CHICAGO--(BUSINESS WIRE)--
Equity Commonwealth (NYSE: EQC) today reported financial results for the
quarter ended September 30, 2018. All per share results are reported on
a diluted basis.
Financial results for the quarter ended September 30, 2018
Net income attributable to common shareholders was $30.8 million, or
$0.25 per share, for the quarter ended September 30, 2018. This compares
to net income attributable to common shareholders of $31.2 million, or
$0.25 per share, for the quarter ended September 30, 2017.
Funds from Operations (FFO), as defined by the National Association of
Real Estate Investment Trusts, for the quarter ended September 30, 2018,
were $20.9 million, or $0.17 per share. This compares to FFO for the
quarter ended September 30, 2017 of $27.0 million, or $0.22 per share.
The following items impacted FFO for the quarter ended September 30,
2018, compared to the corresponding 2017 period:
-
($0.15) per share of income from properties sold;
- $0.05 per share of interest expense savings;
- $0.04 per of share of increase in interest and other income (net of a
$0.02 per share loss on the sale of a mortgage receivable); and
- $0.01 per share of general & administrative expense savings.
Normalized FFO was $21.6 million, or $0.18 per share. This compares to
Normalized FFO for the quarter ended September 30, 2017 of $24.0
million, or $0.19 per share. The following items impacted Normalized FFO
for the quarter ended September 30, 2018, compared to the corresponding
2017 period:
-
($0.15) per share of income from properties sold;
- $0.06 per of share of increase in interest and other income;
- $0.05 per share of interest expense savings;
- $0.02 per share of increase in same property cash NOI; and
- $0.01 per share of general & administrative 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.
For the quarter ended September 30, 2018, the company’s balance of cash
and marketable securities net of distributions payable was $2.6 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 September 30,
2018 was 122,850,928 shares, compared to 125,174,651 for the quarter
ended September 30, 2017. The weighted average number of diluted common
shares outstanding when calculating FFO or Normalized FFO per share for
the quarter ended September 30, 2018 was 122,896,648 shares, compared to
125,174,651 for the quarter ended September 30, 2017.
Same property results for the quarter ended September 30, 2018
The company’s same property portfolio at the end of the quarter
consisted of 11 properties totaling 5.4 million square feet. Operating
results were as follows:
-
The same property portfolio was 94.0% leased as of September 30, 2018,
compared to 91.8% as of June 30, 2018, and 91.1% as of September 30,
2017.
-
The same property portfolio commenced occupancy was 91.3% as of
September 30, 2018, compared to 89.9% as of June 30, 2018, and 87.5%
as of September 30, 2017.
-
Same property NOI increased 1.7% when compared to the same period in
2017.
-
Same property cash NOI increased 9.1% when compared to the same period
in 2017.
-
The company entered into leases for approximately 563,000 square feet,
including new leases for approximately 562,000 square feet and renewal
leases for approximately 1,000 square feet.
-
GAAP rental rates on new and renewal leases were 11.0% higher compared
to prior GAAP rental rates for the same space.
-
Cash rental rates on new and renewal leases were 1.2% lower 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 July 1, 2017
through September 30, 2018.
Significant events during the quarter ended September 30, 2018
-
The company completed dispositions totaling $170.5 million. The
properties sold during the quarter included:
- 777 East Eisenhower Parkway, a 39.8% leased, 290,530 square foot
office building in Ann Arbor, Michigan, for a gross sale price of
$29.5 million.
- 8750 Bryn Mawr Avenue, a 95.5% leased, 636,078 square foot, office
property in Chicago, Illinois, for a gross sale price of $141
million.
-
The company announced a special, one-time cash distribution of $2.50
per common share, which was paid on October 23, 2018 to shareholders
of record on October 9, 2018.
