RAIT Financial Trust Announces Second Quarter 2014 Financial Results
PHILADELPHIA, PA — July 31, 2014 — RAIT Financial Trust (“RAIT”) (NYSE: RAS) today announced second quarter 2014 financial results.
Financial Performance
•
Cash Available for Distribution (“CAD”) per share increased 41.2% to $0.24 for the quarter ended June 30, 2014 from $0.17 for the quarter ended June 30, 2013.
•
Total revenues grew 25.1% to $73.3 million for the quarter ended June 30, 2014 from $58.6 million for the quarter ended June 30, 2013.
Dividends
•
On June 12, 2014, RAIT declared a second quarter 2014 common dividend of $0.18 per share, representing a 38% increase from the second quarter 2013 common dividend of $0.13 per common share. The second quarter common dividend record date was July 11, 2014 and was paid on July 31, 2014.
CRE Loan Portfolio
•
Investments in mortgages and loans increased 17.9% to $1.32 billion at June 30, 2014 from $1.12 billion at December 31, 2013.
•
RAIT originated $246.3 million of loans during the quarter ended June 30, 2014 consisting of $112.8 million bridge loans, $119.7 million conduit loans and $13.8 million mezzanine loans. RAIT originated $470.8 million of loans for the six-month period ended June 30, 2014.
•
RAIT sold $46.9 million of conduit loans during the quarter ended June 30, 2014 which generated $2.8 million of fee income.
CRE Property Portfolio
•
Based upon properties owned as of June 30, 2014, average effective rent per unit per month in RAIT’s multifamily portfolio increased 7.5% to $799 for the quarter ended June 30, 2014 from $743 for the quarter ended June 30, 2013.
•
As of June 30, 2014, RAIT’s investments in real estate increased 30% to $1.3 billion from $1.0 billion at December 31, 2013.
•
Rental income increased 41% to $39.2 million during the quarter ended June 30, 2014 from $27.9 million for the quarter ended June 30, 2013 driven largely by the acquisition of 16 properties subsequent to June 30, 2013 which generated $10.6 million of rental income during the quarter ended June 30, 2014.
Assets Under Management
•
Assets under management increased 47% to $5.3 billion at June 30, 2014 from $3.6 billion at December 31, 2013 due primarily to inclusion of third party retail properties managed by RAIT’s retail-focused property manager beginning in 2014.
Scott Schaeffer, RAIT’s Chairman and CEO, said, “We continue executing on our strategy of raising capital and investing it into our multi-strategy commercial real estate business. During the second quarter gross loan originations increased 44% to $246.3 million when compared to the second quarter of 2013. Our property portfolio grew through acquisitions and increasing rents which led to a 41% increase in rental income and a 51% increase in net operating income since June 30, 2013. The second quarter common dividend, which has increased 38% since the second quarter of 2013, represents a 75% payout ratio on our second quarter CAD per share.”
Financial Results
RAIT reported CAD, a non-GAAP financial measure, for the three-month period ended June 30, 2014 of $19.7 million, or $0.24 per share — diluted based on 81.8 million weighted-average shares outstanding – diluted, as compared to CAD for the three-month period ended June 30, 2013 of $11.9 million, or $0.17 per share – diluted based on 69.8 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the three-month period ended June 30, 2014 of $25.7 million, or $0.31 total loss per share — diluted based on 81.8 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the three-month period ended June 30, 2013 of $65.9 million, or $0.94 total loss per share – diluted based on 69.8 million weighted-average shares outstanding – diluted. The second quarter 2014 net loss includes $25.1 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from CAD.
RAIT reported CAD for the six-month period ended June 30, 2014 of $37.0 million, or $0.46 per share — diluted based on 80.6 million weighted-average shares outstanding – diluted, as compared to CAD for the six-month period ended June 30, 2013 of $22.8 million, or $0.35 per share – diluted based on 65.1 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the six-month period ended June 30, 2014 of $40.2 million, or $0.50 total loss per share — diluted based on 80.6 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the six-month period ended June 30, 2013 of $156.4 million, or $2.40 total loss per share – diluted based on 65.1 million weighted-average shares outstanding – diluted. The six-month period ended June 30, 2014 net loss includes $49.2 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from CAD.
