Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Sabra Health Care REIT, Inc. | sbraex9922017q4.htm |
| EX-99.1 - EXHIBIT 99.1 - Sabra Health Care REIT, Inc. | sbraex9912017q4.htm |
| 8-K - 8-K - Sabra Health Care REIT, Inc. | sbra8-k2017q4.htm |
Reconciliations of
Non-GAAP Financial Measures
December 31, 2017
(Unaudited)
2
2017 2016 2017 2016
Net income attributable to common stockholders $ 101,385 $ 20,615 $ 148,141 $ 60,034
Add:
Depreciation of real estate assets 51,592 17,199 113,882 68,472
Depreciation and amortization of real estate assets related to noncontrolling interests (45) - (53) -
Net (gain) loss on sales of real estate (47,415) 2,919 (52,029) 6,122
Impairment of real estate 1,326 - 1,326 29,811
FFO attributable to common stockholders $ 106,843 $ 40,733 $ 211,267 $ 164,439
Lease termination fee - (2,992) (2,634) (7,724)
Additional default interest income - - - (4,398)
CCP merger and transition related costs - - - -
Non-recurring or unusual expensed acquisition pursuit costs 1,633 - 35,617 624
Loss on extinguishment of debt - - 553 556
Provision for doubtful accounts and loan losses, net 9,323 3,244 12,457 3,941
Other normalizing items (1) 116 (373) 279 (1,000)
Normalized FFO attributable to common stockholders $ 117,915 $ 40,612 $ 257,539 $ 156,438
FFO attributable to common stockholders 106,843$ 40,733$ 211,267$ 164,439$
Merger and acquisition costs (2) 505 (25) 30,255 1,197
Stock-based compensation expense (2) 29 1,359 7,017 7,496
Straight-line rental income adjustments (11,180) (5,274) (29,440) (21,984)
Amortization of above and below market lease intangibles, net (1,549) - (912) -
Non-cash interest income adjustments (632) 33 (769) 582
Non-cash interest expense 2,488 1,525 7,776 5,678
Non-cash portion of loss on extinguishment of debt - - 553 556
Change in fair value of contingent consideration 126 (1,576) (426) (1,526)
Provision for doubtful straight-line rental income, loan losses and other reserves 10,044 2,388 16,854 5,833
Other non-cash adjustments (3) (104) (395) 103 (806)
AFFO attributable to common stockholders $ 106,570 $ 38,768 $ 242,278 $ 161,465
CCP transition costs 708 - 5,005 -
Additional default interest income - - - (4,398)
Lease termination fee - (2,992) (2,634) (7,724)
(Recovery) provision for doubtful cash income (385) (131) 176 (290)
Other normalizing items (1) 236 23 294 (194)
Normalized AFFO attributable to common stockholders $ 107,129 $ 35,668 $ 245,119 $ 148,859
Amounts per diluted common share attributable to common stockholders:
Net income $ 0.57 $ 0.31 $ 1.40 $ 0.92
FFO $ 0.60 $ 0.62 $ 2.00 $ 2.51
Normalized FFO $ 0.66 $ 0.62 $ 2.43 $ 2.39
AFFO $ 0.60 $ 0.59 $ 2.28 $ 2.45
Normalized AFFO $ 0.60 $ 0.54 $ 2.31 $ 2.26
Weighted average number of common shares outstanding, diluted:
Net income, FFO and Normalized FFO 178,428,200 65,671,345 105,842,434 65,520,672
AFFO and Normalized AFFO 178,647,299 65,923,624 106,074,862 65,904,435
(2) Merger and acquisition costs incurred during the year ended December 31, 2017 primarily relate to the CCP merger. Merger and acquisition costs include $1.4 million of stock-based compensation expense related to former CCP employees.
(3) Other non-cash adjustments include ineffectiveness gain/loss on derivative instruments and other non-cash income/loss.
