Final answer:
The funds from operation (FFO), adjust the net income by adding back non-cash expenses like amortization and depreciation and removing infrequent gains or losses. In this case, after adjustments, the FFO is $75,809,000, meaning the correct answer is B) $75,809,000.
Step-by-step explanation:
To calculate the funds from operation (FFO), you start with the net income and adjust for items that do not reflect ongoing operations. Specifically, you would add back the non-cash expenses, such as depreciation and amortization, and exclude gains or losses from infrequent and unusual events. Here is the step-by-step breakdown:
- Calculate the adjustments: Add the amounts for amortization of tenant improvements, amortization of leasing expenses, and depreciation.
- Exclude infrequent gains or losses: Adjust the net income by removing the gains or losses from infrequent and unusual events.
- Combine for FFO: Add the adjusted net income and the total adjustments from the previous steps to find the FFO.
In this case, we have the following calculations:
- Amortization of tenant improvements: $575,000
- Amortization of leasing expenses: $133,000
- Depreciation (real property): $30,906,000
- Total adjustments (non-cash expenses): $575,000 + $133,000 + $30,906,000 = $31,614,000
- Net income: $44,245,000
- Gains/losses from infrequent events: $50,000 (Subtract this amount as it's not part of ongoing operations)
- Net income adjusted for gains/losses: $44,245,000 - $50,000 = $44,195,000
- FFO: $44,195,000 + $31,614,000 = $75,809,000
Therefore, the correct answer is B) $75,809,000.