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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Government Properties Income Trust of Beneficial Interest (delisted) | NASDAQ:GOV | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.87 | 6.87 | 6.95 | 0 | 01:00:00 |
Maryland
|
|
26-4273474
|
(State or Other Jurisdiction of Incorporation or
Organization)
|
|
(IRS Employer Identification No.)
|
Large accelerated filer ☒
|
|
Accelerated filer ☐
|
|
|
|
Non-accelerated filer ☐
|
|
Smaller reporting company ☐
|
(Do not check if a smaller reporting company)
|
|
|
Emerging growth company ☐
|
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
|
|
||
Real estate properties:
|
|
|
|
|
|
|
||
Land
|
|
$
|
623,610
|
|
|
$
|
627,108
|
|
Buildings and improvements
|
|
2,313,123
|
|
|
2,348,613
|
|
||
Total real estate properties, gross
|
|
2,936,733
|
|
|
2,975,721
|
|
||
Accumulated depreciation
|
|
(353,329
|
)
|
|
(341,848
|
)
|
||
Total real estate properties, net
|
|
2,583,404
|
|
|
2,633,873
|
|
||
|
|
|
|
|
||||
Equity investment in Select Income REIT
|
|
465,131
|
|
|
467,499
|
|
||
Investment in unconsolidated joint ventures
|
|
48,758
|
|
|
50,202
|
|
||
Assets of properties held for sale
|
|
18,080
|
|
|
—
|
|
||
Acquired real estate leases, net
|
|
323,710
|
|
|
351,872
|
|
||
Cash and cash equivalents
|
|
17,380
|
|
|
16,569
|
|
||
Restricted cash
|
|
4,766
|
|
|
3,111
|
|
||
Rents receivable, net
|
|
65,539
|
|
|
61,429
|
|
||
Deferred leasing costs, net
|
|
22,622
|
|
|
22,977
|
|
||
Other assets, net
|
|
106,234
|
|
|
96,033
|
|
||
Total assets
|
|
$
|
3,655,624
|
|
|
$
|
3,703,565
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Unsecured revolving credit facility
|
|
$
|
570,000
|
|
|
$
|
570,000
|
|
Unsecured term loans, net
|
|
548,022
|
|
|
547,852
|
|
||
Senior unsecured notes, net
|
|
944,743
|
|
|
944,140
|
|
||
Mortgage notes payable, net
|
|
182,083
|
|
|
183,100
|
|
||
Liabilities of properties held for sale
|
|
275
|
|
|
—
|
|
||
Accounts payable and other liabilities
|
|
74,623
|
|
|
89,440
|
|
||
Due to related persons
|
|
8,544
|
|
|
4,859
|
|
||
Assumed real estate lease obligations, net
|
|
12,480
|
|
|
13,635
|
|
||
Total liabilities
|
|
2,340,770
|
|
|
2,353,026
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Preferred units of limited partnership
|
|
20,496
|
|
|
20,496
|
|
||
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|
|
||
Common shares of beneficial interest, $.01 par value: 150,000,000 shares authorized,
|
|
|
|
|
||||
99,145,304 and 99,145,921 shares issued and outstanding, respectively
|
|
991
|
|
|
991
|
|
||
Additional paid in capital
|
|
1,968,205
|
|
|
1,968,217
|
|
||
Cumulative net income
|
|
174,585
|
|
|
108,144
|
|
||
Cumulative other comprehensive income
|
|
945
|
|
|
60,427
|
|
||
Cumulative common distributions
|
|
(850,368
|
)
|
|
(807,736
|
)
|
||
Total shareholders’ equity
|
|
1,294,358
|
|
|
1,330,043
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
3,655,624
|
|
|
$
|
3,703,565
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Rental income
|
|
$
|
108,717
|
|
|
$
|
69,296
|
|
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
|
|
||
Real estate taxes
|
|
12,964
|
|
|
8,177
|
|
||
Utility expenses
|
|
6,690
|
|
|
4,606
|
|
||
Other operating expenses
|
|
22,837
|
|
|
13,992
|
|
||
Depreciation and amortization
|
|
44,204
|
|
|
20,505
|
|
||
Loss on impairment of real estate
|
|
6,116
|
|
|
—
|
|
||
General and administrative
|
|
9,606
|
|
|
3,962
|
|
||
Total expenses
|
|
102,417
|
|
|
51,242
|
|
||
|
|
|
|
|
||||
Operating income
|
|
6,300
|
|
|
18,054
|
|
||
Dividend income
|
|
304
|
|
|
304
|
|
||
Unrealized gain on equity securities
|
|
12,931
|
|
|
—
|
|
||
Interest income
|
|
116
|
|
|
61
|
|
||
Interest expense (including net amortization of debt premiums and discounts
|
|
|
|
|
||||
and debt issuance costs of $965 and $807, respectively)
|
|
(22,766
|
)
|
|
(13,581
|
)
|
||
Income (loss) from continuing operations before income taxes and
|
|
|
|
|
|
|
||
equity in earnings of investees
|
|
(3,115
|
)
|
|
4,838
|
|
||
Income tax expense
|
|
(32
|
)
|
|
(18
|
)
|
||
Equity in earnings of investees
|
|
9,712
|
|
|
2,739
|
|
||
Income from continuing operations
|
|
6,565
|
|
|
7,559
|
|
||
Loss from discontinued operations
|
|
—
|
|
|
(144
|
)
|
||
Net income
|
|
6,565
|
|
|
7,415
|
|
||
Other comprehensive income (loss):
|
|
|
|
|
|
|
||
Unrealized gain on investment in equity securities
|
|
—
|
|
|
12,142
|
|
||
Equity in unrealized gain (loss) of investees
|
|
(41
|
)
|
|
4,615
|
|
||
Other comprehensive income (loss)
|
|
(41
|
)
|
|
16,757
|
|
||
Comprehensive income
|
|
$
|
6,524
|
|
|
$
|
24,172
|
|
|
|
|
|
|
||||
Net income
|
|
$
|
6,565
|
|
|
$
|
7,415
|
|
Preferred units of limited partnership distributions
|
|
(278
|
)
|
|
—
|
|
||
Net income available for common shareholders
|
|
$
|
6,287
|
|
|
$
|
7,415
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding (basic)
|
|
99,041
|
|
|
71,079
|
|
||
Weighted average common shares outstanding (diluted)
|
|
99,049
|
|
|
71,094
|
|
||
|
|
|
|
|
||||
Per common share amounts (basic and diluted):
|
|
|
|
|
|
|
||
Income from continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.11
|
|
Loss from discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income available for common shareholders
|
|
$
|
0.06
|
|
|
$
|
0.10
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
||
Net income
|
|
$
|
6,565
|
|
|
$
|
7,415
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation
|
|
17,172
|
|
|
11,576
|
|
||
Net amortization of debt premiums and discounts and debt issuance costs
|
|
965
|
|
|
807
|
|
||
Straight line rental income
|
|
(3,091
|
)
|
|
(1,300
|
)
|
||
Amortization of acquired real estate leases
|
|
26,790
|
|
|
8,672
|
|
||
Amortization of deferred leasing costs
|
|
1,120
|
|
|
849
|
|
||
Other non-cash (income) expenses, net
|
|
(334
|
)
|
|
5
|
|
||
Loss on impairment of real estate
|
|
6,116
|
|
|
—
|
|
||
Unrealized gain on equity securities
|
|
(12,931
|
)
|
|
—
|
|
||
Equity in earnings (losses) of investees, net
|
|
(9,712
|
)
|
|
(2,739
|
)
|
||
Distributions of earnings from Select Income REIT
|
|
10,289
|
|
|
2,611
|
|
||
Change in assets and liabilities:
|
|
|
|
|