Year Ended December 31,Three Months Ended December 31,
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
FFO, Normalized FFO, AFFO and Normalized AFFO
(dollars in thousands, except per share data)
(1) Other normalizing items for FFO include operating expenses other than for Senior Housing - Managed communities and ineffectiveness gain/loss related to our LIBOR interest rate swaps and gain on sale of 48 skilled nursing beds. Other
normalizing items for AFFO include operating expenses other than for Senior Housing - Managed communities and gain on sale of 48 skilled nursing beds.
3
Year Ended
December 31, 2017
Net Income attributable to Sabra Health Care REIT, Inc. 158,383$
Interest 88,440
Income tax expense 651
Depreciation and amortization 113,882
EBTIDA 361,356$
Stock-based compensation expense 7,017
Merger and acquisition costs 30,255
CCP transition costs 5,005
Provision for loan losses and other reserves 6,367
Impairment of real estate 1,326
Loss on extinguishment of debt 553
Other income (2,876)
Net gain on sales of real estate (52,029)
Adjusted EBITDA (1) 356,974
Annualizing adjustments (2) 245,348
Annualized Adjusted EBITDA (3) 602,322$
Pro forma adjustments for:
Acquisitions (4) 40,011
Genesis and CCP rent reductions (24,983)
Facilities transitioned to new operator (5,530)
Pro Forma Annualized Adjusted EBITDA (5) 611,820$
Adjustment for:
Unconsolidated joint venture interest expense (6) 18,993
Pro Forma Annualized Adjusted EBITDA, as adjusted 630,813$
(2) Annualizing adjustments give effect to the acquisitions and dispositions completed during the year ended December 31, 2017 as though such acquisitions and dispositions were completed as of January 1, 2017.
(4) Includes the Enlivant and North American Healthcare acquisitions completed subsequent to December 31, 2017 as though such acquisitions were completed at the beginning of the period presented.
(6) Represents Sabra's pro rata share of unconsolidated joint venture interest expense as though our investment in the Enlivant joint venture was completed at the beginning of the period presented.
(5) Pro Forma Annualized Adjusted EBITDA is calculated as Annualized Adjusted EBITDA adjusted to give effect to acquisitions, dispositions and other transactions completed after the period presented as though
such acquisitions, dispositions and other transactions occurred at the beginning of the period.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA, Annualized Adjusted EBITDA, Pro Forma Annualized
Adjusted EBITDA, and Pro Forma Annualized Adjusted EBITDA, As Adjusted
(in thousands)
(3) Annualized Adjusted EBITDA is calculated as Adjusted EBITDA as adjusted to give effect to the adjustments described in footnote 2 above.
(1) Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company's
long-term equity award program and loan loss reserves.
4
Senior Care
Centers Enlivant
Genesis
Healthcare, Inc.
Avamere
Family of
Companies
Signature
Healthcare
Holiday AL
Holdings LP
North
American
Healthcare
Signature
Behavioral
Cadia
Healthcare
The McGuire
Group
All Other
Relationships Corporate Total
Net Income (loss) 19,211$ -$ 113,956$ 13,248$ 8,661$ 24,066$ 7,215$ 9,051$ 7,956$ 5,294$ 109,133$ (159,426)$ 158,365$
Adjustments:
Depreciation and amortization 4,986 - 16,036 4,092 5,042 15,184 2,444 3,223 2,622 2,376 57,010 867 113,882
Interest 1,140 - 4,875 - - - - - - - 1,669 80,756 88,440
General and administrative - - - - - - - - - - - 32,401 32,401
Merger and acquisition costs - - - - - - - - - - - 30,255 30,255
Provision for doubtful accounts and loan losses - - - - - - - - - - - 17,113 17,113
