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Funds from operations ("FFO") remained relatively unchanged at $7.5million and $7.4 million for the three month periods ended June 30, 2008 and2007, respectively, or $.63 per diluted share during each period. FFO were$14.8 million, or $1.24 per diluted share, during the six-month period endedJune 30, 2008 as compared to $14.8 million, or $1.25 per diluted share, duringthe comparable six-month period of the prior year.
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Included in our financial results during the three and six-month periodsof 2008 was: (i) a decrease in our equity in income of unconsolidated LLCs asa result of increased depreciation expense recorded by certain of ourunconsolidated limited liability companies ("LLC") in connection with newlyconstructed medical office buildings ("MOBs") which opened during the fourthquarter of 2007, and; (ii) depreciation expense recorded on the replacementassets received from Universal Health Services, Inc. ("UHS") in connectionwith the previously disclosed Chalmette Medical Center ("Chalmette") assetexchange and substitution transaction. As a result, on a combined basis, ournet income was unfavorably impacted by $187,000, or $.02 per diluted share,during the second quarter of 2008 and by $516,000, or $.04 per diluted share,during the six-month period ended June 30, 2008. In addition, our equity inincome of unconsolidated LLCs during the three and six-month periods endedJune 30, 2008 were each unfavorably impacted by $329,000, or $.03 per dilutedshare, from the recording of the following by two of our unconsolidated LLCsthat own MOBs in Las Vegas, Nevada: (i) reserves established for certaintenant receivables in connection with the leases which are in defaultresulting from the licensure revocation and closure of physician-ownedgastroenterology and endoscopy clinics, and; (ii) higher than anticipatedbuilding maintenance and repairs expense.
Favorably impacting net income during the quarter ended June 30, 2007 wasa combined gain of $3.2 million, or $.27 per diluted share, consisting of: (i)a gain of $2.3 million, or $.19 per diluted share, realized on the sale of amedical office building (included in income from discontinued operations),and; (ii) a gain of $939,000, or $.08 per diluted share, related to therecovery of replacement real estate assets in connection with the Chalmetteasset exchange and substitution agreement. Favorably impacting net incomeduring the six-month period ended June 30, 2007 was a combined gain of $4.3million, or $.36 per diluted share, consisting of: (i) a gain of $2.3 million,or $.19 per diluted share, realized on the sale of a medical office building(included in income from discontinued operations); (ii) a gain of $1.7million, or $.15 per diluted share, related to the recovery of replacementreal estate assets in connection with the Chalmette asset exchange andsubstitution agreement, and; (iii) a gain of $252,000, or $.02 per dilutedshare, resulting from the sale of real property by an unconsolidated LLC.
As of June 30, 2008, construction continues on three new MOBs, which areowned by LLCs, as follows: (i) Palmdale Medical Plaza located in Palmdale,California, which is substantially completed and scheduled to open soon; (ii)Summerlin Hospital Medical Office Building III located in Las Vegas, Nevada,which is scheduled to be completed and opened during the fourth quarter of2008, and; (iii) Deer Valley Medical Office Buildi