Subsequent Events
-
The company currently has 4 properties totaling 2.9 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, October 25, 2018, at 9:00 A.M. CT. 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 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 September 30, 2018, EQC’s
portfolio comprised 11 properties and 5.4 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2018 |
|
| December 31, 2017 |
| ASSETS |
|
|
|
|
|
|
|
Real estate properties:
| | | |
|
| |
|
Land
| | |
$
|
137,329
| | | |
$
|
191,775
| |
|
Buildings and improvements
| | |
1,000,822
|
| | |
1,555,836
|
|
| | |
1,138,151
| | | |
1,747,611
| |
|
Accumulated depreciation
| | |
(370,854
|
)
| | |
(450,718
|
)
|
| | |
767,297
| | | |
1,296,893
| |
|
Assets held for sale
| | |
—
| | | |
97,688
| |
|
Acquired real estate leases, net
| | |
596
| | | |
23,847
| |
|
Cash and cash equivalents
| | |
2,673,328
| | | |
2,351,693
| |
|
Marketable securities
| | |
248,838
| | | |
276,928
| |
|
Restricted cash
| | |
9,708
| | | |
8,897
| |
|
Rents receivable, net of allowance for doubtful accounts of $5,816
and $4,771, respectively
| | |
50,103
| | | |
93,436
| |
|
Other assets, net
|
|
|
63,858
|
|
|
|
87,563
|
|
| Total assets |
|
| $ | 3,813,728 |
|
|
| $ | 4,236,945 |
|
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
Revolving credit facility
| | |
$
|
—
| | | |
$
|
—
| |
|
Senior unsecured debt, net
| | |
248,258
| | | |
815,984
| |
|
Mortgage notes payable, net
| | |
31,643
| | | |
32,594
| |
|
Liabilities related to properties held for sale
| | |
—
| | | |
1,840
| |
|
Accounts payable, accrued expenses and other
| | |
46,896
| | | |
74,956
| |
|
Rent collected in advance
| | |
8,182
| | | |
11,076
| |
|
Distributions payable
|
|
|
309,238
|
|
|
|
—
|
|
| Total liabilities |
|
| $ | 644,217 |
|
|
| $ | 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
| | |
4,306,020
| | | |
4,380,313
| |
|
Cumulative net income
| | |
2,855,557
| | | |
2,596,259
| |
|
Cumulative other comprehensive loss
| | |
(1,006
|
)
| | |
(95
|
)
|
|
Cumulative common distributions
| | |
(3,418,995
|
)
| | |
(3,111,868
|
)
|
|
Cumulative preferred distributions
| | |
(693,736
|
)
| | |
(685,748
|
)
|
|
Total shareholders’ equity
| | |
3,168,318
| | | |
3,299,366
| |
|
Noncontrolling interest
|
|
|
1,193
|
|
|
|
1,129
|
|
| Total equity |
|
| $ | 3,169,511 |
|
|
| $ | 3,300,495 |
|
| Total liabilities and equity |
|
| $ | 3,813,728 |
|
|
| $ | 4,236,945 |
|
| | | | | | | | | |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(amounts in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
| | | Three Months Ended |
|
| Nine Months Ended | |
| | | September 30, | | | September 30, |
|
| | | 2018 |
| 2017 |
|
| 2018 |
|
| 2017 |
|
|
Revenues:
| | | |
| | | | |
|
| | |
|
Rental income
| | |
$
|
34,138
| | |
$
|
61,091
| | | |
$
|
112,898
| | | |
$
|
215,648
| |
|
Tenant reimbursements and other income
|
|
|
12,735
|
|
|