Impairment of real estate - - - - - - - - - - 1,326 - 1,326
Loss on extinguishment of debt - - - - - - - - - - - 553 553
Other income - - - - - - - - - - - (3,170) (3,170)
Net (gain) loss on sale of real estate - - (54,627) - 204 - - - - - 2,394 - (52,029)
Income tax expense - - - - - - - - - - - 651 651
Net Operating Income 25,337$ -$ 80,240$ 17,340$ 13,907$ 39,250$ 9,659$ 12,274$ 10,578$ 7,670$ 171,532$ -$ 387,787$
Non-cash rental income adjustments (2,541) - (1,884) (2,372) 371 (6,245) (1,090) (957) (564) (2,106) (12,964) - (30,352)
Cash Net Operating Income 22,796$ -$ 78,356$ 14,968$ 14,278$ 33,005$ 8,569$ 11,317$ 10,014$ 5,564$ 158,568$ -$ 357,435$
Annualizing adjustments 35,992 - (8,205) 25,101 24,256 859 21,675 18,971 173 9,327 85,860 - 214,009
Annualized Cash Net Operating Income 58,788$ -$ 70,151$ 40,069$ 38,534$ 33,864$ 30,244$ 30,288$ 10,187$ 14,891$ 244,428$ -$ 571,444$
Pro forma adjustments for:
Acquisitions - 54,968 - - - - 3,424 - - - - - 58,392
Genesis and CCP rent reductions - - (19,000) - (3,000) - - - - - (2,983) - (24,983)
Facilities transitioned to new operator - - - - - - - - 18,527 - (25,941) (7,414)
Pro forma Annualized Cash Net Operating Income 58,788$ 54,968$ 51,151$ 40,069$ 35,534$ 33,864$ 33,668$ 30,288$ 28,714$ 14,891$ 215,504$ -$ 597,439$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)
Year Ended December 31, 2017
5
Genesis
Holiday AL
Holdings LP NMS Healthcare
Canadian
Portfolio
Cadia
Healthcare
All Other
Relationships Corporate Total
Net Income (loss) 52,211$ 24,066$ 19,356$ 5,634$ 7,956$ 34,823$ (73,841)$ 70,205$
Adjustments:
Depreciation and amortization 17,056 15,184 7,110 4,389 2,622 21,295 816 68,472
Interest 5,091 - 400 660 - 1,037 57,685 64,873
General and administrative - - - - - - 17,671 17,671
Merger and acquisition costs - - - - - - 1,197 1,197
Provision for doubtful accounts and loan losses - - - - - - 5,543 5,543
Impairment of real estate - - - - - 29,811 - 29,811
Loss on extinguishment of debt - - - - - - 556 556
Other income - - - - - - (10,677) (10,677)
Net loss (gain) on sale of real estate 4,602 - - (21) - 1,541 - 6,122
Income tax expense - - - - - - 1,050 1,050
Net Operating Income 78,960$ 39,250$ 26,866$ 10,662$ 10,578$ 88,507$ -$ 254,823$
Non-cash rental income adjustments (2,181) (7,475) (4,295) (1,119) (856) (6,058) - (21,984)
Cash Net Operating Income 76,779$ 31,775$ 22,571$ 9,543$ 9,722$ 82,449$ -$ 232,839$
Annualizing adjustments 1,285 943 2,791 1,096 168 (13,988) - (7,705)
Annualized Cash Net Operating Income 78,064$ 32,718$ 25,362$ 10,639$ 9,890$ 68,461$ -$ 225,134$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)
Year Ended December 31, 2016
6
Skilled Nursing/
Transitional Care
Senior Housing -
Leased
Senior Housing -
Managed
Total Senior
Housing
Specialty
Hospitals and
Other
Interest and
Other Income Corporate Total
Net Income (loss) 120,147$ 15,225$ 1,236$ 16,461$ 9,292$ 6,964$ (48,895)$ 103,969$
Adjustments:
Depreciation and amortization 37,428 8,312 1,423 9,735 4,211 - 218 51,592
Interest 1,915 477 - 477 - - 29,830 32,222
General and administrative - - - - - - 8,242 8,242
Merger and acquisition costs - - - - - - 505 505
Provision for doubtful accounts and loan losses - - - - - - 9,659 9,659
Impairment of real estate 1,326 - - - - - - 1,326
Other income - - - - - - (49) (49)
Net gain on sale of real estate (46,762) (653) - (653) - - - (47,415)
Income tax expense - - - - - - 490 490
Net Operating Income 114,054$ 23,361$ 2,659$ 26,020$ 13,503$ 6,964$ -$ 160,541$
Non-cash rental income adjustments (8,114) (2,810) - (2,810) (1,804) - - (12,728)
