EX-99.1 2 dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

 

For Immediate Release   LOGO

For information contact:

Liz Kohlmyer

Director of Communications

(407) 540-2221

NYSE: TSY

TRUSTREET PROPERTIES, INC. ANNOUNCES THIRD QUARTER RESULTS

ORLANDO, FL – November 7, 2006 – Trustreet Properties, Inc. (NYSE: TSY) announces operating results for the quarter and nine months ended September 30, 2006. Trustreet is the largest real estate investment trust focused primarily on the restaurant industry.

Highlights

 

    The Company reported revenues of $54.9 million for the quarter ended September 30, 2006, a 6.6 percent increase over $51.5 million reported in the quarter ended September 30, 2005.

 

    In the third quarter of 2006 and 2005, the Company reported funds from operations (“FFO”) available to common shareholders, after adding back the principal amortization on capital leases, of $20.0 million, or $0.30 cents per diluted share compared to $18.5 million or $0.32 cents per diluted share, respectively.

 

    For the nine months ended September 30 2006 and 2005, the Company reported funds from operations (“FFO”) available to common shareholders, after adding back the principal amortization on capital leases, of $60.7 million, or $0.90 cents per diluted share compared to $45.1 million or $0.85 cents per diluted share, respectively.

 

    For the quarter ended September 30, 2006, adjusted funds from operations (“AFFO”) was $22.2 million, compared to $20.8 million for the quarter ended September 30, 2005.

 

    The Company acquired 57 properties in the third quarter representing a total investment of $68 million. Through September 30, 2006, the Company has acquired $233 million in properties.

 

    In the third quarter, the taxable REIT subsidiary (“TRS”) sold 54 properties generating $75.6 million in sales proceeds producing a pre-tax gain of $8.9 million. Through September 30, 2006, the TRS has sold $190.5 million producing a pre-tax gain of $22.3 million

 

    The Company owned 2,021 properties in the core REIT portfolio of which 98 percent were leased based on carrying value as of September 30, 2006.

 

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    The Company paid monthly common dividends per share of $0.11 cents throughout the third quarter.

Third Quarter Results and Portfolio Highlights

For the quarter ended September 30, 2006, the Company reported funds from operations of $18.4 million, or $0.27 cents per share computed in accordance with the definition of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO generated by the core REIT portfolio represented approximately 86 percent of gross FFO. NAREIT FFO does not include cash received from tenants that is treated as the principal component of a capital lease. Unlike many REITs that are in the Company’s peer group, the Company has a meaningful number of capital leases. FFO and the principal component of capital leases total $20.0 million, or $0.30 cents per share for the quarter ended September 30, 2006.

For the quarter ended September 30, 2006, adjusted funds from operations (“AFFO”) was $22.2 million. The Company believes that AFFO is useful as a measure of its cash available for distribution. Given the variation in the definition of AFFO in the REIT industry, investors should take these differences into account when comparing AFFO against other REITs. Typically, this metric will exceed the Company’s FFO because of the level of deferred financing cost amortization, the principal component of capital leases, non-real estate depreciation, non-cash real estate impairment charges and loan provisions.

The Company acquired 57 properties for $68 million during the third quarter. The Company designated 16 of the third quarter acquisitions as long-term investments resulting in improved tenant and geographic diversity and a stronger outlook for net income from continuing operations within the core REIT portfolio. The remaining 41 properties were designated as held-for-sale inventory to be sold through Trustreet’s investment property sales platform. For the nine months ended September 30, 2006, we purchased $233 million in net lease properties. In addition to the $18.2 million in transactions closed through the end of October 2006, the Company currently has signed commitments to acquire a further $174.3 million, the substantial majority of which is expected to close over the next six months.

In the third quarter, the Company sold 54 properties generating $75.6 million in sales proceeds from its investment property sales platform producing a pre-tax gain of $8.9 million. For the nine months ended September 30, 2006, the Company sold $190.5 million through its investment property sales platform. At September 30, 2006, we held 121 properties for sale to investors through our IPS program with an investment of $150 million. These results are required to be recorded as discontinued operations under GAAP. In addition, the Company held for sale an additional 50 properties in their development pipeline comprising an investment of $46 million.

As of September 30, 2006, the Company owned 2,021 properties held in the core REIT portfolio of which 98 percent were leased based on carrying value. The weighted average remaining lease term of the Company’s real estate investment portfolio was approximately 10.2 years, with more than 81 percent of the Company’s lease expirations occurring after 2011 based on annualized base rent. During the nine months ended September 30, 2006, the Company has recycled capital or paid down debt through sales of $43.8 million in the core REIT generating a pre-tax gain of $8.6 million.

