Other Data

Taxable Income (unaudited)

The Company has elected to be taxed as a REIT, as defined under the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders.

As a REIT, the Company generally will not be subject to federal income tax on taxable income it distributes currently to its stockholders. Accordingly, no provision for federal income taxes has been made in the accompanying Consolidated Financial Statements. If the Company fails to qualify as a REIT for any taxable year, then it will be subject to federal income taxes at regular corporate rates, including any applicable alternative minimum tax, and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies as a REIT, it may be subject to certain state and local taxes on its income and property and to federal income and excise tax on its undistributed taxable income.

Earnings and profits, the current and accumulated amounts of which determine the taxability of distributions to stockholders, vary from net income attributable to common stockholders and taxable income because of different depreciation recovery periods and methods, and other items.

On a tax-basis, the Company’s gross real estate assets totaled approximately $2.8 billion, $2.7 billion, and $2.5 billion, respectively, for the three years ended December 31, 2012.

The following table reconciles the Company’s consolidated net income (loss) attributable to common stockholders to taxable income for the three years ended December 31, 2012:



	Year Ended December 31,
(In thousands)	2012			2011			2010
Net income (loss) attributable to common stockholders	$	5,465		$	(214	)	$	8,200
Reconciling items to taxable income:
Depreciation and amortization	28,526			21,479			19,603
Gain or loss on disposition of depreciable assets	922			(85		)	6,916
Straight-line rent	(6,075		)	(4,142		)	(1,520		)
Receivable allowances	(74		)	(299		)	(3,652		)
Stock-based compensation	5,400			6,104			1,977
Other	12,724			9,926			4,752
	41,423			32,983			28,076
Taxable income (1)	$	46,888		$	32,769		$	36,276
Dividends paid	$	96,356		$	89,270		$	75,821

(1) Before REIT dividend paid deduction.

Characterization of Distributions (unaudited)

Distributions in excess of earnings and profits generally constitute a return of capital. The following table gives the characterization of the distributions on the Company’s common stock for the three years ended December 31, 2012.

For the three years ended December 31, 2012, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.



	2012				2011				2010
	Per Share		%		Per Share		%		Per Share		%
Common stock:
Ordinary income	$	0.63	52.3	%	$	0.34	28.5	%	$	0.40	33.8	%
Return of capital	0.56		47.1	%	0.80		66.3	%	0.56		46.4	%
Unrecaptured section 1250 gain	0.01		0.6	%	0.06		5.2	%	0.24		19.8	%
Common stock distributions	$	1.20	100.0	%	$	1.20	100.0	%	$	1.20	100.0	%

State Income Taxes

The Company must pay certain state income taxes, which are included in general and administrative expense on the Company’s Consolidated Statements of Operations.

Certain states have implemented new state tax laws in the past few years that have impacted the Company. The State of Texas implemented in 2007 a gross margins tax on gross receipts from operations. The Company understands that the Securities and Exchange Commission views this gross margins tax as an income tax. As such, the Company has disclosed the gross margins tax in the table below. The State of Michigan signed into law in 2008 the Michigan Business Tax Act (“MBTA”), which replaced the Michigan single business tax with a combined business income tax and modified gross receipts tax. The enactment of the MBTA resulted in the creation of a deferred tax liability for the Company. In 2011, the Michigan business tax was replaced with a flat corporate income tax effective January 1, 2012. Management believes that the new tax will eliminate any tax liability in Michigan. Additionally, this legislation repealed the tax associated with the Company’s deferred tax liability previously recorded, which resulted in a $0.2 million reduction of state income tax expense during 2011.

State income tax expense and state income tax payments for the three years ended December 31, 2012 are detailed in the table below:



(Dollars in thousands)	2012		2011			2010
State income tax expense:
Texas gross margins tax (1)	$	843	$	459		$	528
Michigan gross receipts deferred tax liability	—		(170		)	(90		)
Other	3		193			116
Total state income tax expense	$	846	$	482		$	554
State income tax payments, net of refunds and collections	$	627	$	522		$	533


(1)	In the table above, income tax expense for 2012 includes $0.1 million that was recorded to the gain on sale of real estate properties sold, which is included in discontinued operations rather than general and administrative expenses on the Company’s Consolidated Statements of Operations.