Other Data

Taxable Income (unaudited)

The Company has elected to be taxed as a REIT, as defined under the Internal Revenue 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 (as defined under the Internal Revenue Code), 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, depreciation methods, and other items.

On a tax-basis, the Company’s gross real estate assets totaled approximately $3.1 billion, $2.8 billion, and $2.7 billion, respectively, for the three years ended December 31, 2013.

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, 2013:



	Year Ended December 31,
(In thousands)	2013			2012			2011
Net income (loss) attributable to common stockholders	$	6,946		$	5,465		$	(214	)
Reconciling items to taxable income:
Depreciation and amortization	26,240			28,526			21,479
Gain or loss on disposition of depreciable assets	(3,656		)	922			(85		)
Impairments	6,222			3,807			4,999
Straight-line rent	(6,493		)	(6,075		)	(4,142		)
Receivable allowances	(716		)	(74		)	(299		)
Stock-based compensation	5,817			5,400			6,104
Other	(1,866		)	8,917			4,927
	25,548			41,423			32,983
Taxable income ⁽¹⁾	$	32,494		$	46,888		$	32,769
Dividends paid	$	111,571		$	96,356		$	89,270

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(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, 2013.

For the three years ended December 31, 2013, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.



	2013				2012				2011
	Per Share		%		Per Share		%		Per Share		%
Common stock:
Ordinary income	$	0.27	22.2	%	$	0.63	52.3	%	$	0.34	28.5	%
Return of capital	0.80		66.3	%	0.56		47.1	%	0.80		66.3	%
Unrecaptured section 1250 gain	0.13		11.5	%	0.01		0.6	%	0.06		5.2	%
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.

The State of Texas gross margins tax on gross receipts from operations is disclosed in the table below as an income tax because it is considered such by the Securities and Exchange Commission. In 2011, the Michigan business tax was replaced with a flat corporate income tax effective January 1, 2013 which eliminated 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, 2013 are detailed in the table below:



	Year Ended December 31,
(Dollars in thousands)	2013		2012		2011
State income tax expense:
Texas gross margins tax (1)	$	649	$	843	$	459
Michigan gross receipts deferred tax liability	—		—		(170		)
Other	23		3		193
Total state income tax expense	$	672	$	846	$	482
State income tax payments, net of refunds and collections	$	768	$	627	$	522

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(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.