$
786

 
$
90

 
$
159

 
$
11

 
$
14,304

Transfers from non-operating properties
$
30,057

 
$
—

 
$
464

 
$
—

 
$
194

 
$
394

 
$
881

 
$
2,296

 
$
9,390

 
$
(154
)
 
$
57,680

 
$
101,202

Segment assets at June 30, 2012
$
1,227,287

 
$
474,959

 
$
120,069

 
$
107,390

 
$
98,779

 
$
369,497

 
$
78,736

 
$
181,808

 
$
111,145

 
$
112,578

 
$
100,708

 
$
2,982,956

The following table reconciles our segment revenues to total revenues as reported on our consolidated statements of operations (in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Segment revenues from real estate operations
$
125,275

 
$
123,968

 
$
247,352

 
$
249,272

Construction contract and other service revenues
20,795

 
16,995

 
35,057

 
38,529

Less: Revenues from discontinued operations (Note 14)
(5,546
)
 
(13,299
)
 
(11,265
)
 
(28,403
)
Total revenues
$
140,524

 
$
127,664

 
$
271,144

 
$
259,398


 
The following table reconciles our segment property operating expenses to property operating expenses as reported on our consolidated statements of operations (in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Segment property operating expenses
$
44,654

 
$
44,048

 
$
88,720

 
$
90,594

Less: Property operating expenses from discontinued operations (Note 14)
(1,246
)
 
(4,607
)
 
(2,793
)
 
(9,966
)
Total property operating expenses
$
43,408

 
$
39,441

 
$
85,927

 
$
80,628


 
As previously discussed, we provide real estate services such as property management and construction and development services primarily for our properties but also for third parties.  The primary manner in which we evaluate the operating performance of our service activities is through a measure we define as net operating income from service operations (“NOI from service operations”), which is based on the net of revenues and expenses from these activities.  Construction contract and other service revenues and expenses consist primarily of subcontracted costs that are reimbursed to us by the customer along with a management fee. The operating margins from these activities are small relative to the revenue.  We believe NOI from service operations is a useful measure in assessing both our level of activity and our profitability in conducting such operations. The table below sets forth the computation of our NOI from service operations (in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
Construction contract and other service revenues
$
20,795

 
$
16,995

 
$
35,057

 
$
38,529

Construction contract and other service expenses
(19,382
)
 
(16,285
)
 
(32,859
)
 
(36,892
)
NOI from service operations
$
1,413

 
$
710

 
$
2,198

 
$
1,637



The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to (loss) income from continuing operations as reported on our consolidated statements of operations (in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2013
 
2012
 
2013
 
2012
NOI from real estate operations
$
80,621

 
$
79,920

 
$
158,632

 
$
158,678

NOI from service operations
1,413

 
710

 
2,198

 
1,637

Interest and other income
2,006

 
840

 
2,952

 
2,057

Equity in income (loss) of unconsolidated entities
126

 
(187
)
 
167

 
(276
)
Income tax expense
(21
)
 
(17
)
 
(37
)
 
(221
)
Other adjustments:
—

 
 

 
—

 
 

Depreciation and other amortization associated with real estate operations
(28,866
)
 
(28,295
)
 
(57,029
)
 
(56,029
)
Impairment recoveries
—

 
—

 
—

 
4,836

General, administrative and leasing expenses
(6,583
)
 
(8,851
)
 
(14,403
)
 
(18,420
)
Business development expenses and land carry costs
(1,327
)
 
(1,298
)
 
(2,686
)
 
(2,874
)
Interest expense on continuing operations
(23,302
)
 
(24,239
)
 
(45,609
)
 
(48,670
)
NOI from discontinued operations
(4,300
)
 
(8,692
)
 
(8,472
)
 
(18,437
)
Loss on early extinguishment of debt
(21,470
)
 
(169
)
 
(26,654
)
 
(169
)
(Loss) income from continuing operations
$
(1,703
)
 
$
9,722

 
$
9,059

 
$
22,112


 
The following table reconciles our segment assets to COPT’s consolidated total assets (in thousands):
 
 
June 30, 2013
 
June 30, 2012
Segment assets
$
3,048,562

 
$
2,982,956

Non-operating property assets
513,752

 
607,590

Other assets
137,321

 
124,529

Total COPT consolidated assets
$
3,699,635

 
$
3,715,075


 
The accounting policies of the segments are the same as those used to prepare our consolidated financial statements, except that discontinued operations are not presented separately for segment purposes.  In the segment reporting presented above, we did not allocate interest expense, depreciation and amortization and impairment losses to our real estate segments since they are not included in the measure of segment profit reviewed by management.  We also did not allocate general and administrative expenses, business development expenses and land carry costs, interest and other income, equity in loss of unconsolidated entities, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.