CHICAGO--(BUSINESS WIRE)--
Equity Commonwealth (NYSE: EQC) today reported financial results for the
quarter ended June 30, 2018. All per share results are reported on a
diluted basis.
Financial results for the quarter ended June 30, 2018
Net income attributable to common shareholders was $35.0 million, or
$0.29 per share, for the quarter ended June 30, 2018. This compares to
net loss attributable to common shareholders of $7.8 million, or $0.06
per share, for the quarter ended June 30, 2017. The increase in net
income was primarily due to gains from property sales and a decrease in
asset impairment.
Funds from Operations (FFO), as defined by the National Association of
Real Estate Investment Trusts, for the quarter ended June 30, 2018, were
$20.8 million, or $0.17 per share. This compares to FFO for the quarter
ended June 30, 2017 of $31.1 million, or $0.25 per share. The following
items impacted FFO for the quarter ended June 30, 2018, compared to the
corresponding 2017 period:
-
($0.21) per share of income from properties sold;
- $0.07 per share of interest expense savings; and
- $0.05 per of share of increase in interest and other income.
Normalized FFO was $20.8 million, or $0.17 per share. This compares to
Normalized FFO for the quarter ended June 30, 2017 of $27.1 million, or
$0.22 per share. The following items impacted Normalized FFO for the
quarter ended June 30, 2018, compared to the corresponding 2017 period:
-
($0.21) per share of income from properties sold;
- $0.07 per share of interest expense savings;
- $0.05 per share of increase in interest and other income; and
- $0.02 per share of increase in same property cash NOI.
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.
For the quarter ended June 30, 2018, the company’s balance of cash and
marketable securities was $2.8 billion. Total debt outstanding was $280
million and availability under the company’s revolving credit facility
was $750 million.
The weighted average number of diluted common shares outstanding when
calculating net income per share for the quarter ended June 30, 2018 was
122,649,382 shares, compared to 124,067,247 for the quarter ended June
30, 2017. The weighted average number of diluted common shares
outstanding when calculating FFO or Normalized FFO per share for the
quarter ended June 30, 2018 was 122,692,289 shares, compared to
125,255,722 for the quarter ended June 30, 2017.
Same property results for the quarter ended June 30, 2018
The company’s same property portfolio at the end of the quarter
consisted of 13 properties totaling 6.3 million square feet. Operating
results were as follows:
-
The same property portfolio was 89.8% leased as of June 30, 2018,
compared to 88.6% as of March 31, 2018, and 87.5% as of June 30, 2017.
-
The same property portfolio commenced occupancy was 87.7% as of June
30, 2018, compared to 83.5% as of March 31, 2018, and 84.8% as of June
30, 2017.
-
Same property NOI increased 2.6% when compared to the same period in
2017.
-
Same property cash NOI increased 12.3% when compared to the same
period in 2017.
-
The company entered into leases for approximately 292,000 square feet,
including new leases for approximately 189,000 square feet and renewal
leases for approximately 103,000 square feet.
-
GAAP rental rates on new and renewal leases were 23.6% higher compared
to prior GAAP rental rates for the same space.
-
Cash rental rates on new and renewal leases were 10.4% higher compared
to prior cash 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. The same property
portfolio includes properties continuously owned from April 1, 2017
through June 30, 2018.
Significant events during the quarter ended June 30, 2018
-
The company repaid at par its $400 million unsecured floating rate
term loans due in 2020 and 2022. The company also terminated its $400
million interest rate cap that would have matured on March 1, 2019.
-
The company completed the sale of 1601 Dry Creek in Longmont,
Colorado, a 100% leased, 553,000 square foot office property for a
gross sale price of $68.5 million.
Subsequent Events
-
The company currently has 3 properties totaling 1.2 million square
feet in various stages of the sale process.
Earnings Conference Call & Supplemental Data
Equity Commonwealth will host a conference call to discuss second
quarter results on Tuesday, July 31, 2018, at 8:00 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 Second Quarter 2018 Supplemental Operating and Financial
Data is available 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 in the United States. As of June 30, 2018, EQC’s
portfolio comprised 13 properties and 6.3 million square feet.