|
|
||
Deferred leasing costs
|
|
(2,091
|
)
|
|
(1,075
|
)
|
||
Rents receivable
|
|
(1,893
|
)
|
|
(974
|
)
|
||
Other assets
|
|
2,296
|
|
|
2,215
|
|
||
Accounts payable and accrued expenses
|
|
(9,679
|
)
|
|
(1,989
|
)
|
||
Due to related persons
|
|
3,685
|
|
|
152
|
|
||
Net cash provided by operating activities
|
|
35,267
|
|
|
26,225
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
||
Real estate acquisitions and deposits
|
|
—
|
|
|
(12,641
|
)
|
||
Real estate improvements
|
|
(11,020
|
)
|
|
(9,656
|
)
|
||
Distributions in excess of earnings from Select Income REIT
|
|
2,419
|
|
|
10,097
|
|
||
Distributions in excess of earnings from unconsolidated joint ventures
|
|
823
|
|
|
—
|
|
||
Proceeds from sale of properties, net
|
|
18,797
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
|
11,019
|
|
|
(12,200
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
||
Repayment of mortgage notes payable
|
|
(899
|
)
|
|
(379
|
)
|
||
Borrowings on unsecured revolving credit facility
|
|
25,000
|
|
|
30,000
|
|
||
Repayments on unsecured revolving credit facility
|
|
(25,000
|
)
|
|
(30,000
|
)
|
||
Repurchase of common shares
|
|
(11
|
)
|
|
—
|
|
||
Preferred units of limited partnership distributions
|
|
(278
|
)
|
|
—
|
|
||
Distributions to common shareholders
|
|
(42,632
|
)
|
|
(30,606
|
)
|
||
Net cash used in financing activities
|
|
(43,820
|
)
|
|
(30,985
|
)
|
||
|
|
|
|
|
||||
Increase (decrease) in cash and cash equivalents and restricted cash
|
|
2,466
|
|
|
(16,960
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
|
19,680
|
|
|
30,471
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
22,146
|
|
|
$
|
13,511
|
|
Interest paid
|
|
$
|
27,733
|
|
|
$
|
15,854
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
||
Cash and cash equivalents
|
|
$
|
17,380
|
|
|
$
|
12,808
|
|
Restricted cash
|
|
4,766
|
|
|
703
|
|
||
Total cash and cash equivalents and restricted cash reported in the statements of cash flows
|
|
$
|
22,146
|
|
|
$
|
13,511
|
|
|
|
For the Three Months
|
||||
|
|
Ended March 31,
|
||||
|
|
2018
|
|
2017
|
||
Weighted average common shares for basic earnings per share
|
|
99,041
|
|
|
71,079
|
|
Effect of dilutive securities: unvested share awards
|
|
8
|
|
|
15
|
|
Weighted average common shares for diluted earnings per share
|
|
99,049
|
|
|
71,094
|
|
|
Three Months Ended March 31,
|
||
|
2017
|
||
Rental income
|
$
|
110,305
|
|
Net loss
|
(4,687
|
)
|
|
Net loss per share
|
$
|
0.05
|
|
Joint Venture
|
|
GOV Ownership
|
|
GOV Carrying Value of Investment at March 31, 2018
|
|
Property Type
|
|
Number of Buildings
|
|
Location
|
|
Square Feet
|
|||
Prosperity Metro Plaza
|
|
51%
|
|
$
|
27,086
|
|
|
Office
|
|
2
|
|
Fairfax, VA
|
|
328,456
|
|
1750 H Street, NW
|
|
50%
|
|
21,672
|
|
|
Office
|
|
1
|
|
Washington, DC
|
|
115,411
|
|
|
Total
|
|
|
|
$
|
48,758
|
|
|
|
|
3
|
|
|
|
443,867
|
|
Joint Venture
|
|
Interest Rate
(1)
|
|
Maturity Date
|
|
Principal Balance at March 31, 2018
(2)
|
||
Prosperity Metro Plaza
|
|
4.09%
|
|
12/1/2029
|
|
$
|
50,000
|
|
1750 H Street, NW
|
|
3.69%
|
|
8/1/2024
|
|
32,000
|
|
|
Weighted Average/Total
|
|
3.93%
|
|
|
|
$
|
82,000
|
|
(1)
|
Includes the effect of mark to market purchase accounting.
|
(2)
|
Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint venture we do not own. None of the debt is recourse to us.
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
|
|
|
Quoted Prices in
|
|
|
|
Significant
|
||||||||
|
|
|
|
Active Markets for
|
|
Significant Other
|
|
Unobservable
|
||||||||
|
|
|
|
Identical Assets
|
|
Observable Inputs
|
|
Inputs
|
||||||||
Description
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Recurring Fair Value Measurements Assets:
|
|
|
|
|
|
|
|
|
||||||||
Investment in RMR Inc.
(1)
|
|
$
|
84,935
|
|
|
$
|
84,935
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-Recurring Fair Value Measurements Assets:
|
|
|
|
|
|
|
|
|
|
|||||||
Properties held for sale
(2)
|
|
$
|
18,080
|
|
|
$
|
—
|
|
|
$
|
18,080
|
|
|
$
|
—
|
|
(1)
|
Our
1,214,225
shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP). Our historical cost basis for these shares is
$26,888
as of
March 31, 2018
. During the three months ended
March 31, 2018
, we recorded an unrealized gain of
$12,931
to adjust the carrying value of our investment in RMR Inc. shares to their fair value.
|
(2)
|
We estimated the fair value of
two
properties (
two
buildings) held for sale at
March 31, 2018
based upon negotiated sale agreements with third parties less estimated sale costs (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 4 for further details.
|
|
|
As of March 31, 2018
|
|
As of December 31, 2017
|
||||||||||||
|
|
Carrying Amount
(1)
|
|
Fair Value
|
|
Carrying Amount
(1)
|
|
Fair Value
|
||||||||
Senior unsecured notes, 3.75% interest rate, due in 2019
|
|
$
|
348,381
|
|
|
$
|
351,673
|
|
|
$
|
348,096
|
|
|
$
|
354,993
|
|
Senior unsecured notes, 5.875% interest rate, due in 2046
|
|
300,318
|
|
|
314,464
|
|
|
300,232
|
|
|
320,416
|
|
||||
Senior unsecured notes, 4.000% interest rate, due in 2022
|
|
296,044
|
|
|
301,044
|
|
|
295,812
|
|
|
302,655
|
|
||||
Mortgage note payable, 4.050% interest rate, due in 2030
(2)
|
|
64,343
|
|
|
63,918
|
|
|
64,293
|
|
|
65,198
|
|
||||
Mortgage note payable, 5.720% interest rate, due in 2020
(2)
|
|
35,786
|
|
|
35,812
|
|
|
36,085
|
|
|
36,332
|
|
||||
Mortgage note payable, 4.220% interest rate, due in 2022
(2)
|
|
27,742
|
|
|
28,081
|
|
|
27,906
|
|
|
28,432
|
|
||||
Mortgage note payable, 4.800% interest rate, due in 2023
(2)
|
|
25,394
|
|
|
25,488
|
|
|
25,501
|
|
|
25,904
|
|
||||
Mortgage note payable, 5.877% interest rate, due in 2021
(2)
|
|
13,560
|
|
|
14,345
|
|
|
13,620
|
|
|
14,565
|
|
||||
Mortgage note payable, 7.000% interest rate, due in 2019
(2)
|
|
8,291
|
|
|
8,410
|
|
|
8,391
|
|
|
8,555
|
|
||||
Mortgage note payable, 8.150% interest rate, due in 2021
(2)
|
|
3,823
|
|
|
4,014
|
|
|
4,111
|
|
|
4,340
|
|
||||
Mortgage note payable, 4.260% interest rate, due in 2020
(2)
|
|
3,144
|
|
|
3,151
|
|
|
3,193
|
|
|
3,216
|
|
||||
|
|
$
|
1,126,826
|
|
|
$
|
1,150,400
|
|
|
$
|
1,127,240
|
|
|
$
|
1,164,606
|
|
(1)
|
Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts.
