CHICAGO--(BUSINESS WIRE)--
Equity Commonwealth (NYSE: EQC) today reported financial results for the
quarter ended March 31, 2015. All per share results are reported on a
fully diluted basis.
Results for the quarter ended March 31, 2015
Funds from Operations (FFO), as defined by the National Association of
Real Estate Investment Trusts, for the quarter ended March 31, 2015 were
$65.4 million, or $0.50 per share. This compares to FFO for the quarter
ended March 31, 2014 of $60.5 million, or $0.51 per share.
Normalized FFO was $72.0 million, or $0.55 per share. This compares to
Normalized FFO for the quarter ended March 31, 2014 of $61.0 million, or
$0.51 per share. The following items impacted Normalized FFO per share
for the quarter ended March 31, 2015 compared to the corresponding 2014
period:
-
approximately ($0.10) per share due to the company’s sale of its
entire interest in Select Income REIT (SIR) in 2014;
-
approximately ($0.02) per share from properties sold;
-
a net impact of approximately ($0.01) per share due to dilution from
the conversion of series D preferred shares to common shares;
-
approximately $0.08 per share from lower general & administrative
(G&A) expense, excluding shareholder litigation and transition
expenses;
-
approximately $0.06 per share from lower interest expense; and
-
approximately $0.02 per share from higher same property cash net
operating income (NOI), which was largely due to lower operating
expenses.
Normalized FFO begins with FFO and eliminates certain items that, by
their nature, are not comparable from period to period, non-cash items,
and items that tend to obscure the company’s operating performance.
Definitions of FFO and Normalized FFO and reconciliations to net income,
determined in accordance with U.S. generally accepted accounting
principles, or GAAP, are included at the end of this press release.
Net income attributable to common shareholders was $6.6 million, or
$0.05 per share, for the quarter ended March 31, 2015. This compares to
net income attributable to common shareholders of $9.3 million, or $0.08
per share for the quarter ended March 31, 2014.
The weighted average number of diluted common shares outstanding for the
quarter ended March 31, 2015 was 129,873,801 shares, compared to
118,399,846 for the quarter ended March 31, 2014.
Operating Highlights
As of March 31, 2014, the company’s portfolio consisted of 154
properties comprising 42.8 million square feet. For the quarter ended
March 31, 2015, operating results were as follows:
-
Same property cash NOI increased 2.5% when compared to the same period
in 2014, largely due to lower operating expenses that resulted from
property tax refunds.
-
Same property NOI decreased 1.0% when compared to the same period in
2014.
-
The same property portfolio was 85.9% leased, compared to 85.9% as of
December 31, 2014, and 86.6% as of March 31, 2014.
-
The company entered into leases for approximately 1,478,000 square
feet, including new leases for approximately 720,000 square feet and
lease renewals for approximately 758,000 square feet.
-
The company signed a new 260,000 square foot 13-year lease for the
headquarters space of Baxter’s bioscience spin-off, Baxalta, at 1200
Lakeside Drive in Bannockburn, IL.
-
Cash rental rates on new and renewal leases were flat compared to
prior cash rental rates for the same space.
-
GAAP rental rates on new and renewal leases were approximately 5.6%
higher than prior GAAP rental rates for the same space.
The definitions and reconciliations of same property NOI and same
property cash NOI to operating income, determined in accordance with
GAAP, are included at the end of this press release. Same property NOI
and same property cash NOI include properties continuously owned from
January 1, 2014 through March 31, 2015. Same property NOI and same
property cash NOI exclude amounts related to the settlement of
outstanding assets and liabilities of previously disposed properties
that are reflected in the company’s consolidated results.
Significant Events for the quarter ended March 31, 2015
-
The company entered into a new $1.15 billion Credit Agreement that
reduced the interest rate and extended the term of the company’s
unsecured revolving credit facility and term loan. The Credit
Agreement is comprised of a $750 million revolving credit facility, a
$200 million five-year term loan, and a $200 million seven-year term
loan.
-
The company sold three buildings totaling 167,000 square feet for
gross sales proceeds of $21.2 million, resulting in a gain on sale of
$5.9 million.