 

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The Company’s portfolio is broadly diversified with more than 170 concepts and more than 500 tenants in 49 states. No single tenant represented more than 7 percent of contractual rents. Of the 62 vacant properties with a carrying value of approximately $39.9 million as of September 30, 12 are either sold, under contract for sale or have a lease or sales contract out for signature, and another four are currently being redeveloped.

In accordance with the terms of the merger agreement with GE Capital Solutions, the Board of Directors declared a dividend of $0.33 per share on Trustreet’s Common Stock for the quarter ending December 31, 2006. The dividend will be payable December 26, 2006 to shareholders of record on November 20, 2006.

“We are pleased with the steady execution of our platform,” states Curtis B. McWilliams, President and Chief Executive Officer of Trustreet Properties, Inc. “As we look ahead, the merger with GE Capital Solutions will allow us to continue to provide our unmatched platform of services while gaining GE Capital Solutions’ superior debt and other financial products. It truly is a merger of industry leaders that will enable the combined company to deliver the highest level of performance, expertise, scale and efficiency that would not otherwise be possible.”

About Trustreet

Trustreet Properties, Inc. is the largest self-administered restaurant real estate investment trust (REIT) in the United States. Trustreet, traded on the NYSE under the ticker symbol TSY, provides a complete range of financial, real estate and advisory services to operators of national and regional restaurant chains. For more information, visit www.trustreet.com.

Conference Call

Management will hold a conference call on Tuesday, November 7, 2006 at 10:00 a.m. EDT to review the Company’s quarterly results. The call can be accessed on the Company’s website at www.trustreet.com and by direct dial-in at (866) 244-4515. Reference conference identification number 981532. For those unable to listen to the live broadcast, a replay will also be available on the Company’s web site for 30 days.

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Cautionary Statements

On October 30, 2006, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company agreed, subject to the approval of it’s common stockholders, to merge with an affiliate of General Electric Capital Corporation. The Company will file with the SEC a proxy statement on Schedule 14A and other documents concerning the merger as soon as practicable. The final proxy statement will be mailed to the holders of the Company’s common stock. Before making any voting or investment decision, holders of common stock are urged to read these documents carefully and in their entirety when they become available because they will contain important information about the merger. In addition, the proxy statement and other documents will be available free

 

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of charge at the SEC’s web site, www.sec.gov. When available, the proxy statement and other pertinent documents also may be obtained free of charge at the Company’s web site, http://www.trustreet.com, or by contacting the Company at Trustreet Properties, Inc., telephone (877) 667-4769.

The Company and its directors and officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the Company’s common stockholders in connection with the merger. Information about the Company’s executive officers and directors and the number of shares of the Company’s common stock beneficially owned by such persons is set forth in the proxy statement for the Company’s 2006 Annual Meeting of Stockholders, which was filed with the SEC on April 21, 2006, and will be set forth in the proxy statement relating to the proposed merger when it becomes available.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Statements in this press release that are not strictly historical are “forward-looking” statements. Forward-looking statements involve known and unknown risks, which may cause the Company’s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, changes in interest rates, increases in operating costs, the availability of capital, and the profitability of the Company’s taxable subsidiary. Additional information concerning these and other factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company’s SEC filings. Copies of each filing may be obtained from the Company or the SEC. Consequently, such forward-looking statements should be regarded solely as reflections of the Company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

“Funds From Operations” (FFO) is a measure of performance that Trustreet computes in accordance with the “White Paper” definition of FFO adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). According to this definition, and as used herein by Trustreet, FFO means net income (loss) allocable to common stockholders (computed in accordance with GAAP), plus real estate related depreciation and amortization excluding gains (or losses) from sales of property held for investment and excluding adjustments allocable to minority interests or joint ventures. NAREIT created FFO as a supplemental performance measure to exclude historical cost depreciation, among other items, from GAAP net income (loss) allocable to common stockholders. Trustreet uses FFO as a supplemental measure to conduct and evaluate its business because there are certain limitations associated with using GAAP net income by itself as the primary measure of operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, Trustreet believes that the presentation of operating results for real estate companies that use historical cost accounting is insufficient by itself. In addition, Trustreet believes that the use of FFO has made comparisons of those results more meaningful and has enabled the evaluation of its operating performance compared to other REITs that use the NAREIT definition in order to make more informed business decisions based on industry trends or conditions. FFO should not be considered as an alternative to net income (loss) allocable to common stockholders as the primary indicator of Trustreet’s operating performance or as an alternative to cash flow as a measure of liquidity. While Trustreet adheres to the NAREIT definition of FFO in making its calculations, this method of calculating FFO may not be comparable to the methods used by other REITs and, accordingly, may be different from similarly titled measures reported by other companies.