A reconciliation of RAIT’s reported net income (loss) allocable to common shares to its CAD is included as Schedule I to this release. A reconciliation of RAIT’s total shareholders’ equity to its adjusted book value, a non-GAAP financial measure, is included as Schedule II to this release. A reconciliation of RAIT’s net income (loss) allocable to common shares to its funds from operations (“FFO)”, a non-GAAP financial measure, and adjusted funds from operations (“AFFO”), a non-GAAP financial measure, is included as Schedule III to this release. These Schedules also include management’s respective rationales for the usefulness of each of these non-GAAP financial measures.
Key Statistics (Unaudited and dollars in thousands, except per share information)
As of or For the Three-Month Periods Ended
June 30, 2014
March 31, 2014
December 31, 2013
September 30, 2013
June 30, 2013
Financial Statistics:
Total revenue
$
73,256
$
67,308
$
67,607
$
62,395
$
58,622
Earnings (loss) per share – diluted
$
(0.31
)
$
(0.18
)
$
(1.90
)
$
(0.24
)
$
(0.94
)
CAD per share, diluted
$
0.24
$
0.22
$
0.27
$
0.23
$
0.17
Common dividend declared per share
$
0.18
$
0.17
$
0.16
$
0.15
$
0.13
Assets under management
$
5,266,296
$
5,119,805
$
3,595,530
$
3,567,675
$
3,616,009
FFO per share, diluted
$
(0.20
)
$
(0.07
)
$
(1.74
)
$
(0.12
)
$
(0.81
)
Commercial Real Estate (“CRE”) Loan Portfolio:
CRE loans— unpaid principal
$
1,325,748
$
1,228,452
$
1,115,949
$
1,103,272
$
1,154,306
Non-accrual loans — unpaid principal
$
30,269
$
28,019
$
37,073
$
45,337
$
65,597
Non-accrual loans as a % of reported loans
2.3
%
2.3
%
3.3
%
4.1
%
5.7
%
Reserve for losses
$
15,336
$
14,279
$
22,955
$
23,317
$
24,222
Reserves as a % of non-accrual loans
50.7
%
51.0
%
61.9
%
51.4
%
36.9
%
Provision for losses
$
1,000
$
1,000
$
1,500
$
500
$
500
CRE Property Portfolio:
Reported investments in real estate(1)
$
1,268,769
$
1,205,995
$
1,004,186
$
986,296
$
949,649
Net operating income(1)
$
19,524
$
17,093
$
13,919
$
13,712
$
12,947
Number of properties owned(1)
74
71
62
61
60
Multifamily units owned(1)
12,388
12,014
9,372
8,940
8,535
Office square feet owned
2,248,321
2,097,022
2,009,852
2,015,524
2,015,576
Retail square feet owned
1,420,909
1,420,909
1,421,059
1,421,059
1,421,059
Land (acres owned)
21.92
21.92
21.92
21.92
21.92
Average occupancy data:
Multifamily(1)
92.8
%
93.3
%
92.2
%
92.5
%
92.6
%
Office
74.3
%
74.8
%
75.6
%
74.1
%
74.3
%
Retail
67.5
%
66.6
%
69.0
%
68.9
%
68.7
%
Average Effective Rent per Unit/Square Foot (2):
Multifamily (1)(3)
$
799
$
767
$
763
$
761
$
743
Office (4)
$
20.10
$
18.70
$
18.40
$
19.45
$
18.77
Retail (4)
$
12.50
$
12.44
$
12.11
$
12.05
$
11.78
(1)
Includes 19 apartment properties owned by RAIT’s consolidated subsidiary, Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT), with 5,342 units and a book value of $343.5 million as of June 30, 2014. At July 30, 2014, RAIT owned 28% of IRT’s outstanding common stock.
(2)
Based on properties owned as of June 30, 2014.
(3)
Average effective rent is rent per unit per month.
(4)
Average effective rent is rent per square foot per year.
Conference Call
All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, July 31, 2014 from the home page of the RAIT Financial Trust website at www.rait.com or by dialing 800.299.9086, access code 20320568. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAIT’s website and telephonically until Thursday, August 7, 2014, by dialing 888.286.8010, access code 35898971.
About RAIT Financial Trust
RAIT Financial Trust is an internally-managed real estate investment trust that provides debt financing options to owners of commercial real estate and invests directly into commercial real estate properties located throughout the United States. In addition, RAIT is an asset and property manager of real estate-related assets. For more information, please visit www.rait.com or call Investor Relations at 215.243.9000.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward” or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in RAIT’s filings with the Securities and Exchange Commission. RAIT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.
