-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GbOI5eQRT6iL8kJ+PuKhARSjegPkTwgbWkuLv3ofAORHNOJrzyedSn6Ro4DxuKKr RfUI82Zffd9gsTHTT41U+w== 0000912595-04-000011.txt : 20040213 0000912595-04-000011.hdr.sgml : 20040213 20040213090312 ACCESSION NUMBER: 0000912595-04-000011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040212 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MID AMERICA APARTMENT COMMUNITIES INC CENTRAL INDEX KEY: 0000912595 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 621543819 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12762 FILM NUMBER: 04594849 BUSINESS ADDRESS: STREET 1: 6584 POPLAR AVE STREET 2: STE 340 CITY: MEMPHIS STATE: TN ZIP: 38138 BUSINESS PHONE: 9016826600 MAIL ADDRESS: STREET 1: 6584 POPLAR AVE STREET 2: SUITE 340 CITY: MEMPHIS STATE: TN ZIP: 38138 8-K 1 er4q03.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 February 12, 2004 Date of Report (Date of earliest event reported) MID-AMERICA APARTMENT COMMUNITIES, INC. (Exact Name of Registrant as Specified in Charter) TENNESSEE 1-12762 62-1543819 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number) 6584 POPLAR AVENUE, SUITE 300 MEMPHIS, TENNEESSEE 38138 (Address of principal executive offices) (901) 682-6600 (Registrant's telephone number, including area code) (Former name or address, if changed since last report) ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits Exhibit Number Description -------- ----------------------------------- 99.1 Press Release dated February 12, 2004 ITEM 12. Results of Operations and Financial Condition On February 12, 2004, the Registrant issued an earnings release for the quarter ended December 31, 2003, a copy of which is furnished as Exhibit 99.1 to this Current Report. This release is furnished by the Registrant pursuant to Item 12 of Form 8-K and is not to be considered "filed" under the Exchange Act, and shall not be incorporated by reference into any previous or future filing by the Registrant under the Securities Act or the Exchange Act. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MID-AMERICA APARTMENT COMMUNITIES, INC. Date: February 12, 2004 /s/Simon R.C. Wadsworth Simon R.C. Wadsworth Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) EX-99 3 er4q03x.txt EXHIBIT 99.1 Press Release Dated February 12, 2004 ================================================================================ PRESS RELEASE ================================================================================ FROM: SIMON R.C. WADSWORTH SUBJECT: MID-AMERICA APARTMENTS FOURTH QUARTER RESULTS IN LINE WITH EXPECTATIONS DATE: FEBRUARY 12, 2004 - -------------------------------------------------------------------------------- Memphis, TN, Mid-America Apartment Communities, Inc. (NYSE: MAA) reported Funds From Operations ("FFO") of $17,119,000 or $0.76 per share/unit for the fourth quarter ended December 31, 2003. This compares to FFO per share/unit of $0.53 for the same quarter a year ago. The year-ago results have been restated in accordance with the current NAREIT definition of FFO, and include a charge of $0.10 per share/unit relating to the redemption of preferred stock. For the year 2003, FFO was $2.59 per share/unit, which included a $0.28 non-cash charge related to the redemption of preferred stock. This compares to FFO per share/unit for 2002 restated to $2.59 per share/unit, which included a $0.10 per share/unit charge relating to the redemption of preferred stock and a charge of $0.07 per share/unit relating to the early extinguishment of debt. FFO for the fourth quarter of 2003 includes $0.04 per share/unit credit to interest expense relating to the amortization of the adjustment of the value of debt assumed during the 3rd quarter. All adjustments associated with restating 2002 FFO were made in accordance with, and as a result of, current NAREIT reporting definitions. FFO is the generally accepted measure of operating performance for real estate investment trusts. Reconciliations and discussions of FFO and the other non-GAAP performance measures can be found later in this release. Net income available for common shareholders for the quarter ended December 31, 2003 was $281,000, or $0.01 per common share, as compared to a loss of $0.16 per common share for the same quarter a year ago (which included the charge of 12 cents per share related to the redemption of preferred stock in 2002). For the year 2003, the net loss available for common shareholders was $1,200,000 which included a $5,987,000 or $0.33 per share non-cash