The Company believes that Adjusted Funds from Operations is helpful to investors as a measure of its ability to pay dividends. While the measure is used commonly in the REIT industry, definitions of AFFO vary and investors should take definitional differences into account when comparing AFFO reported by other REITs. The Company calculates AFFO by subtracting from or adding to FFO (i) amortization of the principal portion of capital leases, (ii) straight-lining of rents, (iii) non-real estate depreciation and amortization, (iv) amortization of deferred loan costs and (v) non-cash real estate impairment charges or loan reserves.

 

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TRUSTREET PROPERTIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In thousands except for per share data)

 

     Quarter ended
September 30,
    Nine months ended
September 30,
 
     2006     2005     2006     2005  

Revenues:

        

Rental income from operating leases

   $ 47,102     $ 41,614     $ 141,061     $ 102,411  

Earned income from capital leases

     2,964       2,999       8,981       8,738  

Interest income from mortgage, equipment and other notes receivables

     1,831       3,025       5,776       15,860  

Investment and interest income

     789       704       1,399       1,697  

Other income

     2,176       3,198       8,520       5,931  
                                
     54,862       51,540       165,737       134,637  
                                

Expenses:

        

General operating and administrative

     7,026       7,358       22,094       28,345  

Interest expense

     25,806       24,213       76,222       65,972  

Property expenses, state and other taxes

     2,481       2,206       8,090       5,262  

Depreciation and amortization

     9,480       8,311       29,585       21,716  

Loss on termination of cash flow hedge

     —         8,558       —         8,558  

Impairment provisions on assets

     1,002       1,250       2,636       1,391  
                                
     45,795       51,896       138,627       131,244  
                                

Income/(loss) from continuing operations before minority interest and equity in earnings of unconsolidated joint ventures

     9,067       (356 )     27,110       3,393  

Minority interest

     (113 )     (78 )     (485 )     (1,627 )

Equity in earnings of unconsolidated joint ventures

     51       28       62       90  
                                

Income/(loss) from continuing operations

     9,005       (406 )     26,687       1,856  

Income from discontinued operations, after income taxes

     8,013       9,650       29,475       28,964  

Gain on sale of assets

     223       9,620       747       9,643  
                                

Net income

     17,241       18,864       56,909       40,463  

Dividends to preferred stockholders

     (7,176 )     (7,176 )     (21,528 )     (17,275 )
                                

Net income allocable to common stockholders

   $ 10,065     $ 11,688     $ 35,381     $ 23,188  
                                

Basic and diluted net income per share:

        

Income/(loss) from continuing operations allocable to common stockholders

   $ 0.03     $ 0.03     $ 0.09     $ (0.11 )

Income from discontinued operations

     0.12       0.17       0.44       0.55  
                                

Basic and diluted net income per share

   $ 0.15     $ 0.20     $ 0.53     $ 0.44  
                                

Weighted average number of shares of common stock outstanding

        

Basic

     67,285       57,846       67,269       53,204  
                                

Diluted

     67,291       57,857       67,305       53,204  
                                


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TRUSTREET PROPERTIES, INC.

DISCONTINUED OPERATIONS BY SEGMENT

(UNAUDITED)

 

    

Quarter ended September 30,

(in millions)

 
     2006     2005  
    

Real Estate

Segment

    Specialty
Finance
Segment
   

Real Estate

Segment

   

Specialty
Finance

Segment

 

Sale of real estate

   $ 6.7     $ 75.6     $ 19.5     $ 52.6  

Cost of real estate sold

     6.2       66.7       16.6       45.5  
                                

Gain on sale of real estate

     0.5       8.9       2.9       7.1  

Rental income

     0.4       3.2       1.8       2.5  

Interest expense

     —         (2.3 )     —         (1.7 )

Other property expense and impairment provisions

     (0.4 )     (0.1 )     (1.5 )     (0.1 )

Net earnings from retail discontinued operations before tax

     —         —         —         —    
                                

Net other income

     —         0.8       0.3       0.7  

Earnings from discontinued operations before tax

     0.5       9.7       3.2       7.8  

Income tax provision

     —         (2.2 )     —         (1.3 )
                                

Income from discontinued operations, after income taxes

   $ 0.5     $ 7.5     $ 3.2     $ 6.5  
                                

 


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TRUSTREET PROPERTIES, INC.

