Acadia Realty Trust Announces Third Quarter 2004 Operating Results; Strong Growth, Occupancy Gains and Positive Leasing Spreads; External Growth Initiatives Continue.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Acadia Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. Trust (NYSE NYSE See: New York Stock Exchange : AKR AKR Auroral Kilometric Radiation AKR Vehicle Cargo Ship AKR Address Key Register AKR Anime Kingdom Rebirth - "Acadia" or the "Company"), a real estate investment trust ("REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ") and owner and operator of shopping centers shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into anchored by grocery and value-oriented retail, today reported operating results for the quarter and nine months ended September 30, 2004. All per share amounts discussed below are on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis. Third Quarter and Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2004 Highlights Quarterly earnings of $0.23 per share after reserving for a potential one-time charge of $0.02 as a result of flood damage --Excluding this charge, FFO FFO See: Funds from operations of $0.25 per share represents a 12% increase over third quarter 2003 --Earnings per share for the quarter of $0.10 Same-store net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. up 3.2% year-to-date --Portfolio occupancy of 89.1% up 60 basis points over second quarter 2004 and up 1.3% over third quarter 2003 --Rent spreads on new and renewal leases which commenced during the period increased 15% over the previous rents on a cash basis Balance sheet ratios remain strong - Coverage ratios strengthen --Conservative dividend payout ratio Dividend Payout Ratio The percentage of earnings paid to shareholders in dividends. Calculated as: of 67% --3 to 1 fixed-charge coverage fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making --37% debt to total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. External growth initiatives continue with RCP (networking, tool) rcp - (Remote copy) The Unix utility for copying files over Ethernet. Rcp is similar to FTP but uses the hosts.equiv user authentication method. Unix manual page: rcp(1). Venture acquisition and New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. Urban/Infill redevelopment program --Acadia completes its first investment in the Retailer Controlled Property ("RCP") Venture with an investment in the acquisition of the 257 store Mervyn's from Target Corporation --Launches New York City Urban/Infill redevelopment program with acquisition of two redevelopment projects Third Quarter Operating Results - Earnings up 12% after adjusting for one-time charge as a result of flood damage Earnings per share on a fully diluted basis was $0.10 for third quarter 2004 compared to $0.09 for third quarter 2003. For the nine months ended September 30, 2004 and 2003, earnings per share was $0.32 and $0.31, respectively. Funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. ("FFO") for the quarter ended September 30, 2004 was $7.2 million, or $0.23 per share, compared to $6.7 million, or $0.23 per share for the third quarter 2003. FFO for the nine months ended September 30, 2004 was $22.4 million, or $0.73 per share compared to $0.73 per share for the same period in 2003. It is important to note that FFO for the quarter and nine months ended September 30, 2004 included a non-recurring charge to reserve for a potential payment of approximately $730,000, or $0.02 per share, related to flood damage incurred at the Mark Plaza located in Wilkes-Barre, PA as previously announced by the Company. The Insurance Services Organization ("ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. ") has extended the hurricane classification of Hurricane Ivan This article is about the Atlantic hurricane of 2004. For other storms of the same name, see Tropical Storm Ivan (disambiguation). Hurricane Ivan was the strongest hurricane of the 2004 Atlantic hurricane season. to include various states, including Pennsylvania. Under the terms of the Company's insurance policy, a maximum deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). of approximately $730,000 would apply in the event the flood damage was the direct result of a "named" storm. Although final determination has not yet been made as to whether the flood damage at the Mark Plaza resulted directly from Hurricane Ivan, the Company has determined it appropriate to reserve its maximum exposure. Portfolio Activity - Same Store Net Operating Income ("NOI') up 3.2% YTD See Year-to-date. YTD See year to date (YTD). Same store NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics for the retail portfolio increased 3.2% year-to-date over the same nine month period in 2003. The favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality was primarily the result of increased rents in the core portfolio from leasing and redevelopment activities. Quarter over quarter, NOI was down 0.5% primarily due to the timing of estimated provisions for specific potential tenant defaults. September 30, 2004 occupancy of 89.1% was up 60 basis points over the June 30, 2004 occupancy of 88.5%, which was primarily the result of broad-based portfolio occupancy gains. On a year-over-year basis, Acadia's portfolio occupancy increased by 1.3% compared to 87.8% at September 30, 2003. During the third quarter 2004, Acadia executed new and renewal leases approximating 231,000 square feet. Rent spreads on new and renewal leases which commenced during the period increased 15% over the previous rents on a cash basis. Balance Sheet - Maintaining Strong Ratios and Reducing Interest Rate Exposure During the quarter, Acadia further reduced its interest rate exposure by locking in interest rates and extending the maturity on $15.0 million of mortgage debt. As a result, 79% of the Company's total mortgage debt, inclusive of inclusive of prep. Taking into consideration or account; including. long-term interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. and the Company's pro-rata share of JV debt, is now fixed-rate. This has been accomplished while maintaining a low blended cost of debt of 5.8% as of September 30, 2004, as compared to 6.1% as of the beginning of the year. In connection with Acadia's plans to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. its debt at the Crossroads Shopping Center, it is currently contemplated that the Company will terminate an interest rate swap that currently hedges the related variable-rate mortgage var·i·a·ble-rate mortgage n. Abbr. VRM See adjustable-rate mortgage. debt. The cost to settle this swap is currently estimated at approximately $1.4 million. After taking into effect the forecasted interest rate savings, the refinancing Refinancing An extension and/or increase in amount of existing debt. is projected to be financially accretive. Importantly, the transaction will further reduce Acadia's exposure to interest rate risk by extending the maturity as well as increasing the fixed-rate portion of Acadia's debt from 79% to 88%. The Company is currently in consultation with its auditors and derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. consultants to determine the appropriate accounting treatment for this transaction, which potentially could result in either an immediate charge of $1.4 million, or $0.045 per share, in the current year, or amortization over future periods. Management's 2004 earnings guidance does not currently incorporate a full charge in the current year and, if appropriate, would be revised accordingly. As of September 30, 2004, Acadia maintained its solid balance sheet position as reflected in its financial ratios as follows (all ratios include the Company's pro-rata share of unconsolidated joint venture debt and interest expense): --Debt to total market capitalization at quarter-end was 37% --Fixed-charge ratio was 3.0 times (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become / interest expense plus preferred distributions) --Dividend payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. was 67% of FFO External Growth Initiatives Retailer Controlled Property ("RCP") Venture During the third quarter, Acadia completed its first investment through its recently formed RCP Venture. A total of $23.2 million was invested by AKR Funds I and II into an affiliate of Lubert-Adler/Klaff, which is part of the investment consortium, along with Sun Capital Partners, Inc. and Cerberus Capital Management, L.P., that acquired the 257 store Mervyn's department store chain from the Target Corporation for $1.175 billion. This was the first investment for AKR Fund II, Acadia's second discretionary acquisition fund which was launched during the second quarter of 2004 with $300 million of committed capital. Launches New York Urban/Infill Redevelopment Program with Two New Projects The Company announced the launching of its New York Urban/Infill program with the acquisition of 400 East Fordham Road Fordham Road is a major street in The Bronx borough of New York City. It runs east-west from the Harlem River to Bronx Park. At its western extreme, it goes through the University Heights neighborhood. in The Bronx, NY for $30 million. In conjunction with its development partner, P/A Associates, Acadia acquired the six-story, retail and commercial building, which is anchored by a multi-level Sears. It is anticipated the redevelopment will commence in 2007, which is the scheduled expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of Sears' current lease term. The total cost of the redevelopment project, including the acquisition cost, is estimated to be between $35 and $40 million, depending on the ultimate scope of the project. Upon completion of the redevelopment, it is anticipated the project will earn an unleveraged yield in excess of 10%. In October, Acadia announced its second urban in-fill project, a 95-year ground lease to redevelop re·de·vel·op v. re·de·vel·oped, re·de·vel·op·ing, re·de·vel·ops v.tr. 1. To develop (something) again. 