charge for the preferred stock that was redeemed in the third quarter. This compared to a loss of $1,929,000 for the year 2002 (after the charge for redemption of preferred stock of $2,041,000). Highlights for the quarter were: o Occupancy performance continued to strengthen as year-end same store occupancy of 93.1% compared favorably to 92.0% for the prior year. o Quarterly same-store NOI grew by 2.9% on a sequential basis, and was down 1.5% from the same quarter a year ago. o Revenue performance for the fourth quarter was the highest quarterly revenue performance the company has ever achieved. o Fixed charge coverage reached a five-year high. o During the quarter and the first few weeks of 2004, the company completed 3 acquisitions which are expected to be immediately accretive to FFO and dividend coverage. o The balance sheet continued to strengthen as $12 million in proceeds were raised in a direct common stock placement. Eric Bolton, Chairman and CEO said, "We continue to strengthen the balance sheet and position for stronger FFO growth as market conditions improve. We're encouraged that the NOI of our same-store portfolio showed sequential quarterly improvement and that the portfolio has continued to show resiliency to the difficult market conditions. Mid-America's unique strategy focused on deploying capital in the high growth southeastern and south central regions of the country, diversified across large, middle and small tier markets, continues to deliver one of the highest risk adjusted investment returns for the sector." Simon Wadsworth, Executive Vice-President and CFO said, "We are pleased with the steady progress made on strengthening the balance sheet. While the operating environment has pressured property revenue performance, we've been successful in significantly lowering our cost of capital. Our fixed charge coverage for 2003 is at 2.55 compared to 2.36 a year ago, a five-year high. Our business and investment strategy continues to deliver fairly predictable results with lower volatility." "Our prior forecast for 2004 included 7 cents per share of non-cash income from the amortization of the adjustment to the value of the debt acquired in 2003. We've revised this estimate to 3 1/2 cents. Therefore we're adjusting the mid-point of our 2004 forecast to $2.88 and tightening the range of projected FFO to $2.86 to $2.90 per share/unit, with the first quarter from $0.71 to $0.73. This assumes that our same store performance continues to recover, with NOI growth in the range of 2.0%, and that we complete one more acquisition in our joint venture as we originally planned. We've assumed no other acquisitions, although we continue to actively pursue investments that will add to AFFO." Bolton said, "We were pleased with the 47% total return that MAA common shareholders received in 2003. Over the 10 years since our initial public offering, our shareholders have experienced a compound annual total return of 15.3%. Our focus continues to be on strengthening dividend coverage and positioning for steady FFO growth. As a result of our commitment to take care of properties and not compromise leasing and resident quality standards during this weak part of the operating cycle, we believe that shareholder value continues to be well protected and poised to see steady growth." MAA is a self-administered, self-managed apartment-only real estate investment trust which currently owns or has ownership interest in 36,712 apartment units throughout the southeast and southcentral U.S. For further details, please refer to our website at www.maac.net or contact Simon R. C. Wadsworth at (901) 682-6668, ext. 105. 6584 Poplar Ave., Suite 300, Memphis, TN 38138. Certain matters in this press release may constitute forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such statements include, but are not limited to, statements made about anticipated market conditions, anticipated acquisitions, redevelopment opportunities, and property financing. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including a downturn in general economic conditions or the capital markets, competitive factors including overbuilding or other supply/demand imbalances in some or all of our markets, shortage of acceptable property acquisition candidates, changes in interest rates and other items that are difficult to control, as well as the other general risks inherent in the apartment and real estate businesses. Reference is hereby made to the filings of Mid-America Apartment Communities, Inc., with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K, and its annual report on Form 10-K, particularly including the risk factors contained in the latter filing. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share data) - --------------------------------------------------------------------------------
