CHICAGO--(BUSINESS WIRE)--
Equity Commonwealth (NYSE: EQC) today reported financial results for the
quarter ended September 30, 2016. All per share results are reported on
a diluted basis.
Financial results for the quarter ended September 30, 2016
Operating income was $22.9 million for the quarter ended September 30,
2016. This compares to $28.9 million for the quarter ended September 30,
2015. The decline in operating income was primarily due to property
sales.
Net income attributable to common shareholders was $84.4 million, or
$0.67 per share, for the quarter ended September 30, 2016. This compares
to net income attributable to common shareholders of $23.5 million, or
$0.18 per share, for the quarter ended September 30, 2015. The increase
in net income was primarily due to an increase in gains from property
sales.
Funds from Operations (FFO), as defined by the National Association of
Real Estate Investment Trusts, for the quarter ended September 30, 2016,
were $31.1 million, or $0.25 per share. This compares to FFO for the
quarter ended September 30, 2015 of $24.2 million, or $0.19 per share.
Normalized FFO was $28.9 million, or $0.23 per share. This compares to
Normalized FFO for the quarter ended September 30, 2015 of $46.4
million, or $0.36 per share. The following items impacted Normalized FFO
for the quarter ended September 30, 2016, compared to the corresponding
2015 period:
-
($0.19) per share of income from properties sold;
- $0.04 per share of preferred distribution savings; and
- $0.03 per share of interest expense savings.
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, 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.
The weighted average number of diluted common shares outstanding for the
quarter ended September 30, 2016 was 126,568,096 shares, compared to
129,878,396 for the quarter ended September 30, 2015.
Same property results for the quarter ended September 30, 2016
The company’s same property portfolio consisted of 37 properties
totaling 16.7 million square feet, which excluded one property
designated as held for sale at the end of the quarter that has
subsequently been sold. Operating results were as follows:
-
The same property portfolio was 91.2% leased as of September 30, 2016,
compared to 91.3% as of June 30, 2016, and 92.5% as of September 30,
2015.
-
The company entered into leases for approximately 237,000 square feet,
including renewal leases for approximately 46,000 square feet and new
leases for approximately 191,000 square feet.
-
GAAP rental rates on new and renewal leases were 9.0% higher compared
to prior GAAP rental rates for the same space.
-
Cash rental rates on new and renewal leases were 5.8% lower compared
to prior cash rental rates for the same space.
-
Same property NOI increased 3.5% when compared to 2015, due to a
one-time parking charge and a non-cash item related to a tenant
bankruptcy totaling $2.8 million in 2015.
-
Same property cash NOI decreased 0.1% when compared to 2015, which
included $1.7 million from the one-time parking charge in 2015.
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. The same property
portfolio includes properties continuously owned from July 1, 2015
through September 30, 2016 and excludes properties owned during this
period that are designated as held for sale.
Significant events during the quarter ended September 30, 2016
-
The company sold 11 properties totaling 5,182,694 square feet for a
gross sales price of $728.6 million at a weighted average cap rate in
the mid-7% range. Proceeds after credits for rent abatements and
contractual lease costs were $663.7 million.
Subsequent Events
-
The company closed on the sale of 7800 Shoal Creek Boulevard a 151,917
square foot 4-building property in Austin, TX for a gross sale price
of $29.2 million. This property was held for sale as of September 30,
2016.
-
The company called the $250 million 6.25% senior unsecured notes due
June 2017 for redemption on December 15, 2016.
Disposition Update
The company continues to pursue its previously announced plan to
reposition its portfolio through active asset management and
dispositions. Year-to-date, through November 2, 2016, the company has
sold $1.2 billion of properties at a weighted average cap rate in the
high 6% range. Since the change in management in 2014, the company has
sold $4.1 billion of assets. Proceeds generated from these sales are
creating capacity for future opportunities. The company currently has 12
properties totaling 5 million square feet in various stages of the sale
process.
Earnings Conference Call & Supplemental Data
Equity Commonwealth will host a conference call to discuss third quarter
results on Thursday, November 3, 2016, at 9:00 A.M. CDT. The conference
call will be available via live audio webcast on the Investor Relations
section of the company’s website (www.eqcre.com).
A replay of the audio webcast will also be available following the call.