|
(2)
|
We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
|
Unrealized Gain
|
|
Equity in
|
|
|
||||||
|
|
on Investment
|
|
Unrealized
|
|
|
||||||
|
|
in Equity
|
|
Gain (Loss)
|
|
|
||||||
|
|
Securities
|
|
of Investees
|
|
Total
|
||||||
Balance at December 31, 2017
|
|
$
|
45,116
|
|
|
$
|
15,311
|
|
|
$
|
60,427
|
|
Amounts reclassified from cumulative other comprehensive income to cumulative net income
|
|
(45,116
|
)
|
|
(14,325
|
)
|
|
(59,441
|
)
|
|||
|
|
|
|
|
|
|
||||||
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
|||
Amounts reclassified from cumulative other comprehensive income to net income
(1)
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|||
Net current period other comprehensive loss
|
|
—
|
|
|
(41
|
)
|
|
(41
|
)
|
|||
Balance at March 31, 2018
|
|
$
|
—
|
|
|
$
|
945
|
|
|
$
|
945
|
|
(1)
|
Amounts reclassified from cumulative other comprehensive loss to net income are included in equity in earnings of investees in our condensed consolidated statements of comprehensive income.
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Real estate properties, net
|
|
$
|
3,888,100
|
|
|
$
|
3,905,616
|
|
Acquired real estate leases, net
|
|
461,577
|
|
|
477,577
|
|
||
Properties held for sale
|
|
5,829
|
|
|
5,829
|
|
||
Cash and cash equivalents
|
|
30,884
|
|
|
658,719
|
|
||
Rents receivable, net
|
|
131,445
|
|
|
127,672
|
|
||
Other assets, net
|
|
151,174
|
|
|
127,617
|
|
||
Total assets
|
|
$
|
4,669,009
|
|
|
$
|
5,303,030
|
|
|
|
|
|
|
||||
Unsecured revolving credit facility
|
|
$
|
107,000
|
|
|
$
|
—
|
|
Industrial Logistics Properties Trust revolving credit facility
|
|
302,000
|
|
|
750,000
|
|
||
Unsecured term loan, net
|
|
—
|
|
|
348,870
|
|
||
Senior unsecured notes, net
|
|
1,428,571
|
|
|
1,777,425
|
|
||
Mortgage notes payable, net
|
|
210,749
|
|
|
210,785
|
|
||
Assumed real estate lease obligations, net
|
|
66,577
|
|
|
68,783
|
|
||
Other liabilities
|
|
125,668
|
|
|
155,348
|
|
||
Total shareholders' equity attributable to SIR
|
|
2,110,595
|
|
|
1,991,819
|
|
||
Noncontrolling interest in consolidated subsidiary
|
|
317,849
|
|
|
—
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
4,669,009
|
|
|
$
|
5,303,030
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Rental income
|
|
$
|
99,755
|
|
|
$
|
97,344
|
|
Tenant reimbursements and other income
|
|
20,874
|
|
|
18,950
|
|
||
Total revenues
|
|
120,629
|
|
|
116,294
|
|
||
|
|
|
|
|
||||
Real estate taxes
|
|
11,788
|
|
|
10,843
|
|
||
Other operating expenses
|
|
15,282
|
|
|
12,867
|
|
||
Depreciation and amortization
|
|
34,946
|
|
|
33,740
|
|
||
General and administrative
|
|
13,941
|
|
|
14,901
|
|
||
Write-off of straight line rents receivable, net
|
|
—
|
|
|
12,517
|
|
||
Loss on asset impairment
|
|
—
|
|
|
4,047
|
|
||
Total expenses
|
|
75,957
|
|
|
88,915
|
|
||
Operating income
|
|
44,672
|
|
|
27,379
|
|
||
|
|
|
|
|
||||
Dividend income
|
|
397
|
|
|
397
|
|
||
Unrealized gain on equity securities
|
|
16,900
|
|
|
—
|
|
||
Interest income
|
|
510
|
|
|
13
|
|
||
Interest expense
|
|
(23,492
|
)
|
|
(21,087
|
)
|
||
Loss on early extinguishment of debt
|
|
(1,192
|
)
|
|
—
|
|
||
Income before income tax expense and equity in earnings of an investee
|
|
37,795
|
|
|
6,702
|
|
||
Income tax expense
|
|
(160
|
)
|
|
(102
|
)
|
||
Equity in earnings of an investee
|
|
44
|
|
|
128
|
|
||
Net income
|
|
37,679
|
|
|
6,728
|
|
||
Net income allocated to noncontrolling interest
|
|
(4,479
|
)
|
|
—
|
|
||
Net income attributed to SIR
|
|
$
|
33,200
|
|
|
$
|
6,728
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding (basic)
|
|
89,382
|
|
|
89,331
|
|
||
Weighted average common shares outstanding (diluted)
|
|
$
|
89,390
|
|
|
$
|
89,348
|
|
Net income attributed to SIR per common share (basic and diluted)
|
|
$
|
0.37
|
|
|
$
|
0.08
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
|
|
Investment
|
|
Investment
|
|
|
|
|
||||||||
|
|
in Real Estate
|
|
in SIR
|
|
Corporate
|
|
Consolidated
|
||||||||
Rental income
|
|
$
|
108,717
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
108,717
|
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate taxes
|
|
12,964
|
|
|
—
|
|
|
—
|
|
|
12,964
|
|
||||
Utility expenses
|
|
6,690
|
|
|
—
|
|
|
—
|
|
|
6,690
|
|
||||
Other operating expenses
|
|
22,837
|
|
|
—
|
|
|
—
|
|
|
22,837
|
|
||||
Depreciation and amortization
|
|
44,204
|
|
|
—
|
|
|
—
|
|
|
44,204
|
|
||||
Loss on impairment of real estate
|
|
6,116
|
|
|
—
|
|
|
—
|
|
|
6,116
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
9,606
|
|
|
9,606
|
|
||||
Total expenses
|
|
92,811
|
|
|
—
|
|
|
9,606
|
|
|
102,417
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
15,906
|
|
|
—
|
|
|
(9,606
|
)
|
|
6,300
|
|
||||
Dividend income
|
|
—
|
|
|
—
|
|
|
304
|
|
|
304
|
|
||||
Unrealized gain on equity securities
|
|
—
|
|
|
|
|
12,931
|
|
|
12,931
|
|
|||||
Interest income
|
|
57
|
|
|
—
|
|
|
59
|
|
|
116
|
|
||||
Interest expense
|
|
(2,096
|
)
|
|
—
|
|
|
(20,670
|
)
|
|
(22,766
|
)
|
||||
Income (loss) from continuing operations before
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
income taxes and equity in earnings (losses) of investees
|
|
13,867
|
|
|
—
|
|
|
(16,982
|
)
|
|
(3,115
|
)
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
(32
|
)
|
||||
Equity in earnings (losses) of
investees
|
|
(621
|
)
|
|
10,289
|
|
|
44
|
|
|
9,712
|
|
||||
Net income (loss)
|
|
$
|
13,246
|
|
|
$
|
10,289
|
|
|
$
|
(16,970
|
)
|
|
$
|
6,565
|
|
Preferred units of limited partnership distributions
|
|
—
|
|
|
—
|
|
|
(278
|
)
|
|
(278
|
)
|
||||
Net income (loss) available for common shareholders
|
|
$
|
13,246
|
|
