Second Quarter Net Income Available for
Common Shareholders of $0.30 Per Share
Second Quarter Normalized FFO Available for
Common Shareholders of $0.52 Per Share
Second Quarter Same Property Cash Basis NOI
Increased 5.0%
Completed 396,359 Square Feet of Leasing in
the Second Quarter
Government Properties Income Trust (Nasdaq: GOV) today announced
its financial results for the quarter and six months ended June 30,
2018.
David Blackman, President and Chief Executive Officer of GOV,
made the following statement:
“GOV had a strong second quarter operationally as we grew same
property cash basis NOI by 5% and executed over 396,000 square feet
of new and renewal leases. We also continued to make progress on
our property disposition plan. During the quarter, we sold two
properties for $129 million in the aggregate, bringing our closed
disposition total under the plan to approximately $149 million year
to date. We also continue to market additional properties for sale
as part of our property disposition plan.”
Results for the Quarter Ended June 30, 2018:
Net income available for common shareholders determined in
accordance with U.S. generally accepted accounting principles, or
GAAP, for the quarter ended June 30, 2018 was $29.6 million,
or $0.30 per diluted share, compared to net income available for
common shareholders of $11.7 million, or $0.16 per diluted share,
for the quarter ended June 30, 2017. Net income available for
common shareholders for the quarter ended June 30, 2018
includes a $17.3 million, or $0.17 per diluted share, gain on sale
of real estate, a $10.3 million, or $0.10 per diluted share,
unrealized gain on equity securities relating to GOV's investment
in The RMR Group Inc., or RMR Inc., and the reversal of $2.2
million, or $0.02 per diluted share, of previously accrued business
management incentive fee expense. The weighted average number of
diluted common shares outstanding was 99.1 million for the quarter
ended June 30, 2018 and 71.1 million for the quarter ended
June 30, 2017.
Normalized funds from operations, or Normalized FFO, available
for common shareholders for the quarter ended June 30, 2018
were $51.3 million, or $0.52 per diluted share, compared to
Normalized FFO available for common shareholders for the quarter
ended June 30, 2017 of $42.4 million, or $0.60 per diluted
share.
Reconciliations of net income available for common shareholders
determined in accordance with GAAP to funds from operations, or
FFO, available for common shareholders and Normalized FFO available
for common shareholders for the quarters ended June 30, 2018
and 2017 appear later in this press release.
Results for the Six Months Ended June 30, 2018:
Net income available for common shareholders determined in
accordance with GAAP was $35.9 million, or $0.36 per diluted share,
for the six months ended June 30, 2018, compared to net income
available for common shareholders of $19.1 million, or $0.27 per
diluted share, for the six months ended June 30, 2017. Net
income available for common shareholders for the six months ended
June 30, 2018 includes a $23.3 million, or $0.24 per diluted share,
unrealized gain on equity securities relating to GOV's investment
in RMR Inc. and a $17.3 million, or $0.17 per diluted share, gain
on sale of real estate, partially offset by a $5.8 million, or
$0.06 per diluted share, loss on impairment of real estate. The
weighted average number of diluted common shares outstanding was
99.1 million for the six months ended June 30, 2018 and 71.1
million for the six months ended June 30, 2017.
Normalized FFO available for common shareholders for the six
months ended June 30, 2018 were $105.4 million, or $1.06 per
diluted share, compared to Normalized FFO available for common
shareholders for the six months ended June 30, 2017 of $82.3
million, or $1.16 per diluted share.
Reconciliations of net income available for common shareholders
determined in accordance with GAAP to FFO available for common
shareholders and Normalized FFO available for common shareholders
for the six months ended June 30, 2018 and 2017 appear later
in this press release.
Leasing, Occupancy and Same Property Results:
During the quarter ended June 30, 2018, GOV entered new and
renewal leases for an aggregate 396,359 rentable square feet at
weighted (by rentable square feet) average rents that were 0.6%
above prior rents for the same space. The weighted (by rentable
square feet) average lease term for these leases was 6.2 years and
leasing concessions and capital commitments for these leases were
$6.8 million, or $2.79 per square foot, per lease year. These new
and renewal leases include approximately 185,000 square feet with
government tenants which have weighted (by rentable square feet)
average rents that are 4.1% above prior rents for the same space, a
weighted (by rentable square feet) average lease term of 8.6 years
and leasing concessions and capital commitments of $3.0 million, or
$1.87 per square foot per weighted (by square foot) average lease
year.