A copy of EQC’s Third Quarter 2016 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 a Chicago based, internally managed
and self-advised real estate investment trust (REIT) with commercial
office properties throughout the United States. EQC’s portfolio is
comprised of 37 properties and 16.7 million square feet.
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 the redemption
of the company’s 6.25% senior unsecured notes due June 2017, marketing
the company’s properties for sale, 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,”
“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)
|
|
|
|
|
|
|
|
| September 30, 2016 |
| December 31, 2015 |
| ASSETS |
|
|
|
|
|
Real estate properties:
| | |
| |
|
Land
| |
$
|
293,225
| | |
$
|
389,410
| |
|
Buildings and improvements
| |
2,642,588
|
| |
3,497,942
|
|
| |
2,935,813
| | |
3,887,352
| |
|
Accumulated depreciation
| |
(751,882
|
)
| |
(898,939
|
)
|
| |
2,183,931
| | |
2,988,413
| |
|
Properties held for sale
| |
13,463
| | |
—
| |
|
Acquired real estate leases, net
| |
52,017
| | |
88,760
| |
|
Cash and cash equivalents
| |
2,405,174
| | |
1,802,729
| |
|
Restricted cash
| |
36,755
| | |
32,245
| |
|
Rents receivable, net of allowance for doubtful accounts of $4,515
and $7,715, respectively
| |
150,728
| | |
174,676
| |
|
Other assets, net
|
|
123,699
|
|
|
144,341
|
|
| Total assets |
| $ | 4,965,767 |
|
| $ | 5,231,164 |
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Revolving credit facility
| |
$
|
—
| | |
$
|
—
| |
|
Senior unsecured debt, net
| |
1,313,267
| | |
1,450,606
| |
|
Mortgage notes payable, net
| |
243,993
| | |
246,510
| |
|
Liabilities related to properties held for sale
| |
667
| | |
—
| |
|
Accounts payable and accrued expenses
| |
87,003
| | |
123,587
| |
|
Assumed real estate lease obligations, net
| |
2,140
| | |
4,296
| |
|
Rent collected in advance
| |
21,529
| | |
27,340
| |
|
Security deposits
|
|
8,128
|
|
|
10,338
|
|
| Total liabilities |
| $ | 1,676,727 |
|
| $ | 1,862,677 |
|
| | | |
|
|
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
shares issued and outstanding, aggregate liquidation preference of
$122,880 | |
$
|
119,263
| | |
$
|
119,263
| |
|
Series E preferred shares; 7 1/4% cumulative redeemable on or after
May 15, 2016; 0 and 11,000,000 shares issued and outstanding,
respectively, aggregate liquidation preference $0 and $275,000,
respectively
| |
—
| | |
265,391
| |
|
Common shares of beneficial interest, $0.01 par value: 350,000,000
shares authorized; 125,532,523 and 126,349,914 shares issued and
outstanding, respectively
| |
1,255
| | |
1,263
| |
|
Additional paid in capital
| |
4,402,927
| | |
4,414,611
| |
|
Cumulative net income
| |
2,554,343
| | |
2,333,709
| |
|
Cumulative other comprehensive loss
| |
(1,117
|
)
| |
(3,687
|
)
|
|
Cumulative common distributions
| |
(3,111,868
|
)
| |
(3,111,868
|
)
|
|
Cumulative preferred distributions
|
|
(675,763
|
)
|
|
(650,195
|
)
|
| Total shareholders’ equity |
| $ | 3,289,040 |
|
| $ | 3,368,487 |
|
| Total liabilities and shareholders’ equity |
| $ | 4,965,767 |
|
| $ | 5,231,164 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per share data) |
|
|
|
|
|
| | Three Months Ended |
| Nine Months Ended |
| | September 30, | | September 30, |
| | 2016 |
| 2015 |
| 2016 |
| 2015 |
|
Revenues:
| | |
| | | |
| |
|
Rental income
| |
$
|
92,722
| | |
$
|
125,459
| | |
$
|
324,345
| | |
$
|
457,128
| |
|
Tenant reimbursements and other income
|
|
21,910
|
|
|
33,749
|
|
|
72,789
|
|
|
118,829
|
|
| Total revenues |
| $ | 114,632 |
|
| $ | 159,208 |
|
| $ | 397,134 |
|
| $ | 575,957 |
|
| | | | | | | |
