The following table includes certain financial information on a consolidated historical basis. You should read this section in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.” Our selected operating data, other data and balance sheet data for the years ended 2004 through 2007 has been reclassified to conform to the presentation for the year ended 2008.
For the Year Ended December 31,
2008
2007
2006
2005
2004
(In thousands, except per share data and ratios)
Operating Data:
Rental income
$
501,964
$
465,728
$
414,261
$
375,655
$
350,837
Property operating income(1)
$
355,093
$
336,862
$
301,513
$
273,398
$
245,022
Income from continuing operations
$
115,338
$
94,009
$
89,952
$
83,058
$
63,566
Gain on sale of real estate
$
12,572
$
94,768
$
23,956
$
30,748
$
14,052
Net income
$
129,787
$
195,537
$
118,712
$
114,612
$
84,156
Net income available for common shareholders
$
129,246
$
195,095
$
103,514
$
103,137
$
72,681
Net cash provided by operating activities(2)
$
228,285
$
214,209
$
186,654
$
174,941
$
174,148
Net cash used in investing activities(2)
$
(207,567
)
$
(151,439
)
$
(317,429
)
$
(152,730
)
$
(157,611
)
Net cash (used in) provided by financing activities(2)
$
(56,186
)
$
(23,574
)
$
133,631
$
(44,047
)
$
(21,030
)
Dividends declared on common shares
$
148,444
$
135,102
$
133,066
$
124,928
$
101,969
Weighted average number of common shares outstanding:
Basic
58,665
56,108
53,469
52,533
51,008
Diluted
58,914
56,543
53,962
53,050
51,547
Earnings per common share, basic:
Continuing operations
$
1.96
$
1.67
$
1.40
$
1.36
$
1.02
Discontinued operations
0.24
1.81
0.40
0.60
0.40
Gain on sale of real estate
—
—
0.14
—
—
Total
$
2.20
$
3.48
$
1.94
$
1.96
$
1.42
Earnings per common share, diluted:
Continuing operations
$
1.95
$
1.65
$
1.39
$
1.35
$
1.01
Discontinued operations
0.24
1.80
0.39
0.59
0.40
Gain on sale of real estate
—
—
0.14
—
—
Total
$
2.19
$
3.45
$
1.92
$
1.94
$
1.41
Dividends declared per common share(3)
$
2.52
$
2.37
$
2.46
$
2.37
$
1.99
Other Data:
Funds from operations available to common shareholders(4)(5)(6)
$
229,176
$
206,762
$
177,113
$
163,544
$
148,671
EBITDA(7)
$
339,099
$
417,560
$
316,783
$
292,465
$
258,143
Adjusted EBITDA(7)
$
326,527
$
322,792
$
292,827
$
261,717
$
244,091
Ratio of EBITDA to combined fixed charges and preferred share dividends(7)(8)
3.2x
3.3x
2.6x
2.7x
2.5x
Ratio of Adjusted EBITDA to combined fixed charges and preferred share dividends(7)(8)
Property operating income consists of rental income, other property income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure.
(2)
Determined in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 95, Statement of Cash Flows.
(3)
The 2006 and 2005 dividends declared per common share each include a special dividend of $0.20 resulting from the sales of condominiums at Santana Row.
(4)
Funds from Operations (“FFO”) is a supplemental non-GAAP financial measure of real estate companies’ operating performances. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income, computed in accordance with the U.S. GAAP, plus depreciation and amortization of real estate assets and excluding extraordinary items and gains on the sale of real estate. We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income.
We consider FFO available for common shareholders a meaningful, additional measure of operating performance primarily because it excludes the assumption that the value of the real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation. We use FFO primarily as one of several means of assessing our operating performance in comparison with other REITs. Comparison of our presentation of FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs. Additional information regarding our calculation of FFO is contained in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The reconciliation of net income to funds from operations available for common shareholders is as follows:
2008
2007
2006
2005
2004
(In thousands)
Net income
$
129,787
$
195,537
$
118,712
$
114,612
$
84,156
Gain on sale of real estate
(12,572
)
(94,768
)
(23,956
)
(30,748
)
(14,052
)
Depreciation and amortization of real estate assets
101,450
95,565
88,649
82,752
81,649
Amortization of initial direct costs of leases
8,771
8,473
7,390
6,972
7,151
Depreciation of joint venture real estate assets
1,331
1,241
768
630
187
Funds from operations
228,767
206,048
191,563
174,218
159,091
Dividends on preferred stock
(541
)
(442
)
(10,423
)
(11,475
)
(11,475
)
Income attributable to operating partnership units
950
1,156
748
801
1,055
Preferred stock redemption costs
—
—
(4,775
)
—
—
Funds from operations available for common shareholders
Includes a charge of $1.6 million in 2008 related to the settlement of a litigation matter relating to a shopping center in New Jersey. The matter is further discussed in Note 8 of the financial statements.
(6)
Includes $3.1 million of insurance recoveries in 2004 attributable to rental income lost at Santana Row as a result of the August 2002 fire. Insurance recoveries received in 2005 were insignificant.
(7)
The SEC has stated that EBITDA is a non-GAAP measure as calculated in the table below. Adjusted EBITDA is a non-GAAP measure that means net income or loss plus net interest expense, income taxes, depreciation and amortization, gain or loss on sale of real estate and impairments of real estate if any. Adjusted EBITDA is presented because we believe that it provides useful information to investors regarding our ability to service debt and because it approximates a key covenant in material notes. Adjusted EBITDA should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. Adjusted EBITDA as presented may not be comparable to other similarly titled measures used by other REITs.
The reconciliation of Adjusted EBITDA to net income for the periods presented is as follows:
2008
2007
2006
2005
2004
(In thousands)
Net income
$
129,787
$
195,537
$
118,712
$
114,612
$
84,156
Depreciation and amortization
111,068
105,966
97,879
91,503
90,438
Interest expense
99,163
117,394
102,808
88,566
85,058
Other interest income
(919
)
(1,337
)
(2,616
)
(2,216
)
(1,509
)
EBITDA
339,099
417,560
316,783
292,465
258,143
Gain on sale of real estate
(12,572
)
(94,768
)
(23,956
)
(30,748
)
(14,052
)
Adjusted EBITDA
$
326,527
$
322,792
$
292,827
$
261,717
$
244,091
(8)
Fixed charges consist of interest on borrowed funds (including capitalized interest), amortization of debt discount and expense and the portion of rent expense representing an interest factor. Preferred share dividends consist of dividends paid on preferred shares and preferred stock redemption costs. Our Series B preferred shares were redeemed in full in November 2006.
filings.tools