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,

 

 

2006

 

2005

Net income (2)

 

$15,667

 

$13,865

Add:   Depreciation expense

 

10,731

 

10,746

Deferred percentage rent (3)

 

1,259

 

815

FFO

 

$27,657

 

$25,426

 

 

 

 

 

Weighted average shares outstanding

 

71,812

 

68,496

 

 

 

 

 

FFO per share

 

$0.39

 

$0.37

Distributions declared

 

$0.32

 

$0.32

 

 

(1)

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.

(2)

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.

(3)

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)
(2,216)
-- 
-- 
FFO $24,390 
$20,520 
$94,824 
$82,762 
Weighted average shares outstanding 64,311 
58,453 
63,406 
58,445 
FFO per share $0.38 
$0.35 
$1.50 
$1.42 
Distributions declared $0.32 
$0.31 
$1.26 
$1.24 

EXCERPTS ON THIS PAGE:

8-K
May 2, 2006
8-K
Feb 15, 2005
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