|
$
|
10,289
|
|
|
$
|
(17,248
|
)
|
|
$
|
6,287
|
|
|
|
As of March 31, 2018
|
||||||||||||||
|
|
Investment
|
|
Investment
|
|
|
|
|
||||||||
|
|
in Real Estate
|
|
in SIR
|
|
Corporate
|
|
Consolidated
|
||||||||
Total Assets
|
|
$
|
3,078,889
|
|
|
$
|
465,131
|
|
|
$
|
111,604
|
|
|
$
|
3,655,624
|
|
|
|
Three Months Ended March 31, 2017
|
||||||||||||||
|
|
Investment
|
|
Investment
|
|
|
|
|
||||||||
|
|
in Real Estate
|
|
in SIR
|
|
Corporate
|
|
Consolidated
|
||||||||
Rental income
|
|
$
|
69,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69,296
|
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real estate taxes
|
|
8,177
|
|
|
—
|
|
|
—
|
|
|
8,177
|
|
||||
Utility expenses
|
|
4,606
|
|
|
—
|
|
|
—
|
|
|
4,606
|
|
||||
Other operating expenses
|
|
13,992
|
|
|
—
|
|
|
—
|
|
|
13,992
|
|
||||
Depreciation and amortization
|
|
20,505
|
|
|
—
|
|
|
—
|
|
|
20,505
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
3,962
|
|
|
3,962
|
|
||||
Total expenses
|
|
47,280
|
|
|
—
|
|
|
3,962
|
|
|
51,242
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
22,016
|
|
|
—
|
|
|
(3,962
|
)
|
|
18,054
|
|
||||
Dividend income
|
|
—
|
|
|
—
|
|
|
304
|
|
|
304
|
|
||||
Interest income
|
|
46
|
|
|
—
|
|
|
15
|
|
|
61
|
|
||||
Interest expense
|
|
(432
|
)
|
|
—
|
|
|
(13,149
|
)
|
|
(13,581
|
)
|
||||
Income (loss) from continuing operations before income taxes and
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
equity in earnings of investees
|
|
21,630
|
|
|
—
|
|
|
(16,792
|
)
|
|
4,838
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
||||
Equity in earnings of investees
|
|
—
|
|
|
2,611
|
|
|
128
|
|
|
2,739
|
|
||||
Income (loss) from continuing operations
|
|
21,630
|
|
|
2,611
|
|
|
(16,682
|
)
|
|
7,559
|
|
||||
Loss from discontinued operations
|
|
(144
|
)
|
|
—
|
|
|
—
|
|
|
(144
|
)
|
||||
Net income (loss) available for common shareholders
|
|
$
|
21,486
|
|
|
$
|
2,611
|
|
|
$
|
(16,682
|
)
|
|
$
|
7,415
|
|
|
|
As of December 31, 2017
|
||||||||||||||
|
|
Investment
|
|
Investment
|
|
|
|
|
||||||||
|
|
in Real Estate
|
|
in SIR
|
|
Corporate
|
|
Consolidated
|
||||||||
Total Assets
|
|
$
|
3,138,764
|
|
|
$
|
467,499
|
|
|
$
|
97,302
|
|
|
$
|
3,703,565
|
|
|
|
|
|
|
|
Comparable
|
||||||
|
|
All Consolidated Properties
(1)
|
|
Consolidated Properties
(2)
|
||||||||
|
|
March 31,
|
|
March 31,
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Total properties
|
|
107
|
|
|
74
|
|
|
71
|
|
|
71
|
|
Total buildings
|
|
166
|
|
|
96
|
|
|
93
|
|
|
93
|
|
Total square feet
(3)
|
|
17,332
|
|
|
11,512
|
|
|
11,234
|
|
|
11,220
|
|
Percent leased
(4)
|
|
94.4
|
%
|
|
95.1
|
%
|
|
95.3
|
%
|
|
95.7
|
%
|
(1)
|
Based on consolidated properties we owned on
March 31, 2018
and
2017
, respectively, and
excludes one property (one building) classified as discontinued operations which was sold in August 2017
.
|
(2)
|
Based on consolidated properties we owned on
March 31, 2018
and which we owned continuously since January 1, 2017. Our comparable properties increased from 70 properties (90 buildings) at
March 31, 2017
as a result of our acquisition of three properties (five buildings) during 2016, partially offset by the sale of two properties (two buildings) since January 1, 2017.
|
(3)
|
Subject to changes when space is re-measured or re-configured for tenants.
|
(4)
|
Percent leased includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Average annualized effective rental rate per square foot
(1)
:
|
|
|
|
|
||||
All properties
(2)
|
|
$
|
26.77
|
|
|
$
|
25.55
|
|
Comparable properties
(3)
|
|
$
|
26.34
|
|
|
$
|
25.69
|
|
(1)
|
Average annualized effective rental rate per square foot represents annualized total rental income during the period specified divided by the average rentable square feet leased during the period specified. Excludes one property (one building) classified as discontinued operations which was sold in August 2017.
|
(2)
|
Based on consolidated properties we owned on
March 31, 2018
and
2017
, respectively, and
excludes one property (one building) classified as discontinued operations which was sold in August 2017
.
|
(3)
|
Based on consolidated properties we owned on
March 31, 2018
and which we owned continuously since January 1, 2017.
|
|
|
Three Months Ended March 31, 2018
|
|||||||
|
|
|
|
Available
|
|
|
|||
|
|
Leased
|
|
for Lease
|
|
Total
|
|||
Beginning of period
|
|
16,477,339
|
|
|
1,021,999
|
|
|
17,499,338
|
|
Changes resulting from:
|
|
|
|
|
|
|
|
|
|
Disposition of properties
|
|
(169,176
|
)
|
|
(24,418
|
)
|
|
(193,594
|
)
|
Lease expirations
|
|
(256,269
|
)
|
|
256,269
|
|
|
—
|
|
Lease renewals
(1)
|
|
196,586
|
|
|
(196,586
|
)
|
|
—
|
|
New leases
(1)
|
|
109,412
|
|
|
(83,833
|
)
|
|
25,579
|
|
Re-measurements
(2)
|
|
—
|
|
|
857
|
|
|
857
|
|
End of period
|
|
16,357,892
|
|
|
974,288
|
|
|
17,332,180
|
|
(1)
|
Based on leases entered during the
three
months ended
March 31, 2018
and an expansion of 25,579 rentable square feet completed at an existing property.
|
(2)
|
Rentable square feet is subject to changes when space is re-measured or re-configured for tenants.
|
|
|
Three Months Ended March 31, 2018
|
|||||||||
|
|
Old Effective
|
|
New Effective
|
|
|
|||||
|
|
Rent Per
|
|
Rent Per
|
|
Rentable
|
|||||
|
|
Square Foot
(1)
|
|
Square Foot
(1)
|
|
Square Feet
|
|||||
New leases
|
|
$
|
20.69
|
|
|
$
|
28.28
|
|
|
148,399
|
|
Lease renewals
|
|
$
|
25.95
|
|
|
$
|
26.59
|
|
|
200,488
|
|
Total leasing activity
|
|
$
|
23.71
|
|
|
$
|
27.31
|
|
|
348,887
|
|
(1)
|
Effective rental rate includes contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and excluding lease value amortization.
