INCOME TAXES

Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986 (the "Code"), as amended. As a REIT, we are entitled to a tax deduction for dividends paid to shareholders, thereby effectively subjecting the distributed net income to taxation at the shareholder level only, provided we distribute at least 90.0% of our taxable income and meet certain other qualifications.

Our two REIT subsidiaries that have historically engaged in third party property and asset management and third party construction services, respectively, have elected to be treated as Taxable REIT Subsidiaries ("TRS") and operate as C-corporations under the Code. Accordingly, these TRS entities separately account for income taxes. Taxes are recorded for these two TRS subsidiaries to the extent they recognize net profits for both financial statement and income tax purposes. The 2013, 2012 and 2011 net operating loss carry forwards for these two TRS subsidiaries, in the aggregate, are approximately $13.3 million, $13.2 million and $11.7 million, respectively, and expire during the years 2018 to 2033.

The gross deferred tax assets were $6.9 million, $6.9 million and $6.2 million at December 31, 2013, 2012 and 2011, respectively, and relate principally to net operating losses of the two TRS subsidiaries. Gross deferred tax liabilities of $254,000, $246,000 and $247,000 at December 31, 2013, 2012 and 2011, respectively, relate primarily to tax basis differences in fixed assets and intangibles. The deferred tax valuation allowance was $6.6 million, $6.6 million and $6.0 million at December 31, 2013, 2012 and 2011, respectively. We reserve for net deferred tax assets when we believe it is more likely than not that they will not be realized. The deferred tax assets and the deferred tax valuation allowance are recorded in "Other assets, net" and the deferred tax liabilities are recorded in "Accounts payable and other liabilities."

At December 31, 2012, our net tax basis of properties exceeds the amount set forth in the Consolidated Balance Sheets by $67.2 million. At December 31, 2013, our net tax basis of properties is below the amount set forth in the Consolidated Balance Sheets by $31.2 million.

Reconciliation between GAAP net income and taxable income:



		Year Ended December 31,
(In thousands)		2013			2012			2011
GAAP net income		$	61,250		$	30,592		$	5,328
Add:	GAAP net income of taxable REIT subsidiaries
	and noncontrolling redeemable interest, net	15			1,224			3,002
GAAP net income from REIT operations⁽¹⁾		61,265			31,816			8,330

Add:	Book depreciation and amortization	61,834			57,672			55,899
Less:	Tax depreciation and amortization	(41,661		)	(39,835		)	(35,086		)
	Book/tax differences on gains from
	capital transactions	(50,472		)	(19,128		)	(4,677		)
Other book/tax differences, net		(4,616		)	1,088			51
Taxable income before adjustments		26,350			31,613			24,517
Less:	Capital gain	(2,356		)	(7,762		)	(9,920		)
Taxable income subject to dividend requirements		$	23,994		$	23,851		$	14,597


(1)	All adjustments to GAAP net income from REIT operations are net of amounts attributable to taxable REIT subsidiaries and noncontrolling interests.

Reconciliation between cash dividends paid and dividends paid deduction:



	Year Ended December 31,
(In thousands)	2013			2012			2011
Cash dividends paid	$	38,933		$	32,406		$	28,089
Less: Portion designated as capital gain distribution	(2,356		)	(7,762		)	(9,920		)
Less: Return of capital	(12,583		)	(793		)	(3,572		)
Taxable income subject to the 90.0% dividend requirement	$	23,994		$	23,851		$	14,597

Dividends Per Share

Total dividends per common share and the related components for the years ended December 31, 2013, 2012 and 2011, as reported for income tax purposes, were as follows:



Year Ended December 31, 2013

			Non-Taxable		Total		Unrecaptured
	Ordinary		Return of		Capital		Section 1250
Date Paid	Income		Capital		Gain		Gain		Dividends
2/1/2013	$	0.129355	$	0.049149	$	0.011496	$	0.011496	$	0.190000
5/1/2013	0.129355		0.049149		0.011496		0.011496		0.190000
8/1/2013	0.129355		0.049149		0.011496		0.011496		0.190000
11/1/2013	0.129355		0.049149		0.011496		0.011496		0.190000
	$	0.517420	$	0.196596	$	0.045984	$	0.045984	$	0.760000



Year Ended December 31, 2012

			Non-Taxable		Total		Unrecaptured
	Ordinary		Return of		Capital		Section 1250
Date Paid	Income		Capital		Gain		Gain		Dividends
2/1/2012	$	0.140533	$	0.009077	$	0.020390	$	0.017826	$	0.170000
5/1/2012	0.148800		0.009611		0.021589		0.018875		0.180000
8/1/2012	0.148800		0.009611		0.021589		0.018875		0.180000
11/1/2012	0.148800		0.009611		0.021589		0.018875		0.180000
	$	0.586933	$	0.037910	$	0.085157	$	0.074451	$	0.710000



Year Ended December 31, 2011

			Non-Taxable		Total		Unrecaptured
	Ordinary		Return of		Capital		Section 1250
Date Paid	Income		Capital		Gain		Gain		Dividends
2/1/2011	$	0.100553	$	0.009460	$	0.059987	$	0.056351	$	0.170000
5/2/2011	0.100553		0.009460		0.059987		0.056351		0.170000
8/1/2011	0.100553		0.009460		0.059987		0.056351		0.170000
11/1/2011	0.100553		0.009460		0.059987		0.056351		0.170000
	$	0.402212	$	0.037840	$	0.239948	$	0.225404	$	0.680000