Regulation FD Disclosures
We intend to use any of the following to comply with our disclosure
obligations under Regulation FD: press releases, SEC filings, public
conference calls, or our website. We routinely post important
information on our website at www.eqcre.com,
including information that may be deemed to be material. We encourage
investors and others interested in the company to monitor these
distribution channels for material disclosures.
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 share
repurchases, marketing the company’s properties for sale and
consummating asset sales. 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 Securities Exchange Act of 1934.
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) |
|
|
|
|
|
|
|
| June 30, 2018 |
| December 31, 2017 |
| ASSETS |
|
|
|
|
|
Real estate properties:
| | |
| |
|
Land
| |
$
|
146,700
| | |
$
|
191,775
| |
|
Buildings and improvements
| |
1,117,446
|
| |
1,555,836
|
|
| |
1,264,146
| | |
1,747,611
| |
|
Accumulated depreciation
| |
(387,888
|
)
| |
(450,718
|
)
|
| |
876,258
| | |
1,296,893
| |
|
Assets held for sale
| |
—
| | |
97,688
| |
|
Acquired real estate leases, net
| |
2,946
| | |
23,847
| |
|
Cash and cash equivalents
| |
2,507,117
| | |
2,351,693
| |
|
Marketable securities
| |
248,275
| | |
276,928
| |
|
Restricted cash
| |
8,419
| | |
8,897
| |
|
Rents receivable, net of allowance for doubtful accounts of $5,101
and $4,771, respectively
| |
57,347
| | |
93,436
| |
|
Other assets, net
|
|
76,512
|
|
|
87,563
|
|
| Total assets |
| $ | 3,776,874 |
|
| $ | 4,236,945 |
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
Revolving credit facility
| |
$
|
—
| | |
$
|
—
| |
|
Senior unsecured debt, net
| |
248,048
| | |
815,984
| |
|
Mortgage notes payable, net
| |
31,964
| | |
32,594
| |
|
Liabilities related to properties held for sale
| |
—
| | |
1,840
| |
|
Accounts payable, accrued expenses and other
| |
44,380
| | |
74,956
| |
|
Rent collected in advance
|
|
10,173
|
|
|
11,076
|
|
| Total liabilities |
| $ | 334,565 |
|
| $ | 936,450 |
|
| | | |
|
|
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
| |
|
Common shares of beneficial interest, $0.01 par value: 350,000,000
shares authorized; 121,482,673 and 124,217,616 shares issued and
outstanding, respectively
| |
1,215
| | |
1,242
| |
|
Additional paid in capital
| |
4,300,822
| | |
4,380,313
| |
|
Cumulative net income
| |
2,822,793
| | |
2,596,259
| |
|
Cumulative other comprehensive loss
| |
(1,469
|
)
| |
(95
|
)
|
|
Cumulative common distributions
| |
(3,111,868
|
)
| |
(3,111,868
|
)
|
|
Cumulative preferred distributions
| |
(689,742
|
)
| |
(685,748
|
)
|
|
Total shareholders’ equity
| |
3,441,014
| | |
3,299,366
| |
|
Noncontrolling interest
|
|
1,295
|
|
|
1,129
|
|
| Total equity |
| $ | 3,442,309 |
|
| $ | 3,300,495 |
|
| Total liabilities and equity |
| $ | 3,776,874 |
|
| $ | 4,236,945 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(amounts in thousands, except per share data) |
|
|
|
|
|
| | Three Months Ended |
| Six Months Ended |
| | June 30, | | June 30, |
| | 2018 |
| 2017 |
| 2018 |
| 2017 |
|
Revenues:
| | |
| | | |
| |
