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, 2006 through 2009 have been reclassified to conform to the 2010 presentation.
Year Ended December 31,
2010
2009
2008
2007
2006
(In thousands, except per share data and ratios)
Operating Data:
Rental income
$
525,528
$
512,725
$
501,055
$
464,884
$
413,719
Property operating income(1)
$
374,532
$
363,782
$
354,731
$
336,434
$
301,229
Income from continuing operations
$
127,107
$
102,379
$
120,616
$
99,430
$
94,276
Gain on sale of real estate
$
1,410
$
1,298
$
12,572
$
94,768
$
23,956
Net income
$
128,237
$
103,872
$
135,153
$
201,127
$
123,065
Net income attributable to the Trust
$
122,790
$
98,304
$
129,787
$
195,537
$
118,712
Net income available for common shareholders
$
122,249
$
97,763
$
129,246
$
195,095
$
103,514
Net cash provided by operating activities
$
256,735
$
256,765
$
228,285
$
214,209
$
186,654
Net cash used in investing activities
$
(187,088
)
$
(127,341
)
$
(207,567
)
$
(151,439
)
$
(317,429
)
Net cash (used in) provided by financing activities
$
(189,239
)
$
(9,258
)
$
(56,186
)
$
(23,574
)
$
133,631
Dividends declared on common shares
$
163,382
$
157,638
$
148,444
$
135,102
$
133,066
Weighted average number of common shares outstanding:
Basic
61,182
59,704
58,665
56,108
53,469
Diluted
61,324
59,830
58,889
56,473
53,858
Earnings per common share, basic:
Continuing operations
$
1.97
$
1.60
$
1.94
$
1.66
$
1.39
Discontinued operations
0.01
0.03
0.25
1.81
0.40
Gain on sale of real estate
0.01
—
—
—
0.14
Total
$
1.99
$
1.63
$
2.19
$
3.47
$
1.93
Earnings per common share, diluted:
Continuing operations
$
1.96
$
1.60
$
1.94
$
1.65
$
1.38
Discontinued operations
0.01
0.03
0.25
1.80
0.39
Gain on sale of real estate
0.01
—
—
—
0.14
Total
$
1.98
$
1.63
$
2.19
$
3.45
$
1.91
Dividends declared per common share(2)
$
2.66
$
2.62
$
2.52
$
2.37
$
2.46
Other Data:
Funds from operations available to common shareholders(3)(4)(5)
$
239,210
$
211,065
$
228,397
$
206,037
$
176,419
EBITDA(4)(6)
$
352,481
$
328,491
$
344,465
$
423,150
$
321,136
Adjusted EBITDA(4)(6)
$
351,071
$
327,193
$
331,893
$
328,382
$
297,180
Ratio of EBITDA to combined fixed charges and preferred share dividends(4)(6)(7)
3.1
x
2.8
x
3.2
x
3.3
x
2.6
x
Ratio of Adjusted EBITDA to combined fixed charges and preferred share dividends(4)(6)(7)
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)
The 2006 dividends declared per common share include a special dividend of $0.20 resulting from the sales of condominiums at Santana Row.
(3)
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:
2010
2009
2008
2007
2006
(In thousands)
Net income
$
128,237
$
103,872
$
135,153
$
201,127
$
123,065
Net income attributable to noncontrolling interests
(5,447
)
(5,568
)
(5,366
)
(5,590
)
(4,353
)
Gain on sale of real estate
(1,410
)
(1,298
)
(12,572
)
(94,768
)
(23,956
)
Depreciation and amortization of real estate assets
107,187
103,104
101,450
95,565
88,649
Amortization of initial direct costs of leases
9,552
9,821
8,771
8,473
7,390
Depreciation of joint venture real estate assets
1,499
1,388
1,331
1,241
768
Funds from operations
239,618
211,319
228,767
206,048
191,563
Dividends on preferred shares
(541
)
(541
)
(541
)
(442
)
(10,423
)
Income attributable to operating partnership units
980
974
950
1,156
748
Preferred share redemption costs
—
—
—
—
(4,775
)
Income attributable to unvested shares
(847
)
(687
)
(779
)
(725
)
(694
)
Funds from operations available for common shareholders
$
239,210
$
211,065
$
228,397
$
206,037
$
176,419
(4)
Includes a charge of $0.3 million and $16.4 million in 2010 and 2009, respectively, for adjusting 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.
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.
(6)
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 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 to EBITDA and adjusted EBITDA for the periods presented is as follows:
2010
2009
2008
2007
2006
(In thousands)
Net income
$
128,237
$
103,872
$
135,153
$
201,127
$
123,065
Depreciation and amortization
119,817
115,093
111,068
105,966
97,879
Interest expense
101,882
108,781
99,163
117,394
102,808
Early extinguishment of debt
2,801
2,639
—
—
—
Other interest income
(256
)
(1,894
)
(919
)
(1,337
)
(2,616
)
EBITDA
352,481
328,491
344,465
423,150
321,136
Gain on sale of real estate
(1,410
)
(1,298
)
(12,572
)
(94,768
)
(23,956
)
Adjusted EBITDA
$
351,071
$
327,193
$
331,893
$
328,382
$
297,180
(7)
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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