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.”
| Year Ended December 31, | ||||||||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||
| (In thousands, except per share data and ratios) | ||||||||||||||||||||||||
| Operating Data: | ||||||||||||||||||||||||
| Rental income | $ | 932,738 | $ | 912,287 | $ | 854,286 | $ | 797,598 | $ | 739,622 | ||||||||||||||
| Property operating income(1) | $ | 637,030 | $ | 627,566 | $ | 584,619 | $ | 547,979 | $ | 510,595 | ||||||||||||||
| Gain on sale of real estate and change in control of interests, net | $ | 116,393 | $ | 11,915 | $ | 77,922 | $ | 32,458 | $ | 28,330 | ||||||||||||||
| Operating income | $ | 470,911 | $ | 361,636 | $ | 410,210 | $ | 353,453 | $ | 328,484 | ||||||||||||||
| Net income | $ | 360,542 | $ | 249,026 | $ | 297,870 | $ | 258,883 | $ | 218,424 | ||||||||||||||
| Net income available for common shareholders | $ | 345,824 | $ | 233,865 | $ | 287,456 | $ | 249,369 | $ | 209,678 | ||||||||||||||
| Net cash provided by operating activities | $ | 461,919 | $ | 516,688 | $ | 458,828 | $ | 427,672 | $ | 371,808 | ||||||||||||||
| Net cash used in investing activities | $ | (316,532 | ) | $ | (192,247 | ) | $ | (837,922 | ) | $ | (590,221 | ) | $ | (355,353 | ) | |||||||||
| Net cash (used in) provided by financing activities | $ | (100,105 | ) | $ | (241,309 | ) | $ | 369,445 | $ | 168,838 | $ | (42,188 | ) | |||||||||||
| Earnings per common share, basic: | ||||||||||||||||||||||||
| Net income available to common shareholders | $ | 4.61 | $ | 3.18 | $ | 3.97 | $ | 3.51 | $ | 3.04 | ||||||||||||||
| Weighted average number of common shares, basic | 74,766 | 73,274 | 72,117 | 70,877 | 68,797 | |||||||||||||||||||
| Earnings per common share, diluted: | ||||||||||||||||||||||||
| Net income available to common shareholders | $ | 4.61 | $ | 3.18 | $ | 3.97 | $ | 3.50 | $ | 3.03 | ||||||||||||||
| Weighted average number of common shares, diluted | 74,766 | 73,302 | 72,233 | 71,049 | 68,981 | |||||||||||||||||||
| Dividends declared per common share | $ | 4.14 | $ | 4.04 | $ | 3.96 | $ | 3.84 | $ | 3.62 | ||||||||||||||
| Other Data: | ||||||||||||||||||||||||
| Funds from operations available to common shareholders(2) | $ | 465,819 | $ | 461,777 | $ | 419,977 | $ | 406,359 | $ | 352,857 | ||||||||||||||
| EBITDAre(3) | $ | 599,567 | $ | 595,558 | $ | 549,107 | $ | 515,151 | $ | 478,734 | ||||||||||||||
| Ratio of EBITDAre to combined fixed charges and preferred share dividends(3)(4) | 4.2x | 4.2x | 3.9x | 4.5x | 3.6x |
| As of December 31, | |||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Balance Sheet Data: | |||||||||||||||||||
| Real estate, at cost | $ | 8,298,132 | $ | 7,819,472 | $ | 7,635,061 | $ | 6,759,073 | $ | 6,064,406 | |||||||||
| Total assets | $ | 6,794,992 | $ | 6,289,644 | $ | 6,275,755 | $ | 5,423,279 | $ | 4,896,559 | |||||||||
| Total debt | $ | 3,356,594 | $ | 3,229,204 | $ | 3,284,766 | $ | 2,798,452 | $ | 2,627,216 | |||||||||
| Total shareholders’ equity | $ | 2,636,132 | $ | 2,467,330 | $ | 2,391,514 | $ | 2,075,835 | $ | 1,781,931 | |||||||||
| Number of common shares outstanding | 75,541 | 74,250 | 73,091 | 71,996 | 69,493 |
| (1) | Property operating income is a non-GAAP measure that consists of rental 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. |
The reconciliation of operating income to property operating income is as follows:
| 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Operating income | $ | 470,911 | $ | 361,636 | $ | 410,210 | $ | 353,453 | $ | 328,484 | |||||||||
| General and administrative | 42,754 | 33,600 | 36,281 | 33,399 | 35,645 | ||||||||||||||
| Depreciation and amortization | 239,758 | 244,245 | 216,050 | 193,585 | 174,796 | ||||||||||||||
| Gain on sale of real estate and change in control of interests, net | (116,393 | ) | (11,915 | ) | (77,922 | ) | (32,458 | ) | (28,330 | ) | |||||||||
| Property operating income | $ | 637,030 | $ | 627,566 | $ | 584,619 | $ | 547,979 | $ | 510,595 |