|
Rental income
| |
$
|
35,211
| | |
$
|
74,352
| | |
$
|
78,760
| | |
$
|
154,557
| |
|
Tenant reimbursements and other income
|
|
13,425
|
|
|
17,247
|
|
|
28,464
|
|
|
36,593
|
|
| Total revenues |
| $ | 48,636 |
|
| $ | 91,599 |
|
| $ | 107,224 |
|
| $ | 191,150 |
|
| | | | | | | |
|
|
Expenses:
| | | | | | | | |
|
Operating expenses
| |
$
|
19,521
| | |
$
|
37,284
| | |
$
|
44,120
| | |
$
|
78,371
| |
|
Depreciation and amortization
| |
13,021
| | |
23,922
| | |
26,924
| | |
50,837
| |
|
General and administrative
| |
11,222
| | |
11,960
| | |
24,561
| | |
24,038
| |
|
Loss on asset impairment
|
|
—
|
|
|
18,428
|
|
|
12,087
|
|
|
19,714
|
|
| Total expenses |
| $ | 43,764 |
|
| $ | 91,594 |
|
| $ | 107,692 |
|
| $ | 172,960 |
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
| $ | 4,872 |
|
| $ | 5 |
|
| $ | (468 | ) |
| $ | 18,190 |
|
| | | | | | | |
|
|
Interest and other income, net
| |
12,668
| | |
6,019
| | |
18,448
| | |
10,391
| |
|
Interest expense (including net amortization of debt discounts,
premiums and deferred financing fees of $645, $849, $1,446 and
$1,562, respectively)
| |
(6,350
|
)
| |
(14,863
|
)
| |
(16,465
|
)
| |
(29,877
|
)
|
|
Loss on early extinguishment of debt
| |
(1,536
|
)
| |
(63
|
)
| |
(6,403
|
)
| |
(63
|
)
|
|
Gain on sale of properties, net
| |
26,937
|
| |
3,136
|
| |
232,148
|
| |
19,590
|
|
|
Income (loss) before income taxes
| |
36,591
| | |
(5,766
|
)
| |
227,260
| | |
18,231
| |
|
Income tax benefit (expense)
|
|
456
|
|
|
(45
|
)
|
|
(2,551
|
)
|
|
(220
|
)
|
| Net income (loss) |
| $ | 37,047 |
|
| $ | (5,811 | ) |
| $ | 224,709 |
|
| $ | 18,011 |
|
|
Net (income) loss attributable to noncontrolling interest
|
|
(14
|
)
|
|
2
|
|
|
(77
|
)
|
|
(6
|
)
|
| Net income (loss) attributable to Equity Commonwealth |
| $ | 37,033 |
|
| $ | (5,809 | ) |
| $ | 224,632 |
|
| 18,005 |
|
|
Preferred distributions
|
|
(1,997
|
)
|
|
(1,997
|
)
|
|
(3,994
|
)
|
|
(3,994
|
)
|
| Net income (loss) attributable to Equity Commonwealth common
shareholders |
| $ | 35,036 |
|
| $ | (7,806 | ) |
| $ | 220,638 |
|
| $ | 14,011 |
|
|
Weighted average common shares outstanding — basic (1) | |
121,822
|
| |
124,067
|
| |
122,839
|
| |
124,057
|
|
|
Weighted average common shares outstanding — diluted (1) | |
122,649
|
| |
124,067
|
| |
126,027
|
| |
125,203
|
|
| | | | | | | |
|
| | | | | | | |
|
|
Earnings per common share attributable to Equity Commonwealth common
shareholders:
| | | | | | | | |
|
Basic
| |
$
|
0.29
|
| |
$
|
(0.06
|
)
| |
$
|
1.80
|
| |
$
|
0.11
|
|
|
Diluted
| |
$
|
0.29
|
| |
$
|
(0.06
|
)
| |
$
|
1.78
|
| |
$
|
0.11
|
|
|
(1)
|
|
Weighted average common shares outstanding for the three months
ended June 30, 2018 and 2017 includes 362 and 0 unvested, earned
RSUs, respectively. Weighted average common shares outstanding for
the six months ended June 30, 2018 and 2017 includes 335 and 0
unvested, earned RSUs, respectively. Additionally, as of June 30,
2018, we had 4,915 series D preferred shares outstanding that were
convertible into 2,363 common shares. The series D preferred shares
are dilutive for GAAP EPS for the six months ended June 30, 2018.