As of June 30, 2018, 94.0% of GOV’s total rentable square
feet was leased, compared to 94.4% as of March 31, 2018 and
95.0% as of June 30, 2017. Occupancy for properties owned
continuously since April 1, 2017, or same properties, was
94.6% as of June 30, 2018, compared to 95.3% as of
March 31, 2018 and 95.4% as of June 30, 2017. Same
properties net operating income, or NOI, increased 4.2% and same
properties cash basis NOI, or Cash Basis NOI, increased 5.0% for
the quarter ended June 30, 2018 compared to the same period in
2017.
Reconciliations of net income available for common shareholders
determined in accordance with GAAP to Consolidated Property NOI and
to Consolidated Property Cash Basis NOI for the quarters ended
June 30, 2018 and 2017 appear later in this press release.
Recent Disposition Activities:
In May 2018, GOV sold an office property (one building) located
in New York, NY with 187,060 rentable square feet for $118.5
million, excluding closing costs.
In May 2018, GOV sold an office property (one building) located
in Sacramento, CA with 110,500 rentable square feet for $10.8
million, excluding closing costs.
Recent Financing Activities:
On May 1, 2018, one of GOV's subsidiaries redeemed all of its
1.8 million outstanding 5.5% Series A Cumulative Preferred Units
for $11.15 per unit, plus accrued and unpaid distributions (an
aggregate of $20.3 million).
Conference Call:
At 11:00 a.m. Eastern Time this morning, President and
Chief Executive Officer, David Blackman, and Chief Financial
Officer and Treasurer, Mark Kleifges, will host a conference call
to discuss GOV’s second quarter 2018 financial results.
The conference call telephone number is (877) 328-1172.
Participants calling from outside the United States and Canada
should dial (412) 317-5418. No pass code is necessary to access the
call from either number. Participants should dial in about 15
minutes prior to the scheduled start of the call. A replay of the
conference call will be available through 11:59 p.m. on Thursday,
August 9, 2018. To access the replay, dial (412) 317-0088. The
replay pass code is 10121842.
A live audio webcast of the conference call will also be
available in a listen only mode on GOV’s website, at
www.govreit.com. Participants wanting to access the webcast should
visit GOV’s website about five minutes before the call. The
archived webcast will be available for replay on GOV’s website
following the call for about one week. The transcription,
recording and retransmission in any way of GOV’s second quarter
conference call are strictly prohibited without the prior written
consent of GOV.
Supplemental Data:
A copy of GOV’s Second Quarter 2018 Supplemental Operating and
Financial Data is available for download at GOV’s website, which is
located at www.govreit.com. GOV’s website is not incorporated
as part of this press release.
GOV is a real estate investment trust, or REIT, which primarily
owns properties located throughout the United States that are
majority leased to government tenants and office properties in the
metropolitan Washington, D.C. market area that are leased to
government and private sector tenants. GOV is managed by the
operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an
alternative asset management company that is headquartered in
Newton, Massachusetts.
Please see the pages attached hereto for a more detailed
statement of GOV’s operating results and financial condition and
for an explanation of GOV’s calculation of FFO available for common
shareholders, Normalized FFO available for common shareholders, NOI
and Cash Basis NOI and a reconciliation of those amounts to amounts
determined in accordance with GAAP.
WARNING CONCERNING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO,
WHENEVER GOV USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”,
“INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR
DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, GOV IS MAKING FORWARD
LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
GOV’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING
STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN
OR IMPLIED BY GOV’S FORWARD LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. FOR EXAMPLE:
- MR. BLACKMAN'S STATEMENTS REGARDING
GOV'S QUARTERLY OPERATING AND LEASING RESULTS MAY IMPLY THAT
SIMILAR OR BETTER RESULTS WILL BE ACHIEVED IN THE FUTURE. HOWEVER,
GOV CANNOT BE SURE THAT IT WILL REALIZE SIMILAR OR BETTER OPERATING
OR LEASING RESULTS IN THE FUTURE.