DISCONTINUED OPERATIONS BY SEGMENT (cont.)

(UNAUDITED)

 

    

Nine months ended September 30,

(in millions)

 
     2006     2005  
    

Real Estate

Segment

   

Specialty
Finance

Segment

   

Real Estate

Segment

   

Specialty
Finance

Segment

 

Sale of real estate

   $ 52.4     $ 190.5     $ 33.0     $ 180.3  

Cost of real estate sold

     43.8       168.2       29.2       152.0  
                                

Gain on sale of real estate

     8.6       22.3       3.8       28.3  

Rental income

     1.9       9.5       5.2       5.9  

Interest expense

     —         (6.6 )     —         (3.8 )

Other property expense and impairment provisions

     (1.4 )     —         (2.5 )     (1.0 )

Net earnings from retail discontinued operations before tax

     —         —         —         0.9  
                                

Net other income

     0.5       2.9       2.7       2.0  

Earnings from discontinued operations before tax

     9.1       25.2       6.5       30.3  

Income tax provision

     —         (4.8 )     —         (7.8 )
                                

Income from discontinued operations, after income taxes

   $ 9.1     $ 20.4     $ 6.5     $ 22.5  
                                


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TRUSTREET PROPERTIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands)

 

    

September 30,

2006

   December 31,
2005

ASSETS

     

Real estate investment properties

   $ 1,757,007    $ 1,718,387

Net investment in capital leases

     148,332      147,184

Real estate held for sale

     209,541      252,019

Mortgage, equipment and other notes receivable, net of allowance of $3,103 and $5,706, respectively

     82,703      88,239

Cash and cash equivalents

     9,610      20,459

Restricted cash

     10,647      32,465

Receivables, less allowance for doubtful accounts of $3,076 and $2,394, respectively

     8,521      7,665

Accrued rental income

     42,264      34,312

Intangible lease costs, net of accumulated amortization of $17,596 and $9,579, respectively

     72,631      77,437

Goodwill

     235,895      235,895

Other assets

     66,395      69,481
             

Total assets

   $ 2,643,546    $ 2,683,543
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Revolver

   $ 134,000    $ 55,000

Notes payable

     576,845      579,002

Mortgage warehouse facilities

     239,703      122,722

Bonds payable

     551,002      742,201

Below market lease liability, net of accumulated amortization of $6,947 and $3,772, respectively

     28,740      31,712

Due to related parties

     299      232

Other payables

     37,545      56,097

Minority interests

     4,215      4,077

Stockholders’ equity

     1,071,197      1,092,500
             

Total liabilities and stockholders’ equity

   $ 2,643,546    $ 2,683,543
             

 


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TRUSTREET PROPERTIES, INC.

RECONCILIATION OF NAREIT FFO AND AFFO

(UNAUDITED)

(In thousands except for per share data)

 

     Quarter ended September 30,     Nine months ended September 30,  
         2006             2005             2006             2005      

Funds From Operations (NAREIT defined):

        

Net income

   $ 17,241     $ 18,864     $ 56,909     $ 40,463  

Less: Dividends on preferred stock

     (7,176 )     (7,176 )     (21,528 )     (17,275 )
                                

Net income allocable to common stockholders

     10,065       11,688       35,381       23,188  

FFO adjustments:

        

Real estate depreciation and amortization

     9,021       8,072       27,988       21,598  

Gain on sale of real estate

     (734 )     (2,884 )     (7,474 )     (3,712 )
                                

NAREIT FFO

   $ 18,352     $ 16,876     $ 55,895     $ 41,074  
                                

NAREIT FFO per share

   $ 0.27     $ 0.29     $ 0.83     $ 0.77  
                                

Principal component of capital leases

     1,613       1,669       4,838       4,006  
                                

FFO and the principal component of capital leases

   $ 19,965     $ 18,545     $ 60,733     $ 45,080  
                                

FFO and the principal component of capital leases per share

   $ 0.30     $ 0.32     $ 0.90     $ 0.85  
                                

Straight-line rent

     (2,238 )     (2,175 )     (8,076 )     (5,591 )

