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 $3.7 billion, $3.4 billion, and $3.3 billion as of December 31, 2016, 2015 and 2014, respectively.

The following table reconciles the Company’s consolidated net income attributable to common stockholders to taxable income for the three years ended December 31, 2016:



	Year Ended December 31,
(Dollars in thousands)	2016			2015			2014
Net income attributable to common stockholders	$	85,571		$	69,436		$	31,887
Reconciling items to taxable income:
Depreciation and amortization	38,260			30,457			28,332
Gain or loss on disposition of depreciable assets	(32,103		)	1,659			(4,940		)
Impairments	121			687			—
Straight-line rent	(7,101		)	(8,833		)	(12,203		)
Receivable allowances	2,067			571			2,074
Stock-based compensation	1,301			7,518			2,020
Other	2,236			4,304			1,213
	4,781			36,363			16,496
Taxable income ⁽¹⁾	$	90,352		$	105,799		$	48,383
Dividends paid	$	131,759		$	120,266		$	116,371

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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, 2016.

For the three years ended December 31, 2016, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.



	2016				2015				2014
	Per Share		%		Per Share		%		Per Share		%
Common stock:
Ordinary income	$	0.78	65.0	%	$	0.61	51.0	%	$	0.50	42.0	%
Return of capital	0.35		29.5	%	0.08		6.7	%	0.70		58.0	%
Unrecaptured section 1250 gain	0.07		5.5	%	0.51		42.3	%	—		—	%
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 Income.

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.

State income tax expense and state income tax payments for the three years ended December 31, 2016 are detailed in the table below:



	Year Ended December 31,
(Dollars in thousands)	2016		2015		2014
State income tax expense:
Texas gross margins tax ⁽¹⁾	$	562	$	528	$	694
Other	2		37		58
Total state income tax expense	$	564	$	565	$	752
State income tax payments, net of refunds and collections	$	544	$	758	$	593

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(1)	In the table above, income tax expense for 2015 includes approximately $50 thousand 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 Income.