- MR. BLACKMAN'S STATEMENTS THAT GOV
CONTINUED TO MAKE PROGRESS ON ITS PROPERTY DISPOSITION PLAN AND
THAT GOV CONTINUES TO MARKET ADDITIONAL PROPERTIES FOR SALE MAY
IMPLY THAT GOV WILL CONTINUE TO SELL ADDITIONAL PROPERTIES IN THE
FUTURE. HOWEVER, GOV MAY NOT BE ABLE TO SUCCESSFULLY SELL
ADDITIONAL PROPERTIES IN THE FUTURE. ALSO, GOV MAY SELL ADDITIONAL
PROPERTIES AT PRICES THAT ARE LESS THAN THEIR CARRYING VALUES AND
GOV MAY INCUR FUTURE LOSSES AS A RESULT.
THE INFORMATION CONTAINED IN GOV’S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN
GOV’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER
IMPORTANT FACTORS THAT COULD CAUSE GOV’S ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE STATED IN OR IMPLIED BY GOV’S FORWARD LOOKING
STATEMENTS. GOV’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S
WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, GOV DOES NOT INTEND TO UPDATE OR
CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
Government Properties Income
TrustCondensed Consolidated Statements of
Income(amounts in thousands, except per share
data)(unaudited)
Three Months Ended
June 30, Six Months Ended June 30, 2018
2017 2018 2017 Rental income $ 108,085
$ 69,887 $ 216,802 $ 139,183
Expenses: Real estate taxes 12,365 7,941 25,330 16,118 Utility
expenses 6,018 4,172 12,707 8,778 Other operating expenses 21,599
15,187 44,436 29,179 Depreciation and amortization 42,671 20,663
86,875 41,168 Loss on impairment of real estate (1) (316 ) — 5,800
— General and administrative (2) 4,449 5,087 14,055
9,049 Total expenses 86,786 53,050
189,203 104,292 Operating income 21,299 16,837
27,599 34,891 Dividend income 304 304 608 608 Unrealized gain on
equity securities (3) 10,321 — 23,252 — Interest income 149 67 265
128
Interest expense (including net
amortization of debt premiums and discounts and debt issuance costs
of $892, $808, $1,856 and $1,615, respectively)
(23,304 ) (13,963 ) (46,070 ) (27,544 ) Net gain on issuance of
shares by Select Income REIT 8 21 8 21
Income from continuing operations before
income taxes, equity in net earnings of investees and gain on sale
of real estate
8,777 3,266 5,662 8,104 Income tax expense (83 ) (25 ) (115 ) (43 )
Equity in net earnings of investees 3,672 8,581
13,384 11,320 Income from continuing operations
12,366 11,822 18,931 19,381 Loss from discontinued operations —
(145 ) — (289 ) Income before gain on sale of real
estate 12,366 11,677 18,931 19,092 Gain on sale of real estate (4)
17,329 — 17,329 — Net income 29,695
11,677 36,260 19,092 Preferred units of limited partnership
distributions (93 ) — (371 ) — Net income available
for common shareholders $ 29,602 $ 11,677 $ 35,889
$ 19,092 Weighted average common shares
outstanding (basic) 99,051 71,088 99,046
71,083 Weighted average common shares outstanding (diluted)
99,064 71,119 99,050 71,109 Per
common share amounts (basic and diluted): Income from continuing
operations $ 0.30 $ 0.17 $ 0.37 $ 0.27 Loss from discontinued
operations $ — $ — $ — $ — Net income available for common
shareholders $ 0.30 $ 0.16 $ 0.36 $ 0.27
Government Properties Income
TrustFunds from Operations and Normalized Funds from
Operations(amounts in thousands, except per share
data)(unaudited)
Three
Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017 Calculation of
Funds from Operations (FFO) and Normalized FFO available for common
shareholders (5): Net income available for common shareholders $
29,602 $ 11,677 $ 35,889 $ 19,092 Add (less): Depreciation and
amortization: Consolidated properties 42,671 20,663 86,875 41,168
Unconsolidated joint venture properties 2,185 — 4,370 — FFO
attributable to SIR investment 12,414 17,149 30,902 29,553 Loss on
impairment of real estate (1) (316 ) — 5,800 — Equity in earnings
of SIR (4,301 ) (8,207 ) (14,590 ) (10,818 ) Gain on sale of real
estate (4) (17,329 ) — (17,329 ) — FFO available for
common shareholders 64,926 41,282 131,917 78,995 Add (less):
Normalized FFO attributable to SIR investment 11,292 17,407 26,898
31,997 FFO attributable to SIR investment (12,414 ) (17,149 )
(30,902 ) (29,553 ) Net gain on issuance of shares by SIR (8 ) (21
) (8 ) (21 ) Estimated business management incentive fees (2)
(2,150 ) 893 737 893 Unrealized gain on equity securities (3)
(10,321 ) — (23,252 ) — Normalized FFO available for
common shareholders $ 51,325 $ 42,412 $ 105,390
$ 82,311 Weighted average common shares
outstanding (basic) 99,051 71,088 99,046 71,083 Weighted average