Non-real estate depreciation and amortization

     850       383       2,783       1,571  

Deferred loan cost amortization

     2,526       2,723       7,369       7,439  

Asset impairment/provisions

     1,116       1,299       2,875       1,798  
                                

ADJUSTED FFO

   $ 22,219     $ 20,775     $ 65,684     $ 50,297  
                                


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LEASE EXPIRATIONS

(based on annualized base rent as of September 30, 2006)

 

     # of Properties    % of Total        # of Properties    % of Total

2006

   22    0.8%   2012    84    4.6%

2007

   74    2.5%   2013    75    4.1%

2008

   80    2.6%   2014    145    8.3%

2009

   101    3.9%   2015    94    5.6%

2010

   103    4.7%   2016    195    9.3%

2011

   82    3.8%   Thereafter (or Vacant)    966    49.8%

DIVERSIFICATION

 

Top 10 Tenants      Top 10 Concepts   

(based on annualized base rent as of September 30, 2006)*

  (based on annualized base rent as of September 30, 2006)*
    

Tenant

   % of Rent       

Concept

   % of Rent

1

   Jack in the Box, Inc.    6.7%   1    Wendy’s*    8.2%

2

   Golden Corral Corporation    5.9%   2    Burger King    7.2%

3

   IHOP Properties, Inc.    4.0%   3    Golden Corral    6.9%

4

   Captain D’s, LLC    3.6%   4    Jack in the Box    6.5%

5

   Sybra Inc.    3.3%   5    Arby’s    6.2%

6

   S&A Properties Corp.    3.0%   6    International House of Pancakes    4.1%

7

   Texas Taco Cabana, LP    2.1%   7    Captain D’s    3.8%

8

   Perkins and Marie Callender’s, Inc.    2.0%   8    Pizza Hut    3.0%

9

   El Chico Restaurants, Inc.    1.9%   9    Bennigan’s    2.9%

10

   Vicorp Restaurants, Inc.    1.5%   10    Perkins    2.6%

 

* Includes contingent rent for units with leases where rent is based solely on actual store sales, generally without a minimum threshold.


Supplemental Information   LOGO

DIVERSIFICATION (cont.)

Top 10 States

(based on annualized base rent as of September 30, 2006)*

 

    

State

   % of Rent       

State

   % of Rent

1

   Texas    19.0%   6    California    3.7%

2

   Florida    10.4%   7    North Carolina    3.5%

3

   Georgia    5.8%   8    Ohio    3.3%

4

   Tennessee    4.1%   9    Missouri    2.9%

5

   Illinois    3.8%   10    Michigan    2.7%

 

* Includes contingent rent for units with leases where rent is based solely on actual store sales, generally without a minimum threshold.

OTHER PORTFOLIO STATISTICS

 

     9/30/06     6/30/06     3/31/06     12/31/05  

Rent to Sales

        

Quick Service

   7.9 %   8.0 %   8.5 %   8.2 %

Casual Dining

   7.5 %   7.5 %   7.7 %   7.8 %

Fixed Charge Coverage

   1.68 x   1.67 x   1.69 x   1.66 x

Notes:

1. The Company looks for rent-to-sales ratios to be under 10% for quick service restaurants and under 14% for casual dining restaurants. Of the portfolio’s 1,046 quick service restaurants reporting sales, the aggregate rent as a percentage of aggregate sales was 7.9% based on the most recent tenant sales information provided. Of the portfolio’s 402 casual and family dining restaurants reporting sales, the aggregate rent as a percentage of aggregate sales was 7.5%.

2. The Company’s initial underwriting criteria requires that tenants have a fixed charge coverage ratio (“FCCR”) of at least 1.25x, generally based on historical financial information adjusted to include the proposed sale/leaseback financing. Based on the most recent tenant financial information obtained, approximately 71% of the units (as measured by rent) that report have a tenant-level FCCR of at least 1.25x, with a weighted average tenant-level FCCR of 1.96x. The weighted average tenant-level FCCR for all reporting units is 1.68x, with 75% (as measured by rent) of the total REIT reporting financial statements. In those cases where the tenant-level FCCR is below 1.25x, we may find store-level FCCRs that exceed 1.25x. A strong store level FCCR often mitigates any negative impact of a weaker tenant-level FCCR.