Cash Net Operating Income 105,940$ 20,551$ 2,659$ 23,210$ 11,699$ 6,964$ -$ 147,813$
Cash Net Operating Income not included in same store (76,721) (3,902) (2,132) (6,034) (10,408)
Same store Cash Net Operating Income 29,219$ 16,649$ 527$ 17,176$ 1,291$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Facility Type
(in thousands)
Three months Ended December 31, 2017
Senior Housing
7
Skilled Nursing/
Transitional Care
Senior Housing -
Leased
Senior Housing -
Managed
Total Senior
Housing
Specialty
Hospitals and
Other
Interest and
Other Income Corporate Total
Net Income (loss) 21,967$ 13,682$ 259$ 13,941$ 898$ 1,981$ (15,617)$ 23,170$
Adjustments:
Depreciation and amortization 8,202 8,030 271 8,301 475 - 221 17,199
Interest 1,176 484 - 484 - - 14,074 15,734
General and administrative - - - - - - 4,159 4,159
Merger and acquisition costs - - - - - - (25) (25)
Provision for doubtful accounts and loan losses - - - - - - 2,257 2,257
Other income - - - - - - (5,332) (5,332)
Net loss (gain) on sale of real estate 2,940 (21) - (21) - - - 2,919
Income tax expense - - - - - - 263 263
Net Operating Income 34,285$ 22,175$ 530$ 22,705$ 1,373$ 1,981$ -$ 60,344$
Non-cash rental income adjustments (2,282) (2,879) - (2,879) (113) - - (5,274)
Cash Net Operating Income 32,003$ 19,296$ 530$ 19,826$ 1,260$ 1,981$ -$ 55,070$
Cash Net Operating Income not included in same store (4,784) (2,329) - (2,329) -
Same store Cash Net Operating Income 27,219$ 16,967$ 530$ 17,497$ 1,260$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Facility Type
(in thousands)
Three months Ended December 31, 2016
Senior Housing
8
Skilled Nursing/
Transitional Care
Senior Housing -
Leased
Senior Housing -
Managed
Total Senior
Housing
Specialty
Hospitals and
Other
Interest and
Other Income Corporate Total
Net Income (loss) 230,358$ 51,539$ 4,253$ 55,792$ 16,615$ 15,026$ (159,426)$ 158,365$
Adjustments:
Depreciation and amortization 68,638 33,253 4,317 37,570 6,807 - 867 113,882
Interest 5,772 1,912 - 1,912 - - 80,756 88,440
General and administrative - - - - - - 32,401 32,401
Merger and acquisition costs - - - - - - 30,255 30,255
Provision for doubtful accounts and loan losses - - - - - - 17,113 17,113
Impairment of real estate 1,326 - - - - - - 1,326
Loss on extinguishment of debt - - - - - - 553 553
Other income - - - - - - (3,170) (3,170)
Net gain on sale of real estate (51,370) (659) - (659) - - - (52,029)
Income tax expense - - - - - - 651 651
Net Operating Income 254,724$ 86,045$ 8,570$ 94,615$ 23,422$ 15,026$ -$ 387,787$
Non-cash rental income adjustments (17,254) (10,363) - (10,363) (2,735) - - (30,352)
Cash Net Operating Income 237,470$ 75,682$ 8,570$ 84,252$ 20,687$ 15,026$ -$ 357,435$
Annualizing adjustments 179,231 8,020 2,099 10,119 26,262 (1,603) - 214,009
Annualized Cash Net Operating Income 416,701$ 83,702$ 10,669$ 94,371$ 46,949$ 13,423$ -$ 571,444$
Pro forma adjustments for:
Acquisitions 3,424 - 54,968 54,968 - - - 58,392
Genesis and CCP rent reductions (24,983) - - - - - - (24,983)
Facilities transitioned to new operator (7,414) - - - - - - (7,414)
Pro forma Annualized Cash Net Operating Income 387,728$ 83,702$ 65,637$ 149,339$ 46,949$ 13,423$ -$ 597,439$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Facility Type
(in thousands)
Year Ended December 31, 2017
Senior Housing
9
Skilled Nursing/
Transitional Care
Senior Housing -
Leased
Senior Housing -
Managed
Total Senior
Housing
Specialty
Hospitals and
Other
Interest and
Other Income Corporate Total
Net Income (loss) 91,702$ 51,574$ 997$ 52,571$ (27,690)$ 27,463$ (73,841)$ 70,205$