They are anti-dilutive for all other periods presented.
|
| CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO |
| (amounts in thousands, except per share data) |
|
|
|
|
|
| | Three Months Ended |
| Six Months Ended |
| | June 30, | | June 30, |
|
|
| 2018 |
| 2017 | | 2018 |
| 2017 |
| Calculation of FFO |
|
|
|
|
|
|
|
|
|
Net income (loss)
| |
$
|
37,047
| |
|
$
|
(5,811
|
)
| |
$
|
224,709
| |
|
$
|
18,011
| |
|
Real estate depreciation and amortization
| |
12,717
| | |
23,619
| | |
26,320
| | |
50,235
| |
|
Loss on asset impairment
| |
—
| | |
18,428
| | |
12,087
| | |
19,714
| |
|
Gain on sale of properties, net
| |
(26,937
|
)
| |
(3,136
|
)
| |
(232,148
|
)
| |
(19,590
|
)
|
|
FFO attributable to Equity Commonwealth | |
22,827
| | |
33,100
| | |
30,968
| | |
68,370
| |
|
Preferred distributions
|
|
(1,997
|
)
|
|
(1,997
|
)
|
|
(3,994
|
)
|
|
(3,994
|
)
|
| FFO attributable to EQC common shareholders and unitholders |
| $ | 20,830 |
|
| $ | 31,103 |
|
| $ | 26,974 |
|
| $ | 64,376 |
|
|
|
|
|
|
|
|
|
|
|
| Calculation of Normalized FFO |
|
|
|
|
|
|
|
|
|
FFO attributable to EQC common shareholders and unitholders
| |
$
|
20,830
| | |
$
|
31,103
| | |
$
|
26,974
| | |
$
|
64,376
| |
|
Lease value amortization
| |
(18
|
)
| |
518
| | |
80
| | |
1,091
| |
|
Straight line rent adjustments
| |
(1,022
|
)
| |
(4,543
|
)
| |
(2,550
|
)
| |
(8,930
|
)
|
|
Loss on early extinguishment of debt
| |
1,536
| | |
63
| | |
6,403
| | |
63
| |
|
Income taxes related to gains on property sales
| |
(496
|
)
| |
—
| | |
2,473
| | |
—
| |
|
Loss on sale of securities
|
|
—
|
|
|
—
|
|
|
4,987
|
|
|
—
|
|
| Normalized FFO attributable to EQC common shareholders and
unitholders |
| $ | 20,830 |
|
| $ | 27,141 |
|
| $ | 38,367 |
|
| $ | 56,600 |
|
| | | | | | | |
|
|
Weighted average common shares and units outstanding -- basic (1) | |
121,865
|
| |
124,106
|
| |
122,882
|
| |
124,091
|
|
|
Weighted average common shares and units outstanding -- diluted (1) | |
122,692
|
| |
125,256
|
| |
123,707
|
| |
125,203
|
|
| | | | | | | |
|
FFO attributable to EQC common shareholders and unitholders per
share and unit -- basic
| |
$
|
0.17
|
| |
$
|
0.25
|
| |
$
|
0.22
|
| |
$
|
0.52
|
|
|
FFO attributable to EQC common shareholders and unitholders per
share and unit -- diluted
| |
$
|
0.17
|
| |
$
|
0.25
|
| |
$
|
0.22
|
| |
$
|
0.51
|
|
Normalized FFO attributable to EQC common shareholders and
unitholders per share and unit -- basic
| |
$
|
0.17
|
| |
$
|
0.22
|
| |
$
|
0.31
|
| |
$
|
0.46
|
|
|
Normalized FFO attributable to EQC common shareholders and
unitholders per share and unit -- diluted
| |
$
|
0.17
|
| |
$
|
0.22
|
| |
$
|
0.31
|
| |
$
|
0.45
|
|
|
(1)
|
|
Our calculations of FFO and Normalized FFO attributable to EQC
common shareholders and unitholders
per share and unit - basic for the three and six months ended June
30, 2018 include 42 LTIP/Operating Partnership Units that are
excluded from the calculation of basic earnings per common share
attributable to EQC common shareholders
(only). Our calculations of FFO and Normalized FFO
attributable to EQC common shareholders and
unitholders per share and unit - basic for the three
and six months ended June 30, 2017 include 39 and 34
LTIP/Operating Partnership Units, respectively, that are excluded
from the calculation of basic earnings per common share
attributable to EQC common shareholders
(only).