-
The company’s compensation committee approved the grant of equity
awards “2014 LTIP Awards” for fiscal year 2014 performance pursuant to
the Company’s previously disclosed long-term incentive program.
Pursuant to GAAP, the 2014 LTIP Awards have an aggregate value of
$13.3 million, which will be amortized into earnings over the
four-year plan period.
Subsequent Events
-
In April, the company entered into several contracts to sell 52
properties, representing over 8 million square feet, in various
portfolio and single asset transactions. Proceeds are anticipated to
total approximately $750 million. These transactions are projected to
close in the second and third quarter of 2015 but are subject to
customary closing conditions. There is no certainty that these
conditions will be met or that these transactions will close.
-
On May 1, 2015, the company redeemed the $138.8 million outstanding
5.75% senior unsecured notes due November 1, 2015. The notes were
redeemed in cash at a price of 100% of the principal amount of the
notes plus accrued and unpaid interest, up to, but excluding, the
redemption date.
Disposition Update
The company continues to pursue its previously announced plan to sell $2
to $3 billion of assets through 2017, creating capacity for future
opportunities as they arise. In addition to the 52 properties under
contract, the company has 32 properties representing over 9 million
square feet being marketed for sale. The company continues to focus on
strengthening its balance sheet and improving the performance of its
properties.
Earnings Conference Call & Supplemental Data
Equity Commonwealth will host a conference call on Thursday, May 7,
2015, at 9:00 a.m. Central Daylight Time to discuss first quarter 2015
results. The conference call will be available via live audio webcast on
the Investor Relations section of the company’s website (www.eqcre.com).
In addition, a replay of the audio webcast will be available on the
Investor Relations section of the company’s website.
A copy of EQC’s First Quarter 2015 Supplemental Operating and Financial
Data is available for download on the Investor Relations section of
EQC’s website at www.eqcre.com.
About Equity Commonwealth
Equity Commonwealth (NYSE: EQC) is an internally managed and
self-advised real estate investment trust (REIT). EQC is one of the
largest commercial office REITs in the United States, with a national
portfolio of 154 properties comprising 42.8 million square feet and
executive offices in Chicago, IL.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this press release constitute
forward-looking statements within the meaning of the federal securities
laws, including, but not limited to, statements regarding marketing the
company’s properties for sale, de-levering the balance sheet,
consummating asset sales, and identifying future investment
opportunities. Any forward-looking statements contained in this press
release are intended to be made pursuant to the safe harbor provisions
of Section 21E of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to expectations, beliefs, projections,
future plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts. In some
cases, you can identify forward-looking statements by the use of
forward-looking terminology such as “may,” “will,” “should,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
or “potential” or the negative of these words and phrases or similar
words or phrases which are predictions of or indicate future events or
trends and which do not relate solely to historical matters. You can
also identify forward-looking statements by discussions of strategy,
plans or intentions.
The forward-looking statements contained in this press release reflect
the company’s current views about future events and are subject to
numerous known and unknown risks, uncertainties, assumptions and changes
in circumstances that may cause the company’s actual results to differ
significantly from those expressed in any forward-looking statement. We
do not guarantee that the transactions and events described will happen
as described (or that they will happen at all).
While forward-looking statements reflect the company’s good faith
beliefs, they are not guarantees of future performance. We disclaim any
obligation to publicly update or revise any forward-looking statement to
reflect changes in underlying assumptions or factors, of new
information, data or methods, future events or other changes. For a
further discussion of these and other factors that could cause the
company’s future results to differ materially from any forward-looking
statements, see the section entitled “Risk Factors” in the company’s
most recent Annual Report on Form 10-K and in the company’s Quarterly
Reports on Form 10-Q for subsequent quarters.