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
|
|
Government
|
|
Non-Government
|
|
|
||||||
|
|
Leases
|
|
Leases
|
|
Total
|
||||||
Rentable square feet leased during the period
|
|
72,006
|
|
|
208,413
|
|
|
280,419
|
|
|||
Tenant leasing costs and concession commitments
(1)
(in thousands)
|
|
$
|
3,682
|
|
|
$
|
4,316
|
|
|
$
|
7,998
|
|
Tenant leasing costs and concession commitments per rentable square foot
(1)
|
|
$
|
51.13
|
|
|
$
|
20.71
|
|
|
$
|
28.52
|
|
Weighted (by square feet) average lease term (years)
|
|
8.2
|
|
|
4.6
|
|
|
5.6
|
|
|||
Total leasing costs and concession commitments per rentable square foot per year
(1)
|
|
$
|
6.20
|
|
|
$
|
4.47
|
|
|
$
|
5.13
|
|
(1)
|
Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Tenant improvements
(1)
|
|
$
|
2,843
|
|
|
$
|
2,403
|
|
Leasing costs
(2)
|
|
$
|
1,986
|
|
|
$
|
1,087
|
|
Building improvements
(3)
|
|
$
|
2,707
|
|
|
$
|
1,778
|
|
Development, redevelopment and other activities
(4)
|
|
$
|
1,416
|
|
|
$
|
6,281
|
|
(1)
|
Tenant improvements include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space.
|
(2)
|
Leasing costs include leasing related costs, such as brokerage commissions and other tenant inducements.
|
(3)
|
Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.
|
(4)
|
Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of a property acquisition and incurred within a short time period after acquiring the property, and (ii) capital expenditure projects that reposition a property or result in new sources of revenue.
|
(1)
|
The year of lease expiration is pursuant to current contract terms. Some government tenants have the right to vacate their space before the stated expirations of their leases. As of
March 31, 2018
, government tenants occupying approximately
9.0%
of our consolidated rentable square feet and responsible for approximately
7.7%
of our annualized rental income as of
March 31, 2018
have currently exercisable rights to terminate their leases before the stated terms of their leases expire. Also, in
2018
,
2019
,
2020
,
2021
,
2022
,
2023
,
2024
,
2025
,
2026
,
2027
and
2028
early termination rights become exercisable by other tenants who currently occupy an additional approximately
0.7%
,
5.2%
,
7.1%
,
1.6%
,
3.4%
,
0.5%
,
0.3%
,
0.1%
,
0.6%
,
0.0%
and
0.6%
of our consolidated rentable square feet, respectively, and contribute an additional approximately
0.6%
,
4.9%
,
7.0%
,
1.5%
,
2.9%
,
0.6%
,
0.5%
,
0.4%
,
0.8%
,
0.1%
and
0.5%
of our annualized rental income, respectively, as of
March 31, 2018
. In addition, as of
March 31, 2018
,
26
of our government tenants have currently exercisable rights to terminate their leases if the legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These
26
tenants occupy approximately
13.0%
of our consolidated rentable square feet and contribute approximately
12.3%
of our annualized rental income as of
March 31, 2018
.
|
(2)
|
Leased square feet is pursuant to leases existing as of
March 31, 2018
, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any. Square feet measurements are subject to changes when space is re-measured or re-configured for new tenants.
|
|
|
|
|
|
|
|
|
|
|
Acquired Properties
|
|
Disposed Properties
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Results
(2)
|
|
Results
(3)
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
|
|
Comparable Properties Results
(1)
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Consolidated Results
|
|||||||||||||||||||||||||||||||||||||||||
|
|
Three Months Ended March 31
|
|
March 31,
|
|
March 31,
|
|
Three Months Ended March 31,
|
|||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
|||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
Change
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Change
|
|
Change
|
|||||||||||||||||||||||||
Rental income
|
|
$
|
69,589
|
|
|
$
|
68,143
|
|
|
$
|
1,446
|
|
|
2.1
|
%
|
|
$
|
38,503
|
|
|
$
|
405
|
|
|
$
|
625
|
|
|
$
|
748
|
|
|
$
|
108,717
|
|
|
$
|
69,296
|
|
|
$
|
39,421
|
|
|
56.9
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Real estate taxes
|
|
8,645
|
|
|
8,048
|
|
|
597
|
|
|
7.4
|
%
|
|
4,255
|
|
|
26
|
|
|
64
|
|
|
103
|
|
|
12,964
|
|
|
8,177
|
|
|
4,787
|
|
|
58.5
|
%
|
|||||||||||||
Utility expenses
|
|
4,685
|
|
|
4,453
|
|
|
232
|
|
|
5.2
|
%
|
|
1,870
|
|
|
7
|
|
|
135
|
|
|
146
|
|
|
6,690
|
|
|
4,606
|
|
|
2,084
|
|
|
45.2
|
%
|
|||||||||||||
Other operating expenses
|
|
14,712
|
|
|
13,591
|
|
|
1,121
|
|
|
8.2
|
%
|
|
7,825
|
|
|
60
|
|
|
300
|
|
|
341
|
|
|
22,837
|
|
|
13,992
|
|
|
8,845
|
|
|
63.2
|
%
|
|||||||||||||
Total operating expenses
|
|
28,042
|
|
|
26,092
|
|
|
1,950
|
|
|
7.5
|
%
|
|
13,950
|
|
|
93
|
|
|
499
|
|
|
590
|
|
|
42,491
|
|
|
26,775
|
|
|
15,716
|
|
|
58.7
|
%
|
|||||||||||||
Net operating income
(4)
|
|
$
|
41,547
|
|
|
$
|
42,051
|
|
|
$
|
(504
|
)
|
|
(1.2
|
%)
|
|
$
|
24,553
|
|
|
$
|
312
|
|
|
$
|
126
|
|
|
$
|
158
|
|
|
66,226
|
|
|
42,521
|
|
|
23,705
|
|
|
55.7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Depreciation and amortization
|
|
44,204
|
|
|
20,505
|
|
|
23,699
|
|
|
115.6
|
%
|
|||||||||||||||||||||||||||||||||||||
Loss on impairment of real estate
|
|
6,116
|
|
|
—
|
|
|
6,116
|
|
|
nm
|
|
|||||||||||||||||||||||||||||||||||||
General and administrative
|
|
9,606
|
|
|
3,962
|
|
|
5,644
|
|
|
142.5
|
%
|
|||||||||||||||||||||||||||||||||||||
Total other expenses
|
|
59,926
|
|
|
24,467
|
|
|
35,459
|
|
|
144.9
|
%
|
|||||||||||||||||||||||||||||||||||||
Operating income
|
|
6,300
|
|
|
18,054
|
|
|
(11,754
|
)
|
|
(65.1
|
%)
|
|||||||||||||||||||||||||||||||||||||
Dividend income
|
|
304
|
|
|
304
|
|
|
—
|
|
|
—
|
%
|
|||||||||||||||||||||||||||||||||||||
Unrealized gain on equity securities
|
—
|
|
12,931
|
|
—
|
|
—
|
|
—
|
|
12,931
|
|
|
nm
|
|
||||||||||||||||||||||||||||||||||
Interest income
|
|
116
|
|
|
61
|
|
|
55
|
|
|
90.2
|
%
|
|||||||||||||||||||||||||||||||||||||
Interest expense (including net amortization of debt premiums and discounts and debt issuance costs of $965 and $807, respectively)
|
|
(22,766
|
)
|
|
(13,581
|
)
|
|
(9,185
|
)
|
|
67.6
|
%
|
|||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes and equity in earnings of investees
|
|
(3,115
|
)
|
|
4,838
|
|
|
(7,953
|
)
|
|
(164.4
|
%)
|
|||||||||||||||||||||||||||||||||||||
Income tax expense
|
|
(32
|
)
|
|
(18
|
)
|
|
(14
|
)
|
|
77.8
|
%
|
|||||||||||||||||||||||||||||||||||||
Equity in earnings of investees
|
|
9,712
|
|
|
2,739
|
|
|
6,973
|
|
|
254.6
|
%
|
|||||||||||||||||||||||||||||||||||||
Income from continuing operations
|
|
6,565
|
|
|
7,559
|
|
|
(994
|
)
|
|
(13.1
|
%)
|
|||||||||||||||||||||||||||||||||||||
Loss from discontinued operations
|
|
—
|
|
|
(144
|
)
|
|
144
|
|
|
(100.0
|
%)
|
|||||||||||||||||||||||||||||||||||||
Net income
|
|
6,565
|
|
|
7,415
|
|
|
(850
|
)
|
|
(11.5
|
%)
|
|||||||||||||||||||||||||||||||||||||
Preferred units of limited partnership distributions
|
|
(278
|
)
|
|
—
|
|
|
(278
|
)
|
|
nm
|
|
|||||||||||||||||||||||||||||||||||||
Net income available for common shareholders
|
|
$
|
6,287
|
|
|
$
|
7,415
|
|
|
$
|
(1,128
|
)
|
|
(15.2
|
%)
|
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding (basic)
|
|
99,041
|
|
|
71,079
|
|
|
27,962
|
|
|
39.3
|
%
|
|||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding (diluted)
|
|
99,049
|
|
|
71,094
|
|
|
27,955
|
|
|
39.3
|
%
|
|||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
Per common share amounts (basic and diluted):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
