filings.toolsItem 6. SELECTED FINANCIAL DATA
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Item 6. SELECTED FINANCIAL DATA
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, 2008 through 2011 have been reclassified to conform to the 2012 presentation.
| Year Ended December 31, | ||||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||||
| (In thousands, except per share data and ratios) | ||||||||||||||||||||||||
| Operating Data: | ||||||||||||||||||||||||
| Rental income | $ | 582,335 | $ | 538,701 | $ | 522,651 | $ | 510,777 | $ | 499,100 | ||||||||||||||
| Property operating income(1) | $ | 428,459 | $ | 382,890 | $ | 372,615 | $ | 362,359 | $ | 353,373 | ||||||||||||||
| Income from continuing operations | $ | 144,372 | $ | 131,554 | $ | 125,851 | $ | 101,325 | $ | 119,655 | ||||||||||||||
| Gain on sale of real estate | $ | 11,860 | $ | 15,075 | $ | 1,410 | $ | 1,298 | $ | 12,572 | ||||||||||||||
| Net income | $ | 156,232 | $ | 149,612 | $ | 128,237 | $ | 103,872 | $ | 135,153 | ||||||||||||||
| Net income attributable to the Trust | $ | 151,925 | $ | 143,917 | $ | 122,790 | $ | 98,304 | $ | 129,787 | ||||||||||||||
| Net income available for common shareholders | $ | 151,384 | $ | 143,376 | $ | 122,249 | $ | 97,763 | $ | 129,246 | ||||||||||||||
| Net cash provided by operating activities | $ | 296,633 | $ | 244,711 | $ | 256,735 | $ | 256,765 | $ | 228,285 | ||||||||||||||
| Net cash used in investing activities | $ | (273,558 | ) | $ | (196,369 | ) | $ | (187,088 | ) | $ | (127,341 | ) | $ | (207,567 | ) | |||||||||
| Net cash (used in) provided by financing activities | $ | (53,893 | ) | $ | 3,667 | $ | (189,239 | ) | $ | (9,258 | ) | $ | (56,186 | ) | ||||||||||
| Dividends declared on common shares | $ | 182,813 | $ | 171,335 | $ | 163,382 | $ | 157,638 | $ | 148,444 | ||||||||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||||||||||
| Basic | 63,881 | 62,438 | 61,182 | 59,704 | 58,665 | |||||||||||||||||||
| Diluted | 64,056 | 62,603 | 61,324 | 59,830 | 58,889 | |||||||||||||||||||
| Earnings per common share, basic: | ||||||||||||||||||||||||
| Continuing operations | $ | 2.17 | $ | 2.00 | $ | 1.95 | $ | 1.59 | $ | 1.93 | ||||||||||||||
| Discontinued operations | — | 0.29 | 0.03 | 0.04 | 0.26 | |||||||||||||||||||
| Gain on sale of real estate | 0.19 | — | 0.01 | — | — | |||||||||||||||||||
| Total | $ | 2.36 | $ | 2.29 | $ | 1.99 | $ | 1.63 | $ | 2.19 | ||||||||||||||
| Earnings per common share, diluted: | ||||||||||||||||||||||||
| Continuing operations | $ | 2.16 | $ | 1.99 | $ | 1.94 | $ | 1.59 | $ | 1.93 | ||||||||||||||
| Discontinued operations | — | 0.29 | 0.03 | 0.04 | 0.26 | |||||||||||||||||||
| Gain on sale of real estate | 0.19 | — | 0.01 | — | — | |||||||||||||||||||
| Total | $ | 2.35 | $ | 2.28 | $ | 1.98 | $ | 1.63 | $ | 2.19 | ||||||||||||||
| Dividends declared per common share | $ | 2.84 | $ | 2.72 | $ | 2.66 | $ | 2.62 | $ | 2.52 | ||||||||||||||
| Other Data: | ||||||||||||||||||||||||
| Funds from operations available to common shareholders(2)(3) | $ | 277,237 | $ | 251,576 | $ | 239,210 | $ | 211,065 | $ | 228,397 | ||||||||||||||
| EBITDA(3)(4) | $ | 410,918 | $ | 374,131 | $ | 352,481 | $ | 328,491 | $ | 344,465 | ||||||||||||||
| Adjusted EBITDA(3)(4) | $ | 399,058 | $ | 357,030 | $ | 351,071 | $ | 327,193 | $ | 331,893 | ||||||||||||||
| Ratio of EBITDA to combined fixed charges and preferred share dividends(3)(4)(5) | 3.3 | x | 3.5 | x | 3.1 | x | 2.8 | x | 3.2 | x | ||||||||||||||
| Ratio of Adjusted EBITDA to combined fixed charges and preferred share dividends(3)(4)(5) | 3.2 | x | 3.3 | x | 3.1 | x | 2.7 | x | 3.1 | x |