common shares outstanding (diluted) 99,064 71,119 99,050 71,109
Per common share amounts (basic and diluted): Net income
available for common shareholders $ 0.30 $ 0.16 $
0.36 $ 0.27 FFO available for common shareholders $
0.66 $ 0.58 $ 1.33 $ 1.11 Normalized
FFO available for common shareholders $ 0.52 $ 0.60 $
1.06 $ 1.16 Distributions declared per share $ 0.43
$ 0.43 $ 0.86 $ 0.86
(1)
Loss on impairment of real estate for the
three months ended June 30, 2018 represents an adjustment of $322
to increase the carrying value of one property (one building)
removed from held for sale status to its estimated fair value and
an adjustment of $6 to reduce the carrying value of one property
(one building) to its estimated fair value less costs to sell. GOV
recorded a $6,116 loss on impairment of real estate in the three
months ended March 31, 2018 to reduce the carrying value of three
properties (three buildings) to their estimated fair value less
costs to sell.
(2)
Incentive fees under GOV’s business
management agreement with The RMR Group 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 expenses in GOV’s condensed consolidated statements
of income. In calculating net income in accordance with GAAP, GOV
recognizes estimated business management incentive fee expense, if
any, in the first, second and third quarters. Although GOV
recognizes this expense, if any, in the first, second and third
quarters for purposes of calculating net income, GOV does not
include such expense in the calculation of Normalized FFO until the
fourth quarter, when the amount of the business management
incentive fee expense for the calendar year, if any, is determined.
Net income includes the reversal of $2,150 of previously accrued
business management incentive fee expense and $893 of estimated
business management incentive fee expense in the three months ended
June 30, 2018 and 2017, respectively. Net income includes $737 and
$893 of estimated business management fee expense in the six months
ended June 30, 2018 and 2017, respectively.
(3)
Unrealized gain on equity securities
represents the adjustment required to adjust the carrying value of
GOV's investment in RMR Inc. common stock to its fair value as of
June 30, 2018 in accordance with new GAAP standards effective
January 1, 2018.
(4)
GOV recorded a $17,329 gain on sale of
real estate in the three months ended June 30, 2018 in connection
with the sale of one property (one building).
(5)
GOV calculates FFO available for common
shareholders and 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
its 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 Select Income REIT, or SIR, 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 GOV. GOV's
calculation of Normalized FFO available for common shareholders
differs from Nareit's definition of FFO available for common
shareholders because GOV includes SIR's Normalized FFO attributable
to GOV's equity investment in SIR (net of FFO attributable to GOV's
equity investment in SIR), GOV includes 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 GOV's 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 GOV excludes gains on issuance of
shares by SIR and unrealized gains and losses on equity securities.
GOV considers 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 GOV's common shareholders
and operating income. GOV believes 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
GOV's 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 GOV's
Board of Trustees when determining the amount of distributions to
GOV's shareholders. Other factors include, but are not limited to,
requirements to maintain GOV's qualification for taxation as a
REIT, limitations in GOV's credit agreement and public debt
covenants, the availability to GOV of debt and equity capital,
GOV's expectation of its future capital requirements and operating
performance, GOV's receipt of distributions from SIR and GOV's
expected needs for and availability of cash to pay its 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 GOV's
operating performance or as measures of GOV's liquidity. These
measures should be considered in conjunction with net income, net
income available for common shareholders and operating income as
presented in GOV's Condensed Consolidated Statements of Income.
Other real estate companies and REITs may calculate FFO available
for common shareholders and Normalized FFO available for common
shareholders differently than GOV does.