|
|
Expenses:
| | | | | | | | |
|
Operating expenses
| |
$
|
49,313
| | |
$
|
73,571
| | |
$
|
157,964
| | |
$
|
261,128
| |
|
Depreciation and amortization
| |
29,184
| | |
40,522
| | |
102,766
| | |
156,858
| |
|
General and administrative
| |
13,277
| | |
16,249
| | |
38,766
| | |
43,718
| |
|
Loss on asset impairment
|
|
—
|
|
|
—
|
|
|
43,736
|
|
|
17,162
|
|
| Total expenses |
| $ | 91,774 |
|
| $ | 130,342 |
|
| $ | 343,232 |
|
| $ | 478,866 |
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
| $ | 22,858 |
|
| $ | 28,866 |
|
| $ | 53,902 |
|
| $ | 97,091 |
|
| | | | | | | |
|
|
Interest and other income
| |
3,013
| | |
637
| | |
7,184
| | |
4,813
| |
|
Interest expense (including net amortization of debt discounts,
premiums and deferred financing fees of $948, $171, $2,880 and $23,
respectively)
| |
(21,427
|
)
| |
(25,111
|
)
| |
(65,074
|
)
| |
(82,926
|
)
|
|
(Loss) gain on early extinguishment of debt
| |
—
| | |
(3,887
|
)
| |
(118
|
)
| |
6,111
| |
|
Foreign currency exchange loss
| |
—
| | |
(9,809
|
)
| |
(5
|
)
| |
(8,953
|
)
|
|
Gain on sale of properties
| |
82,169
|
| |
39,793
|
| |
225,210
|
| |
42,953
|
|
|
Income before income taxes
| |
86,613
| | |
30,489
| | |
221,099
| | |
59,089
| |
|
Income tax expense
|
|
(225
|
)
|
|
(23
|
)
|
|
(465
|
)
|
|
(2,377
|
)
|
| Net income |
| $ | 86,388 |
|
| $ | 30,466 |
|
| $ | 220,634 |
|
| $ | 56,712 |
|
|
Preferred distributions
| |
(1,997
|
)
| |
(6,981
|
)
| |
(15,959
|
)
| |
(20,943
|
)
|
|
Excess fair value of consideration paid over carrying value of
preferred shares (1) |
|
—
|
|
|
—
|
|
|
(9,609
|
)
|
|
—
|
|
| Net income attributable to Equity Commonwealth common shareholders |
| $ | 84,391 |
|
| $ | 23,485 |
|
| $ | 195,066 |
|
| $ | 35,769 |
|
| | | | | | | | | | | | |
|
|
Weighted average common shares outstanding — basic
| | |
125,533
|
| |
128,739
|
| |
125,627
|
| |
129,386
|
|
|
Weighted average common shares outstanding — diluted (2) | | |
126,568
|
| |
129,878
|
| |
127,009
|
| |
130,093
|
|
| | | | | | | | |
|
|
Earnings per common share attributable to Equity Commonwealth common
shareholders:
| | | | | | | | | |
|
Basic
| | |
$
|
0.67
|
| |
$
|
0.18
|
| |
$
|
1.55
|
| |
$
|
0.28
|
|
|
Diluted
| | |
$
|
0.67
|
| |
$
|
0.18
|
| |
$
|
1.54
|
| |
$
|
0.27
|
|
|
(1)
|
|
On May 15, 2016, we redeemed all of our 11,000,000 outstanding
series E preferred shares at a price of $25.00 per share, for a
total of $275.0 million, plus any accrued and unpaid dividends.
The redemption payment occurred on May 16, 2016 (the first
business day following the redemption date). We recorded $9.6
million related to the excess fair value of consideration paid
over the carrying value of the preferred shares as a reduction to
net income attributable to Equity Commonwealth common shareholders
for the nine months ended September 30, 2016.
|
|
(2)
| |
As of September 30, 2016, we had granted RSUs to certain employees,
officers, and the Chairman of the Board of Trustees. The RSUs
contain both service and market-based vesting components. None of
the RSUs have vested. If the market-based vesting component was
measured as of September 30, 2016, and 2015, 1,035 and 1,139 common
shares would be issued to the RSU holders, respectively. Using a
weighted average basis, 1,035 and 1,139 common shares are reflected
in diluted earnings per common share, diluted FFO per common share,
and diluted Normalized FFO per common share for the three months
ended September 30, 2016 and 2015, respectively, and 1,382 and 707
common shares are reflected in these measures for the nine months
ended September 30, 2016 and 2015 respectively.
