Quarterly report pursuant to Section 13 or 15(d)

Information by Business Segment

v2.4.0.8
Information by Business Segment
 3 Months Ended
Mar. 31, 2014
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; Huntsville; Washington, DC — Capitol Riverfront; St. Mary’s and King George Counties; Greater Baltimore; Greater Philadelphia; Colorado Springs; 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
 
Huntsville
 
Washington,
DC - Capitol
Riverfront
 
St. Mary’s & 
King George
Counties
 
Greater
Baltimore
 
Greater
Philadelphia
 
Colorado
Springs
 
Other
 
Operating
Wholesale
Data Center
 
Total
Three Months Ended March 31, 2014
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
61,113

 
$
24,968

 
$
8,479

 
$
2,555

 
$
3,634

 
$
4,316

 
$
11,496

 
$
3,340

 
$
18

 
$
2,576

 
$
2,401

 
$
124,896

Property operating expenses
23,597

 
8,973

 
4,474

 
653

 
1,765

 
1,504

 
5,476

 
1,300

 
(9
)
 
331

 
1,688

 
49,752

NOI from real estate operations
$
37,516

 
$
15,995

 
$
4,005

 
$
1,902

 
$
1,869

 
$
2,812

 
$
6,020

 
$
2,040

 
$
27

 
$
2,245

 
$
713

 
$
75,144

Additions to long-lived assets
$
5,741

 
$
3,495

 
$
(6
)
 
$
2,507

 
$
63

 
$
839

 
$
1,012

 
$
11

 
$
—

 
$
55

 
$
12

 
$
13,729

Transfers from non-operating properties
$
(169
)
 
$
26,588

 
$
—

 
$
20,102

 
$
—

 
$
—

 
$
7,154

 
$
3,176

 
$
11

 
$
—

 
$
78

 
$
56,940

Segment assets at March 31, 2014
$
1,237,796

 
$
636,895

 
$
117,812

 
$
99,378

 
$
97,843

 
$
95,645

 
$
307,699

 
$
94,428

 
$
7

 
$
79,535

 
$
165,711

 
$
2,932,749

Three Months Ended March 31, 2013
 

 
 

 
 

 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Revenues from real estate operations
$
58,660

 
$
22,942

 
$
7,757

 
$
740

 
$
4,244

 
$
3,992

 
$
10,719

 
$
2,487

 
$
6,682

 
$
2,501

 
$
1,353

 
$
122,077

Property operating expenses
20,053

 
7,817

 
3,888

 
182

 
1,949

 
1,193

 
4,168

 
838

 
2,437

 
225

 
1,316

 
44,066

NOI from real estate operations
$
38,607

 
$
15,125

 
$
3,869

 
$
558

 
$
2,295

 
$
2,799

 
$
6,551

 
$
1,649

 
$
4,245

 
$
2,276

 
$
37

 
$
78,011

Additions to long-lived assets
$
2,760

 
$
1,544

 
$
10

 
$
—

 
$
157

 
$
275

 
$
702

 
$
—

 
$
315

 
$
91

 
$
—

 
$
5,854

Transfers from non-operating properties
$
22,997

 
$
9,839

 
$
—

 
$
24,240

 
$
—

 
$
6

 
$
113

 
$
7,050

 
$
1,783

 
$
—

 
$
65,568

 
$
131,596

Segment assets at March 31, 2013
$
1,279,794

 
$
574,970

 
$
119,145

 
$
52,361

 
$
102,928

 
$
97,346

 
$
317,953

 
$
85,017

 
$
177,728

 
$
81,714

 
$
166,920

 
$
3,055,876

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 March 31,
 
2014
 
2013
Segment revenues from real estate operations
$
124,896

 
$
122,077

Construction contract and other service revenues
21,790

 
14,262

Less: Revenues from discontinued operations (Note 15)
(19
)
 
(10,120
)
Total revenues
$
146,667

 
$
126,219


 
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 March 31,
 
2014
 
2013
Segment property operating expenses
$
49,752

 
$
44,066

Less: Property operating expenses from discontinued operations (Note 15)
20

 
(3,678
)
Total property operating expenses
$
49,772

 
$
40,388


 
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 March 31,
 
2014
 
2013
Construction contract and other service revenues
$
21,790

 
$
14,262

Construction contract and other service expenses
(18,624
)
 
(13,477
)
NOI from service operations
$
3,166

 
$
785



The following table reconciles our NOI from real estate operations for reportable segments and NOI from service operations to income from continuing operations as reported on our consolidated statements of operations (in thousands):
 
For the Three Months Ended March 31,
 
2014
 
2013
NOI from real estate operations
$
75,144

 
$
78,011

NOI from service operations
3,166

 
785

Interest and other income
1,285

 
946

Equity in income of unconsolidated entities
60

 
41

Income tax expense
(64
)
 
(16
)
Other adjustments:
—

 
 

Depreciation and other amortization associated with real estate operations
(43,596
)
 
(27,010
)
General, administrative and leasing expenses
(8,143
)
 
(7,820
)
Business development expenses and land carry costs
(1,326
)
 
(1,359
)
Interest expense on continuing operations
(20,827
)
 
(20,290
)
NOI from discontinued operations
(39
)
 
(6,442
)
Loss on early extinguishment of debt
—

 
(5,184
)
Income from continuing operations
$
5,660

 
$
11,662


 
The following table reconciles our segment assets to the consolidated total assets of COPT and subsidiaries (in thousands):
 
 
March 31,
2014
 
March 31,
2013
Segment assets
$
2,932,749

 
$
3,055,876

Non-operating property assets
503,030

 
490,083

Other assets
170,118

 
139,140

Total COPT consolidated assets
$
3,605,897

 
$
3,685,099


 
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, impairment losses and loss on early extinguishment of debt 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 income of unconsolidated entities, income taxes and noncontrolling interests because these items represent general corporate or non-operating property items not attributable to segments.