Government Properties Income
TrustCalculation and Reconciliation of Consolidated Property
Net Operating Income (NOI) and Consolidated Property Cash Basis
NOI (1)(amounts in
thousands)(unaudited)
Three
Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017 Calculation of
Consolidated Property NOI and Consolidated Property Cash Basis
NOI (2): Rental income (3) $ 108,085 $ 69,887 $
216,802 $ 139,183 Property operating expenses (39,982 ) (27,300 )
(82,473 ) (54,075 ) Consolidated Property NOI 68,103 42,587 134,329
85,108 Non-cash straight line rent adjustments included in rental
income (3) (2,744 ) (1,104 ) (5,835 ) (2,404 ) Lease value
amortization included in rental income (3) 753 617 1,588 1,244
Non-cash amortization included in property operating expenses (4)
(121 ) (121 ) (242 ) (242 ) Consolidated Property Cash Basis NOI $
65,991 $ 41,979 $ 129,840 $ 83,706
Reconciliation of Net Income Available for Common
Shareholders to Consolidated NOI and Consolidated Property Cash
Basis NOI: Net income available for common shareholders $
29,602 $ 11,677 $ 35,889 $ 19,092 Preferred units of limited
partnership distributions 93 — 371 —
Net income 29,695 11,677 36,260 19,092 Gain on sale of real estate
(17,329 ) — (17,329 ) — Income before gain on sale of
real estate 12,366 11,677 18,931 19,092 Loss from discontinued
operations — 145 — 289 Income from
continuing operations 12,366 11,822 18,931 19,381 Equity in net
earnings of investees (3,672 ) (8,581 ) (13,384 ) (11,320 ) Income
tax expense 83 25 115 43 Net gain on issuance of shares by SIR (8 )
(21 ) (8 ) (21 ) Interest expense 23,304 13,963 46,070 27,544
Interest income (149 ) (67 ) (265 ) (128 ) Unrealized gain on
equity securities (10,321 ) — (23,252 ) — Dividend income (304 )
(304 ) (608 ) (608 ) Operating income 21,299 16,837 27,599 34,891
General and administrative 4,449 5,087 14,055 9,049 Loss on
impairment of real estate (316 ) — 5,800 — Depreciation and
amortization 42,671 20,663 86,875 41,168
Consolidated Property NOI 68,103 42,587 134,329 85,108
Non-cash amortization included in property operating expenses (4)
(121 ) (121 ) (242 ) (242 ) Lease value amortization included in
rental income (3) 753 617 1,588 1,244 Non-cash straight line rent
adjustments included in rental income (3) (2,744 ) (1,104 ) (5,835
) (2,404 ) Consolidated Property Cash Basis NOI $ 65,991 $
41,979 $ 129,840 $ 83,706
Reconciliation of Consolidated Property NOI to Same Property
NOI (5)(6): Rental income $ 108,085 $ 69,887 $
216,802 $ 139,183 Property operating expenses (39,982 ) (27,300 )
(82,473 ) (54,075 ) Consolidated Property NOI 68,103 42,587 134,329
85,108 Less: NOI of properties not included in same property
results (26,341 ) (2,514 ) (53,456 ) (5,494 ) Same property NOI $
41,762 $ 40,073 $ 80,873 $ 79,614
Calculation of Same Property Cash Basis NOI (5)
(6): Same property NOI $ 41,762 $ 40,073 $ 80,873 $
79,614 Add: Lease value amortization included in rental income (3)
455 530 958 1,067 Less: Non-cash straight line rent adjustments
included in rental income (3) (751 ) (1,102 ) (1,345 ) (2,463 )
Non-cash amortization included in property operating expenses (4)
(121 ) (115 ) (238 ) (230 ) Same property Cash Basis NOI $ 41,345
$ 39,386 $ 80,248 $ 77,988
(1)
GOV calculates Consolidated Property NOI
and Consolidated Property Cash Basis NOI as shown above. The
calculations of Consolidated Property NOI and Consolidated Property
Cash Basis NOI exclude certain components of net income available
for common shareholders in order to provide results that are more
closely related to GOV's consolidated property level results of
operations. GOV defines Consolidated Property NOI as consolidated
income from its rental of real estate less its consolidated
property operating expenses. Consolidated Property NOI excludes
amortization of capitalized tenant improvement costs and leasing
commissions that GOV records as depreciation and amortization. GOV
defines Consolidated Property Cash Basis NOI as Consolidated
Property NOI excluding non-cash straight line rent adjustments,
lease value amortization and non-cash amortization included in
other operating expenses. GOV considers Consolidated Property NOI
and Consolidated Property Cash Basis NOI to be appropriate
supplemental measures to net income available for common
shareholders because they may help both investors and management to
understand the operations of GOV's consolidated properties. GOV
uses Consolidated Property NOI and Consolidated Property Cash Basis
NOI to evaluate individual and company wide consolidated property
level performance, and GOV believes that Consolidated Property NOI
and Consolidated Property Cash Basis NOI provide useful information
to investors regarding GOV's results of operations because they
reflect only those income and expense items that are generated and
incurred at the property level and may facilitate comparisons of
GOV's operating performance between periods and with other REITs.