Adjustments:
Depreciation and amortization 32,319 30,929 1,088 32,017 3,320 - 816 68,472
Interest 5,218 1,970 - 1,970 - - 57,685 64,873
General and administrative - - - - - - 17,671 17,671
Merger and acquisition costs - - - - - - 1,197 1,197
Provision for doubtful accounts and loan losses - - - - - - 5,543 5,543
Impairment of real estate - - - - 29,811 - - 29,811
Loss on extinguishment of debt - - - - - - 556 556
Other income - - - - - - (10,677) (10,677)
Net loss (gain) on sale of real estate 6,091 (21) - (21) 52 - - 6,122
Income tax expense - - - - - - 1,050 1,050
Net Operating Income 135,330$ 84,452$ 2,085$ 86,537$ 5,493$ 27,463$ -$ 254,823$
Non-cash rental income adjustments (9,429) (12,091) - (12,091) (464) - - (21,984)
Cash Net Operating Income 125,901$ 72,361$ 2,085$ 74,446$ 5,029$ 27,463$ -$ 232,839$
Annualizing adjustments 2,026 9,617 48 9,665 46 (19,442) - (7,705)
Annualized Cash Net Operating Income 127,927$ 81,978$ 2,133$ 84,111$ 5,075$ 8,021$ -$ 225,134$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Facility Type
(in thousands)
Year Ended December 31, 2016
Senior Housing
10
Private Payors Non-Private Payors Corporate Total
Net Income (loss) 111,187$ 206,604$ (159,426)$ 158,365$
Adjustments:
Depreciation and amortization 52,301 60,714 867 113,882
Interest 2,882 4,802 80,756 88,440
General and administrative - - 32,401 32,401
Merger and acquisition costs - - 30,255 30,255
Provision for doubtful accounts and loan losses - - 17,113 17,113
Impairment of real estate 133 1,193 - 1,326
Loss on extinguishment of debt - - 553 553
Other income - - (3,170) (3,170)
Net gain on sale of real estate (8,633) (43,396) - (52,029)
Income tax expense - - 651 651
Net Operating Income 157,870$ 229,917$ -$ 387,787$
Non-cash rental income adjustments (15,323) (15,029) - (30,352)
Cash Net Operating Income 142,547$ 214,888$ -$ 357,435$
Annualizing adjustments 50,391 163,618 - 214,009
Annualized Cash Net Operating Income 192,938$ 378,506$ -$ 571,444$
Pro forma adjustments for:
Acquisitions 55,532 2,860 - 58,392
Genesis and CCP rent reductions (4,831) (20,152) - (24,983)
Facilities transitioned to new operator (961) (6,453) - (7,414)
Pro forma Annualized Cash Net Operating Income 242,678$ 354,761$ -$ 597,439$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Type
(in thousands)
Year Ended December 31, 2017
11
Private Payors Non-Private Payors Corporate Total
Net Income (loss) 62,339$ 81,707$ (73,841)$ 70,205$
Adjustments:
Depreciation and amortization 38,960 28,696 816 68,472
Interest 2,542 4,646 57,685 64,873
General and administrative - - 17,671 17,671
Merger and acquisition costs - - 1,197 1,197
Provision for doubtful accounts and loan losses - - 5,543 5,543
Impairment of real estate 29,811 - - 29,811
Loss on extinguishment of debt - - 556 556
Other income - - (10,677) (10,677)
Net loss on sale of real estate 1,273 4,849 - 6,122
Income tax expense - - 1,050 1,050
Net Operating Income 134,925$ 119,898$ -$ 254,823$
Non-cash rental income adjustments (13,449) (8,535) - (21,984)
Cash Net Operating Income 121,476$ 111,363$ -$ 232,839$
Annualizing adjustments (9,841) 2,136 - (7,705)
Annualized Cash Net Operating Income 111,635$ 113,499$ -$ 225,134$
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Type
(in thousands)
Year Ended December 31, 2016
12
NON-GAAP FINANCIAL MEASURES
DEFINITIONS
Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the
Company's long-term equity award program, and loan loss reserves. Adjusted EBITDA is an important non-GAAP supplemental measure of operating performance.
