Reconciliation of Funds From Operations and Normalized Funds From Operations ⁽¹⁾⁽²⁾

(in thousands, except share and per share amounts)

Three months ended

March 31,

2011

2010

Net income

 $          19,093

 $          15,943

Elimination of certain items in net income:

Real estate depreciation

               2,690

               2,395

Real estate depreciation in discontinued operations        

                       -

                    66

Net gain on sale of real estate

             (2,299)

Funds from operations

 $          19,484

 $          18,404

Collection and recognition of past due rent

                       -

             (1,520)

Gains on sales of marketable securities

                (154)

                       -

Other items

                       -

                  290

Normalized funds from operations

 $          19,330

 $          17,174

Weighted average common shares outstanding

Basic

      27,696,727

      27,632,376

Diluted

      27,796,109

      27,681,479

Funds from operations per share:

Basic

 $              0.70

 $              0.67

Diluted

 $              0.70

 $              0.66

Normalized FFO per share:

Basic

 $              0.70

 $              0.62

Diluted

 $              0.70

 $              0.62

(1) Management believes that funds from operations (FFO) is an important supplemental measure of operating performance for a real estate investment trust.  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.  Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative, and should be supplemented with a measure such as FFO.  The term FFO was designed by the real estate investment trust industry to address this issue.  Our measure may not be comparable to similarly titled measures used by other REITs.  Consequently, our funds from operations may not provide a meaningful measure of our performance as compared to that of other REITs.  Since other REITs may not use our definition of FFO, caution should be exercised when comparing our Company’s FFO to that of other REITs.  FFO does not represent cash generated from operating activities in accordance with GAAP (funds from operations does not include changes in operating assets and liabilities) and therefore should not be considered an alternative to net earnings as an indication of operating performance, or to net cash flow from operating activities as determined by GAAP in the United States, as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs.

(2) Normalized FFO excludes from FFO any material one-time items reflected in GAAP net income.  Excluded items may include, but are not limited to, impairments of assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, and recoveries of previous write-downs.

Condensed Statements of Income

(in thousands, except share and per share amounts)

Three months ended

March 31,

2011

2010

Revenues:

Rental income

 $        19,020

 $        18,187

Mortgage interest income

             1,596

             1,996

           20,616

           20,183

Expenses:

Depreciation

             2,884

             2,523

Legal expense

                188

                282

Franchise, excise and other taxes

                358

                278

General and administrative

             3,774

             3,806

             7,204

             6,889

Income Before Non-Operating Income

           13,412

           13,294

Non-operating income (investment interest and other)

             1,412

             1,433

Interest expense and amortization of loan costs, net of  

change in fair value of interest rate swap agreement

                741

              (228)

Income From Continuing Operations

           15,565

           14,499

Income from discontinued operations

             1,229

             1,444

Net gain on sale of real estate

             2,299

                     -

Income from discontinued operations

             3,528

             1,444

Net income

 $        19,093

 $        15,943

Weighted average common shares outstanding:

Basic

    27,696,727

    27,632,376

Diluted

    27,796,109

    27,681,479

Earnings per share:

Basic:

Income from continuing operations

 $            0.56

 $            0.53

Discontinued operations

               0.13

               0.05

Net income available to common stockholders

 $            0.69

 $            0.58

Diluted:

Income from continuing operations

 $            0.56

 $            0.53

Discontinued operations

               0.13

               0.05

Net income available to common stockholders

 $            0.69

 $            0.58

Dividend declared per common share

 $          0.615

 $          0.575

Selected Balance Sheet Data

(in thousands)

March 31, 2011

December 31, 2010

Real estate properties, net

 $          325,096

 $                327,654

Mortgages receivable, net

               77,283

                     75,465

Investment in preferred stock, at cost               

               38,132

                     38,132

Cash and cash equivalents

               21,097

                       2,664

Marketable securities

               21,378

                     22,476

Assets held for sale, net

               29,381

                     36,853

Debt

               49,375

                     37,765

Stockholders' equity

             447,518

                   442,500