RAIT Financial Trust Contact Andres Viroslav 215-243-9000 aviroslav@rait.com
1
RAIT Financial Trust Consolidated Statements of Operations (Dollars in thousands, except share and per share information) (unaudited)
For the Three-Month
For the Six-Month
Periods Ended
Periods Ended
June 30,
June 30,
Revenues:
2014
2013
2014
2013
Net interest margin:
Investment Interest income
$
34,646
$
31,256
$
69,609
$
62,536
Investment Interest expense
(7,523
)
(7,278
)
(14,706
)
(14,761
)
Net interest margin
27,123
23,978
54,903
47,775
Rental income
39,214
27,858
74,390
55,027
Fee and other income
6,919
6,786
11,271
14,071
Total revenue
73,256
58,622
140,564
116,873
Expenses:
Interest expense
13,241
9,978
24,846
19,644
Real estate operating expense
19,690
14,911
37,773
29,321
Compensation expense
7,376
6,337
15,931
13,284
General and administrative expense
4,874
3,562
9,075
7,338
Provision for losses
1,000
500
2,000
1,000
Depreciation and amortization expense
13,441
8,618
25,483
17,188
Total expenses
59,622
43,906
115,108
87,775
Operating income
13,634
14,716
25,456
29,098
Other income (expense)
5
69
15
145
Gains (losses) on assets
(7,599
)
224
(5,375
)
221
Gains (losses) on extinguishment of debt
—
—
2,421
—
Change in fair value of financial instruments
(25,071
)
(76,020
)
(49,210
)
(175,777
)
Income (loss) before taxes and discontinued operations
(19,031
)
(61,011
)
(26,693
)
(146,313
)
Income tax benefit (provision)
21
673
260
634
Net income (loss)
(19,010
)
(60,338
)
(26,433
)
(145,679
)
(Income) loss allocated to preferred shares
(7,415
)
(5,589
)
(13,221
)
(10,807
)
(Income) loss allocated to noncontrolling interests
775
50
(583
)
77
Net income (loss) allocable to common shares
$
(25,650
)
$
(65,877
)
$
(40,237
)
$
(156,409
)
Earnings (loss) per share—Basic:
Total earnings (loss) per share—Basic
$
(0.31
)
$
(0.94
)
$
(0.50
)
$
(2.40
)
Weighted-average shares outstanding—Basic
81,778,947
69,757,807
80,636,895
65,086,432
Earnings (loss) per share—Diluted:
Total earnings (loss) per share—Diluted
$
(0.31
)
$
(0.94
)
$
(0.50
)
$
(2.40
)
Weighted-average shares outstanding—Diluted
81,778,947
69,757,807
80,636,895
65,086,432
2
RAIT Financial Trust Consolidated Balance Sheets (Dollars in thousands, except share and per share information) (unaudited)
As of
As of
June 30,
December 31,
2014
2013
Assets
Investments in mortgages and loans, at amortized cost:
Commercial mortgages, mezzanine loans, other loans and preferred
$
1,323,677
$
1,122,377
equity interests
Allowance for losses
(15,336
)
(22,955
)
Total investments in mortgages and loans
1,308,341
1,099,422
Investments in real estate, net of accumulated depreciation of $145,751
1,268,769
1,004,186
and $127,745, respectively
Investments in securities and security-related receivables, at fair value
574,178
567,302
Cash and cash equivalents
75,079
88,847
Restricted cash
102,189
121,589
Accrued interest receivable
52,857
48,324
Other assets
72,165
57,081
Deferred financing costs, net of accumulated amortization of $21,484 and
22,469
18,932
$17,768, respectively
Intangible assets, net of accumulated amortization of $8,960 and $4,564,
23,100
21,554
respectively
Total assets
$
3,499,147
$
3,027,237
Liabilities and Equity
Indebtedness:
Recourse indebtedness
$
353,145
$
235,011
Non-recourse indebtedness
2,064,025
1,851,390
Total indebtedness
2,417,170
2,086,401
Accrued interest payable
31,177
26,936
Accounts payable and accrued expenses
28,683
32,447
Derivative liabilities
95,974
113,331
Deferred taxes, borrowers’ escrows and other liabilities
128,665
79,462
Total liabilities
2,701,669
2,338,577
Series D Preferred Shares,4,000,000 shares authorized, 4,000,000 and 2,600,000 shares issued and outstanding
74,723
52,970
Equity:
Preferred shares, $0.01 par value per share, 25,000,000 shares authorized:
7.75% Series A cumulative redeemable preferred shares, liquidation
41
41
preference $25.00 per share, 8,069,288 and 4,760,000 shares authorized, 4,069,288 shares issued and outstanding
8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,300,000 shares authorized, 2,288,465 shares issued and outstanding
23
23