|
CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO (amounts in thousands, except per share data) |
|
|
|
|
|
| | Three Months Ended |
| Nine Months Ended |
| | September 30, | | September 30, |
|
|
| 2016 |
| 2015 |
| 2016 |
| 2015 |
| Calculation of FFO |
|
|
|
|
|
|
|
|
|
Net income
| |
$
|
86,388
| |
|
$
|
30,466
| | |
$
|
220,634
| |
|
$
|
56,712
| |
|
Real estate depreciation and amortization
| |
28,907
| | |
40,522
| | |
102,015
| | |
156,858
| |
|
Loss on asset impairment
| |
—
| | |
—
| | |
43,736
| | |
17,162
| |
|
Gain on sale of properties
| |
(82,169
|
)
| |
(39,793
|
)
| |
(225,210
|
)
| |
(42,953
|
)
|
|
FFO attributable to Equity Commonwealth | |
33,126
| | |
31,195
| | |
141,175
| | |
187,779
| |
|
Preferred distributions
| |
(1,997
|
)
| |
(6,981
|
)
| |
(15,959
|
)
| |
(20,943
|
)
|
|
Excess fair value of consideration paid over carrying value of
preferred shares (1) |
|
—
|
|
|
—
|
|
|
(9,609
|
)
|
|
—
|
|
| FFO attributable to EQC Common Shareholders |
| $ | 31,129 |
|
| $ | 24,214 |
|
| $ | 115,607 |
|
| $ | 166,836 |
|
|
|
|
|
|
|
|
|
|
|
| Calculation of Normalized FFO |
|
|
|
|
|
|
|
|
|
FFO attributable to EQC common shareholders
| |
$
|
31,129
| | |
$
|
24,214
| | |
$
|
115,607
| | |
$
|
166,836
| |
|
Lease value amortization
| |
882
| | |
2,766
| | |
5,870
| | |
6,033
| |
|
Straight line rent adjustments
| |
(2,954
|
)
| |
(1,901
|
)
| |
(12,384
|
)
| |
(3,584
|
)
|
|
Loss (gain) on early extinguishment of debt
| |
—
| | |
3,887
| | |
118
| | |
(6,111
|
)
|
|
Minimum cash rent from direct financing lease (2) | |
—
| | |
2,032
| | |
—
| | |
6,096
| |
|
Interest earned from direct financing lease
| |
—
| | |
(96
|
)
| |
—
| | |
(356
|
)
|
|
Shareholder litigation and transition related expenses (3) | |
(138
|
)
| |
5,474
| | |
999
| | |
8,731
| |
|
Transition services fee
| |
—
| | |
198
| | |
—
| | |
2,613
| |
|
Gain on sale of securities
| |
—
| | |
—
| | |
—
| | |
(3,080
|
)
|
|
Foreign currency exchange loss
| |
—
| | |
9,809
| | |
5
| | |
8,953
| |
|
Excess fair value of consideration paid over carrying value of
preferred shares (1) |
|
—
|
|
|
—
|
|
|
9,609
|
|
|
—
|
|
| Normalized FFO attributable to EQC Common Shareholders |
| $ | 28,919 |
|
| $ | 46,383 |
|
| $ | 119,824 |
|
| $ | 186,131 |
|
| | | | | | | |
|
|
Weighted average common shares outstanding -- basic
| |
125,533
|
| |
128,739
|
| |
125,627
|
| |
129,386
|
|
|
Weighted average common shares outstanding -- diluted (4) | |
126,568
|
| |
129,878
|
| |
127,009
|
| |
130,093
|
|
|
FFO attributable to EQC common shareholders per share -- basic
| |
$
|
0.25
|
| |
$
|
0.19
|
| |
$
|
0.92
|
| |
$
|
1.29
|
|
|
FFO attributable to EQC common shareholders per share -- diluted
| |
$
|
0.25
|
| |
$
|
0.19
|
| |
$
|
0.91
|
| |
$
|
1.28
|
|
|
Normalized FFO attributable to EQC common shareholders per share --
basic
| |
$
|
0.23
|
| |
$
|
0.36
|
| |
$
|
0.95
|
| |
$
|
1.44
|
|
|
Normalized FFO attributable to EQC common shareholders per share --
diluted
| |
$
|
0.23
|
| |
$
|
0.36
|
| |
$
|
0.94
|
| |
$
|
1.43
|
|
|
(1)
|
|
On May 15, 2016, we redeemed all of our 11,000,000 outstanding
series E preferred shares at a price of $25.00 per share, for a
total of $275.0 million, plus any accrued and unpaid dividends.