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
(amounts in thousands, except share data)
|
|
|
|
|
|
| March 31, 2015 |
| December 31, 2014 |
| ASSETS |
|
|
|
|
|
Real estate properties:
| | |
| |
|
Land
| |
$
|
705,222
| | |
$
|
714,238
| |
|
Buildings and improvements
| |
4,994,374
|
| |
5,014,205
|
|
| |
5,699,596
| | |
5,728,443
| |
|
Accumulated depreciation
| |
(1,066,369
|
)
| |
(1,030,445
|
)
|
| |
4,633,227
| | |
4,697,998
| |
|
Acquired real estate leases, net
| |
184,894
| | |
198,287
| |
|
Cash and cash equivalents
| |
421,736
| | |
364,516
| |
|
Restricted cash
| |
33,349
| | |
32,257
| |
|
Rents receivable, net of allowance for doubtful accounts of $8,110
and $6,565, respectively
| |
249,408
| | |
248,101
| |
|
Other assets, net
|
|
211,682
|
|
|
220,480
|
|
| Total assets |
| $ | 5,734,296 |
|
| $ | 5,761,639 |
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Revolving credit facility
| |
$
|
—
| | |
$
|
—
| |
|
Senior unsecured debt, net
| |
1,598,652
| | |
1,598,416
| |
|
Mortgage notes payable, net
| |
606,423
| | |
609,249
| |
|
Accounts payable and accrued expenses
| |
149,009
| | |
162,204
| |
|
Assumed real estate lease obligations, net
| |
24,220
| | |
26,784
| |
|
Rent collected in advance
| |
30,719
| | |
31,359
| |
|
Security deposits
|
|
14,095
|
|
|
14,044
|
|
| Total liabilities |
| $ | 2,423,118 |
|
| $ | 2,442,056 |
|
| | | |
|
|
Shareholders’ equity:
| | | | |
|
Preferred shares of beneficial interest, $0.01 par value: 50,000,000
shares authorized;
| | | | |
|
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196
and 4,915,497
| | | | | | | | |
|
shares issued and outstanding, respectively, aggregate liquidation
preference of
| | | | | | | | |
| $122,880 and $122,887, respectively
| |
$
|
119,263
| | |
$
|
119,266
| |
|
Series E preferred shares; 7 1/4% cumulative redeemable on or after
May 15, 2016;
| | | | | | |
|
11,000,000 shares issued and outstanding, aggregate liquidation
preference $275,000 | |
265,391
| | |
265,391
| |
| | | | | |
|
|
Common shares of beneficial interest, $0.01 par value: 350,000,000
shares authorized;
| | | | | | |
|
129,733,742 and 129,607,279 shares issued and outstanding,
respectively
| |
1,297
| | |
1,296
| |
|
Additional paid in capital
| |
4,491,093
| | |
4,487,133
| |
|
Cumulative net income
| |
2,247,482
| | |
2,233,852
| |
|
Cumulative other comprehensive loss
| |
(72,228
|
)
| |
(53,216
|
)
|
|
Cumulative common distributions
| |
(3,111,868
|
)
| |
(3,111,868
|
)
|
|
Cumulative preferred distributions
|
|
(629,252
|
)
|
|
(622,271
|
)
|
| Total shareholders’ equity |
| $ | 3,311,178 |
|
| $ | 3,319,583 |
|
| Total liabilities and shareholders’ equity |
| $ | 5,734,296 |
|
| $ | 5,761,639 |
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(amounts in thousands, except per share data) |
|
|
|
| | For the Three Months Ended |
| | March 31, |
| | 2015 |
| 2014 |
|
Revenues
| | |
| |
|
Rental income(1) | |
$
|
167,972
| | |
$
|
172,040
| |
|
Tenant reimbursements and other income
|
|
45,083
|
|
|
45,220
|
|
| Total revenues |
| $ | 213,055 |
|
| $ | 217,260 |
|
| | | |
|
|
Expenses:
| | | | |
|
Operating expenses
| |
$
|
97,871
| | |
$
|
101,731
| |
|
Depreciation and amortization
| |
62,699
| | |
51,649
| |
|
General and administrative
