Quarterly report pursuant to Section 13 or 15(d)

Information by Business Segment

v2.4.0.8
Information by Business Segment
 9 Months Ended
Sep. 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 September 30, 2013
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
57,226

 
$
23,062

 
$
7,898

 
$
4,295

 
$
4,270

 
$
10,703

 
$
2,332

 
$
6,622

 
$
3,258

 
$
3,819

 
$
1,076

 
$
124,561

Property operating expenses
18,780

 
7,999

 
4,061

 
1,946

 
1,299

 
4,143

 
862

 
2,371

 
924

 
654

 
1,846

 
44,885

NOI from real estate operations
$
38,446

 
$
15,063

 
$
3,837

 
$
2,349

 
$
2,971

 
$
6,560

 
$
1,470

 
$
4,251

 
$
2,334

 
$
3,165

 
$
(770
)
 
$
79,676

Additions to long-lived assets
$
7,204

 
$
2,459

 
$
251

 
$
86

 
$
630

 
$
1,707

 
$
88

 
$
1,413

 
$
102

 
$
(84
)
 
$
86

 
$
13,942

Transfers from non-operating properties
$
8,706

 
$
26,355

 
$
—

 
$
—

 
$
—

 
$
9

 
$
(183
)
 
$
1,860

 
$
3,414

 
$
(33
)
 
$
2,714

 
$
42,842

Three Months Ended September 30, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
55,799

 
$
20,363

 
$
8,125

 
$
4,389

 
$
4,085

 
$
11,918

 
$
2,371

 
$
6,278

 
$
2,541

 
$
3,589

 
$
1,806

 
$
121,264

Property operating expenses
18,534

 
7,115

 
4,272

 
1,924

 
1,241

 
4,539

 
1,041

 
2,432

 
663

 
686

 
1,252

 
43,699

NOI from real estate operations
$
37,265

 
$
13,248

 
$
3,853

 
$
2,465

 
$
2,844

 
$
7,379

 
$
1,330

 
$
3,846

 
$
1,878

 
$
2,903

 
$
554

 
$
77,565

Additions to long-lived assets
$
4,454

 
$
54,781

 
$
—

 
$
414

 
$
355

 
$
1,055

 
$
36

 
$
548

 
$
195

 
$
(35
)
 
$
—

 
$
61,803

Transfers from non-operating properties
$
12,431

 
$
12,979

 
$
—

 
$
—

 
$
24

 
$
99

 
$
(88
)
 
$
315

 
$
1,843

 
$
548

 
$
(5
)
 
$
28,146

Nine Months Ended September 30, 2013
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
171,049

 
$
68,992

 
$
24,019

 
$
12,716

 
$
12,355

 
$
32,246

 
$
6,809

 
$
19,874

 
$
8,529

 
$
10,878

 
$
4,446

 
$
371,913

Property operating expenses
57,030

 
24,020

 
12,427

 
5,769

 
3,715

 
12,408

 
2,393

 
7,014

 
2,482

 
1,667

 
4,680

 
133,605

NOI from real estate operations
$
114,019

 
$
44,972

 
$
11,592

 
$
6,947

 
$
8,640

 
$
19,838

 
$
4,416

 
$
12,860

 
$
6,047

 
$
9,211

 
$
(234
)
 
$
238,308

Additions to long-lived assets
$
14,029

 
$
6,699

 
$
268

 
$
484

 
$
1,634

 
$
1,761

 
$
143

 
$
2,323

 
$
387

 
$
3,588

 
$
262

 
$
31,578

Transfers from non-operating properties
$
37,270

 
$
37,209

 
$
—

 
$
—

 
$
12

 
$
113

 
$
337

 
$
4,540

 
$
28,031

 
$
20,925

 
$
69,163

 
$
197,600

Segment assets at September 30, 2013
$
1,223,246

 
$
593,335

 
$
118,701

 
$
99,852

 
$
96,679

 
$
305,947

 
$
52,726

 
$
159,578

 
$
105,112

 
$
130,598

 
$
168,039

 
$
3,053,813

Nine Months Ended September 30, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
167,726