| As of December 31, | |||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Balance Sheet Data: | |||||||||||||||||||
| Real estate, at cost | $ | 4,779,674 | $ | 4,426,444 | $ | 3,895,942 | $ | 3,759,234 | $ | 3,673,685 | |||||||||
| Total assets | $ | 3,898,565 | $ | 3,666,210 | $ | 3,159,553 | $ | 3,222,309 | $ | 3,092,776 | |||||||||
| Mortgages payable and capital lease obligations | $ | 832,482 | $ | 810,616 | $ | 589,441 | $ | 601,884 | $ | 452,810 | |||||||||
| Notes payable | $ | 299,575 | $ | 295,159 | $ | 97,881 | $ | 261,745 | $ | 336,391 | |||||||||
| Senior notes and debentures | $ | 1,076,545 | $ | 1,004,635 | $ | 1,079,827 | $ | 930,219 | $ | 956,584 | |||||||||
| Preferred shares | $ | 9,997 | $ | 9,997 | $ | 9,997 | $ | 9,997 | $ | 9,997 | |||||||||
| Shareholders’ equity | $ | 1,310,593 | $ | 1,240,604 | $ | 1,115,768 | $ | 1,151,738 | $ | 1,084,569 | |||||||||
| Number of common shares outstanding | 64,815 | 63,544 | 61,526 | 61,242 | 58,986 |
| (1) | 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) | 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 real estate related depreciation and amortization 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:
| 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Net income | $ | 156,232 | $ | 149,612 | $ | 128,237 | $ | 103,872 | $ | 135,153 | |||||||||
| Net income attributable to noncontrolling interests | (4,307 | ) | (5,695 | ) | (5,447 | ) | (5,568 | ) | (5,366 | ) | |||||||||
| Gain on sale of real estate | (11,860 | ) | (15,075 | ) | (1,410 | ) | (1,298 | ) | (12,572 | ) | |||||||||
| Gain on deconsolidation of VIE | — | (2,026 | ) | — | — | — | |||||||||||||
| Depreciation and amortization of real estate assets | 125,611 | 113,188 | 107,187 | 103,104 | 101,450 | ||||||||||||||
| Amortization of initial direct costs of leases | 10,935 | 10,432 | 9,552 | 9,821 | 8,771 | ||||||||||||||
| Depreciation of joint venture real estate assets | 1,513 | 1,771 | 1,499 | 1,388 | 1,331 | ||||||||||||||
| Funds from operations | 278,124 | 252,207 | 239,618 | 211,319 | 228,767 | ||||||||||||||
| Dividends on preferred shares | (541 | ) | (541 | ) | (541 | ) | (541 | ) | (541 | ) | |||||||||
| Income attributable to operating partnership units | 943 | 981 | 980 | 974 | 950 | ||||||||||||||
| Income attributable to unvested shares | (1,289 | ) | (1,071 | ) | (847 | ) | (687 | ) | (779 | ) | |||||||||
| Funds from operations available for common shareholders | $ | 277,237 | $ | 251,576 | $ | 239,210 | $ | 211,065 | $ | 228,397 |
| (3) | 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 9 to the consolidated financial statements. |
(4) 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:
| 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Net income | $ | 156,232 | $ | 149,612 | $ | 128,237 | $ | 103,872 | $ | 135,153 | |||||||||
| Depreciation and amortization | 142,039 | 126,568 | 119,817 | 115,093 | 111,068 | ||||||||||||||
| Interest expense | 113,336 | 98,465 | 101,882 | 108,781 | 99,163 | ||||||||||||||
| Early extinguishment of debt | — | (296 | ) | 2,801 | 2,639 | — | |||||||||||||
| Other interest income | (689 | ) | (218 | ) | (256 | ) | (1,894 | ) | (919 | ) | |||||||||
| EBITDA | 410,918 | 374,131 | 352,481 | 328,491 | 344,465 | ||||||||||||||
| Gain on sale of real estate | (11,860 | ) | (15,075 | ) | (1,410 | ) | (1,298 | ) | (12,572 | ) | |||||||||
| Gain on deconsolidation of VIE | — | (2,026 | ) | — | — | — | |||||||||||||
| Adjusted EBITDA | $ | 399,058 | $ | 357,030 | $ | 351,071 | $ | 327,193 | $ | 331,893 |
(5) 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.
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