| |
16,558
| | |
24,848
| |
|
Loss (reversal of loss) on asset impairment
| |
1,904
| | |
(4,761
|
)
|
|
Acquisition related costs
|
|
—
|
|
|
5
|
|
| Total expenses |
| $ | 179,032 |
|
| $ | 173,472 |
|
|
|
|
|
|
|
| Operating income |
| $ | 34,023 |
|
| $ | 43,788 |
|
| | | |
|
|
Interest and other income
| |
3,448
| | |
384
| |
|
Interest expense (including net amortization of debt discounts,
premiums
| | | | | | |
|
and deferred financing fees of $29 and $(309), respectively)
| |
(29,842
|
)
| |
(37,935
|
)
|
|
Loss on early extinguishment of debt
| |
(428
|
)
| |
—
| |
|
Gain on issuance of shares by an equity investee
| |
—
| | |
109
| |
|
Gain on sale of properties
| |
5,868
|
| |
—
|
|
|
Income from continuing operations before income taxes and equity in
| | | | | | |
|
earnings of investees
| |
13,069
| | |
6,346
| |
|
Income tax benefit (expense)
| |
561
| | |
(555
|
)
|
|
Equity in earnings of investees
| |
—
|
| |
10,934
|
|
|
Income from continuing operations
| |
13,630
| | |
16,725
| |
|
Discontinued operations:
| | | | |
|
Income from discontinued operations
| |
—
| | |
4,011
| |
|
Loss on asset impairment from discontinued operations
|
|
—
|
|
|
(288
|
)
|
| Net income |
| $ | 13,630 |
|
| $ | 20,448 |
|
|
Preferred distributions
|
|
(6,981
|
)
|
|
(11,151
|
)
|
| Net income attributable to Equity Commonwealth common shareholders |
| $ | 6,649 |
|
| $ | 9,297 |
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(amounts in thousands, except per share data) |
|
|
|
| | For the Three Months Ended |
| | March 31, |
| | 2015 |
| 2014 |
|
Amounts attributable to Equity Commonwealth common shareholders:
| | |
| |
|
Income from continuing operations
| |
$
|
6,649
| | |
$
|
5,574
| |
|
Income from discontinued operations
| |
—
| | |
4,011
| |
|
Loss on asset impairment from discontinued operations
| |
—
|
| |
(288
|
)
|
|
Net income
| |
$
|
6,649
|
| |
$
|
9,297
|
|
| | | |
|
|
Weighted average common shares outstanding — basic (2) | |
129,696
|
| |
118,400
|
|
|
Weighted average common shares outstanding — diluted (2) | |
129,874
|
| |
118,400
|
|
| | | |
|
|
Basic and diluted earnings per common share attributable to Equity
| | | | |
|
Commonwealth common shareholders:
| | | | |
|
Income from continuing operations
| |
$
|
0.05
|
| |
$
|
0.05
|
|
|
Income from discontinued operations
| |
$
|
—
|
| |
$
|
0.03
|
|
|
Net income
| |
$
|
0.05
|
| |
$
|
0.08
|
|
|
|
|
(1)
|
|
We report rental income on a straight line basis over the terms of
the respective leases; rental income and income from discontinued
operations include non-cash straight line rent adjustments. Rental
income and income from discontinued operations also included
non-cash amortization of intangible lease assets and liabilities.
|
| |
|
|
(2)
| |
As of March 31, 2015, we had 4,915 series D preferred shares
outstanding that were convertible into 2,363 of our common shares,
which were anti-dilutive for earnings per common share attributable
to EQC common shareholders for all periods presented. 254 common
shares (178 common shares on a weighted average basis) would be
issued to the RSU holders if the market-based vesting component of
the RSUs was measured as of March 31, 2015. No RSUs had been issued
as of March 31, 2014.
