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 December 31, 2005 through 2008 have been reclassified to conform to the 2009 presentation.
For the Year Ended December 31,
2009
2008
2007
2006
2005
(In thousands, except per share data and ratios)
Operating Data:
Rental income
$
513,220
$
501,627
$
465,394
$
414,261
$
375,655
Property operating income(1)
$
364,040
$
354,989
$
336,642
$
301,513
$
273,398
Income from continuing operations
$
102,356
$
120,600
$
99,379
$
94,305
$
88,292
Gain on sale of real estate
$
1,298
$
12,572
$
94,768
$
23,956
$
30,748
Net income
$
103,872
$
135,153
$
201,127
$
123,065
$
119,846
Net income attributable to the Trust
$
98,304
$
129,787
$
195,537
$
118,712
$
114,612
Net income available for common shareholders
$
97,763
$
129,246
$
195,095
$
103,514
$
103,137
Net cash provided by operating activities
$
256,765
$
228,285
$
214,209
$
186,654
$
174,941
Net cash used in investing activities
$
(127,341
)
$
(207,567
)
$
(151,439
)
$
(317,429
)
$
(152,730
)
Net cash (used in) provided by financing activities
$
(9,258
)
$
(56,186
)
$
(23,574
)
$
133,631
$
(44,047
)
Dividends declared on common shares
$
157,638
$
148,444
$
135,102
$
133,066
$
124,928
Weighted average number of common shares outstanding:
Basic
59,704
58,665
56,108
53,469
52,533
Diluted
59,830
58,889
56,473
53,858
53,050
Earnings per common share, basic(2):
Continuing operations
$
1.60
$
1.94
$
1.66
$
1.39
$
1.35
Discontinued operations
0.03
0.25
1.81
0.40
0.60
Gain on sale of real estate
—
—
—
0.14
—
Total
$
1.63
$
2.19
$
3.47
$
1.93
$
1.95
Earnings per common share, diluted(2):
Continuing operations
$
1.60
$
1.94
$
1.65
$
1.38
$
1.34
Discontinued operations
0.03
0.25
1.80
0.39
0.59
Gain on sale of real estate
—
—
—
0.14
—
Total
$
1.63
$
2.19
$
3.45
$
1.91
$
1.93
Dividends declared per common share(3)
$
2.62
$
2.52
$
2.37
$
2.46
$
2.37
Other Data:
Funds from operations available to common shareholders(2)(4)(5)(6)
$
211,065
$
228,397
$
206,037
$
176,419
$
162,819
EBITDA(5)(7)
$
322,923
$
339,099
$
417,560
$
316,783
$
292,465
Adjusted EBITDA(5)(7)
$
321,625
$
326,527
$
322,792
$
292,827
$
261,717
Ratio of EBITDA to combined fixed charges and preferred share dividends(5)(7)(8)
2.7x
3.2x
3.3x
2.6x
2.7x
Ratio of Adjusted EBITDA to combined fixed charges and preferred share dividends(5)(7)(8)
Property operating income is a non-GAAP measure that 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. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.
(2)
Effective January 1, 2009, we adopted a new accounting standard which requires us to calculate earnings per share (“EPS”) and funds from operations available for common shareholders (“FFO”) per share for all periods presented using the two-class method. EPS and FFO per share for prior periods have been restated to conform to the requirements of the new accounting standard which is further discussed in Note 16 to the consolidated financial statements.
(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)
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 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:
2009
2008
2007
2006
2005
(In thousands)
Net income
$
103,872
$
135,153
$
201,127
$
123,065
$
119,846
Net income attributable to noncontrolling interests
(5,568
)
(5,366
)
(5,590
)
(4,353
)
(5,234
)
Gain on sale of real estate
(1,298
)
(12,572
)
(94,768
)
(23,956
)
(30,748
)
Depreciation and amortization of real estate assets
103,104
101,450
95,565
88,649
82,752
Amortization of initial direct costs of leases
9,821
8,771
8,473
7,390
6,972
Depreciation of joint venture real estate assets
1,388
1,331
1,241
768
630
Funds from operations
211,319
228,767
206,048
191,563
174,218
Dividends on preferred shares
(541
)
(541
)
(442
)
(10,423
)
(11,475
)
Income attributable to operating partnership units
974
950
1,156
748
801
Preferred share redemption costs
—
—
—
(4,775
)
—
Income attributable to unvested shares
(687
)
(779
)
(725
)
(694
)
(725
)
Funds from operations available for common shareholders
Includes a charge of $16.4 million in 2009 for increasing the accrual for litigation regarding a parcel of land located adjacent to Santana Row as well as other costs related to the litigation and appeal process. The matter is further discussed in Note 8 to the consolidated financial statements.
(6)
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 to the consolidated financial statements.
(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 attributable to the Trust 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 it approximates a key performance measure in our debt covenants, but it 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 net income attributable to the Trust to EBITDA and adjusted EBITDA for the periods presented is as follows:
2009
2008
2007
2006
2005
(In thousands)
Net income attributable to the Trust
$
98,304
$
129,787
$
195,537
$
118,712
$
114,612
Depreciation and amortization
115,093
111,068
105,966
97,879
91,503
Interest expense
108,781
99,163
117,394
102,808
88,566
Early extinguishment of debt
2,639
—
—
—
—
Other interest income
(1,894
)
(919
)
(1,337
)
(2,616
)
(2,216
)
EBITDA
322,923
339,099
417,560
316,783
292,465
Gain on sale of real estate
(1,298
)
(12,572
)
(94,768
)
(23,956
)
(30,748
)
Adjusted EBITDA
$
321,625
$
326,527
$
322,792
$
292,827
$
261,717
(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 share redemption costs. Our Series B preferred shares were redeemed in full in November 2006.
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