| (2) | 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 GAAP, plus real estate related depreciation and amortization, gains and losses on the sale of real estate, and impairment write-downs of depreciable 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 FFO available for common shareholders is as follows:
| 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Net income | $ | 360,542 | $ | 249,026 | $ | 297,870 | $ | 258,883 | $ | 218,424 | |||||||||
| Net income attributable to noncontrolling interests | (6,676 | ) | (7,119 | ) | (7,956 | ) | (8,973 | ) | (8,205 | ) | |||||||||
| Gain on sale of real estate and change in control of interests, net | (116,393 | ) | (11,915 | ) | (77,632 | ) | (31,133 | ) | (28,330 | ) | |||||||||
| Depreciation and amortization of real estate assets | 215,139 | 213,098 | 188,719 | 169,198 | 154,232 | ||||||||||||||
| Amortization of initial direct costs of leases | 19,359 | 24,603 | 19,124 | 16,875 | 15,026 | ||||||||||||||
| Funds from operations | 471,971 | 467,693 | 420,125 | 404,850 | 351,147 | ||||||||||||||
| Dividends on preferred shares | (7,500 | ) | (7,500 | ) | (1,917 | ) | (541 | ) | (541 | ) | |||||||||
| Income attributable to operating partnership units | 2,703 | 3,053 | 3,143 | 3,145 | 3,398 | ||||||||||||||
| Income attributable to unvested shares | (1,355 | ) | (1,469 | ) | (1,374 | ) | (1,095 | ) | (1,147 | ) | |||||||||
| Funds from operations available for common shareholders | $ | 465,819 | $ | 461,777 | $ | 419,977 | $ | 406,359 | $ | 352,857 |
(3) EBITDA for Real Estate ("EBITDAre") is a non-GAAP measure that NAREIT defines as: net income computed in accordance with GAAP plus net interest expense, income tax expense, depreciation and amortization, gain or loss on sale of real estate, impairments of real estate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates. We calculate EBITDAre consistent with the NAREIT definition. As EBITDA is a widely known and understood measure of performance, management believes EBITDAre represents an additional non-GAAP performance measure, independent of a company's capital structure that will provide investors with a uniform basis to measure the enterprise value of a company. EBITDAre also 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.
The reconciliation of net income to EBITDAre for the periods presented is as follows:
| 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Net income | $ | 360,542 | $ | 249,026 | $ | 297,870 | $ | 258,883 | $ | 218,424 | |||||||||
| Interest expense | 109,623 | 110,154 | 100,125 | 94,994 | 92,553 | ||||||||||||||
| Other interest income | (1,266 | ) | (942 | ) | (475 | ) | (374 | ) | (149 | ) | |||||||||
| Early extinguishment of debt | — | — | 12,273 | — | 19,072 | ||||||||||||||
| Provision for income tax | 772 | 1,521 | 1,813 | — | — | ||||||||||||||
| Depreciation and amortization | 239,758 | 244,245 | 216,050 | 193,585 | 174,796 | ||||||||||||||
| Gain on sale of real estate and change in control of interests | (116,779 | ) | (13,560 | ) | (79,345 | ) | (32,458 | ) | (28,330 | ) | |||||||||
| Adjustments of EBITDAre of unconsolidated affiliates | 6,917 | 5,114 | 796 | 521 | 2,368 | ||||||||||||||
| EBITDAre | $ | 599,567 | $ | 595,558 | $ | 549,107 | $ | 515,151 | $ | 478,734 |
(4) Fixed charges consist of interest on borrowed funds (including capitalized interest), amortization of debt discount/ premiums and debt costs, costs related to the early extinguishment of debt, and the portion of rent expense representing an interest factor. Excluding the $11.9 million charge related to the buyout of the Kmart lease at Assembly Square Marketplace, our ratio of EBITDAre to combined fixed charges and preferred share dividends remains 4.2x in 2019. Excluding the $12.3 million and $19.1 million early extinguishment of debt charge from fixed charges in 2017 and 2015, respectively, the ratio of EBITDAre to combined fixed charges and preferred share dividends is 4.2x and 4.3x, for 2017 and 2015, respectively.
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