Three months ended Twelve months ended December 31, December 31, ---------------------------------- ---------------------------------- 2003 2002 2003 2002 ----------------- --------------- ----------------- --------------- Property revenues $ 64,211 $ 57,756 $ 239,245 $ 231,532 Property operating expenses 27,493 23,607 100,526 92,530 - ---------------------------------------------------------------------------------------------------------------------------- Net operating income 36,718 34,149 138,719 139,002 Interest and other non-property income 173 266 839 737 Management and fee income, net 93 205 822 775 Property management expenses 1,651 1,851 8,435 8,633 General & administrative 1,902 1,557 7,235 6,665 Interest expense 11,936 12,067 46,032 49,448 Loss (gain) on debt extinguishment (215) 1,412 (111) 1,444 Depreciation and amortization 16,333 13,815 59,018 55,110 Amortization of deferred financing costs 470 701 2,062 2,712 - ---------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before loss from investments in unconsolidated entities and minority interest in operating partnership income 4,907 3,217 17,709 16,502 Loss from investments in unconsolidated entities (633) (115) (949) (532) Minority interest in operating partnership income (243) (27) (1,360) (388) Net gain (loss) on insurance settlement proceeds 260 (40) 2,942 397 Discontinued operations: Property operations 16 39 (55) 162 Gain (loss) on sale of discontinued operations (2) - 1,919 - - ---------------------------------------------------------------------------------------------------------------------------- Net income 4,305 3,074 20,206 16,141 Preferred dividend distribution 4,024 3,944 15,419 16,029 Premiums and original issuance costs associated with the redemption of preferred stock - 2,041 5,987 2,041 - ---------------------------------------------------------------------------------------------------------------------------- Net income (loss) available for common shareholders $ 281 $ (2,911) $ (1,200) $ (1,929) ============================================================================================================================ Weighted average common shares - Diluted(1) 19,949 17,709 18,374 17,561 Net income (loss) available for common shareholders $ 0.01 ($0.16) ($0.07) ($0.11) (1) For periods where the Company reported a net loss available for common shareholders, the effect of dilutive shares has been excluded from net loss available for common shareholders per common shares computations because including such shares would be anti-dilutive.
- -------------------------------------------------------------------------------- FUNDS FROM OPERATIONS (in thousands except per share data) - -------------------------------------------------------------------------------- Net income $ 4,305 $ 3,074 $ 20,206 $ 16,141 Addback: Depreciation and amortization real estate assets 15,989 13,323 57,645 53,753 Subtract: Net gain (loss) on insurance settlement proceeds 260 (40) 2,942 397 Addback: Depreciation and amortization real estate assets of discontinued operations - 40 78 153 Subtract: Gain (loss) on sale of discontinued operations (2) - 1,919 - Addback: Depreciation and amortization real estate assets of unconsolidated entities 864 398 2,345 1,430 Subtract: Gain on sale of non-depreciable assets - 45 - 45 Subtract: Preferred dividend distribution 4,024 3,944 15,419 16,029 Addback: Minority interest in operating partnership income (243) (27) (1,360) (388) - ---------------------------------------------------------------------------------------------------------------------------- Funds from operations before premiums and original issuance costs associated with the redemption of preferred stock 17,119 12,913 61,354 55,394 Premiums and original issuance costs associated with the redemption of preferred stock - 2,041 5,987 2,041 - ---------------------------------------------------------------------------------------------------------------------------- Funds from operations $ 17,119 $ 10,872 $ 55,367 $ 53,353 ============================================================================================================================ Weighted average common shares and units - Diluted 22,637 20,634 21,354 20,613 Funds from operations before premiums and original issuance costs associated with the redemption of preferred stock per shares and units - Diluted $ 0.76 $ 0.63 $ 2.87 $ 2.69 Funds from operations per shares and units - Diluted $ 0.76 $ 0.53 $ 2.59 $ 2.59