2. a 16-acre site in Pelham Noun 1. Pelham - a bit with a bar mouthpiece that is designed to combine a curb and snaffle bit - piece of metal held in horse's mouth by reins and used to control the horse while riding; "the horse was not accustomed to a bit" Manor, NY, located 10 miles from Manhattan. Currently the site includes 320,000 square feet of warehouse space. The redevelopment contemplates demolishing the existing warehouse buildings and replacing them with a 200,000 or greater square foot multi-anchor community retail center. Acadia anticipates the redevelopment will cost between $30 to $40 million, with construction projected to commence in the next 12 to 24 months. Prior to commencement of the redevelopment process, the ground rent paid by Acadia is projected to equal the warehouse rents collected. Upon stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders , the property is projected to generate an unleveraged yield also in excess of 10%. Earnings Outlook Guidance for 2004 The Company maintains its current earnings guidance for 2004, as adjusted for a $0.02 per share non-recurring charge related to flood damage as previously discussed. As such the Company's 2004 FFO forecast range has been adjusted to a range of $0.97 to $0.99. On an earnings per share basis, the Company currently forecasts $0.42 to $0.44 per share. This FFO and earnings per share forecast is also subject to the final determination of the appropriate accounting for the interest rate swap transaction at the Crossroads Shopping Center as previously discussed. Preliminary Guidance for 2005 The Company currently forecasts its 2005 FFO will range from $1.00 to $1.09 per share. 2005 earnings per share is expected to range from $0.46 to $0.55 per share. This guidance is based on current expectations and is forward-looking. The variation in the low and high end of this range is primarily a result of the level of projected acquisition activity. The following is a reconciliation of the calculation of FFO per share and earnings per share:
Guidance Range for 2005 Low High
----------------------------------------------------------------------
Earnings per share $0.46 $0.55
Depreciation of real estate and amortization of leasing
costs:
Wholly owned and consolidated partnerships 0.47 0.47
Unconsolidated partnerships 0.07 0.07
----- -----
Funds from operations $1.00 $1.09
===== =====
Management will discuss the 2004 and 2005 earnings guidance during tomorrow's conference call. Management Comments Commenting on the results for the quarter, Kenneth Bernstein, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "We are quite pleased with our third quarter results. Along with the solid performance of our core portfolio evidenced by NOI growth, occupancy gains and positive leasing spreads, our exciting external growth initiatives are combining nicely to enable us to create continued growth and long-term shareholder value" Investor Conference Call Mr. Bernstein and Michael Nelsen, Sr. Vice President and CFO See Chief Financial Officer. , will conduct a conference call November 1, 2004 at 2:00 PM EST EST electroshock therapy. EST abbr. electroshock therapy to review the Company's earnings and operating results. The live conference call can be accessed by dialing 888-339-2688 (internationally 617-847-3007). No passcode is required. The call will also be webcast and can be accessed in a listen-only mode at Acadia's web site at www.acadiarealty.com. If you are unable to participate during the live webcast, the call will be archived and available on Acadia's website. Alternatively, to access the replay by phone, dial 888-286-8010 (internationally 617-801-6888). The passcode will be 35386914. The phone replay will be available through Sunday, November 7, 2004. Acadia Realty Trust, headquartered in White Plains, NY, is a fully integrated and self-managed real estate investment trust which specializes in the acquisition, redevelopment and operation of shopping centers which are anchored by grocery and value-oriented retail. Acadia currently owns, or has interests in, and operates 70 properties totaling approximately nine million square feet, located primarily in the Northeast, Mid-Atlantic and Midwest United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Certain matters in this