|
|
|
CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO |
(amounts in thousands) |
|
| |
|
|
| | | | For the Three Months Ended |
| | | | March 31, |
|
|
|
|
| 2015 |
| 2014 |
|
|
| Calculation of FFO |
|
|
|
|
| |
Net income
| |
$
|
13,630
| |
|
$
|
20,448
| |
|
Plus:
| |
Depreciation and amortization
| |
62,699
| | |
51,649
| |
| |
Loss on asset impairment from discontinued operations
| |
—
| | |
288
| |
| |
FFO from equity investees
| |
—
| | |
14,940
| |
|
Less:
| |
Loss (reversal of loss) on asset impairment from continuing
operations (1) | |
1,904
| | |
(4,761
|
)
|
| |
Gain on sale of properties
| |
(5,868
|
)
| |
—
| |
| |
Equity in earnings of investees
| |
—
|
| |
(10,934
|
)
|
| |
FFO attributable to Equity Commonwealth | |
72,365
| | |
71,630
| |
|
Less:
|
|
Preferred distributions
|
|
(6,981
|
)
|
|
(11,151
|
)
|
|
|
| FFO attributable to EQC Common Shareholders |
| $ | 65,384 |
|
| $ | 60,479 |
|
|
|
|
|
|
|
|
|
|
|
| Calculation of Normalized FFO |
|
|
|
|
| |
FFO attributable to EQC common shareholders
| |
$
|
65,384
| | |
$
|
60,479
| |
| |
Recurring adjustments:
| | | | |
| |
Lease value amortization
| |
1,474
| | |
2,252
| |
| |
Straight line rent from continuing operations
| |
181
| | |
(5,896
|
)
|
| |
Straight line rent from discontinued operations
| |
—
| | |
(81
|
)
|
| |
Loss on early extinguishment of debt
| |
428
| | |
—
| |
| |
Minimum cash rent from direct financing lease (2) | |
2,032
| | |
2,032
| |
| |
Gain on issuance of shares by an equity investee
| |
—
| | |
(109
|
)
|
| |
Interest earned from direct financing lease
| |
(141
|
)
| |
(229
|
)
|
| |
Normalized FFO from equity investees, net of FFO
| |
—
| | |
(1,399
|
)
|
| |
Other items which affect comparability:
| | | | |
| |
Shareholder litigation and transition related expenses (3) | |
3,472
| | |
3,913
| |
| |
Transition services fee
| |
2,235
| | |
—
| |
| |
Acquisition related costs
| |
—
| | |
5
| |
|
|
|
Gain on sale of securities
|
|
(3,080
|
)
|
|
—
|
|
|
|
| Normalized FFO attributable to EQC Common Shareholders |
| $ | 71,985 |
|
| $ | 60,967 |
|
| | | | | |
|
| |
Weighted average common shares outstanding -- basic
| |
129,696
|
| |
118,400
|
|
| |
Weighted average common shares outstanding -- diluted (4) | |
129,874
|
|
|
118,400
|
|
| |
FFO attributable to EQC common shareholders per share -- basic &
diluted (4) | |
$
|
0.50
|
| |
$
|
0.51
|
|
| |
Normalized FFO attributable to EQC common shareholders per share --
basic (4) | |
$
|
0.56
|
| |
$
|
0.51
|
|
| |
Normalized FFO attributable to EQC common shareholders per share --
diluted (4) | |
$
|
0.55
|
| |
$
|
0.51
|
|
|
| |
|
(1)
| |
During the three months ended March 31, 2015, we recorded an
impairment charge of $1.9 million related to 12655 Olive Boulevard
and 1285 Fern Ridge Parkway, based upon updated market information
in accordance with our impairment analysis procedures. In 2014, we
ceased to actively market properties which we had previously
classified as held for sale. These properties were reclassified to
properties held and used in operations because they no longer met
the requirements for classification as held for sale. In connection
with this reclassification, we reversed previously recorded
impairment losses totaling $4.8 million, which includes the
elimination of estimated costs to sell.
|
| |
|
|
(2)
| |
Contractual cash payments (including management fees) from one
tenant at Arizona Center for the three months ended March 31, 2015
and 2014 were $2,032. These payments will decrease to approximately
$515 per year beginning in 2016. Our calculation of Normalized FFO
reflects the cash payments received from this tenant. The terms of
this tenant's lease require us to classify the lease as a direct
financing (or capital) lease. As such, the revenue recognized on a
GAAP basis within our condensed consolidated statements of
operations was $141 and $229 for the three months ended March 31,
2015 and 2014, respectively. This direct financing lease has an
expiration date in 2045.