Annualized Cash Net Operating Income (“Annualized Cash NOI”). The Company believes that net income attributable to common stockholders as defined by GAAP is the most appropriate earnings measure. We consider
Annualized Cash NOI an important supplemental measure because it allows investors, analysts and our management to evaluate the operating performance of our investments. We define Annualized Cash NOI as
Annualized Revenues less operating expenses and non-cash revenues. Annualized Cash NOI excludes all other financial statement amounts included in net income.
Annualized Revenues. The annual straight-line rental revenues under leases and interest and other income generated by the Company's loans receivable and other investments based on amounts invested and
applicable terms as of the end of the period presented. Annualized Revenues do not include tenant recoveries or additional rents.
Cash Net Operating Income ("Cash NOI"). The Company believes that net income attributable to common stockholders as defined by GAAP is the most appropriate earnings measure. We consider Cash NOI an important
supplemental measure because it allows investors, analysts and our management to evaluate the operating performance of our investments. We define Cash NOI as total revenues less operating expenses and non-cash
revenues. Cash NOI excludes all other financial statement amounts included in net income.
Funds From Operations Attributable to Common Stockholders (“FFO”) and Adjusted Funds from Operations Attributable to Common Stockholders (“AFFO”). The Company believes that net income attributable to
common stockholders as defined by GAAP is the most appropriate earnings measure. The Company also believes that Funds From Operations, or FFO, as defined in accordance with the definition used by the National
Association of Real Estate Investment Trusts (“NAREIT”), and Adjusted Funds from Operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company's operating
performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets
diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses
historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost
depreciation and amortization, among other items, from net income attributable to common stockholders, as defined by GAAP. FFO is defined as net income attributable to common stockholders, computed in
accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, and real estate impairment charges.
AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, straight-line rental income adjustments, amortization of above and below market lease intangibles, net, non-cash
interest income adjustments, non-cash interest expense, as well as other non-cash revenue and expense items (including non-cash portion of loss on extinguishment of debt, change in fair value of contingent
consideration, provision for doubtful straight-line rental income, loan losses and other reserves, ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling
interests). The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company's operating results
among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating
and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other
companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, they do not represent cash flows from operations or net income attributable to
common stockholders as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO and AFFO also do not consider the costs
associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s
computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current NAREIT definition or that interpret the
current NAREIT definition or define AFFO differently than the Company does.
Net Operating Income ("NOI"). The Company believes that net income attributable to common stockholders as defined by GAAP is the most appropriate earnings measure. We consider NOI an important supplemental
measure because it allows investors, analysts and our management to evaluate the operating performance of our investments. We define NOI as total revenues less operating expenses. NOI excludes all other financial
statement amounts included in net income.
Normalized FFO and Normalized AFFO. Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of
its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help
investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as
defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs
associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s
computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition
or that interpret the current NAREIT definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.