Asset Sales in 2015 of $2.0 Billion
Same Property Portfolio 91.4% Leased 2015 Same Property
Leasing Activity of 3.9 Million Square Feet
Equity Commonwealth (NYSE: EQC) today reported its financial
results for the quarter and full year ended December 31, 2015. All
per share results are reported on a diluted basis.
Financial results for the quarter ended December 31,
2015
Funds from Operations (FFO), as defined by the National
Association of Real Estate Investment Trusts, for the quarter ended
December 31, 2015, were $31.8 million, or $0.25 per share. This
compares to FFO for the quarter ended December 31, 2014 of $60.4
million, or $0.47 per share.
Normalized FFO was $34.4 million, or $0.27 per share. This
compares to Normalized FFO for the quarter ended December 31, 2014
of $68.7 million, or $0.53 per share.
The decrease in FFO and Normalized FFO during the quarter ended
December 31, 2015 was largely due to the successful execution of
$2.0 billion in dispositions in 2015.
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.
Net income attributable to common shareholders was $36.2
million, or $0.28 per share, for the quarter ended December 31,
2015. This compares to a net loss attributable to common
shareholders of $165.5 million, or $1.28 per share, for the quarter
ended December 31, 2014.
The weighted average number of diluted common shares outstanding
for the quarter ended December 31, 2015 was 127,492,793 shares,
compared to 129,397,816 for the quarter ended December 31,
2014.
Same property results for the quarter ended December 31,
2015
The company’s same property portfolio, for the quarter and year
ended December 31, 2015, consisted of 65 properties totaling 24.0
million square feet. There were no properties designated as held
for sale at the end of the quarter. Operating results were as
follows:
- The same property portfolio was 91.4%
leased as of December 31, 2015, compared to 91.7% as of September
30, 2015, and 90.0% as of December 31, 2014.
- The company entered into leases for
approximately 984,000 square feet, including renewal leases for
approximately 585,000 square feet and new leases for approximately
399,000 square feet.
- Same property cash NOI decreased 6.5%
when compared to the same period in 2014, largely the result of an
increase in operating expenses.
- Same property NOI decreased 5.8% when
compared to the same period in 2014, largely the result of an
increase in operating expenses.
- Cash rental rates on new and renewal
leases were 5.6% higher compared to prior cash rental rates for the
same space.
- GAAP rental rates on new and renewal
leases were 15.5% higher compared to prior GAAP 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. Same property NOI and same property cash NOI include
properties continuously owned from October 1, 2014 through December
31, 2015 and exclude properties owned during this period that are
designated as held for sale.
Significant events for the quarter ended December 31,
2015
- The company sold nine properties
totaling 2.6 million square feet for a gross sales price of $275.2
million and a weighted average cap rate in the low 6% range. Seven
of these properties were designated as held for sale at the quarter
ended September 30, 2015.
- The company prepaid at par the $116.0
million 5.24% mortgage loan encumbering 111 Monument Circle in
Indianapolis, IN.
- A common dividend distribution was not
required and the Board of Trustees determined not to make a
distribution in 2015.
Financial results for the year ended December 31,
2015
FFO for the full year ended December 31, 2015, was $198.7
million, or $1.53 per share. This compares to FFO for the full year
ended December 31, 2014 of $415.3 million, or $3.32 per share. The
decrease in FFO for the full year 2015 was largely due to asset
sales and the company’s sale of its equity interest in Select
Income REIT in 2014.
Normalized FFO was $220.6 million, or $1.70 per share. This
compares to Normalized FFO for the full year ended December 31,
2014 of $268.3 million, or $2.14 per share. The following items
impacted Normalized FFO per share for the year ended December 31,
2015 compared to the corresponding 2014 period:
- approximately ($0.66) per share from
properties sold as part of the company’s previously announced
repositioning plan;
- approximately ($0.23) per share due to
the company’s sale of its entire interest in Select Income REIT
(SIR);
- approximately $0.28 per share from
lower interest expense; and
- approximately $0.22 per share from
lower recurring general & administrative expense.
Net income attributable to common shareholders was $71.9
million, or $0.56 per share, for the year ended December 31, 2015.
This compares to net loss attributable to common shareholders of
$24.3 million, or $0.19 per share, for the year ended December 31,
2014.
The weighted average number of diluted common shares outstanding
for the year ended December 31, 2015 was 129,436,642 shares,
compared to 125,162,915 for the year ended December 31, 2014.
