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"We continue the momentum from the first quarter, reporting strongoperating results for the second quarter of 2008. Compared to the secondquarter of 2007, revenue is up 26.7%, diluted FFO per share is up 9.8%, anddiluted FAD per share is up 5.8%. In addition to acquiring six medical officebuildings from Pacific Medical Buildings for $137 million in April, wepurchased two additional medical office buildings from PMB for $61 million inMay," commented Douglas M. Pasquale, NHP's President and Chief ExecutiveOfficer. "Including the PMB purchases, our total investments made in thesecond quarter totaled $250 million. In April, we completed the sale of 23facilities to Emeritus Corporation and used a portion of the proceeds to payoff the outstanding balance on our credit facility. Our diluted FAD payoutratio and FAD coverage remain among the strongest in our sector at 80% and1.25, respectively," Mr. Pasquale added.
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SECOND QUARTER 2008 RESULTS OF OPERATIONS
Diluted Funds From Operations ("FFO") and Diluted Funds Available forDistribution ("FAD") are non-generally accepted accounting principles ("GAAP")measures that we believe are important to understanding our operations. Webelieve diluted FFO is an important supplemental measure of operatingperformance because it excludes the effects of depreciation and amortizationand gains (losses) from sales of facilities (both of which are based onhistorical costs and which may be of limited relevance in evaluating currentperformance). We believe diluted FAD is an important supplemental measure ofoperating performance because, like diluted FFO, it excludes the effects ofdepreciation and amortization and gains (losses) from sales of facilities(both of which are based on historical costs and which may be of limitedrelevance in evaluating current performance). It also excludes straight-linedrent and other non-cash items that have become more significant for us and ourcompetitors over the last several years. We believe that net income is themost directly comparable GAAP measure to diluted FFO and diluted FAD.Reconciliations between net income and diluted FFO and net income and dilutedFAD are included in the accompanying financial data. For guidance, we havealso included in the accompanying financial data reconciliations between netincome per share and diluted FFO and FAD per share.
SECOND QUARTER 2008 INVESTMENT ACTIVITY
The following table summarizes our first quarter and year to dateinvestment activity and details the second quarter 2008 investment activity:
Pacific Medical Buildings LLC ("PMB") Update -- In February 2008, weentered into an agreement with PMB and certain of its affiliates to acquire upto 18 multi-tenant medical office buildings, including six that are currentlyin development, for $747.6 million, including the assumption of approximately$282.6 million of mortgage financing. During the six months ended June 30,2008, we acquired eight of the 18 multi-tenant medical office buildingslocated in three states. The purchase price totaled $198.3 million, includingthe assumption of $96.6 million of mortgage financing and the issuance of1,470,754 limited partnership units with a value of $47.3 million.
2008 FINANCING TRANSACTIONS
During the second quarter of 2008, we issued 315,000 shares of our commonstock through our controlled equity offering program at an average price of$36.38 per share resulting in net proceeds of approximately $11.3 million.Year to date, we have issued 1.2 million shares of our common stock throughour controlled equity offering program at an average price of $34.60 per shareresulting in net proceeds of approximately $42.6 million.
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