The redemption payment occurred on May 16, 2016 (the first
business day following the redemption date). We recorded $9.6
million related to the excess fair value of consideration paid
over the carrying value of the preferred shares as a reduction to
FFO attributable to Equity Commonwealth common shareholders for
the nine months ended September 30, 2016.
|
|
(2)
| |
Amounts relate to contractual cash payments (including management
fees) from one tenant at Arizona Center. Arizona Center was sold
during the fourth quarter of 2015. Our calculation of Normalized FFO
reflects the cash payments received from this tenant. The terms of
this tenant's lease required 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 $104 and $379 for the three and nine months ended
September 30, 2015, respectively.
|
|
(3)
| |
Shareholder litigation and transition related expenses within
general and administrative for the three and nine months ended
September 30, 2016 is primarily related to the shareholder-approved
liability for the reimbursement of expenses incurred by
Related/Corvex since February 2013 in connection with their consent
solicitations to remove the former Trustees, elect the new Board of
Trustees and engage in related litigation. Approximately $16.7
million was reimbursed to Related/Corvex during 2014, and in August
2016 and 2015, we reimbursed $8.2 million and $8.4 million,
respectively, to Related/Corvex under the terms of the
shareholder-approved agreement. As of September 30, 2016, there is
no future obligation to pay any amounts under the
shareholder-approved agreement to Related/Corvex. No shareholder
litigation related expenses were incurred during 2016.
|
|
(4)
| |
As of September 30, 2016, we had granted RSUs to certain employees,
officers, and the Chairman of the Board of Trustees. The RSUs
contain both service and market-based vesting components. None of
the RSUs have vested. If the market-based vesting component was
measured as of September 30, 2016, and 2015, 1,035 and 1,139 common
shares would be issued to the RSU holders, respectively. Using a
weighted average basis, 1,035 and 1,139 common shares are reflected
in diluted earnings per common share, diluted FFO per common share,
and diluted Normalized FFO per common share for the three months
ended September 30, 2016 and 2015, respectively, and 1,382 and 707
common shares are reflected in these measures for the nine months
ended September 30, 2016 and 2015 respectively.
|
|
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. Our calculation of
Normalized FFO differs from NAREIT’s definition of FFO because we
exclude certain items that we view as nonrecurring or impacting
comparability from period to period. 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 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 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 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 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 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 |
| For the Nine Months Ended |
| | September 30, | | September 30, |
| | 2016 |
| 2015 |
| 2016 |
| 2015 |
| Calculation of Same Property NOI and Same Property Cash Basis NOI: | | |
| | | |
| |
|
Rental income
| |
$
|
92,722
| | |
$
|
125,459
| | |
$
|
324,345
| | |
$
|
457,128
| |
|
Tenant reimbursements and other income
| |
21,910
| | |
33,749
| | |
72,789
| | |
118,829
| |
|
Operating expenses
|
|
(49,313
|
)
|
|
(73,571
|
)
|
|
(157,964
|
)
|
|
(261,128
|
)
|
| NOI |
| $ | 65,319 |
|
| $ | 85,637 |
|
| $ | 239,170 |
|
| $ | 314,829 |
|
|
Straight line rent adjustments
| |
(2,954
|
)
| |
(1,901
|
)
| |
(12,384
|
)
| |
(3,584
|
)
|
|
Lease value amortization
| |
882
| | |
2,766
| | |
5,870
| | |
6,033
| |
|
Lease termination fees
|
|
(1,825
|
)
|
|
(1,759
|
)
|
|
(19,569
|
)
|
|
(7,875
|
)