Consolidated Property NOI and Consolidated Property Cash Basis NOI
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 GOV's operating performance or as
measures of its liquidity. These measures should be considered in
conjunction with net income, net income available for common
shareholders and operating income as presented in GOV's Condensed
Consolidated Statements of Income. Other real estate companies and
REITs may calculate Consolidated Property NOI and Consolidated
Property Cash Basis NOI differently than GOV does.
(2)
Excludes one property (one building)
classified as discontinued operations which was sold on August 31,
2017.
(3)
GOV reports rental income on a straight
line basis over the terms of the respective leases; as a result,
rental income includes non-cash straight line rent adjustments.
Rental income also includes expense reimbursements, tax
escalations, parking revenues, service income and other fixed and
variable charges paid to GOV by its tenants, as well as the net
effect of non-cash amortization of intangible lease assets and
liabilities.
(4)
GOV recorded a liability for the amount by
which the estimated fair value for accounting purposes exceeded the
price GOV paid for its investment in RMR Inc. common stock in June
2015. A portion of this liability is being amortized on a straight
line basis through December 31, 2035 as a reduction to property
management fees expense, which is included in property operating
expenses.
(5)
For the three months ended June 30, 2018
and 2017, same property NOI and same property Cash Basis NOI are
based on consolidated properties GOV owned as of June 30, 2018 and
which it owned continuously since April 1, 2017.
(6)
For the six months ended June 30, 2018 and
2017, same property NOI and same property Cash Basis NOI are based
on consolidated properties GOV owned as of June 30, 2018 and which
it owned continuously since January 1, 2017.
Government Properties Income
TrustCondensed Consolidated Balance Sheets(amounts in
thousands, except share data)(unaudited)
June 30,
December 31, 2018 2017 ASSETS Real estate
properties: Land $ 587,173 $ 627,108 Buildings and improvements
2,258,276 2,348,613 Total real estate properties,
gross 2,845,449 2,975,721 Accumulated depreciation (358,286 )
(341,848 ) Total real estate properties, net 2,487,163 2,633,873
Equity investment in Select Income REIT 456,756 467,499 Investment
in unconsolidated joint ventures 46,712 50,202 Acquired real estate
leases, net 297,696 351,872 Cash and cash equivalents 18,695 16,569
Restricted cash 2,448 3,111 Rents receivable, net 61,522 61,429
Deferred leasing costs, net 22,900 22,977 Other assets, net 113,877
96,033 Total assets $ 3,507,769 $ 3,703,565
LIABILITIES AND SHAREHOLDERS’ EQUITY Unsecured
revolving credit facility $ 452,000 $ 570,000 Unsecured term loans,
net 548,192 547,852 Senior unsecured notes, net 945,346 944,140
Mortgage notes payable, net 180,986 183,100 Accounts payable and
other liabilities 80,728 89,440 Due to related persons 7,129 4,859
Assumed real estate lease obligations, net 11,738 13,635
Total liabilities 2,226,119 2,353,026
Commitments and contingencies Preferred units of limited
partnership — 20,496 Shareholders’ equity: Common shares of
beneficial interest, $.01 par value: 150,000,000 shares authorized,
99,165,854 and 99,145,921 shares issued and outstanding,
respectively 992 991 Additional paid in capital 1,968,493 1,968,217
Cumulative net income 205,028 108,144 Cumulative other
comprehensive income 139 60,427 Cumulative common distributions
(893,002 ) (807,736 ) Total shareholders’ equity 1,281,650
1,330,043 Total liabilities and shareholders’ equity $
3,507,769 $ 3,703,565
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq.No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
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version on businesswire.com: https://www.businesswire.com/news/home/20180802005159/en/
Government Properties Income TrustBrad Shepherd,
617-219-1410Director, Investor Relations
Government Properties Income (NASDAQ:GOV)
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