Other Data

12 Months Ended

Dec. 31, 2019

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 $4.4 billion, $4.0 billion, and $4.0 billion as of December 31, 2019, 2018 and 2017, 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, 2019:



	YEAR ENDED DECEMBER 31,
Dollars in thousands	2019			2018			2017
Net income	$	39,185		$	69,771		$	23,092
Reconciling items to taxable income
Depreciation and amortization	67,953			64,775			46,426
Gain or loss on disposition of depreciable assets	(15,689		)	(27,581		)	1,570
Straight-line rent	(11,535		)	(3,049		)	(4,551		)
Receivable allowances	1,942			2,470			1,680
Share-based compensation	2,628			(1,699		)	1,855
Other	12,631			842			6,552
	57,930			35,758			53,532
Taxable income ¹	$	97,115		$	105,529		$	76,624
Dividends paid	$	155,358		$	150,266		$	142,327


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, 2019.

For the three years ended December 31, 2019, there were no preferred shares outstanding. As such, no dividends were distributed related to preferred shares for those periods.



	2019				2018				2017
	PER SHARE		%		PER SHARE		%		PER SHARE		%
Common stock
Ordinary income ¹	$	0.79	65.7	%	$	0.75	62.2	%	$	0.42	34.5	%
Return of capital	0.40		33.9	%	0.33		27.8	%	0.50		42.0	%
Unrecaptured section 1250 gain	0.01		0.4	%	0.12		10.0	%	0.28		23.5	%
Common stock distributions	$	1.20	100.0	%	$	1.20	100.0	%	$	1.20	100.0	%


1	For the 2018 reporting year all ordinary income is also Code Section 199A eligible per the The Tax Cut and Jobs Act of 2017.

State Income Taxes

The Company must pay certain state income taxes, which are typically 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, 2019 are detailed in the table below:



	YEAR ENDED DECEMBER 31,
Dollars in thousands	2019		2018		2017
State income tax expense
Texas gross margins tax	$	550	$	586	$	608
Total state income tax expense	$	550	$	586	$	608
State income tax payments, net of refunds and collections	$	543	$	637	$	555