|
|
We compute FFO in accordance with standards established by 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. FFO and Normalized FFO are
supplemental non-GAAP financial measures. We consider FFO and
Normalized FFO to be appropriate measures of operating performance
for a REIT, along with net income (loss), net income (loss)
attributable to EQC common shareholders, operating income (loss) 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 (loss), net income
(loss) attributable to EQC common shareholders, operating income
(loss) 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 (loss), net income
(loss) attributable to EQC common shareholders, operating income
(loss) 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 |
| | 6/30/2018 |
| 3/31/2018 |
| 12/31/2017 |
| 9/30/2017 |
| 6/30/2017 |
| Calculation of Same Property NOI and Same Property Cash Basis NOI: | | |
| |
| |
| |
| |
|
Rental income
| |
$
|
35,211
| | |
$
|
43,549
| | |
$
|
54,672
| | |
$
|
61,091
| | |
$
|
74,352
| |
|
Tenant reimbursements and other income
| |
13,425
| | |
15,039
| | |
16,951
| | |
16,707
| | |
17,247
| |
|
Operating expenses
|
|
(19,521
|
)
|
|
(24,599
|
)
|
|
(30,674
|
)
|
|
(32,380
|
)
|
|
(37,284
|
)
|
| NOI |
| $ | 29,115 |
|
| $ | 33,989 |
|
| $ | 40,949 |
|
| $ | 45,418 |
|
| $ | 54,315 |
|
|
Straight line rent adjustments
| |
(1,022
|
)
| |
(1,528
|
)
| |
(1,938
|
)
| |
(3,557
|
)
| |
(4,543
|
)
|
|
Lease value amortization
| |
(18
|
)
| |
98
| | |
295
| | |
388
| | |
518
| |
|
Lease termination fees
|
|
(1,557
|
)
|
|
(965
|
)
|
|
(942
|
)
|
|
(1,477
|
)
|
|
(814
|
)
|
| Cash Basis NOI |
| $ | 26,518 |
|
| $ | 31,594 |
|
| $ | 38,364 |
|
| $ | 40,772 |
|
| $ | 49,476 |
|
|
Cash Basis NOI from non-same properties (1) |
|
(775
|
)
|
|
(7,451
|
)
|
|
(13,411
|
)
|
|
(16,531
|
)
|
|
(26,558
|
)
|
| Same Property Cash Basis NOI |
| $ | 25,743 |
|
| $ | 24,143 |
|
| $ | 24,953 |
|
| $ | 24,241 |
|
| $ | 22,918 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
1,970
|
|
|
1,913
|
|
|
1,845
|
|
|
3,284
|
|
|
4,100
|
|
| Same Property NOI |
| $ | 27,713 |
|
| $ | 26,056 |
|
| $ | 26,798 |
|
| $ | 27,525 |
|
| $ | 27,018 |
|
| | | | | | | | | |
|
| Reconciliation of Same Property NOI to GAAP Operating Income: |
|
|
|
|
|
|
|
|
|
|
| Same Property NOI |
| $ | 27,713 |
|
| $ | 26,056 |
|
| $ | 26,798 |
|
| $ | 27,525 |
|
| $ | 27,018 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
(1,970
|
)
|
|
(1,913
|
)
|
|
(1,845
|
)
|
|
(3,284
|
)
|
|
(4,100
|
)
|
| Same Property Cash Basis NOI |
| $ | 25,743 |
|
| $ | 24,143 |
|
| $ | 24,953 |
|
| $ | 24,241 |
|
| $ | 22,918 |
|
|
Cash Basis NOI from non-same properties (1) |
|
775
|
|
|
7,451
|
|
|
13,411
|
|
|
16,531
|
|
|
26,558
|
|
| Cash Basis NOI |
| $ | 26,518 |
|
| $ | 31,594 |
|
| $ | 38,364 |
|
| $ | 40,772 |
|
| $ | 49,476 |
|
|
Straight line rent adjustments
| |
1,022
| | |
1,528
| | |
1,938
| | |
3,557
| | |
4,543
| |
|
Lease value amortization
| |
18
| | |
(98
|
)
| |
(295
|
)
| |
(388
|
)
| |
(518
|
)
|
|
Lease termination fees
|
|
1,557
|
|
|
965
|
|
|
942
|
|
|
1,477
|
|
|
814
|
|
| NOI |
| $ | 29,115 |
|
| $ | 33,989 |
|
| $ | 40,949 |
|
| $ | 45,418 |
|
| $ | 54,315 |
|
|
Depreciation and amortization
| |
(13,021
|
)
| |
(13,903
|
)
| |
(18,738
|
)
| |
(21,133
|
)
| |
(23,922
|
)
|
|
General and administrative
| |
(11,222
|
)
| |
(13,339
|
)
| |
(12,033
|
)
| |
(11,689
|
)
| |
(11,960
|
)
|
|
Loss on asset impairment
|
|
—
|
|
|
(12,087
|
)
|
|
—
|
|
|
—
|
|
|
(18,428
|
)
|
| Operating Income (Loss) |
| $ | 4,872 |
|
| $ | (5,340 | ) |
| $ | 10,178 |
|
| $ | 12,596 |
|
| $ | 5 |
|
|
(1)
|
|
Cash Basis NOI from non-same properties for all periods presented
includes the operations of properties disposed or classified as held
for sale and land parcels.