|
| Cash Basis NOI |
| $ | 61,422 |
|
| $ | 84,743 |
|
| $ | 213,087 |
|
| $ | 309,403 |
|
|
Cash Basis NOI from non-same properties (1) |
|
(5,866
|
)
|
|
(29,142
|
)
|
|
(44,264
|
)
|
|
(134,062
|
)
|
| Same Property Cash Basis NOI |
| $ | 55,556 |
|
| $ | 55,601 |
|
| $ | 168,823 |
|
| $ | 175,341 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
2,393
|
|
|
411
|
|
|
10,554
|
|
|
(1,007
|
)
|
| Same Property NOI |
| $ | 57,949 |
|
| $ | 56,012 |
|
| $ | 179,377 |
|
| $ | 174,334 |
|
| | | | | | | |
|
| Reconciliation of Same Property NOI to GAAP Operating Income: |
|
|
|
|
|
|
|
|
| Same Property NOI |
| $ | 57,949 |
|
| $ | 56,012 |
|
| $ | 179,377 |
|
| $ | 174,334 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
(2,393
|
)
|
|
(411
|
)
|
|
(10,554
|
)
|
|
1,007
|
|
| Same Property Cash Basis NOI |
| $ | 55,556 |
|
| $ | 55,601 |
|
| $ | 168,823 |
|
| $ | 175,341 |
|
|
Cash Basis NOI from non-same properties (1) |
|
5,866
|
|
|
29,142
|
|
|
44,264
|
|
|
134,062
|
|
| Cash Basis NOI |
| $ | 61,422 |
|
| $ | 84,743 |
|
| $ | 213,087 |
|
| $ | 309,403 |
|
|
Straight line rent adjustments
| |
2,954
| | |
1,901
| | |
12,384
| | |
3,584
| |
|
Lease value amortization
| |
(882
|
)
| |
(2,766
|
)
| |
(5,870
|
)
| |
(6,033
|
)
|
|
Lease termination fees
|
|
1,825
|
|
|
1,759
|
|
|
19,569
|
|
|
7,875
|
|
| NOI |
| $ | 65,319 |
|
| $ | 85,637 |
|
| $ | 239,170 |
|
| $ | 314,829 |
|
|
Depreciation and amortization
| |
(29,184
|
)
| |
(40,522
|
)
| |
(102,766
|
)
| |
(156,858
|
)
|
|
General and administrative
| |
(13,277
|
)
| |
(16,249
|
)
| |
(38,766
|
)
| |
(43,718
|
)
|
|
Loss on asset impairment
|
|
—
|
|
|
—
|
|
|
(43,736
|
)
|
|
(17,162
|
)
|
| Operating Income |
| $ | 22,858 |
|
| $ | 28,866 |
|
| $ | 53,902 |
|
| $ | 97,091 |
|
|
(1)
|
|
Cash Basis NOI from non-same properties for all periods presented
includes the operations of properties disposed or classified as held
for sale.
|
|
NOI is income from our real estate including lease termination fees
received from tenants less our property operating expenses. NOI
excludes amortization of capitalized tenant improvement costs and
leasing commissions and corporate level expenses. Cash Basis NOI is
NOI excluding the effects of straight line rent adjustments, lease
value amortization, and lease termination fees. The quarter-to-date
same property versions of these measures include the results of
properties continuously owned from July 1, 2015 through September
30, 2016. The year-to-date same property versions of these measures
include the results of properties continuously owned from January 1,
2015 through September 30, 2016. Properties classified as held for
sale within our condensed consolidated balance sheets are excluded
from the same property versions of these measures.
|
|
|
|
We consider these measures to be appropriate supplemental measures
to net income because they help to understand the operations of our
properties. We use these measures internally to evaluate property
level performance, and we believe that they 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. Cash
Basis NOI is among the factors considered with respect to
acquisition, disposition and financing decisions. These measures do
not represent cash generated by operating activities in accordance
with GAAP and should not be considered as an alternative to net
income, net income attributable to Equity Commonwealth 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 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 and condensed consolidated statements of cash flows. Other
REITs and real estate companies may calculate these measures
differently than we do.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20161102006685/en/
Equity Commonwealth
Sarah Byrnes, Investor Relations
(312)
646-2801
[email protected]
Source: Equity Commonwealth