securities analysts, investors and other interested parties in the
evaluation of REITs, many of which present FFO when reporting their
results. FFO is intended to exclude GAAP historical cost depreciation
and amortization of real estate and related assets, which assumes that
the value of real estate assets diminishes ratably over time.
Historically, however, real estate values have risen or fallen with
market conditions. Because FFO excludes depreciation and amortization
unique to real estate, gains and losses from property dispositions and
extraordinary items, it provides a performance measure that, when
compared year over year, reflects the impact to operations from trends
in occupancy rates, rental rates, operating costs, development
activities and interest costs, providing a perspective not immediately
apparent from net income. The Company computes FFO in accordance with
standards established by the Board of Governors of NAREIT in its March
1995 White Paper (as amended in November 1999 and April 2002), which
may differ from the methodology for calculating FFO utilized by other
equity REITs and, accordingly, may not be comparable to such other
REITs. Further, FFO does not represent amounts available for
management's discretionary use because of needed capital replacement
or expansion, debt service obligations, or other commitments and
uncertainties. FFO should not be considered as an alternative to net
income (loss) (computed in accordance with GAAP) as an indicator of
the Company's performance, nor is it indicative of funds available to
fund its cash needs, including its ability to pay dividends or make
distributions.
(2) Real estate depreciation and amortization c
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