press release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of federal securities law and as such may involve known and unknown risk, uncertainties and other factors which may cause the actual results, performances or achievements of Acadia to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of this document. Acadia expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Acadia's expectations with regard thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. or change in events, conditions or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which any such statement is based. The Company also refers you to the documents filed by the Company, from time to time, with the Securities and Exchange Commission, including without limitation the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and the "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" incorporated by reference therein, for a discussion of such risks and uncertainties. The Company considers funds from operations ("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts ") to be an appropriate supplemental disclosure of operating performance for an equity REIT Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing the performance of the Company. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (or losses) from sales of property and depreciation and amortization. However, the Company's method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, the Company defines FFO as net income (computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP), excluding gains (or losses) from sales of depreciated Depreciated may refer to:
EBITDA is a widely used financial measure in many industries, including the REIT industry, and is presented to assist investors and analysts in analyzing the performance of the Company. It is helpful as it excludes various items included in net income that are not indicative of operating performance, such as gains (or losses) from sales of property and depreciation and amortization and is used in computing computing - computer various financial ratios as a measure of operational performance. The Company computes EBITDA as the sum of net income before extraordinary items plus interest expense, depreciation, income taxes and amortization, less any gains (losses including impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges) on the sale of income producing properties. The Company's method of calculating EBITDA may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. EBITDA does not represent cash generated from operations as defined by GAAP and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as a measure of liquidity. Refer to the Company's Financial and Operating Reporting Supplement for the quarter as posted on its website and included in the Company's filing on Form 8K with the Securities and Exchange Commission for a reconciliation of EBITDA. For more information visit Acadia Realty Trust's Web site at www.acadiarealty.com
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters and Nine Months ended September 30, 2004 and 2003
(amounts in thousands, except per share data)
==================================================================
STATEMENTS OF INCOME
For the For the nine
quarters ended months ended
Revenues September 30, September 30,
2004 2003 2004 2003
-------- -------- -------- --------
Minimums rents $ 13,124 $ 12,635 $ 39,304 $ 37,350
Percentage rents 147 156 569 545
Expense reimbursements 3,385 3,012 10,188 9,625
Other property income 171 169 499 481
Management fee income 1,548 489 3,100 1,418
Interest income 318 243 918 657
Other 14 -- 210 1,218
-------- -------- -------- --------
Total revenues 18,707 16,704 54,788 51,294
-------- -------- -------- --------
Operating expenses
Property operating 4,316 2,957 11,860 10,700
Real estate taxes 2,461 2,288 6,900 6,297
General and
administrative 2,674 2,786 7,585 7,931
Depreciation and
amortization 3,928 3,788 11,905 11,277
-------- -------- -------- --------
Total operating
expenses 13,379 11,819 38,250 36,205
-------- -------- -------- --------
Operating income 5,328 4,885 16,538 15,089
Equity in earnings of
unconsolidated
partnerships 483 629 1,533 1,777
Interest expense (2,958) (2,882) (8,464) (8,413)
Gain on sale 423 (25) 931 1,187
Minority interest (381) (183) (1,029) (1,310)
-------- -------- -------- --------
Net income - Basic 2,895 2,424 9,509 8,330
Distributions -
Preferred OP Units -- 50 -- 100
-------- -------- -------- --------
Net income - Diluted $ 2,895 $ 2,474 $ 9,509 $ 8,430
======== ======== ======== ========
Net income per Common
Share - Basic
Weighted average Common
Shares 29,254 27,236 28,692 26,338
======== ======== ======== ========
Net income per Common
Share $ .10 $ .09 $ .33 $ .32
======== ======== ======== ========
