In calculating the expected range for or amount of net (loss) income attributable to common shareholders to estimate projected FFO and Operating FFO for future periods, the Company does not include a projection of gain and losses from the disposition of real estate property, potential impairments and reserves of real estate property and related investments, hurricane-related activity, certain transaction costs or certain fee income. Other real estate companies may calculate expected FFO and Operating FFO in a different manner.
The Company also uses net operating income (“NOI”), anon-GAAP financial measure, as a supplemental performance measure. NOI is calculated as property revenues less property-related expenses. The Company believes NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level and, when compared across periods, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis.
The Company presents NOI information on a same store basis or “SSNOI.” The Company defines SSNOI as property revenues less property-related expenses, which exclude straight-line rental income and expenses, lease termination income, management fee expense, fair market value of leases and expense recovery adjustments. SSNOI also excludes activity associated with development and major redevelopment and includes assets owned in comparable periods (15 months for quarter comparisons). In addition, SSNOI excludes allnon-property and corporate level revenue. Other real estate companies may calculate NOI and SSNOI in a different manner. The Company believes SSNOI provides investors with additional information regarding the operating performances of comparable assets because it excludes certainnon-cash andnon-comparable items as noted above.
FFO, Operating FFO, NOI and SSNOI do not represent cash generated from operating activities in accordance with GAAP, are not necessarily indicative of cash available to fund cash needs and should not be considered as alternatives to net income computed in accordance with GAAP as indicators of the Company’s operating performance or as alternatives to cash flow as a measure of liquidity.
Reconciliations of 2018 and 2019 SSNOI and five-year growth targets for SSNOI and Operating FFO to the most directly comparable GAAP financial measure are not provided because the Company is unable to provide such reconciliations without unreasonable effort.
Net Asset Value (NAV)
Overall, Net Asset Value (“NAV”) and growth in NAV is arrived at by calculating the estimated gross asset values for the Company’s real estate portfolio as well as investments and other significant assets and interests, and then deducting from such amounts the corresponding net carrying value of debt and third-party interests in the assets. Gross asset values for operating real estate properties are generally calculated using the direct capitalization method by dividing projected net operating income for aone-year period by an estimated capitalization rate for each property. A wide range of other methodologies is applied for assets that have unique characteristics, such as high vacancy rates, redevelopment components, or undeveloped land components. Where utilized, a capitalization rate is estimated for a property based, in part, on its geographic location and quality of tenants. Estimates of capitalization rates are based on information from recent property sale transactions as well as from publicly available information regarding third party property transactions. The use of NAV as a measure of value is subjective in that it involves estimates and assumptions and can be calculated using various methods. The Company’s methods of determining NAV may differ from the methods used by other companies.
