EX-99.2 3 sirq317form8kexhibit992.htm EXHIBIT 99.2 sirq317form8kexhibit992
1 7958 South Chester Street, Centennial, CO Square Feet: 167,917 United Launch Alliance Corporate Headquarters Third Quarter 2017 Supplemental Operating and Financial Data Select Income REIT Exhibit 99.2 All amounts in this report are unaudited. 445 Jan Davis Drive, Huntsville, AL Square Feet: 57,420 Digium, Inc. Corporate Headquarters


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 2 TABLE OF CONTENT S PAGE/EXHIBIT CORPORATE INFORMATION Company Profile 7 Investor Information 8 Research Coverage 9 FINANCIALS Key Financial Data 11 Condensed Consolidated Balance Sheets 12 Condensed Consolidated Statements of Income 13 Condensed Consolidated Statements of Cash Flows 15 Debt Summary 17 Debt Maturity Schedule 18 Leverage Ratios, Coverage Ratios and Public Debt Covenants 19 Capital Expenditures Summary 20 Property Acquisitions and Dispositions Information Since 1/1/17 21 Calculation of Property Net Operating Income (NOI) and Cash Basis NOI 22 Reconciliation of NOI to Same Property NOI and Calculation of Same Property Cash Basis NOI 23 Calculation of EBITDA and Adjusted EBITDA 24 Calculation of Funds from Operations (FFO) Attributed to SIR and Normalized FFO Attributed to SIR 25 Definitions of Certain Non-GAAP Financial Measures 26 PORTFOLIO INFORMATION Portfolio Summary by Property Type 28 Same Property Results of Operations 29 Leasing Summary 31 Occupancy and Leasing Analysis by Property Type 32 Tenant Diversity and Credit Characteristics 33 Tenants Representing 1% or More of Total Annualized Rental Revenue 34 Three Year Lease Expiration Schedule by Property Type 35 Portfolio Lease Expiration Schedule 36 Hawaii Land Rent Reset Summary 37 EXHIBIT A Property Detail 39 TABLE OF CONTENTS


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 3 W ARNING CONCERNING FO RW ARD LOOKING S TA TEMENT S THIS PRESENTATION OF SUPPLEMENTAL OPERATING AND FINANCIAL DATA 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 WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING: • THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT OR BE NEGATIVELY AFFECTED BY CYCLICAL ECONOMIC CONDITIONS, • THE LIKELIHOOD THAT OUR TENANTS WILL RENEW OR EXTEND THEIR LEASES OR THAT WE WILL BE ABLE TO OBTAIN REPLACEMENT TENANTS, • OUR ACQUISITIONS OF PROPERTIES, • OUR SALES OF PROPERTIES, • OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY, • THE LIKELIHOOD THAT OUR RENTS WILL INCREASE WHEN WE RENEW OR EXTEND OUR LEASES, WE ENTER NEW LEASES OR RENTS ARE RESET AT OUR HAWAII PROPERTIES, • OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS, • THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY, • OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS, • OUR ABILITY TO RAISE EQUITY OR DEBT 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 EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF THE RMR GROUP INC., OR RMR INC., • OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF AFFILIATES INSURANCE COMPANY, OR AIC, AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC, • OUR QUALIFICATION FOR TAXATION AS A REAL ESTATE INVESTMENT TRUST, OR REIT, • THE CREDIT QUALITIES OF OUR TENANTS, AND • OTHER MATTERS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FUNDS FROM OPERATIONS, OR FFO, ATTRIBUTED TO SELECT INCOME REIT, OR SIR, NORMALIZED FUNDS FROM OPERATIONS, OR NORMALIZED FFO, ATTRIBUTED TO SIR, NET OPERATING INCOME, OR NOI, CASH BASIS NOI, EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION, OR EBITDA, EBITDA AS ADJUSTED, OR ADJUSTED EBITDA, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO: • THE IMPACT OF 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, • COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS, • 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, WARNING CONCERNING FORWARD LOOKING STATEMENTS