8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 3,600,000 shares authorized, 1,640,100 shares issued and outstanding
17
17
Series E cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,000,000 shares authorized
—
—
Common shares, $0.03 par value per share, 200,000,000 shares authorized, 82,507,410 and 71,447,437 issued and outstanding, including 541,825 and 369,500 unvested restricted common share awards
2,474
2,143
Additional paid in capital
2,007,593
1,920,455
Accumulated other comprehensive income (loss)
(50,226
)
(63,810
)
Retained earnings (deficit)
(1,326,186
)
(1,257,306
)
Total shareholders’ equity
633,736
601,563
Noncontrolling interests
89,019
34,127
Total equity
722,755
635,690
Total liabilities and equity
$
3,499,147
$
3,027,237
3
Schedule I RAIT Financial Trust Reconciliation of Net income (loss) Allocable to Common Shares and Cash Available for Distribution (1) (Dollars in thousands, except share and per share amounts) (unaudited)
For the Six-Month Period Ended
For the Three-Month Period Ended June 30,
June 30,
2014
2013
2014
2013
Amount
Per Share (2)
Amount
Per Share (3)
Amount
Per Share (2)
Amount
Per Share (3)
Cash Available for Distribution:
Net income (loss) allocable to common shares
$
(25,650
)
$
(0.31
)
$
(65,877
)
$
(0.94
)
$
(40,237
)
$
(0.50
)
$
(156,409
)
$
(2.40
)
Adjustments:
Depreciation and amortization expense
13,441
0.16
8,618
0.12
25,483
0.32
17,188
0.26
Change in fair value of financial instruments
25,071
0.32
76,020
1.09
49,210
0.61
175,777
2.69
(Gains) losses on assets
7,599
0.09
(224
)
0.00
5,375
0.07
(221
)
0.00
(Gains) losses on extinguishment of debt
—
—
—
—
(2,421
)
(0.03
)
—
—
Taberna VIII and Taberna IX securitizations, net effect
(7,028
)
(0.09
)
(9,526
)
(0.14
)
(14,088
)
(0.18
)
(18,002
)
(0.28
)
Straight-line rental adjustments
24
0.00
(678
)
(0.01
)
(91
)
0.00
(966
)
(0.01
)
Share-based compensation
1,180
0.01
743
0.01
2,629
0.03
1,466
0.02
Origination fees and other deferred items
5,181
0.06
2,300
0.03
9,732
0.12
2,978
0.05
Provision for losses
1,000
0.01
500
0.01
2,000
0.03
1,000
0.02
Noncontrolling interest effect from certain adjustments
(1,095
)
(0.01
)
(9
)
0.00
(635
)
(0.01
)
(9
)
0.00
Cash Available for Distribution
$
19,723
$
0.24
$
11,867
$
0.17
$
36,957
$
0.46
$
22,802
$
0.35
(1)
Cash available for distribution, or CAD, is a non-GAAP financial measure. We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability and our board of trustees considers CAD in determining our quarterly cash dividends. We also believe that CAD is useful because it adjusts for a variety of noncash items (such as depreciation and amortization, equity-based compensation, realized gain (loss) on assets, provision for loan losses and non-cash interest income and expense items). Furthermore, CAD removes the effect from our consolidation of the legacy Taberna securitizations.
We calculate CAD by subtracting from or adding to net income (loss) attributable to common shareholders the following items: depreciation and amortization items including, depreciation and amortization, straight-line rental income or expense, amortization of in place leases, amortization of deferred financing costs, amortization of discount on financings and equity-based compensation; changes in the fair value of our financial instruments, including such changes reflected in our consolidated Taberna securitizations; net interest income from consolidated Taberna securitizations; realized gain (loss) on assets and other; provision for loan losses; impairment on depreciable property; acquisition gains or losses and transaction costs; certain fee income eliminated in consolidation that is attributable to third parties and one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items.
CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. In these Schedules, references to “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries.
(2)
Based on 81,778,947 and 80,636,895 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2014.
(3)
Based on 69,757,807and 65,086,432 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2013.