Same property results for the year ended December 31,
2015
- The company entered into leases for
approximately 3.9 million square feet, including renewal leases for
approximately 2.0 million square feet and new leases for
approximately 1.9 million square feet.
- Same property cash NOI decreased 0.8%
when compared to the same period in 2014.
- Same property NOI decreased 0.3% when
compared to the same period in 2014.
- Cash rental rates on new and renewal
leases were 3.0% higher compared to prior cash rental rates for the
same space.
- GAAP rental rates on new and renewal
leases were 10.6% higher compared to prior GAAP rental rates for
the same space.
Significant events for the year ended December 31,
2015
- The company disposed of 91 properties
totaling 18.9 million square feet. The gross sales price was $2.0
billion at a weighted average cap rate in the low-to-mid 7% range.
Proceeds were $1.7 billion following credits for contractual lease
costs and mortgage debt repayments, including prepayment
costs.
- The company entered into a new $1.15
billion Credit Agreement that reduced the interest rate and
extended the term of the company’s unsecured revolving credit
facility and term loan. The Credit Agreement is comprised of a $750
million revolving credit facility, a $200 million five-year term
loan, and a $200 million seven-year term loan.
- The company reduced debt by $489.9
million with a weighted average interest rate of 5.8%.
- The Board of Trustees authorized the
repurchase of up to $200 million of its common shares. In 2015, the
company repurchased 3,410,300 of its common shares at an average
price of $25.76 per share for a total investment of $87.8
million.
Subsequent Events
- In 2016, the company’s share buyback
activity has totaled 861,162 common shares at an average price of
$25.94 per share, for a total investment of $22.3 million.
- In February 2016, the company redeemed
the $139.1 million outstanding 6.25% senior unsecured notes due
August 2016.
- In February 2016, the company closed on
the sale of Executive Park, a 427,000 square foot, 72.8% leased, 9
building office park located in Atlanta, GA for a gross sales price
of $50.9 million.
Disposition Update
The company continues to pursue its previously announced plan to
sell approximately $3.0 billion of assets, creating capacity for
future opportunities. As part of this plan, the company has sold
$2.1 billion of assets at a weighted average cap rate in the low 7%
range. The company has 11 properties totaling over 1.5 million
square feet in the market.
Earnings Conference Call & Supplemental Data
Equity Commonwealth will host a conference call to discuss
fourth quarter and year end results on Thursday, February 18, 2016,
at 9:00 am CST. 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 Fourth Quarter 2015 Supplemental Operating and
Financial Data is available for download on the Investor Relations
section of EQC’s website at www.eqcre.com.
About Equity Commonwealth
Equity Commonwealth (NYSE: EQC) is a Chicago based, internally
managed and self-advised real estate investment trust (REIT) with
commercial office properties throughout the United States. As of
February 17, 2016, EQC’s portfolio comprised 64 properties and 23.5
million square feet.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this press release
constitute forward-looking statements within the meaning of the
federal securities laws, including, but not limited to, statements
regarding share repurchases, marketing the company’s properties for
sale, consummating asset sales, identifying future investment
opportunities, strengthening the balance sheet and improving
property performance. Any forward-looking statements contained in
this press release are intended to be made pursuant to the safe
harbor provisions of Section 21E of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements relate to
expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning
matters that are not historical facts. In some cases, you can
identify forward-looking statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” or the negative of these words and phrases or similar
words or phrases which are predictions of or indicate future events
or trends and which do not relate solely to historical matters. You
can also identify forward-looking statements by discussions of
strategy, plans or intentions.
The forward-looking statements contained in this press release
reflect the company’s current views about future events and are
subject to numerous known and unknown risks, uncertainties,
assumptions and changes in circumstances that may cause the
company’s actual results to differ significantly from those
expressed in any forward-looking statement. We do not guarantee
that the transactions and events described will happen as described
(or that they will happen at all).