Income from continuing operations
|
|
$
|
0.07
|
|
|
$
|
0.11
|
|
|
$
|
(0.04
|
)
|
|
(36.4
|
%)
|
||||||||||||||||||||||||||||||||||
Loss from discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
||||||||||||||||||||||||||||||||||
Net income available for common shareholders
|
|
$
|
0.06
|
|
|
$
|
0.10
|
|
|
$
|
(0.04
|
)
|
|
(40.0
|
%)
|
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
Reconciliation of Net Income Available for Common Shareholders to Consolidated Property NOI:
(4)
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders
|
|
$
|
6,287
|
|
|
$
|
7,415
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Preferred units of limited partnership distributions
|
|
278
|
|
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Net income
|
|
6,565
|
|
|
7,415
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Loss from discontinued operations
|
|
—
|
|
|
144
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Income from continuing operations
|
|
6,565
|
|
|
7,559
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Equity in earnings of investees
|
|
(9,712
|
)
|
|
(2,739
|
)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Income tax expense
|
|
32
|
|
|
18
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Interest expense
|
|
22,766
|
|
|
13,581
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Interest income
|
|
(116
|
)
|
|
(61
|
)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Unrealized gain on equity securities
|
|
(12,931
|
)
|
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Dividend income
|
|
(304
|
)
|
|
(304
|
)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Operating income
|
|
6,300
|
|
|
18,054
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
General and administrative
|
|
9,606
|
|
|
3,962
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Loss on impairment of real estate
|
|
6,116
|
|
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Depreciation and amortization
|
|
44,204
|
|
|
20,505
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Net operating income
|
|
$
|
66,226
|
|
|
$
|
42,521
|
|
|
|
|
|
(1)
|
Comparable properties consist of
71
consolidated properties (
93
buildings) we owned on
March 31, 2018
and which we owned continuously since January 1, 2017.
|
(2)
|
Acquired properties consist of 36 consolidated properties (73 buildings) we acquired since January 1, 2017. In October 2017, we acquired 35 of these properties (72 buildings) in connection with the FPO Transaction and acquired one property (one building) in a separate transaction in January 2017.
|
(3)
|
Disposed properties consist of one consolidated property (one building) which we sold in October 2017 and one consolidated property (one building) we sold during the three months ended March 31, 2018 and excludes one property (one building) classified as discontinued operations which was sold in August 2017.
|
(4)
|
The calculation of Consolidated Property Net Operating Income, or NOI, excludes certain components of net income available for common shareholders in order to provide results that are more closely related to our consolidated property level results of operations. We define Consolidated Property NOI as consolidated income from our rental of real estate less our consolidated property operating expenses. Consolidated Property NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We consider Consolidated Property NOI to be an appropriate supplemental measure to net income available for common shareholders because it may help both investors and management to understand the operations of our consolidated properties. We use Consolidated Property NOI to evaluate individual and company wide consolidated property level performance, and we believe that Consolidated Property NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Consolidated Property NOI does not represent cash generated by operating activities in accordance with U.S. generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income, net income available for common shareholders or operating income as an indicator of our operating performance or as a measure of our liquidity. This measure should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in our condensed consolidated statements of comprehensive income (loss). Other real estate companies and REITs may calculate Consolidated Property NOI differently than we do.
|
(5)
|
We calculate funds from operations, or FFO, available for common shareholders and normalized funds from operations, or Normalized FFO, available for common shareholders as shown above. FFO available for common shareholders is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is net income available for common shareholders calculated in accordance with GAAP, plus real estate depreciation and amortization of consolidated properties and our proportionate share of the real estate depreciation and amortization of unconsolidated joint venture properties and the difference between FFO attributable to an equity investment and equity in earnings of an equity investee but excluding impairment charges on and increases in the carrying value of real estate assets, any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO available for common shareholders differs from Nareit's definition of FFO available for common shareholders because we include SIR's Normalized FFO attributable to our equity investment in SIR (net of FFO attributable to our equity investment in SIR), we include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year and we exclude unrealized gains and losses on equity securities. We consider FFO available for common shareholders and Normalized FFO available for common shareholders to be appropriate supplemental measures of operating performance for a REIT, along with net income, net income available for our common shareholders and operating income. We believe that FFO available for common shareholders and Normalized FFO available for common shareholders provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO available for common shareholders and Normalized FFO available for common shareholders may facilitate a comparison of our operating performance between periods and with other REITs. FFO available for common shareholders and Normalized FFO available for common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance, our receipt of distributions from SIR and our expected needs for and availability of cash to pay our obligations. FFO available for common shareholders and Normalized FFO available for common shareholders do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income available for common shareholders or operating income as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in our condensed consolidated statements of comprehensive income. Other real estate companies and REITs may calculate FFO available for common shareholders and Normalized FFO available for common shareholders differently than we do.
|
(6)
|
Incentive fees under our business management agreement with The RMR Group LLC, or RMR LLC, are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our condensed consolidated statements of comprehensive income. In calculating net income available for common shareholders in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income available for common shareholders, we do not include such expense in the calculation of Normalized FFO available for common shareholders until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined.