4
Schedule II RAIT Financial Trust Reconciliation of Shareholders’ Equity to Adjusted Book Value (1) (Dollars in thousands, except share and per share amounts) (unaudited)
As of June 30, 2014
Amount
Per Share (2)
Total shareholders’ equity
$
633,736
$
7.68
Liquidation value of preferred shares characterized as equity(3)
(199,946
)
(2.42
)
Book value
433,790
5.26
Adjustments:
Taberna VIII and Taberna IX securitizations, net effect
(187,864
)
(2.29
)
RAIT I and RAIT II derivative liabilities
31,102
0.38
Change in fair value for warrants and investor SARs
18,820
0.23
Accumulated depreciation and amortization
183,932
2.23
Valuation of recurring collateral and property management fees
57,479
0.70
Total adjustments
$
103,469
$
1.25
Adjusted book value
$
537,259
$
6.51
(1)
Management views adjusted book value as a useful and appropriate supplement to shareholders’ equity and book value per share. The measure serves as an additional measure of our value because it facilitates evaluation of us without the effects of various items that we are required to record in accordance with GAAP but which have limited economic impact on our business. Those adjustments primarily reflect the effect of consolidated securitizations where we do not currently receive cash flows on our retained interests, accumulated depreciation and amortization, the valuation of long-term derivative instruments and a valuation of our recurring collateral and property management fees. Adjusted book value is a non-GAAP financial measurement, and does not purport to be an alternative to reported shareholders’ equity, determined in accordance with GAAP, as a measure of book value. Adjusted book value should be reviewed in connection with shareholders’ equity as set forth in our consolidated balance sheets, to help analyze our value to investors. Adjusted book value may be defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted book value to that of other REITs.
(2)
Based on 82,507,410 common shares outstanding as of June 30, 2014.
(3)
Based on 4,069,288 Series A preferred shares, 2,288,465 Series B preferred shares, and 1,640,100 Series C preferred shares outstanding as of June 30, 2014, all of which have a liquidation preference of $25.00 per share.
5
Schedule III RAIT Financial Trust Reconciliation of Net income (loss) Allocable to Common Shares and Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) (1) (Dollars in thousands, except share and per share amounts) (unaudited)
For the Sixth-Month Period Ended
For the Three-Month Period Ended June 30,
June 30,
2014
2013
2014
2013
Amount
Per Share (2)
Amount
Per Share (3)
Amount
Per Share (2)
Amount
Per Share (3)
Funds From Operations:
Net income (loss) allocable to common shares
$
(25,650
)
$
(0.31
)
$
(65,877
)
$
(0.94
)
$
(40,237
)
$
(0.50
)
$
(156,409
)
$
(2.40
)
Adjustments:
Real estate depreciation and amortization
9,315
0.11
8,050
0.11
18,134
0.23
16,023
0.24
(Gains) losses on the sale of real estate
—
—
1,326
0.02
321
0.00
1,326
0.02
Funds From Operations
$
(16,335
)
$
(0.20
)
$
(56,501
)
$
(0.81
)
$
(21,782
)
$
(0.27
)
$
(139,060
)
$
(2.14
)
Adjusted Funds From Operations:
Funds From Operations
$
(16,335
)
$
(0.20
)
$
(56,501
)
$
(0.81
)
$
(21,782
)
$
(0.27
)
$
(139,060
)
$
(2.14
)
Adjustments:
Change in fair value of financial instruments
25,071
0.32
76,020
1.09
49,210
0.61
175,777
2.69
(Gains) losses on debt extinguishment
—
—
—
—
(2,421
)
(0.03
)
—
—
Capital expenditures, net of direct financing
(1,295
)
(0.02
)
(797
)
(0.01
)
(1,942
)
(0.02
)
(969
)
(0.01
)
Straight-line rental adjustments
24
0.00
(678
)
(0.01
)
(91
)
0.00
(966
)
(0.01
)
Amortization of deferred items and intangible assets
7,414
0.09
3,267
0.05
13,831
0.17
4,400
0.07
Share-based compensation
1,180
0.01
743
0.01
2,629
0.03
1,466
0.02
Adjusted Funds From Operations
$
16,059
$
0.20
$
22,054
$
0.32
$
39,434
$
0.49
$
40,648
$
0.62
(1)
We believe that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and us in particular.
We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles.
AFFO is a computation made by analysts and investors to measure a real estate company’s cash flow generated by operations. We calculate AFFO by adding to or subtracting from FFO: change in fair value of financial instruments; gains or losses on debt extinguishment; capital expenditures, net of any direct financing associated with those capital expenditures; straight-line rental effects; amortization of various deferred items and intangible assets; and share-based compensation.
Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP that may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs.
Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.
(2)
Based on 81,778,947 and 80,636,895 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2014.
(3)
Based on 69,757,807 and 65,086,432 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2013.
6
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