16,707
|
|
|
|
41,199
|
|
|
|
53,300
|
|
| Total revenues |
|
| $ | 46,873 |
|
| $ | 77,798 |
|
|
| $ | 154,097 |
|
| | $ | 268,948 |
|
| | | | | | | | | | | |
|
|
Expenses:
| | | | | | | | | | | | |
|
Operating expenses
| | |
$
|
20,257
| | |
$
|
32,380
| | | |
$
|
64,377
| | | |
$
|
110,751
| |
|
Depreciation and amortization
| | |
11,287
| | |
21,133
| | | |
38,211
| | | |
71,970
| |
|
General and administrative
| | |
10,905
| | |
11,689
| | | |
35,466
| | | |
35,727
| |
|
Loss on asset impairment
|
|
|
—
|
|
|
—
|
|
|
|
12,087
|
|
|
|
19,714
|
|
| Total expenses |
|
| $ | 42,449 |
|
| $ | 65,202 |
|
|
| $ | 150,141 |
|
|
| $ | 238,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
| $ | 4,424 |
|
| $ | 12,596 |
|
|
| $ | 3,956 |
|
|
| $ | 30,786 |
|
| | | | | | | | | | | |
|
|
Interest and other income, net
| | |
12,626
| | |
7,596
| | | |
31,074
| | | |
17,987
| |
|
Interest expense (including net amortization of debt discounts,
premiums and deferred financing fees of $559, $784, $2,005 and
$2,346, respectively)
| | |
(5,085
|
)
| |
(11,510
|
)
| | |
(21,550
|
)
| | |
(41,387
|
)
|
|
Loss on early extinguishment of debt
| | |
—
| | |
(203
|
)
| | |
(6,403
|
)
| | |
(266
|
)
|
|
Gain on sale of properties, net
| | |
20,877
|
| |
25,080
|
| | |
253,025
|
| |
|
44,670
|
|
|
Income before income taxes
| | |
32,842
| | |
33,559
| | | |
260,102
| | | |
51,790
| |
|
Income tax expense
|
|
|
(65
|
)
|
|
(335
|
)
|
|
|
(2,616
|
)
|
|
|
(555
|
)
|
| Net income |
|
| $ | 32,777 |
|
| $ | 33,224 |
|
|
| $ | 257,486 |
|
|
| $ | 51,235 |
|
|
Net income attributable to noncontrolling interest
|
|
|
(13
|
)
|
|
(12
|
)
|
|
|
(90
|
)
|
|
|
(18
|
)
|
| Net income attributable to Equity Commonwealth |
|
| $ | 32,764 |
|
| $ | 33,212 |
|
|
| $ | 257,396 |
|
|
| $ | 51,217 |
|
|
Preferred distributions
|
|
|
(1,997
|
)
|
|
(1,997
|
)
|
|
|
(5,991
|
)
|
|
|
(5,991
|
)
|
| Net income attributable to Equity Commonwealth common shareholders |
|
| $ | 30,767 |
|
| $ | 31,215 |
|
|
| $ | 251,405 |
|
|
| $ | 45,226 |
|
| | | | | | | | | | | | | | |
|
|
Weighted average common shares outstanding — basic (1) | | |
121,845
|
| |
124,089
|
| | |
122,504
|
| | |
124,068
|
|
|
Weighted average common shares outstanding — diluted (1) | | |
122,851
|
| |
125,175
|
| | |
123,389
|
| | |
125,194
|
|
| | | | | | | | | | | |
|
|
Earnings per common share attributable to Equity Commonwealth common
shareholders:
| | | | | | | | | | | | |
|
Basic
| | |
$
|
0.25
|
| |
$
|
0.25
|
| | |
$
|
2.05
|
| |
$
|
|
0.36
|
|
|
Diluted
| | |
$
|
0.25
|
| |
$
|
0.25
|
| | |
$
|
2.04
|
| |
$
|
|
0.36
|
|
| | | | | | | | | | | |
|
|
Distributions declared per common share
| | |
$
|
2.50
|
| |
$
|
—
|
| | |
$
|
2.50
|
| |
$
|
|
—
|
|
|
(1)
|
|
Weighted average common shares outstanding for the three months
ended September 30, 2018 and 2017 includes 362 and 0 unvested,
earned RSUs, respectively. Weighted average common shares
