communities in addition to same store information. Therefore, the
company believes that the company's presentation of same store
recurring and non-recurring capital expenditures is necessary to
demonstrate same store replacement costs over time. The company
believes that the most directly comparable GAAP measure to same store
recurring and non-recurring capital expenditures are the lines on the
company's consolidated statements of cash flows entitled "recurring
capital expenditures" and "non-recurring capital expenditures."
NET INCOME, FFO AND FAD EXCLUDING CERTAIN CHARGES - The company uses
net income, FFO and FAD excluding one-time severance, proxy and
impairment charges as operating measures. The company reports net
income, FFO and FAD excluding certain one-time, non-cash charges as
alternative financial measures of core operating performance. The
company believes net income, FFO and FAD before one-time, non-cash
charges are informative measures for comparing operating performance
between periods and for comparing operating performance to other
companies that have not incurred such charges. The company further
believes that one-time, non-cash charges of the nature incurred in 2003
are not necessarily repetitive in nature and that it is therefore
meaningful to compare operating performance using alternative, non-GAAP
measures. In addition, the company believes the investment and analyst
communities desire to understand the meaningful components of the
company's performance and that these non-GAAP measures assist in
providing such supplemental measures. The company believes that the
most directly comparable GAAP financial measures to each of net income,
FFO and FAD, excluding certain one-time, non-cash charges, is the line
on the company's consolidated statements of operations entitled "net
income (loss) available to common shareholders." The company computes
dividend payout ratios using dividends declared during the quarter
divided by FFO and FAD per diluted share, excluding certain one-time,
non-cash charges in order to provide investors with alternate earnings
measures to compare the relationship of FFO and FAD, excluding certain
one-time, non-cash charges, to the company's quarterly dividends and
distributions.
DEBT STATISTICS AND DEBT RATIOS - The company uses a number of debt
statistics and ratios as supplemental measures of liquidity. The
numerator and/or the denominator of certain of these statistics and/or
ratios include non-GAAP financial measures that have been reconciled to
the most directly comparable GAAP financial measure. These debt
statistics and ratios include: (1) an interest coverage ratio; (2) a
fixed charge coverage ratio; (3) total debt as a percentage of
undepreciated real estate (unadjusted and adjusted for joint venture
partners' share of debt); (4) a ratio of consolidated debt to total
assets; (5) a ratio of secured debt to total assets; (6) a ratio of
total unencumbered assets to unsecured debt; and (7) a ratio of
consolidated income available to debt service to annual debt service
charge. A number of these debt statistics and ratios are derived from
covenants found in the company's debt agreements, including, among
others, the company's revolving line of credit and the company's senior
unsecured notes. In addition, the company presents these measures
because the degree of leverage could affect the company's ability to
obtain additional financing for working capital, capital expenditures,
acquisitions, development or other general corporate purposes. The
company uses these measures internally as an indicator of liquidity and
the company believes that these measures are also utilized by the
investment and analyst communities to better understand the company's
liquidity.
RECONCILIATIONS OF SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
TABLE 1
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE EQUITY IN INCOME (LOSSES) OF UNCONSOLIDATED
ENTITIES, GAINS ON PROPERTY SALES AND MINORITY INTEREST (Dollars in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------------------- ------------------------------
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2003 2002
------------- ------------- --------- ------------- -------------
Total same store NOI $ 35,247 $ 37,483 $ 34,851 $ 105,980 $ 113,376
Property NOI from other operating segments 6,763 5,452 6,798 19,424 13,771
--------- --------- --------- --------- ---------
Consolidated property NOI 42,010 42,935 41,649 125,404 127,147
Add:
Interest income 223 316 251 708 1,002
Minority interest in consolidated property
partnerships 677 537 348 1,359 1,480
Less:
Depreciation (21,553) (19,311) (20,247) (62,097) (55,637)
Interest (17,122) (13,676) (16,035) (48,992) (37,386)
Amortization of deferred loan costs (1,084) (588) (968) (2,840) (1,711)
General and administrative (3,735) (3,495) (3,342) (10,697) (10,980)
Other expenses (277) -- -- (844) (136)
Severance charges -- -- (1,795) (21,506) --
Proxy and related costs -- -- (5,231) (5,231) --
--------- --------- --------- --------- ---------
Income (loss) from continuing operations
before equity in income (losses) of
unconsolidated entities, gains on property
sales and minority interest $ (861) $ 6,718 $ (5,370) $ (24,736) $ 23,779
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