While forward-looking statements reflect the company’s good
faith beliefs, they are not guarantees of future performance. We
disclaim any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying
assumptions or factors, of new information, data or methods, future
events or other changes. For a further discussion of these and
other factors that could cause the company’s future results to
differ materially from any forward-looking statements, see the
section entitled “Risk Factors” in the company’s most recent Annual
Report on Form 10-K and in the company’s Quarterly Reports on Form
10-Q for subsequent quarters.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands, except share
data)
December
31, 2015 December 31, 2014 ASSETS
Real estate properties:
Land $ 389,410 $ 714,238 Buildings and improvements
3,497,942 5,014,205 3,887,352 5,728,443 Accumulated
depreciation (898,939 ) (1,030,445 ) 2,988,413 4,697,998 Acquired
real estate leases, net 88,760 198,287 Cash and cash equivalents
1,802,729 364,516 Restricted cash 32,245 32,257 Rents receivable,
net of allowance for doubtful accounts of $7,715 and $6,565,
respectively 174,676 248,101 Other assets, net 157,549
220,480
Total assets
$ 5,244,372 $
5,761,639
LIABILITIES AND SHAREHOLDERS’ EQUITY
Revolving credit facility $ — $ — Senior unsecured
debt, net 1,460,592 1,598,416 Mortgage notes payable, net 249,732
609,249 Accounts payable and accrued expenses 123,587 162,204
Assumed real estate lease obligations, net 4,296 26,784 Rent
collected in advance 27,340 31,359 Security deposits 10,338
14,044
Total liabilities
$ 1,875,885 $
2,442,056 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 and 4,915,497 shares issued and outstanding,
respectively, aggregate liquidation preference of $122,880 and
$122,887, respectively $ 119,263 $ 119,266 Series E preferred
shares; 7 1/4% cumulative redeemable on or after May 15, 2016;
11,000,000 shares issued and outstanding, aggregate liquidation
preference $275,000 265,391 265,391 Common shares of beneficial
interest, $0.01 par value: 350,000,000 shares authorized;
126,349,914 and 129,607,279 shares issued and outstanding,
respectively 1,263 1,296 Additional paid in capital 4,414,611
4,487,133 Cumulative net income 2,333,709 2,233,852 Cumulative
other comprehensive loss (3,687 ) (53,216 ) Cumulative common
distributions (3,111,868 ) (3,111,868 ) Cumulative preferred
distributions (650,195 ) (622,271 )
Total
shareholders’ equity $ 3,368,487
$ 3,319,583 Total liabilities
and shareholders’ equity $ 5,244,372
$ 5,761,639
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(amounts in thousands, except per share
data)
Three Months Ended
Year Ended December 31, December 31,
2015 2014 2015
2014 Revenues Rental income(1) $ 113,254 $
173,036 $ 570,382 $ 691,699 Tenant reimbursements and other income
25,680 39,772 144,509
170,158
Total revenues $
138,934 $ 212,808
$ 714,891 $ 861,857
Expenses: Operating expenses $ 63,820 $ 94,158 $
324,948 $ 387,982 Depreciation and amortization 37,143 58,839
194,001 227,532 General and administrative 13,739 16,760 57,457
113,155 Loss on asset impairment — 167,145 17,162 185,067
Acquisition related costs — — —
5
Total expenses $
114,702 $ 336,902
$ 593,568 $ 913,741
Operating income (loss) $ 24,232
$ (124,094 ) $
121,323 $ (51,884 )
Interest and other income 1,176 490 5,989 1,561 Interest
expense (including net amortization of debt discounts, premiums and
deferred financing fees of $1,005, $151, $1,028, and $(549),
respectively) (24,390 ) (32,151 ) (107,316 ) (143,230 ) Gain (loss)
on early extinguishment of debt 550 (1,790 ) 6,661 4,909 (Loss)
gain on sale of equity investment — (160 ) — 171,561 Gain on
issuance of shares by an equity investee — — — 17,020 Foreign
currency exchange gain (loss) 96 — (8,857 ) — Gain on sale of
properties 41,468 — 84,421 —
Income (loss) from continuing operations before income taxes and
equity in earnings of investees 43,132 (157,705 ) 102,221 (63 )
Income tax benefit (expense) 13 (1,025 ) (2,364 ) (3,191 ) Equity
in earnings of investees — — — 24,460
Income (loss) from continuing operations 43,145 (158,730 )
99,857 21,206 Discontinued operations: Income from discontinued
operations (1) — 169 — 8,389 Loss on asset impairment from
discontinued operations — — — (2,238 ) Loss on early extinguishment
of debt from discontinued operations — —
— (3,345 )
Net income (loss)
$ 43,145 $
(158,561 ) $ 99,857
$ 24,012 Preferred distributions (6,981
) (6,981 ) (27,924 ) (32,095 ) Excess fair value of consideration
over carrying value of preferred shares — —
— (16,205 )
Net income (loss)
attributable to Equity Commonwealth common shareholders
$ 36,164 $ (165,542
) $ 71,933 $
(24,288 )
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(amounts in thousands, except per share
data)
Three Months Ended
Year Ended December 31, December 31,
2015 2014 2015