Supplemental Information   LOGO

EBITDA

(UNAUDITED)

(in thousands)

 

      Quarter ended
September 30,
    Nine months ended
September 30,
 
      2006     2005     2006     2005  

Net income

   $ 17,241     $ 18,864     $ 56,909     $ 40,463  

Interest expense

     28,147       25,895       82,778       69,730  

Income tax expense

     2,189       1,348       4,760       7,756  

Depreciation and amortization

     9,620       8,475       30,104       23,218  
                                

EBITDA

   $ 57,197     $ 54,582     $ 174,551     $ 141,167  

Impairment provisions on assets

     1,116       1,299       2,875       1,798  

Principal component of capital leases

     1,613       1,669       4,838       4,006  

Loss on termination of cash flow hedge

     —         8,558       —         8,558  

Amortization of above/below market leases

     251       409       666       371  

Straight line rent

     (2,238 )     (2,175 )     (8,076 )     (5,591 )
                                

Adjusted EBITDA

   $ 57,939     $ 64,342     $ 174,854     $ 150,309  
                                

Dividends to preferred stockholders

   $ 7,176     $ 7,176     $ 21,528     $ 17,275  
                                

EBITDA/interest expense + preferred dividends

     1.62 x     1.65 x     1.67 x     1.62 x
                                

Adjusted EBITDA/interest expense + preferred dividends

     1.64 x     1.92 x     1.68 x     1.73 x
                                

Note:

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a non-GAAP measure that, as calculated by the Company, represents net income plus (i) interest expense, (ii) income tax expense and (iii) depreciation and amortization. Adjusted EBITDA represents EBITDA plus (i) impairment provisions on assets, (ii) principal component of capital leases, (iii) amortization of above/below market leases, (iv) loss on termination of cash flow hedges less (v) straight line rent. EBITDA and Adjusted EBITDA are presented, because we believe that they provide useful information to investors regarding our ability to service debt and the preferred dividend obligation. EBITDA and Adjusted EBITDA should not be considered alternative measures of operating results or cash flow from operations as determined in accordance with GAAP.


Supplemental Information   LOGO

SEGMENT FFO RECONCILIATION

(UNAUDITED)

 

      Quarter ended September 30, 2006     Quarter ended September 30, 2005  

(in thousands except for per share data)

   Real
Estate
Segment
    Specialty
Finance
Segment
    Other     Consolidated     Real
Estate
Segment
    Specialty
Finance
Segment
    Other     Consolidated  

Net income/(Loss)

   $ 14,034     $ 3,251     $ (44 )   $ 17,241     $ 16,685     $ 2,189     $ (10 )   $ 18,864  

Less: Dividends on preferred stock*

     (6,459 )     (717 )     —         (7,176 )     (6,459 )     (717 )     —         (7,176 )
                                                                

Net income allocable to common stockholders

     7,575       2,534       (44 )     10,065       10,226       1,472       (10 )     11,688  

FFO adjustments:

                

Real Estate related depreciation & amortization

     8,933       88       —         9,021       8,001       71       —         8,072  

Gain on sale of property

     (734 )     —         —         (734 )     (2,884 )     —         —         (2,884 )
                                                                

NAREIT FFO

   $ 15,774     $ 2,622     $ (44 )   $ 18,352     $ 15,343     $ 1,543     $ (10 )   $ 16,876  
                                                                

NAREIT FFO per share

   $ 0.23     $ 0.04       —       $ 0.27     $ 0.27     $ 0.02       —       $ 0.29  
                                                                

Principal component of capital leases

     1,601       12       —         1,613       1,669       —         —         1,669  

FFO and the principal component of capital leases

   $ 17,375     $ 2,634     $ (44 )   $ 19,965     $ 17,012     $ 1,543     $ (10 )   $ 18,545  
                                                                

FFO and the principal component of capital leases per share

   $ 0.26     $ 0.04       —       $ 0.30     $ 0.29     $ 0.03       —       $ 0.32  
                                                                

Straight-line rent

     (2,159 )     (79 )     —         (2,238 )     (2,136 )     (39 )     —         (2,175 )

Non-real estate related depreciation and amortization

     353       497       —         850       (23 )     406       —         383  

Deferred loan cost amortization

     2,186       340       —         2,526       2,459       264       —         2,723  

Asset impairments / provisions

     1,024       92       —         1,116       1,299       —         —         1,299  
                                                                

Adjusted FFO

   $ 18,779     $ 3,484     $ (44 )   $ 22,219     $ 18,611     $ 2,174     $ (10 )   $ 20,775  
                                                                

 

* Represents internal allocation of 90% to the real estate segment and 10% to the specialty finance segment.