outstanding for the nine months ended September 30, 2018 and 2017
includes 344 and 0 unvested, earned RSUs, 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, |
|
|
|
| 2018 |
| 2017 |
|
| 2018 |
| 2017 |
| Calculation of FFO |
|
|
|
|
|
|
|
|
|
|
|
Net income
| | |
$
|
32,777
| |
|
$
|
33,224
| | | |
$
|
257,486
| |
|
$
|
51,235
| |
|
Real estate depreciation and amortization
| | |
10,978
| | |
20,842
| | | |
37,298
| | |
71,077
| |
|
Loss on asset impairment
| | |
—
| | |
—
| | | |
12,087
| | |
19,714
| |
|
Gain on sale of properties, net
| | |
(20,877
|
)
| |
(25,080
|
)
| | |
(253,025
|
)
| |
(44,670
|
)
|
|
FFO attributable to Equity Commonwealth | | |
22,878
| | |
28,986
| | | |
53,846
| | |
97,356
| |
|
Preferred distributions
|
|
|
(1,997
|
)
|
|
(1,997
|
)
|
|
|
(5,991
|
)
|
|
(5,991
|
)
|
| FFO attributable to EQC common shareholders and unitholders |
|
| $ | 20,881 |
|
| $ | 26,989 |
|
|
| $ | 47,855 |
|
| $ | 91,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Calculation of Normalized FFO |
|
|
|
|
|
|
|
|
|
|
|
FFO attributable to EQC common shareholders and unitholders
| | |
$
|
20,881
| | |
$
|
26,989
| | | |
$
|
47,855
| | |
$
|
91,365
| |
|
Lease value amortization
| | |
(4
|
)
| |
388
| | | |
76
| | |
1,479
| |
|
Straight line rent adjustments
| | |
(1,435
|
)
| |
(3,557
|
)
| | |
(3,985
|
)
| |
(12,487
|
)
|
|
Loss on early extinguishment of debt
| | |
—
| | |
203
| | | |
6,403
| | |
266
| |
|
Loss on sale of securities
| | |
—
| | |
—
| | | |
4,987
| | |
—
| |
|
Loss on sale of real estate mortgage receivable
| | |
2,117
| | |
—
| | | |
2,117
| | |
—
| |
|
Income taxes related to gains on property sales
|
|
|
25
|
|
|
—
|
|
|
|
2,498
|
|
|
—
|
|
| Normalized FFO attributable to EQC common shareholders and
unitholders |
|
| $ | 21,584 |
|
| $ | 24,023 |
|
|
| $ | 59,951 |
|
| $ | 80,623 |
|
| | | | | | | | | |
|
|
Weighted average common shares and units outstanding -- basic (1) | | |
121,891
|
| |
124,132
|
| | |
122,548
|
| |
124,105
|
|
|
Weighted average common shares and units outstanding -- diluted (1) | | |
122,897
|
| |
125,175
|
| | |
123,433
|
| |
125,194
|
|
| | | | | | | | | |
|
|
FFO attributable to EQC common shareholders and unitholders per
share and unit -- basic
| | |
$
|
0.17
|
| |
$
|
0.22
|
| | |
$
|
0.39
|
| |
$
|
0.74
|
|
|
FFO attributable to EQC common shareholders and unitholders per
share and unit -- diluted
| | |
$
|
0.17
|
| |
$
|
0.22
|
| | |
$
|
0.39
|
| |
$
|
0.73
|
|
|
Normalized FFO attributable to EQC common shareholders and
unitholders per share and unit -- basic
| | |
$
|
0.18
|
| |
$
|
0.19
|
| | |
$
|
0.49
|
| |
$
|
0.65
|
|
|
Normalized FFO attributable to EQC common shareholders and
unitholders per share and unit -- diluted
| | |
$
|
0.18
|
| |
$
|
0.19
|
| | |
$
|
0.49
|
| |
$
|
0.64
|
|
(1)
|
|
Our calculations of FFO and Normalized FFO attributable to EQC
common shareholders and unitholders