|
| |
|
|
(3)
| |
Refer to the Additional Income Statement Information for a
discussion of expenses related to the shareholder-approved
Related/Corvex consent solicitation liability.
|
| |
|
|
(4)
| |
As of March 31, 2015, we had 4,915 series D preferred shares
outstanding that were convertible into 2,363 of our common shares,
which were anti-dilutive for FFO and Normalized FFO per common share
for all periods presented. 254 common shares (178 common shares on a
weighted average basis) would be issued to the RSU holders if the
market-based vesting component of the RSUs was measured as of March
31, 2015. No RSUs had been issued as of March 31, 2014.
|
|
|
|
We compute FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts (NAREIT).
NAREIT defines FFO as net income (loss), calculated in accordance
with GAAP, excluding real estate depreciation and amortization,
gains (or losses) from sales of depreciable property, impairment of
depreciable real estate, and our portion of these items related to
equity investees and noncontrolling interests. Normalized FFO begins
with FFO and excludes lease value amortization, straight line rent,
gains and losses on early extinguishment of debt, gains and losses
on the sale of equity investments, gains and losses on the issuance
of shares by an equity investee, shareholder litigation and
transition-related expenses, acquisition related costs, interest
earned from a direct financing lease, gain on sale of securities,
and our portion of these items related to equity investees and
noncontrolling interests. Normalized FFO also includes the minimum
cash rent from a direct financing lease. We consider FFO and
Normalized FFO to be appropriate measures of operating performance
for a REIT, along with net income, net income attributable to Equity
Commonwealth, net income attributable to EQC common shareholders,
operating income and cash flow from operating activities.
|
|
|
|
We believe that FFO and Normalized FFO provide useful information to
investors because by excluding the effects of certain historical
amounts, such as depreciation expense, FFO and Normalized FFO may
facilitate a comparison of our operating performance between periods
and with other REITs. FFO and Normalized FFO are among the factors
considered by our Board of Trustees when determining the amount of
distributions to our shareholders. FFO and Normalized FFO do not
represent cash generated by operating activities in accordance with
GAAP and should not be considered as alternatives to net income, net
income attributable to EQC common shareholders, operating income or
cash flow from operating activities, determined in accordance with
GAAP, or as indicators of our financial performance or liquidity,
nor are these measures necessarily indicative of sufficient cash
flow to fund all of our needs. These measures should be considered
in conjunction with net income, net income attributable to EQC
common shareholders, operating income and cash flow from operating
activities as presented in our condensed consolidated statements of
operations, condensed consolidated statements of comprehensive
income (loss) and condensed consolidated statements of cash flows.
Other REITs and real estate companies may calculate FFO and
Normalized FFO differently than we do.
|
|
|
CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND
SAME PROPERTY CASH BASIS NOI |
(amounts in thousands) |
|
|
|
| | For the Three Months Ended |
| | March 31, |
| | 2015 |
| 2014 |
| Calculation of Same Property NOI and Same Property Cash Basis NOI (1): | | |
| |
|
Rental income
| |
$
|
167,972
| | |
$
|
172,040
| |
|
Tenant reimbursements and other income
| |
45,083
| | |
45,220
| |
|
Operating expenses
|
|
(97,871
|
)
|
|
(101,731
|
)
|
| NOI |
| $ | 115,184 |
|
| $ | 115,529 |
|
|
Straight line rent
| |
181
| | |
(5,896
|
)
|
|
Lease value amortization
| |
1,474
| | |
2,252
| |
|
Lease termination fees
|
|
(1,949
|
)
|
|
(593
|
)
|
| Cash Basis NOI |
| $ | 114,890 |
|
| $ | 111,292 |
|
|
Cash Basis NOI from non-same properties (2) |
|
(1,200
|
)
|
|
(397
|
)
|
| Same Property Cash Basis NOI |
| $ | 113,690 |
|
| $ | 110,895 |
|
|
