SNH » Topics » Calculation of Funds From Operations (FFO) (1) :

This excerpt taken from the SNH 8-K filed May 2, 2006.

Calculation of Funds From Operations (FFO) (1):



Quarter Ended March 31,






Net income (2)





Add:   Depreciation expense





Deferred percentage rent (3)















Weighted average shares outstanding










FFO per share





Distributions declared








We compute FFO as shown in the calculation above. Such calculation begins with income from continuing operations or, if such amount is the same as net income, with net income. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO because we include deferred percentage rent in FFO as discussed in Note 3 below. We consider FFO to be an appropriate measure of performance for a REIT along with net income and cash flow from operating, investing and financing activities. We believe that FFO provides useful information to investors because by excluding the effects of certain historical costs, such as depreciation expense and gain or loss on sale of properties, FFO can facilitate comparison of current operating performance among REITs. FFO does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. FFO is one important factor considered by our board of trustees in determining the amount of distributions to shareholders. Other important factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving bank credit facility and public debt covenants, the availability of debt and equity capital to us and our expectation of our future performance.


Net income includes legal expenses incurred related to the HealthSouth litigation of approximately $390,000 and $400,000 for the quarters ended March 31, 2006 and 2005, respectively.


We recognize percentage rental income received during the first, second and third quarters in the fourth quarter. Although recognition of revenue is deferred until the fourth quarter for purposes of calculating net income, the calculation of FFO for the first three quarters includes estimated amounts with respect to those periods. The fourth quarter FFO calculation excludes the amounts recognized during the first three quarters.



This excerpt taken from the SNH 8-K filed Feb 15, 2005.

Calculation of Funds From Operations (FFO)(1):

Quarter Ended December 31, Year Ended December 31,
2004 2003 2004 2003
Income from continuing operations $16,513  $13,565  $55,523  $47,034 
Add:       Depreciation expense 10,286  9,171  39,301  35,728 
                Deferred percentage rent(2) (2,409)
FFO $24,390 
Weighted average shares outstanding 64,311 
FFO per share $0.38 
Distributions declared $0.32 


May 2, 2006
Feb 15, 2005
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