per share and unit - basic for the three and nine months ended
September 30, 2018 include 46 and 44 LTIP/Operating Partnership
Units, respectively, 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 nine months ended September 30, 2017 include 43 and 37
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 |
| | | 9/30/2018 |
|
| 6/30/2018 |
|
| 3/31/2018 |
|
| 12/31/2017 |
|
| 9/30/2017 |
| Calculation of Same Property NOI and Same Property Cash Basis NOI: | | | |
|
| |
|
| |
|
| |
|
| |
|
Rental income
| | |
$
|
34,138
| | | |
$
|
35,211
| | | |
$
|
43,549
| | | |
$
|
54,672
| | | |
$
|
61,091
| |
|
Tenant reimbursements and other income
| | |
12,735
| | | |
13,425
| | | |
15,039
| | | |
16,951
| | | |
16,707
| |
|
Operating expenses
|
|
|
(20,257
|
)
|
|
|
(19,521
|
)
|
|
|
(24,599
|
)
|
|
|
(30,674
|
)
|
|
|
(32,380
|
)
|
| NOI |
|
| $ | 26,616 |
|
|
| $ | 29,115 |
|
|
| $ | 33,989 |
|
|
| $ | 40,949 |
|
|
| $ | 45,418 |
|
|
Straight line rent adjustments
| | |
(1,435
|
)
| | |
(1,022
|
)
| | |
(1,528
|
)
| | |
(1,938
|
)
| | |
(3,557
|
)
|
|
Lease value amortization
| | |
(4
|
)
| | |
(18
|
)
| | |
98
| | | |
295
| | | |
388
| |
|
Lease termination fees
|
|
|
(395
|
)
|
|
|
(1,557
|
)
|
|
|
(965
|
)
|
|
|
(942
|
)
|
|
|
(1,477
|
)
|
| Cash Basis NOI |
|
| $ | 24,782 |
|
|
| $ | 26,518 |
|
|
| $ | 31,594 |
|
|
| $ | 38,364 |
|
|
| $ | 40,772 |
|
|
Cash Basis NOI from non-same properties (1) |
|
|
(58
|
)
|
|
|
(1,856
|
)
|
|
|
(7,579
|
)
|
|
|
(14,905
|
)
|
|
|
(18,110
|
)
|
| Same Property Cash Basis NOI |
|
| $ | 24,724 |
|
|
| $ | 24,662 |
|
|
| $ | 24,015 |
|
|
| $ | 23,459 |
|
|
| $ | 22,662 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
|
1,120
|
|
|
|
1,107
|
|
|
|
1,084
|
|
|
|
1,192
|
|
|
|
2,745
|
|
| Same Property NOI |
|
| $ | 25,844 |
|
|
| $ | 25,769 |
|
|
| $ | 25,099 |
|
|
| $ | 24,651 |
|
|
| $ | 25,407 |
|
| | | | | | | | | | | | | | |
|
| Reconciliation of Same Property NOI to GAAP Operating Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Same Property NOI |
|
| $ | 25,844 |
|
|
| $ | 25,769 |
|
|
| $ | 25,099 |
|
|
| $ | 24,651 |
|
|
| $ | 25,407 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
|
(1,120
|
)
|
|
|
(1,107
|
)
|
|
|
(1,084
|
)
|
|
|
(1,192
|
)
|
|
|
(2,745
|
)
|
| Same Property Cash Basis NOI |
|
| $ | 24,724 |
|
|
| $ | 24,662 |
|
|
| $ | 24,015 |
|
|
| $ | 23,459 |
|
|
| $ | 22,662 |
|
|
Cash Basis NOI from non-same properties (1) |
|
|
58
|
|
|
|
1,856
|
|
|
|
7,579
|
|
|
|
14,905
|
|
|
|
18,110
|
|
| Cash Basis NOI |
|
| $ | 24,782 |
|
|
| $ | 26,518 |
|
|
| $ | 31,594 |
|
|
| $ | 38,364 |
|
|
| $ | 40,772 |
|
|
Straight line rent adjustments
| | |
1,435
| | | |
1,022
| | | |
1,528
| | | |
1,938
| | | |
3,557
| |
|
Lease value amortization
| | |
4
| | | |
18
| | | |
(98
|
)
| | |
(295
|
)
| | |
(388
|
)
|
|
Lease termination fees
|
|
|
395
|
|
|
|
1,557
|
|
|
|
965
|
|
|
|
942
|
|
|
|
1,477
|
|
| NOI |
|
| $ | 26,616 |
|
|
| $ | 29,115 |
|
|
| $ | 33,989 |