2014 Amounts attributable to Equity Commonwealth common
shareholders: Income (loss) from continuing
operations $ 36,164 $ (165,711 ) $ 71,933 $ (27,094 ) Income from
discontinued operations — 169 — 8,389 Loss on asset impairment from
discontinued operations — — — (2,238 ) Loss on early extinguishment
of debt from discontinued operations — — —
(3,345 ) Net income (loss) $ 36,164 $ (165,542 )
$ 71,933 $ (24,288 ) Weighted average common
shares outstanding — basic (2) 126,350 129,398
128,621 125,163 Weighted average common shares
outstanding — diluted (2) 127,493 129,398
129,437 125,163 Basic earnings (loss) per
common share attributable to Equity Commonwealth common
shareholders: Income (loss) from continuing operations $ 0.29
$ (1.28 ) $ 0.56 $ (0.21 ) Income from
discontinued operations $ — $ — $ — $
0.02
Net income (loss)
$ 0.29 $ (1.28 ) $ 0.56 $ (0.19 ) Diluted
earnings (loss) per common share attributable to Equity
Commonwealth common shareholders: Income (loss) from continuing
operations $ 0.28 $ (1.28 ) $ 0.56 $ (0.21 ) Income
from discontinued operations $ — $ — $ — $
0.02
Net income (loss)
$ 0.28 $ (1.28 ) $ 0.56 $ (0.19 ) (1) Rental
income and income from discontinued operations include non-cash
straight line rent adjustments, and non-cash amortization of
intangible lease assets and liabilities. (2) As of December 31,
2015 we had 4,915 series D preferred shares outstanding that were
convertible into 2,363 of our common shares. The series D preferred
shares are anti-dilutive for all periods presented. We have granted
restricted share units ("RSU"s) to certain employees, officers, and
the chairman of the Board of Trustees. The RSUs contain both
service and market-based vesting components. None of the RSUs have
vested. If the market-based vesting component was measured as of
December 31, 2015, 1,143 common shares would be issued to RSU
holders, and no shares would have been issued as of December 31,
2014. Using a weighted average basis, 1,143 and 816 common shares
are reflected in diluted earnings per common share for the three
months and year ended December 31, 2015, respectively. The RSUs are
excluded from basic earnings per common share for all periods
presented because the market-based vesting measurement date has not
yet occurred.
CALCULATION OF FUNDS FROM OPERATIONS
(FFO) AND NORMALIZED FFO
(amounts in thousands, except per share
data)
Three Months Ended
Year Ended December 31, December 31,
2015 2014 2015
2014 Calculation of FFO
Net income (loss) $ 43,145 $
(158,561 ) $ 99,857 $ 24,012 Depreciation and amortization
37,143 58,839 194,001 227,532 Loss on asset impairment from
continuing operations — 167,145 17,162 185,067 Loss on asset
impairment from discontinued operations — — — 2,238 FFO from equity
investees — — — 33,007 Gain on sale of properties (41,468 ) —
(84,421 ) — Equity in earnings of investees — —
— (24,460 ) FFO attributable to Equity Commonwealth
38,820 67,423 226,599 447,396 Preferred distributions (6,981
) (6,981 ) (27,924 ) (32,095 )
FFO
attributable to EQC Common Shareholders $
31,839 $ 60,442
$ 198,675 $ 415,301
Calculation of Normalized FFO
FFO attributable to EQC common
shareholders $ 31,839 $ 60,442 $ 198,675 $ 415,301 Recurring
adjustments: Lease value amortization 1,482 2,133 7,515 10,650
Straight line rent adjustments from continuing operations (1,744 )
(2,359 ) (5,328 ) (12,531 ) Straight line rent adjustments from
discontinued operations — — — (226 ) (Gain) loss on early
extinguishment of debt from continuing operations (550 ) 1,790
(6,661 ) (4,909 ) Loss on early extinguishment of debt from
discontinued operations — — — 3,345 Minimum cash rent from direct
financing lease (1) 1,355 2,032 7,451 8,128 Loss (gain) on sale of
equity investments — 160 — (171,561 ) Gain on issuance of shares by
an equity investee — — — (17,020 ) Interest earned from direct
financing lease (51 ) (164 ) (407 ) (787 ) Normalized FFO from
equity investees, net of FFO — — — (3,353 ) Other items which
affect comparability: Shareholder litigation and transition related
expenses (2) 2,138 1,099 10,869 37,681 Transition services fee 66
3,600 2,679 3,600 Acquisition related costs — — — 5 Gain on sale of
securities — — (3,080 ) — Foreign currency exchange (gain) loss
(96 ) — 8,857 —
Normalized FFO attributable to EQC Common Shareholders
$ 34,439 $ 68,733
$ 220,570 $
268,323 Weighted average common shares
outstanding -- basic (3) 126,350 129,398 128,621
125,163 Weighted average common shares outstanding --
diluted (3) 127,493 129,398 129,437 125,163
FFO attributable to EQC common shareholders per share --
basic (3) $ 0.25 $ 0.47 $ 1.54 $ 3.32
FFO attributable to EQC common shareholders per share -- diluted(3)
$ 0.25 $ 0.47 $ 1.53 $ 3.32 Normalized
FFO attributable to EQC common shareholders per share -- basic (3)
$ 0.27 $ 0.53 $ 1.71 $ 2.14 Normalized
FFO attributable to EQC common shareholders per share -- diluted