Non-cash rental and termination income from same properties
|
|
321
|
|
|
4,236
|
|
| Same Property NOI |
| $ | 114,011 |
|
| $ | 115,131 |
|
| | | |
|
| Reconciliation of Same Property NOI to GAAP Operating Income |
|
|
|
|
| Same Property NOI |
| $ | 114,011 |
|
| $ | 115,131 |
|
|
Non-cash rental and termination income from same properties
|
|
(321
|
)
|
|
(4,236
|
)
|
| Same Property Cash Basis NOI |
| $ | 113,690 |
|
| $ | 110,895 |
|
|
Cash Basis NOI from non-same properties (2) |
|
1,200
|
|
|
397
|
|
| Cash Basis NOI |
| $ | 114,890 |
|
| $ | 111,292 |
|
|
Straight line rent
| |
(181
|
)
| |
5,896
| |
|
Lease value amortization
| |
(1,474
|
)
| |
(2,252
|
)
|
|
Lease termination fees
|
|
1,949
|
|
|
593
|
|
| NOI |
| $ | 115,184 |
|
| $ | 115,529 |
|
|
Depreciation and amortization
| |
(62,699
|
)
| |
(51,649
|
)
|
|
General and administrative
| |
(16,558
|
)
| |
(24,848
|
)
|
|
(Loss) reversal of loss on asset impairment
| |
(1,904
|
)
| |
4,761
| |
|
Acquisition related costs
|
|
—
|
|
|
(5
|
)
|
| Operating Income |
| $ | 34,023 |
|
| $ | 43,788 |
|
|
|
|
|
(1)
|
|
Properties sold and properties classified as discontinued operations
are excluded. Same property results include properties continuously
owned from January 1, 2014 through March 31, 2015. Amounts related
to the settlement of outstanding assets and liabilities of
previously-disposed properties that are reflected in our
consolidated results are excluded from same property results.
|
| | |
|
|
(2)
| |
Cash Basis NOI from non-same properties for the three months ended
March 31, 2015 includes real estate tax refunds related to
previously-disposed properties of $1.0 million. Cash Basis NOI from
non-same properties for all periods presented includes the
settlement of outstanding assets and liabilities of
previously-disposed properties.
|
|
|
|
We define NOI as income from our real estate including lease
termination fees received from tenants less our property operating
expenses, which expenses include property marketing costs. NOI
excludes amortization of capitalized tenant improvement costs and
leasing commissions. We define Cash Basis NOI as NOI less non cash
straight line rent adjustments, lease value amortization and lease
termination fees.
|
|
|
|
We consider NOI and Cash Basis NOI to be appropriate supplemental
measures to net income because they may help both investors and
management to understand the operations of our properties. We use
NOI and Cash Basis NOI internally to evaluate individual, regional
and combined property level performance, and we believe that NOI and
Cash Basis NOI provide useful information to investors regarding our
results of operations because they reflect only those income and
expense items that are incurred at the property level and may
facilitate comparisons of our operating performance between periods
and with other REITs. The calculations of NOI and Cash Basis NOI
exclude certain components of net income in order to provide results
that are more closely related to our properties' results of
operations. NOI and Cash Basis NOI do not represent cash generated
by operating activities in accordance with GAAP, and should not be
considered as alternatives to net income, net income attributable to
Equity Commonwealth, net income attributable to EQC common
shareholders, operating income or cash flow from operating
activities, determined in accordance with GAAP, or as indicators of
our financial performance or liquidity, nor are these measures
necessarily indicative of sufficient cash flow to fund all of our
needs. These measures should be considered in conjunction with net
income, net income attributable to Equity Commonwealth, net income
attributable to EQC common shareholders, operating income and cash
flow from operating activities as presented in our condensed
consolidated statements of operations, condensed consolidated
statements of comprehensive income (loss) and condensed consolidated
statements of cash flows. Other REITs and real estate companies may
calculate NOI and Cash Basis NOI differently than we do.
|
|
|
Equity Commonwealth
Sarah Byrnes, Investor Relations
(312)
646-2801
www.eqcre.com
Source: Equity Commonwealth