- -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS (in thousands) - --------------------------------------------------------------------------------
December 31, December 31, 2003 2002 -------------- -------------- Assets Gross real estate assets $ 1,670,417 $ 1,452,362 Accumulated depreciation (339,704) (283,277) Other real estate assets, net 21,136 23,454 - -------------------------------------------------------------------------------------- Real estate assets, net 1,351,849 1,192,539 Cash and cash equivalents, including restricted cash 20,880 18,057 Other assets 33,804 28,871 - -------------------------------------------------------------------------------------- Total assets $ 1,406,533 $ 1,239,467 ====================================================================================== Liabilities Bonds and notes payable $ 951,941 $ 803,703 Other liabilities 61,279 64,188 - -------------------------------------------------------------------------------------- Total liabilities 1,013,220 867,891 Shareholders' equity and minority interest 393,313 371,576 - -------------------------------------------------------------------------------------- Total liabilities & shareholders' equity $ 1,406,533 $ 1,239,467 ======================================================================================
- -------------------------------------------------------------------------------- OPERATING RESULTS (Dollars and shares in thousands except per share data) - --------------------------------------------------------------------------------
ROA Three Months Ended Trailing December 31, 2003 4 Quarters ------------------- ------------------ Net income $ 4,305 $ 20,206 Net gain on insurance settlement proceeds (260) (2,942) Gain on sale of discontinued operations 2 (1,919) Depreciation and amortization 16,333 59,018 Amortization of deferred financing costs 470 2,062 Interest expense 11,936 46,032 - ---------------------------------------------------------------------------------------- EBITDA $ 32,786 $ 122,457 ========================================================================================
Annualized Trailing 4Q03 4 Quarters ------------------ ----------------- Gross Real Estate Assets, Average $ 1,695,111 $ 1,589,685 EBITDA $ 131,144 $ 122,457 EBITDA/Gross Real Estate Assets 7.7% 7.7%
Three Months Ended December 31, Twelve Months Ended December 31, ------------------------------------- -------------------------------- 2003 2002 2003 2002 -------------------- --------------- ---------------- -------------- EBITDA/Debt Service 2.57x 2.29x 2.49x 2.31x EBITDA/Fixed Charges 2.64x 2.33x 2.55x 2.36x Total Debt as % of Gross Real Estate Assets 56% 54% MAA portion of JV debt $14,884 $36,747
AFFO Three Months Ended December 31, Twelve Months Ended December 31, -------------------------------- -------------------------------- 2003 2002 2003 2002 --------------- --------------- ---------------- -------------- FFO $ 17,119 $ 10,872 $ 55,367 $ 53,353 Premiums and original issuance costs associated with the redemption of preferred stock - 2,041 5,987 2,041 - ---------------------------------------------------------------------------------------------------------------------- FFO before premiums and original issuance costs associated with the redemption of preferred stock 17,119 12,913 61,354 55,394 Recurring Capex 3,256 4,966 12,846 12,123 - ---------------------------------------------------------------------------------------------------------------------- AFFO(1) $ 13,863 $ 7,947 $ 48,508 $ 43,271 ====================================================================================================================== Average Common Shares and Units - Diluted 22,637 20,634 21,354 20,613 AFFO per Shares and Units - Diluted $ 0.61 $ 0.39 $ 2.27 $ 2.10 (1) The three and twelve months ended December 31, 2003 include approximately $952,000 of a credit to interest expense relating to the amortization of the adjustment of the value of debt assumed during the third quarter.
- -------------------------------------------------------------------------------- COMMUNITY STATISTICS - -------------------------------------------------------------------------------- Properties are grouped by operational responsibility.