(3) $ 0.27 $ 0.53 $ 1.70 $ 2.14 (1)
Amounts relate to contractual cash payments (including
management fees) from one tenant at Arizona Center. Arizona Center
was sold during the fourth quarter of 2015. Our calculation of
Normalized FFO reflects the cash payments received from this
tenant. The terms of this tenant's lease required us to classify
the lease as a direct financing (or capital) lease. As such, the
revenue recognized on a GAAP basis within our condensed
consolidated statements of operations was $(281) and $172 for the
three months ended December 31, 2015 and 2014, and $98 and $817 for
the year ended December 31, 2015 and 2014, respectively. (2)
Shareholder litigation and transition related expenses within
general and administrative for the three months and year ended
December 31, 2015 includes $2.1 million and $9.0 million,
respectively, for the shareholder-approved liability for the
reimbursement of expenses incurred by Related/Corvex since February
2013 in connection with their consent solicitations to remove the
former Trustees, elect the new Board of Trustees and engage in
related litigation. On August 4, 2015, we reimbursed $8.4 million
to Related/Corvex under the terms of the shareholder-approved
agreement. An additional $8.4 million will be reimbursed only if
the average closing price of our common shares is at least $26.00
(as adjusted for any share splits or share dividends) from August
1, 2015 through July 31, 2016. As of December 31, 2015, the fair
value of this liability is $7.2 million. (3) As of December 31,
2015 we had 4,915 series D preferred shares outstanding that were
convertible into 2,363 of our common shares. The series D preferred
shares are anti-dilutive for all periods presented. We have granted
restricted share units ("RSU"s) to certain employees, officers, and
the chairman of the Board of Trustees. The RSUs contain both
service and market-based vesting components. None of the RSUs have
vested. If the market-based vesting component was measured as of
December 31, 2015, 1,143 common shares would be issued to RSU
holders, and no shares would have been issued as of December 31,
2014. Using a weighted average basis, 1,143 and 816 common shares
are reflected in diluted FFO and Normalized FFO attributable to EQC
common shareholders per share for the three months and year ended
December 31, 2015, respectively. The RSUs are excluded from basic
FFO and Normalized FFO attributable to EQC common shareholders per
share for all periods presented because the market-based vesting
measurement date has not yet occurred. We compute FFO in accordance
with standards established by the National Association of Real
Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income
(loss), calculated in accordance with GAAP, excluding real estate
depreciation and amortization, gains (or losses) from sales of
depreciable property, impairment of depreciable real estate, and
our portion of these items related to equity investees and
noncontrolling interests. Our calculation of Normalized FFO differs
from NAREIT’s definition of FFO because we exclude certain items
that we view as nonrecurring or impacting comparability from period
to period. We consider FFO and Normalized FFO to be appropriate
measures of operating performance for a REIT, along with net
income, net income attributable to Equity Commonwealth common
shareholders, operating income and cash flow from operating
activities. We believe that FFO and Normalized FFO provide
useful information to investors because by excluding the effects of
certain historical amounts, such as depreciation expense, FFO and
Normalized FFO may facilitate a comparison of our operating
performance between periods and with other REITs. FFO and
Normalized FFO are among the factors considered by our Board of
Trustees when determining the amount of distributions to our
shareholders. FFO and Normalized FFO do not represent cash
generated by operating activities in accordance with GAAP and
should not be considered as alternatives to net income, net income
attributable to Equity Commonwealth common shareholders, operating
income or cash flow from operating activities, determined in
accordance with GAAP, or as indicators of our financial performance
or liquidity, nor are these measures necessarily indicative of
sufficient cash flow to fund all of our needs. These measures
should be considered in conjunction with net income, net income
attributable to Equity Commonwealth common shareholders, operating
income and cash flow from operating activities as presented in our
condensed consolidated statements of operations, condensed
consolidated statements of comprehensive income and condensed
consolidated statements of cash flows. Other REITs and real estate
companies may calculate FFO and Normalized FFO differently than we
do.