 
$
57,974

 
$
23,563

 
$
12,515

 
$
12,436

 
$
41,954

 
$
12,680

 
$
18,880

 
$
7,171

 
$
10,977

 
$
4,660

 
$
370,536

Property operating expenses
56,677

 
21,270

 
11,998

 
5,485

 
3,524

 
15,911

 
5,357

 
6,754

 
1,851

 
2,088

 
3,378

 
134,293

NOI from real estate operations
$
111,049

 
$
36,704

 
$
11,565

 
$
7,030

 
$
8,912

 
$
26,043

 
$
7,323

 
$
12,126

 
$
5,320

 
$
8,889

 
$
1,282

 
$
236,243

Additions to long-lived assets
$
9,393

 
$
57,161

 
$
259

 
$
116

 
$
815

 
$
5,390

 
$
1,219

 
$
1,334

 
$
285

 
$
124

 
$
11

 
$
76,107

Transfers from non-operating properties
$
42,488

 
$
12,979

 
$
464

 
$
—

 
$
218

 
$
493

 
$
793

 
$
2,611

 
$
11,233

 
$
394

 
$
57,675

 
$
129,348

Segment assets at September 30, 2012
$
1,187,700

 
$
535,521

 
$
119,752

 
$
106,090

 
$
97,977

 
$
283,996

 
$
53,395

 
$
173,918

 
$
66,301

 
$
111,426

 
$
100,471

 
$
2,836,547

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 September 30,
 
For the Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Segment revenues from real estate operations
$
124,561

 
$
121,264

 
$
371,913

 
$
370,536

Construction contract and other service revenues
16,991

 
15,283

 
52,048

 
53,812

Less: Revenues from discontinued operations (Note 15)
(5,521
)
 
(6,902
)
 
(16,786
)
 
(35,305
)
Total revenues
$
136,031

 
$
129,645

 
$
407,175

 
$
389,043


 
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 September 30,
 
For the Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Segment property operating expenses
$
44,885

 
$
43,699

 
$
133,605

 
$
134,293

Less: Property operating expenses from discontinued operations (Note 15)
(1,403
)
 
(2,225
)
 
(4,196
)
 
(12,191
)
Total property operating expenses
$
43,482

 
$
41,474

 
$
129,409

 
$
122,102


 
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 September 30,
 
For the Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
Construction contract and other service revenues
$
16,991

 
$
15,283

 
$
52,048

 
$
53,812

Construction contract and other service expenses
(16,306
)
 
(14,410
)
 
(49,165
)
 
(51,302
)
NOI from service operations
$
685

 
$
873

 
$
2,883

 
$
2,510



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 September 30,
 
For the Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
NOI from real estate operations
$
79,676

 
$
77,565

 
$
238,308

 
$
236,243

NOI from service operations
685

 
873

 
2,883

 
2,510

Interest and other (loss) income
(3
)
 
1,095

 
2,949

 
3,152

Equity in income (loss) of unconsolidated entities
44

 
(246
)
 
211

 
(522
)
Income tax expense
(24
)
 
(106
)
 
(61
)
 
(327
)
Other adjustments:
—

 
 

 
—

 
 

Depreciation and other amortization associated with real estate operations
(29,210
)
 
(28,604
)
 
(86,239
)
 
(84,633
)
Impairment losses
(16,300
)
 
(46,096
)
 
(16,300
)
 
(41,260
)
General, administrative and leasing expenses
(8,027
)
 
(6,377
)
 
(22,430
)
 
(24,797
)
Business development expenses and land carry costs
(1,383
)
 
(1,632
)
 
(4,069
)
 
(4,506
)
Interest expense on continuing operations
(21,242
)
 
(23,239
)
 
(66,851
)
 
(71,909
)
NOI from discontinued operations
(4,118
)
 
(4,677
)
 
(12,590
)
 
(23,114
)
Loss on early extinguishment of debt
(374
)
 
(768
)
 
(27,028
)
 
(937
)
(Loss) income from continuing operations
$
(276
)
 
$
(32,212
)
 
$
8,783

 
$
(10,100
)

 
The following table reconciles our segment assets to COPT’s consolidated total assets (in thousands):
 
 
September 30,
2013
 
September 30,
2012
Segment assets
$
3,053,813

 
$
2,836,547

Non-operating property assets
530,389

 
616,526

Other assets
171,386

 
144,583

Total COPT consolidated assets
$
3,755,588

 
$
3,597,656


 
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.