At December 31, 2003 ------------------------------------------------------------- Average Number of Portfolio Rental Rate Units Concentration Occupancy Per Unit ------------- --------------- ------------- -------------- Tennessee Memphis 4,837 13.4% 92.0% $ 646.67 Nashville 1,399 3.9% 92.0% $ 721.04 Chattanooga 943 2.6% 93.2% $ 565.82 Jackson 664 1.9% 93.8% $ 582.81 Florida Jacksonville 3,631 10.2% 90.7% $ 757.54 Tampa 1,120 3.1% 92.1% $ 769.00 Other 2,518 7.0% 94.1% $ 734.08 Georgia Atlanta 2,116 5.9% 91.2% $ 738.18 Columbus / LaGrange 1,509 4.2% 95.1% $ 657.07 Augusta / Aiken / Savannah 912 2.6% 92.7% $ 617.79 Other 1,962 5.5% 93.8% $ 673.03 Texas Dallas 2,854 8.0% 90.1% $ 658.52 Houston 1,310 3.7% 90.1% $ 739.81 Austin 1,254 3.5% 91.8% $ 621.55 South Carolina Greenville 1,492 4.2% 94.3% $ 547.98 Other 784 2.2% 89.9% $ 691.84 Kentucky Lexington 924 2.6% 94.4% $ 701.50 Other 624 1.7% 95.5% $ 608.51 Mississippi 1,673 4.7% 95.9% $ 596.08 Alabama 952 2.7% 93.8% $ 655.18 Arkansas 808 2.3% 94.9% $ 626.77 North Carolina 738 2.1% 95.1% $ 539.66 Ohio 414 1.2% 92.8% $ 675.13 Virginia 296 0.8% 99.3% $ 755.10 - ------------------------------------------------------------------------------------------------------------- Total 35,734 100.0% 92.7% $ 671.62 =============================================================================================================
- -------------------------------------------------------------------------------- SAME STORE STATISTICS - -------------------------------------------------------------------------------- Dollars in thousands except Average Rental Rate
Three Months Three Months Percent Change Three Months Percent Change Ended Ended From Ended From Dec 31, 2003 Dec 31, 2002 Dec 31, 2002 Sep 30, 2003 Sep 30, 2003 --------------- --------------- ---------------- -------------- --------------- Revenues $54,323 $53,984 0.6% $54,102 0.4% Property Operating Expenses 15,909 14,978 6.2% 16,524 -3.7% RE Taxes and Insurance 6,774 6,940 -2.4% 6,773 0.0% Other Expenses 152 87 74.7% 207 -26.6% - ------------------------------------------------------------------------------------------------------------- Total Operating Expenses 22,835 22,005 3.8% 23,504 -2.8% - ------------------------------------------------------------------------------------------------------------- NOI $31,488 $31,979 -1.5% $30,598 2.9% ============================================================================================================= Units (1) 29,043 29,043 29,043 Average Rental Rate (1) $657.81 $657.39 0.1% $657.20 0.1% Average Physical Occupancy (1) 93.1% 92.0% 1.1% 94.7% -1.6% (1) Values are at December 31, 2003 and 2002, and September 30, 2003.
- -------------------------------------------------------------------------------- DEBT AS OF DECEMBER 31, 2003 - -------------------------------------------------------------------------------- Dollars in thousands
Principal Average Years Average Balance to Maturity(1) Rate ---------------- ----------------- ------------ Conventional - Fixed Rate or Swapped $ 612,472 8.5 6.7% Conventional - Forward Swapped(2) 40,000 8.6 1.8% Tax-free - Fixed Rate or Swapped 116,068 23.7 5.4% Conventional - Variable Rate 165,741 7.7 1.9% Tax-free - Variable Rate 17,660 27.7 2.0% - ------------------------------------------------------------------------------------------------------------------------- Total $ 951,941 10.6 5.4% (1) Maturities on swapped balances are calculated using the life of the underlying variable debt. (2) As the forward swaps are not yet in effect, the average rate represents the rate on the underlying variable debt.
