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INCOME TAXES
 12 Months Ended
Dec. 31, 2011
INCOME TAXES  
INCOME TAXES

NOTE 14—INCOME TAXES

        The Company elected to be taxed as a REIT under the Internal Revenue Code, commencing with its taxable year ended December 31, 1983. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its adjusted taxable income to its stockholders. It is management's current intention to adhere to these requirements and maintain the Company's REIT status. As a REIT, the Company generally will not be subject to corporate level federal, state and local income tax on taxable income it distributes currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal, state and local income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even though the Company qualifies for taxation as a REIT, the Company is subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.

        Included in general and administrative expenses for 2011, 2010 and 2009 are state tax expense of $168,000, $193,000 and $178,000, respectively.

Reconciliation between Financial Statement Net Income and Federal Taxable Income:

        The following unaudited table reconciles financial statement net income to federal taxable income for the years indicated (amounts in thousands):

 
   2011
Estimate 		  2010
Actual 		  2009
Actual 		 

Net income

   $ 13,724   $ 9,306   $ 19,641  

Straight line rent adjustments

     (1,434 )   (693 )   (1,176 )

Financial statement gain on sale in excess of tax gain(a)

     (61 )   557     (9,620 )

Rent received in advance, net

     (78 )   205     299  

Financial statement adjustment for above/below market leases

     37     (442 )   23  

Non-deductible portion of restricted stock expense

     300     249     741  

Financial statement adjustment of fair value of derivative

     —     —     (650 )

Financial statement depreciation in excess of tax depreciation

     1,176     1,051     626  

Property acquisition costs—capitalize for tax purposes

     213     1,010     59  

Other adjustments

     (474 )   542     600  
               

Federal taxable income

   $ 13,403   $ 11,785   $ 10,543  
               
(a)
For 2009, amount includes (i) $5,021 GAAP gain on sale of real estate which was deferred for federal tax purposes in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended and (ii) financial statement impairment charges of $5,983, which were recorded during the year ended December 31, 2008 relating to four properties that were disposed of in 2009.

Reconciliation between Cash Dividends Paid and Dividends Paid Deduction:

        The following unaudited table reconciles cash dividends paid with the dividends paid deduction for the years indicated (amounts in thousands):

 
   2011
Estimate 		  2010
Actual 		  2009
Actual 		 

Dividends paid(a)

   $ 14,748   $ 14,123   $ 9,416  

Dividend reinvestment plan(b)

     153     108     —  
               

 

     14,901     14,231     9,416  

Less: Spillover dividends designated to previous year

     (1,448 )   (3,844 )   (2,667 )

Plus: Dividends designated from following year

     —     1,448     3,844  
               

Dividends paid deduction(c)

   $ 13,453   $ 11,835   $ 10,593  
               
(a)
In 2009, the quarterly dividends on the Company's common stock of $.22 per share were paid in cash and/or common stock of the Company.

(b)
Amount reflects the 5% discount on common stock purchased through the dividend reinvestment plan which was suspended in December 2008 and reinstated in June 2010.

(c)
Dividends paid deduction is slightly higher than federal taxable income in 2011, 2010 and 2009 to account for adjustments made to federal taxable income as a result of the impact of the alternative minimum tax.