|
•
|
our ability to maintain or increase the occupancy of, and the rental rates at, our properties;
|
•
|
our ability to control operating expenses and capital expenses at our properties;
|
•
|
our ability to purchase additional properties which produce cash flows from operations in excess of our cost of acquisition capital and property operating expenses and capital expenses; and
|
•
|
our receipt of distributions from our investments in SIR and RMR Inc.
|
•
|
Our $300,000 term loan, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at
March 31, 2018
, on the amount outstanding under our $300,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of
March 31, 2018
, the annual interest rate for the amount outstanding under our $300,000 term loan was
3.3%
.
|
•
|
Our $250,000 term loan, which matures on March 31, 2022, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum at
March 31, 2018
, on the amount outstanding under our $250,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of
March 31, 2018
, the annual interest rate for the amount outstanding under our $250,000 term loan was
3.7%
.
|
|
|
|
|
Annual
|
|
Annual
|
|
|
|
Interest
|
|||||
|
|
Principal
|
|
Interest
|
|
Interest
|
|
|
|
Payments
|
|||||
Debt
|
|
Balance
(1)
|
|
Rate
(1)
|
|
Expense
(1)
|
|
Maturity
|
|
Due
|
|||||
Senior unsecured notes
|
|
$
|
350,000
|
|
|
3.750
|
%
|
|
$
|
13,125
|
|
|
2019
|
|
Semi-annually
|
Senior unsecured notes
|
|
310,000
|
|
|
5.875
|
%
|
|
18,213
|
|
|
2046
|
|
Quarterly
|
||
Senior unsecured notes
|
|
300,000
|
|
|
4.000
|
%
|
|
12,000
|
|
|
2022
|
|
Semi-annually
|
||
Mortgage note (one property (one building) in Tampa, FL)
|
|
8,152
|
|
|
7.000
|
%
|
|
579
|
|
|
2019
|
|
Monthly
|
||
Mortgage note (one property (one building) in Washington, DC)
|
|
34,285
|
|
|
5.720
|
%
|
|
1,988
|
|
|
2020
|
|
Monthly
|
||
Mortgage note (one property (one building) in Chesapeake, VA)
|
|
3,126
|
|
|
4.260
|
%
|
|
135
|
|
|
2020
|
|
Monthly
|
||
Mortgage note (one property (one building) in Lakewood, CO)
|
|
3,771
|
|
|
8.150
|
%
|
|
312
|
|
|
2021
|
|
Monthly
|
||
Mortgage note (one property (one building) in Fairfax, VA)
|
|
13,628
|
|
|
5.877
|
%
|
|
812
|
|
|
2021
|
|
Monthly
|
||
Mortgage note (one property (one building) in Washington, DC)
|
|
27,708
|
|
|
4.220
|
%
|
|
1,186
|
|
|
2022
|
|
Monthly
|
||
Mortgage note (one property (one building) in Washington, DC)
|
|
24,798
|
|
|
4.800
|
%
|
|
1,207
|
|
|
2023
|
|
Monthly
|
||
Mortgage note (one property (one building) in Washington, DC)
|
|
66,780
|
|
|
4.050
|
%
|
|
2,742
|
|
|
2030
|
|
Monthly
|
||
|
|
$
|
1,142,248
|
|
|
|
|
|
$
|
52,299
|
|
|
|
|
|
(1)
|
The principal balances and interest rates are the amounts stated in the contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we issued or assumed these debts. For more information, see Notes 7 and 8 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
|
|
|
Our JV
|
|
|
|
Annual
|
|
Annual
|
|
|
|
Interest
|
|||||
|
|
Ownership
|
|
Principal
|
|
Interest
|
|
Interest
|
|
|
|
Payments
|
|||||
Debt
|
|
Interest
|
|
Balance
(1)(2)
|
|
Rate
(1)
|
|
Expense
(1)
|
|
Maturity
|
|
Due
|
|||||
Mortgage note one property (one building) in Washington, DC
|
|
50%
|
|
$
|
32,000
|
|
|
3.920
|
%
|
|
$
|
1,254
|
|
|
2024
|
|
Monthly
|
Mortgage note one property (two buildings) in Fairfax, VA
|
|
51%
|
|
50,000
|
|
|
3.910
|
%
|
|
1,955
|
|
|
2029
|
|
Monthly
|
||
|
|
|
|
$
|
82,000
|
|
|
|
|
$
|
3,209
|
|
|
|
|
|
(1)
|
The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract. In accordance with GAAP, the joint ventures' recorded interest expense may differ from these amounts because of market conditions at the time they incurred the debt.
|
(2)
|
Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the part of the joint venture arrangement interests we do not own.
|
|
|
Impact of Changes in Interest Rates
|
|||||||||||||
|
|
Annual
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
Interest Rate
(1)
|
|
Debt
|
|
Expense Per Year
|
|
Per Share Impact
(2)
|
|||||||
At March 31, 2018
|
|
3.2
|
%
|
|
$
|
1,120,000
|
|
|
$
|
36,338
|
|
|
$
|
0.37
|
|
One percentage point
|
|
4.2
|
%
|
|
$
|
1,120,000
|
|
|
$
|
47,693
|
|
|
$
|
0.48
|
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility and our term loans as of
March 31, 2018
.
|
(2)
|
Based on the weighted average shares outstanding (diluted) for the
three
months ended
March 31, 2018
.
|
|
|
Impact of an Increase in Interest Rates
|
|||||||||||||
|
|
Annual
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
Interest Rate
(1)
|
|
Debt
|
|
Expense Per Year
|
|
Per Share Impact
(2)
|
|||||||
At March 31, 2018
|
|
3.2
|
%
|
|
$
|
1,300,000
|
|
|
$
|
42,178
|
|
|
$
|
0.43
|
|
One percentage point
|
|
4.2
|
%
|
|
$
|
1,300,000
|
|
|
$
|
55,358
|
|
|
$
|
0.56
|
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility (assuming fully drawn) and our term loans as of
March 31, 2018
.
|
(2)
|
Based on the weighted average shares outstanding (diluted) for the
three
months ended
March 31, 2018
.
|
•
|
OUR SALES AND ACQUISITIONS OF PROPERTIES,
|
•
|
OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY,
|
•
|
THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT OR BE NEGATIVELY AFFECTED BY CYCLICAL ECONOMIC CONDITIONS OR GOVERNMENT BUDGET CONSTRAINTS,
|
•
|
THE LIKELIHOOD THAT OUR TENANTS WILL RENEW OR EXTEND THEIR LEASES AND NOT EXERCISE EARLY TERMINATION OPTIONS PURSUANT TO THEIR LEASES OR THAT WE WILL OBTAIN REPLACEMENT TENANTS,
|
•
|
THE LIKELIHOOD THAT OUR RENTS WILL INCREASE WHEN WE RENEW OR EXTEND OUR LEASES OR ENTER NEW LEASES,
|
•
|
OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO SUSTAIN THE AMOUNT OF SUCH DISTRIBUTIONS,
|
•
|
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN SIR,
|
•
|
OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,
|
•
|
THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,
|
•
|
OUR EXPECTATION THAT THERE WILL BE OPPORTUNITIES FOR US TO ACQUIRE, AND THAT WE WILL ACQUIRE, ADDITIONAL PROPERTIES IN THE METROPOLITAN WASHINGTON, D.C. MARKET AREA OR ELSEWHERE, INCLUDING PROPERTIES THAT ARE MAJORITY LEASED TO GOVERNMENT TENANTS, GOVERNMENT CONTRACTOR TENANTS OR OTHER PRIVATE TENANTS,
|
•
|
OUR EXPECTATIONS REGARDING DEMAND FOR LEASED SPACE BY GOVERNMENT TENANTS,
|
•
|
OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL,
|
•
|
OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,
|
•
|
OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL,
|
•
|
OUR CREDIT RATINGS,
|
•
|
OUR EXPECTED BENEFITS FROM THE FPO TRANSACTION,
|
•
|
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH RMR INC.,
|
•
|
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH AIC AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,
|
•
|
THE CREDIT QUALITIES OF OUR TENANTS,
|
•
|
OUR QUALIFICATION FOR TAXATION AS A REIT, AND
|
•
|
OTHER MATTERS.