FUTURE PAYMENTS Average Scheduled Rate of Amortization Maturities Total Maturities -------------- --------------- --------------- ----------- 2004 $ 3,511 $ 93,595 $ 97,106 5.8% 2005 3,806 - 3,806 2006 4,046 4,459 8,505 8.8% 2007 4,242 - 4,242 2008 4,524 - 4,524 6.9% Thereafter 102,757 731,001 833,758 5.3% - ------------------------------------------------------------------------------------------------------------------------- Total $ 122,886 $ 829,055 $ 951,941 5.4%
- -------------------------------------------------------------------------------- OTHER DATA - -------------------------------------------------------------------------------- Shares and units in thousands except per share data
Three Months Ended December 31, Twelve Months Ended December 31, -------------------------------- -------------------------------- 2003 2002 2003 2002 ------------------ ------------ ------------------- ----------- Weighted average common shares and units - Basic 22,285 20,449 21,093 20,415 Weighted average common shares and units - Diluted 22,637 20,634 21,354 20,613 Weighted average common shares - Diluted(1) 19,949 17,709 18,374 17,561 Number of apartment units with ownership interest (excluding development units not delivered) 35,734 33,923 35,734 33,923 Apartment units added during period, net 501 464 1,811 512 (1) For periods where the Company reported a net loss available for common shareholders, the effect of dilutive shares has been excluded from weighted avergae common shares computations because including such shares would be anti-dilutive.
PER SHARE DATA Dividend declared per common share $0.585 $0.585 $2.340 $2.340
DIVIDEND INFORMATION (latest declaration) Payment Payment Record per Share Date Date ----------------- --------------- ---------------- Common Dividend - quarterly $0.5850 01/31/2004 01/24/2004 Preferred Series F - monthly $0.1927 02/13/2004 02/01/2004 Preferred Series H - quarterly $0.51875 12/23/2003 12/13/2003
- -------------------------------------------------------------------------------- NON-GAAP FINANCIAL DEFINITIONS - -------------------------------------------------------------------------------- Funds From Operations (FFO) FFO represents net income (computed in accordance with accounting principles generally accepted in the United States of America, or GAAP) excluding extraordinary items, minority interest in Operating Partnership income, gain or loss on sale of discontinued operations and insurance settlement proceeds, plus depreciation and amortization of real estate and adjustments for joint ventures to reflect FFO on the same basis. This definition of FFO is in accordance with the National Association of Real Estate Investment Trust's definition. Our calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs. FFO should not be considered as an alternative to net income. The Company believes that FFO is helpful in understanding the Company's operating performance in that FFO excludes depreciation expense on real estate assets. The Company believes that GAAP historical cost depreciation of real estate assets is generally not correlated with changes in the value of those assets, whose value does not diminish predictably over time, as historical cost depreciation implies. While the Company has included the amount charged to retire preferred stock in excess of carrying values in its FFO calculation in response to the SEC's July 31st Staff Policy Statement relating to EITF Topic D-42 concerning the calculation of earnings per share for the redemption of preferred stock, the Company believes that FFO before amount charged to retire preferred stock in excess of carrying values is also an important measure of operating performance as the amount charged to retire preferred stock in excess of carrying values is a non-cash adjustment representing issuance costs in prior periods for preferred stock. Adjusted Funds From Operations (AFFO) For purposes of these computations, AFFO is composed of FFO less recurring capital expenditures plus the premiums and original issuance costs of preferred stock that was redeemed. As an owner and operator of real estate, we consider AFFO to be an important measure of performance from core operations because AFFO measures our ability to control revenues, expenses and recurring capital expenditures. Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) For purposes of these computations, EBITDA is composed of net income before net gain on discontinued operations and insurance settlement proceeds, plus depreciation and amortization, interest expense, and amortization of deferred financing costs. EBITDA is a non-GAAP financial measure we use as a performance measure. As an owner and operator of real estate, we consider EBITDA to be an important measure of performance from core operations because EBITDA does not include various income and expense items that are not indicative of our operating performance. EBITDA should not be considered as an alternative to net income as an indicator of financial performance. Our computation of EBITDA may differ from the methodology utilized by other companies to calculate EBITDA. -----END PRIVACY-ENHANCED MESSAGE-----