CALCULATION OF SAME PROPERTY NET
OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(amounts in thousands)
For the Three Months
Ended For the Year Ended December 31,
December 31, 2015 2014
2015 2014 Calculation of Same Property NOI
and Same Property Cash Basis NOI: Rental income $
113,254 $ 173,036 $ 570,382 $ 691,699 Tenant reimbursements and
other income 25,680 39,772 144,509 170,158 Operating expenses
(63,820 ) (94,158 ) (324,948 ) (387,982
)
NOI $ 75,114 $
118,650 $ 389,943
$ 473,875 Straight line rent adjustments
(1,744 ) (2,359 ) (5,328 ) (12,531 ) Lease value amortization 1,482
2,133 7,515 10,650 Lease termination fees (309 )
(1,477 ) (8,184 ) (4,749 )
Cash Basis NOI
$ 74,543 $ 116,947
$ 383,946 $
467,245 Cash Basis NOI from non-same properties (1)
(2,232 ) (39,629 ) (73,916 ) (154,699 )
Same Property Cash Basis NOI $ 72,311
$ 77,318 $
310,030 $ 312,546
Non-cash rental and termination income from same properties
735 224 610 (1,057 )
Same Property NOI $ 73,046
$ 77,542 $ 310,640
$ 311,489
Reconciliation of Same Property NOI to GAAP Operating Income
(Loss)
Same Property NOI $ 73,046
$ 77,542 $ 310,640
$ 311,489 Non-cash rental and
termination income from same properties (735 ) (224 )
(610 ) 1,057
Same Property Cash Basis
NOI $ 72,311 $
77,318 $ 310,030
$ 312,546 Cash Basis NOI from non-same
properties (1) 2,232 39,629
73,916 154,699
Cash Basis NOI
$ 74,543 $ 116,947
$ 383,946 $
467,245 Straight line rent adjustments 1,744 2,359
5,328 12,531 Lease value amortization (1,482 ) (2,133 ) (7,515 )
(10,650 ) Lease termination fees 309 1,477
8,184 4,749
NOI
$ 75,114 $ 118,650
$ 389,943 $
473,875 Depreciation and amortization (37,143 )
(58,839 ) (194,001 ) (227,532 ) General and administrative (13,739
) (16,760 ) (57,457 ) (113,155 ) Loss on asset impairment —
(167,145 ) (17,162 ) (185,067 ) Acquisition related costs —
— — (5 )
Operating
Income (Loss) $ 24,232
$ (124,094 ) $ 121,323
$ (51,884 ) (1) Cash
Basis NOI from non-same properties for all periods presented
includes the operations of properties disposed during 2015. NOI is
total revenues minus operating 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 October 1, 2014 through December
31, 2015. The year-to-date same property versions of these measures
include the results of properties continuously owned from January
1, 2014 through December 31, 2015. Discontinued operations and
properties classified as held for sale are excluded from same
property results. We consider these measures to be
appropriate supplemental measures to net income because they may
help both investors and management 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.
These measures do not represent cash generated by operating
activities in accordance with GAAP and should not be considered as
an alternative to net income, net income attributable to Equity
Commonwealth common shareholders, operating income or cash flow
from operating activities, determined in accordance with GAAP, or
as indicators of our financial performance or liquidity, nor are
these measures necessarily indicative of sufficient cash flow to
fund all of our needs. These measures should be considered in
conjunction with net income, net income attributable to Equity
Commonwealth common shareholders, operating income and cash flow
from operating activities as presented in our condensed
consolidated statements of operations, condensed consolidated
statements of comprehensive income and condensed consolidated
statements of cash flows. Other REITs and real estate companies may
calculate these measures differently than we do.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160217006596/en/
Equity CommonwealthSarah Byrnes, Investor Relations(312)
646-2801ir@eqcre.com
Equity Commonwealth (NYSE:EQC)
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