Net income per Common
Share - Diluted
Weighted average Common
Shares 29,848 28,300 29,389 27,142
======== ======== ======== ========
Net income per Common
Share $ .10 $ .09 $ .32 $ .31
======== ======== ======== ========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
For the Quarters and Nine Months ended September 30, 2004 and 2003
(amounts in thousands, except per share data)
=====================================================================
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (2)
For the For the nine
quarters ended months ended
September 30, September 30,
2004 2003 2004 2003
-------- -------- ------- --------
Net income $ 2,895 $ 2,424 $ 9,509 $ 8,330
Depreciation of real
estate and amortization
of leasing costs:
Wholly owned and
consolidated
partnerships 3,588 3,571 10,672 10,541
Unconsolidated
partnerships 586 547 1,707 1,557
Income attributable to
minority interest in
Operating
Partnership 57 117 244 758
-------- -------- ------- --------
Funds from operations -
Basic 7,126 6,659 22,132 21,186
Distributions -
Preferred OP Units 88 50 248 150
-------- -------- ------- --------
Funds from operations -
Diluted $ 7,214 $ 6,709 $22,380 $ 21,336
======== ======== ======= ========
Funds from operations
per share - Basic
Weighted average Common
Shares and OP Units (3) 29,680 28,463 29,359 28,452
======== ======== ======= ========
Funds from operations
per share $ .24 $ .23 $ .75 $ .74
======== ======== ======= ========
Funds from operations
per share - Diluted
Weighted average Common
Shares and OP Units
(1),(3) 30,796 29,528 30,548 29,255
======== ======== ======= ========
Funds from operations
per share $ .23 $ .23 $ .73 $ .73
======== ======== ======= ========
ACADIA REALTY TRUST AND SUBSIDIARIES
Financial Highlights
As of September 30, 2004 and December 31, 2003
(amounts in thousands, except per share data)
=====================================================================
SELECTED BALANCE SHEET INFORMATION
September 30, December 31,
2004 2003
--------------------------
Cash and cash equivalents $ 13,091 $ 14,663
Rental property, at cost 432,517 427,628
Total assets 433,380 388,184
Mortgage notes payable 225,004 190,444
Total liabilities 243,976 208,765
Fixed rate debt: (4) 170,470 156,433
% of outstanding debt 76 % 82 %
Weighted average interest rate 6.5 % 6.6 %
Variable rate debt (4) $ 54,536 $ 34,011
% of outstanding debt 24 % 18 %
Weighted average interest rate 3.1 % 2.9 %
Total weighted average interest rate 5.7 % 5.9 %
Notes (amounts in thousands): (1) Reflects the potential dilution potential dilution The decrease in the proportional equity position of a share of stock that will occur eventually if additional authorized shares are actually issued. that could occur if securities or other contracts to issue Common Shares were exercised or converted into Common Shares. (2) The Company considers funds from operations ("FFO") as defined by the National Association of Real Estate Investment Trusts ("NAREIT") to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is presented to assist investors in analyzing the performance of the Company. It is helpful as it excludes various items included in net income that are not indicative of the operating performance, such as gains (or losses) from sales of property and depreciation and amortization. However, the Company's method of calculating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO does not represent cash generated from operations as defined by generally accepted accounting principles ("GAAP") and is not indicative of cash available to fund all cash needs, including distributions. It should not be considered as an alternative to net income for the purpose of evaluating the Company's performance or to cash flows as a measure of liquidity. Consistent with the NAREIT definition, the Company defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciated property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. (3) In addition to the weighted average Common Shares outstanding, diluted FFO also assumes full conversion of a weighted average 425 and 1,228 OP Units into Common Shares for the quarters ended September 30, 2004 and 2003, respectively and 667 and 2,113 OP Units into Common Shares for the nine months ended September 30, 2004 and 2003, respectively. For 2004, diluted FFO also includes the assumed conversion of Preferred OP Units into 523 Common Shares and 492 Common Shares for the quarter and nine months ended September 30, 2004, respectively. (4) Fixed-rate debt includes $86,289 of notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. principal fixed through swap transactions. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , variable-rate debt excludes this amount. |
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