|
|
| $ | 40,949 |
|
|
| $ | 45,418 |
|
|
Depreciation and amortization
| | |
(11,287
|
)
| | |
(13,021
|
)
| | |
(13,903
|
)
| | |
(18,738
|
)
| | |
(21,133
|
)
|
|
General and administrative
| | |
(10,905
|
)
| | |
(11,222
|
)
| | |
(13,339
|
)
| | |
(12,033
|
)
| | |
(11,689
|
)
|
|
Loss on asset impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,087
|
)
|
|
|
—
|
|
|
|
—
|
|
| Operating Income (Loss) |
|
| $ | 4,424 |
|
|
| $ | 4,872 |
|
|
| $ | (5,340 | ) |
|
| $ | 10,178 |
|
|
| $ | 12,596 |
|
|
(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 Nine Months Ended September 30, |
| | | 2018 |
|
|
| 2017 |
| Calculation of Same Property NOI and Same Property Cash Basis NOI: | | | |
|
|
| |
|
Rental income
| | |
$
|
112,898
| | | | |
$
|
215,648
| |
|
Tenant reimbursements and other income
| | |
41,199
| | | | |
53,300
| |
|
Operating expenses
|
|
|
(64,377
|
)
|
|
|
|
(110,751
|
)
|
| NOI |
|
| $ | 89,720 |
|
|
|
| $ | 158,197 |
|
|
Straight line rent adjustments
| | |
(3,985
|
)
| | | |
(12,487
|
)
|
|
Lease value amortization
| | |
76
| | | | |
1,479
| |
|
Lease termination fees
|
|
|
(2,917
|
)
|
|
|
|
(4,002
|
)
|
| Cash Basis NOI |
|
| $ | 82,894 |
|
|
|
| $ | 143,187 |
|
|
Cash Basis NOI from non-same properties (1) |
|
|
(9,493
|
)
|
|
|
|
(78,164
|
)
|
| Same Property Cash Basis NOI |
|
| $ | 73,401 |
|
|
|
| $ | 65,023 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
|
3,311
|
|
|
|
|
10,011
|
|
| Same Property NOI |
|
| $ | 76,712 |
|
|
|
| $ | 75,034 |
|
| | | | | | |
|
| Reconciliation of Same Property NOI to GAAP Operating Income: |
|
|
|
|
|
|
|
| Same Property NOI |
|
| $ | 76,712 |
|
|
|
| $ | 75,034 |
|
|
Non-cash rental income and lease termination fees from same
properties
|
|
|
(3,311
|
)
|
|
|
|
(10,011
|
)
|
| Same Property Cash Basis NOI |
|
| $ | 73,401 |
|
|
|
| $ | 65,023 |
|
|
Cash Basis NOI from non-same properties (1) |
|
|
9,493
|
|
|
|
|
78,164
|
|
| Cash Basis NOI |
|
| $ | 82,894 |
|
|
|
| $ | 143,187 |
|
|
Straight line rent adjustments
| | |
3,985
| | | | |
12,487
| |
|
Lease value amortization
| | |
(76
|
)
| | | |
(1,479
|
)
|
|
Lease termination fees
|
|
|
2,917
|
|
|
|
|
4,002
|
|
| NOI |
|
| $ | 89,720 |
|
|
|
| $ | 158,197 |
|
|
Depreciation and amortization
| | |
(38,211
|
)
| | | |
(71,970
|
)
|
|
General and administrative
| | |
(35,466
|
)
| | | |
(35,727
|
)
|
|
Loss on asset impairment
|
|
|
(12,087
|
)
|
|
|
|
(19,714
|
)
|
| Operating Income |
|
| $ | 3,956 |
|
|
|
| $ | 30,786 |
|
|
(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 July 1, 2017 through
September 30, 2018. The year-to-date same property versions of these
measures include the results of properties continuously owned from
January 1, 2017 through September 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/20181024005826/en/
Equity Commonwealth
Sarah Byrnes, Investor Relations
(312)
646-2801
[email protected]
Source: Equity Commonwealth