|
•
|
THE IMPACT OF CONDITIONS AND CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS,
|
•
|
COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED AND WITH RESPECT TO GOVERNMENT TENANCIES,
|
•
|
THE IMPACT OF CHANGES IN THE REAL ESTATE NEEDS AND FINANCIAL CONDITIONS OF GOVERNMENT TENANTS,
|
•
|
COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,
|
•
|
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM,
|
•
|
LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES, AND
|
•
|
ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL.
|
•
|
OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE OUR PROPERTIES, OUR WORKING CAPITAL REQUIREMENTS AND OUR RECEIPT OF DISTRIBUTIONS FROM SIR. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED,
|
•
|
OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS, LESS THEIR PROPERTY OPERATING COSTS, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES,
|
•
|
AS PART OF OUR LONG TERM FINANCING PLANS TO REDUCE OUR LEVERAGE, WE EXPECT TO DISPOSE OF CERTAIN OF OUR PROPERTIES. CURRENTLY, WE ARE MARKETING OR PLAN TO MARKET FOR SALE 24 PROPERTIES. WE CANNOT BE SURE WE WILL SELL ANY OF THESE PROPERTIES OR WHAT THE TERMS OF ANY SALE MAY BE. WE MAY SELL SOME OR ALL OF THESE PROPERTIES AT PRICES THAT ARE LESS THAN OUR CARRYING VALUES AND WE MAY OTHERWISE INCUR LOSSES AS A RESULT OF CONSIDERING AND PURSUING THESE SALES. FURTHER, WE MAY ELECT TO CHANGE WHICH PROPERTIES WE MAY TO SEEK TO SELL, WHICH COULD RESULT IN DIFFERENT PROPERTIES AND FEWER OR GREATER NUMBER OF PROPERTIES BEING SOLD OR MARKETED FOR SALE,
|
•
|
SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN OR INCREASE THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES,
|
•
|
SOME GOVERNMENT TENANTS MAY EXERCISE THEIR RIGHTS TO VACATE THEIR SPACE BEFORE THE STATED EXPIRATIONS OF THEIR LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES,
|
•
|
RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE,
|
•
|
CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE,
|
•
|
WE INTEND TO CONDUCT OUR BUSINESS ACTIVITIES IN A MANNER THAT WILL AFFORD US REASONABLE ACCESS TO CAPITAL FOR INVESTMENT AND FINANCING ACTIVITIES. HOWEVER, WE MAY NOT SUCCEED IN THIS REGARD AND WE MAY NOT HAVE REASONABLE ACCESS TO CAPITAL,
|
•
|
CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,
|
•
|
ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE DEBT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH DEBT,
|
•
|
THE INTEREST RATES PAYABLE UNDER OUR FLOATING RATE DEBT OBLIGATIONS DEPEND UPON OUR CREDIT RATINGS. WE CURRENTLY HAVE A NEGATIVE DEBT RATINGS OUTLOOK BY BOTH MOODY'S AND S&P WHICH MAY IMPLY THAT OUR CREDIT RATINGS MAY BE DOWNGRADED. IF OUR CREDIT RATINGS ARE DOWNGRADED, OUR BORROWING COSTS WILL INCREASE,
|
•
|
OUR ABILITY TO ACCESS DEBT CAPITAL AND THE COST OF OUR DEBT CAPITAL WILL DEPEND IN PART ON OUR CREDIT RATINGS. IF OUR CREDIT RATINGS ARE DOWNGRADED, WE MAY NOT BE ABLE TO ACCESS DEBT CAPITAL OR THE DEBT CAPITAL WE CAN ACCESS MAY BE EXPENSIVE,
|
•
|
WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,
|
•
|
THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS MAY BE INCREASED TO UP TO $2.5 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,
|
•
|
WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS; HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET,
|
•
|
THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS,
|
•
|
WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE,
|
•
|
WE MAY FAIL TO EXECUTE SUCCESSFULLY ON OUR EXPANDED BUSINESS STRATEGY OR INCREASED SCALE OF OUR BUSINESS RESULTING FROM THE FPO TRANSACTION AND THEREFORE MAY NOT REALIZE THE BENEFITS WE EXPECT FROM THE FPO TRANSACTION,
|
•
|
SIR MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US,
|
•
|
RMR INC. MAY REDUCE THE AMOUNT OF DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US,
|
•
|
WE MAY BE UNABLE TO SELL OUR SIR COMMON SHARES FOR AN AMOUNT EQUAL TO OUR CARRYING VALUE OF THOSE SHARES AND ANY SUCH SALE MAY BE AT A DISCOUNT TO MARKET PRICE BECAUSE OF THE LARGE SIZE OF OUR SIR HOLDINGS OR OTHERWISE; WE MAY REALIZE A LOSS ON OUR INVESTMENT IN OUR SIR SHARES, AND
|
•
|
AS OF MARCH 31, 2018, WE HAD ESTIMATED UNSPENT LEASING RELATED OBLIGATIONS OF
$32.8
MILLION. OUR UNSPENT LEASING RELATED OBLIGATIONS MAY COST MORE OR LESS AND MAY TAKE LONGER TO COMPLETE THAN WE CURRENTLY EXPECT, AND WE MAY INCUR INCREASED AMOUNTS FOR THESE AND SIMILAR PURPOSES IN THE FUTURE.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Approximate Dollar
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
|
Value of Shares that
|
|
|
Number of
|
|
|
|
|
|
as Part of Publicly
|
|
|
May Yet Be Purchased
|
|
|
Shares
|
|
Average Price
|
|
|
Announced Plans
|
|
|
Under the Plans or
|
|
Calendar Month
|
|
Purchased
(1)
|
|
Paid per Share
|
|
or Programs
|
|
Programs
|
|||
January 2018
|
|
617
|
|
$
|
18.54
|
|
$
|
—
|
|
$
|
—
|
Total
|
|
617
|
|
$
|
18.54
|
|
$
|
—
|
|
$
|
—
|
(1)
|
This common share purchase was made to satisfy employee tax withholding and payment obligations of a former RMR LLC employee in connection with the vesting of awards of our common shares. We purchased these shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on December 29, 2017.
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Exhibit Number
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Description
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3.1
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3.2
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4.1
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4.2
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4.3
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4.4
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4.5
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4.6
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4.7
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4.8
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12.1
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31.1
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31.2
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32.1
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101.1
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The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)
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GOVERNMENT PROPERTIES INCOME TRUST
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By:
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/s/ David M. Blackman
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David M. Blackman
President and Chief Operating Officer
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Dated: May 3, 2018
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By:
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/s/ Mark L. Kleifges
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Mark L. Kleifges
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
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Dated: May 3, 2018
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1 Year Government Properties Income Chart |
1 Month Government Properties Income Chart |
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