|
CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND
SAME PROPERTY CASH BASIS NOI |
(amounts in thousands) |
|
| |
| | For the Six Months Ended June 30, |
| | 2018 |
| 2017 |
| Calculation of Same Property NOI and Same Property Cash Basis NOI: | | |
| |
|
Rental income
| |
$
|
78,760
| | |
$
|
154,557
| |
|
Tenant reimbursements and other income
| |
28,464
| | |
36,593
| |
|
Operating expenses
|
|
(44,120
|
)
|
|
(78,371
|
)
|
| NOI |
| $ | 63,104 |
|
| $ | 112,779 |
|
|
Straight line rent adjustments
| |
(2,550
|
)
| |
(8,930
|
)
|
|
Lease value amortization
| |
80
| | |
1,091
| |
|
Lease termination fees
|
|
(2,522
|
)
|
|
(2,525
|
)
|
| Cash Basis NOI |
| $ | 58,112 |
|
| $ | 102,415 |
|
|
Cash Basis NOI from non-same properties (1) |
|
(8,226
|
)
|
|
(56,356
|
)
|
| Same Property Cash Basis NOI |
| $ | 49,886 |
|
| $ | 46,059 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
3,883
|
|
|
7,568
|
|
| Same Property NOI |
| $ | 53,769 |
|
| $ | 53,627 |
|
| | | |
|
| Reconciliation of Same Property NOI to GAAP Operating Income: |
|
|
|
|
| Same Property NOI |
| $ | 53,769 |
|
| $ | 53,627 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
(3,883
|
)
|
|
(7,568
|
)
|
| Same Property Cash Basis NOI |
| $ | 49,886 |
|
| $ | 46,059 |
|
|
Cash Basis NOI from non-same properties (1) |
|
8,226
|
|
|
56,356
|
|
| Cash Basis NOI |
| $ | 58,112 |
|
| $ | 102,415 |
|
|
Straight line rent adjustments
| |
2,550
| | |
8,930
| |
|
Lease value amortization
| |
(80
|
)
| |
(1,091
|
)
|
|
Lease termination fees
|
|
2,522
|
|
|
2,525
|
|
| NOI |
| $ | 63,104 |
|
| $ | 112,779 |
|
|
Depreciation and amortization
| |
(26,924
|
)
| |
(50,837
|
)
|
|
General and administrative
| |
(24,561
|
)
| |
(24,038
|
)
|
|
Loss on asset impairment
|
|
(12,087
|
)
|
|
(19,714
|
)
|
| Operating (Loss) Income |
| $ | (468 | ) |
| $ | 18,190 |
|
|
(1)
|
|
Cash Basis NOI from non-same properties for all periods presented
includes the operations of properties disposed or classified as held
for sale and land parcels.
|
|
NOI is income from our real estate operations 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 April 1, 2017 through June 30, 2018. The year-to-date same
property versions of these measures include the results of
properties continuously owned from January 1, 2017 through June 30,
2018. Land parcels and 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 supplemental non-GAAP financial measures to be
appropriate supplemental measures to net income (loss) 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 (loss), net income (loss) attributable
to EQC common shareholders, operating income (loss) 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 (loss), net income (loss) attributable to EQC common
shareholders, operating income (loss) 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: https://www.businesswire.com/news/home/20180730005728/en/
Equity Commonwealth
Sarah Byrnes, Investor Relations
(312)
646-2801
[email protected]
Source: Equity Commonwealth