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 4 W ARNING CONCERNING FO RW ARD LOOKING S TA TEMENTS (CONTINUED ) • ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, THE RMR GROUP LLC, OR RMR LLC, RMR INC., GOVERNMENT PROPERTIES INCOME TRUST, OR GOV, AIC, AND OTHERS AFFILIATED WITH THEM, AND • ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL. FOR EXAMPLE: • 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 AND OUR WORKING CAPITAL REQUIREMENTS. 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, • 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, • RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE, • A SIGNIFICANT NUMBER OF OUR HAWAII PROPERTIES ARE LANDS LEASED FOR RENTS THAT ARE PERIODICALLY RESET BASED ON THEN CURRENT FAIR MARKET VALUES. REVENUES FROM OUR PROPERTIES IN HAWAII HAVE GENERALLY INCREASED DURING OUR OWNERSHIP AS THE LEASES FOR THOSE PROPERTIES HAVE BEEN RESET OR RENEWED. ALTHOUGH WE EXPECT THAT RENTS FOR OUR HAWAII PROPERTIES WILL INCREASE IN THE FUTURE, WE CANNOT BE SURE THEY WILL. FUTURE RENTS FROM THESE PROPERTIES COULD DECREASE OR NOT INCREASE TO THE EXTENT THEY HAVE IN THE PAST, • WE MAY NOT SUCCEED IN FURTHER DIVERSIFYING OUR REVENUE SOURCES AND ANY DIVERSIFICATION WE MAY ACHIEVE MAY NOT MITIGATE OUR PORTFOLIO RISKS OR IMPROVE THE SECURITY OF OUR REVENUES OR OUR OPERATING PERFORMANCE, • WE HAVE SUBSTANTIALLY COMPLETED A 35,000 SQUARE FOOT EXPANSION OF A BUILDING ON A PROPERTY WE OWN IN OKLAHOMA. AT SEPTEMBER 30, 2017, WE EXPECT TO SPEND AN ADDITIONAL $1.3 MILLION TO COMPLETE THIS EXPANSION. IN ADDITION, AS OF SEPTEMBER 30, 2017, WE HAVE ESTIMATED UNSPENT LEASING RELATED OBLIGATIONS OF $24.5 MILLION WHICH EXCLUDES THE ESTIMATED EXPANSION COSTS NOTED IN THE PRECEDING SENTENCE. IT IS DIFFICULT TO ACCURATELY ESTIMATE DEVELOPMENT AND TENANT IMPROVEMENT COSTS.  THIS DEVELOPMENT PROJECT AND OUR UNSPENT LEASING RELATED OBLIGATIONS MAY COST MORE OR LESS AND MAY TAKE LONGER TO COMPLETE THAN WE CURRENTLY EXPECT, AND WE MAY INCUR INCREASING AMOUNTS FOR THESE AND SIMILAR PURPOSES IN THE FUTURE, • OUR POSSIBLE REDEVELOPMENT OF CERTAIN OF OUR HAWAII PROPERTIES MAY NOT BE REALIZED OR BE SUCCESSFUL, • THE UNEMPLOYMENT RATE OR ECONOMIC CONDITIONS IN AREAS WHERE OUR PROPERTIES ARE LOCATED MAY BECOME WORSE IN THE FUTURE. SUCH CIRCUMSTANCES OR OTHER CONDITIONS MAY REDUCE DEMAND FOR LEASING OFFICE AND INDUSTRIAL SPACE. IF THE DEMAND FOR LEASING OFFICE AND INDUSTRIAL SPACE IS REDUCED, WE MAY BE UNABLE TO RENEW LEASES WITH OUR TENANTS AS LEASES EXPIRE OR ENTER INTO NEW LEASES AT RENTAL RATES AS HIGH AS EXPIRING RATES AND OUR FINANCIAL RESULTS MAY DECLINE, • OUR BELIEF THAT THERE IS A LIKELIHOOD THAT TENANTS MAY RENEW OR EXTEND OUR LEASES WHEN THEY EXPIRE WHENEVER THEY HAVE MADE SIGNIFICANT INVESTMENTS IN THE LEASED PROPERTIES, OR BECAUSE THOSE PROPERTIES MAY BE OF STRATEGIC IMPORTANCE TO THEM, MAY NOT BE REALIZED, • 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, • WE MAY INCUR SIGNIFICANT COSTS TO PREPARE A PROPERTY FOR A TENANT, PARTICULARLY FOR SINGLE TENANT PROPERTIES, WARNING CONCERNING FORWARD LOOKING STATEMENTS (CONTINUED)


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 5 W ARNING CONCERNING FO RW ARD LOOKING S TA TEMENTS (CONTINUED ) • A FORMER TENANT OF TWO OF OUR PROPERTIES HAS FILED FOR BANKRUPTCY AND REJECTED ITS TWO LEASES WITH US. ALTHOUGH A SUBTENANT OF THAT FORMER TENANT AT ONE OF THE TWO PROPERTIES IS NOW CONTRACTUALLY OBLIGATED TO PAY RENT TO US IN AN AMOUNT EQUAL TO THE RENT UNDER THE FORMER TENANT'S LEASE, THAT SUBTENANT HAS CERTAIN RIGHTS TO TERMINATE ITS SUBLEASE, INCLUDING UPON ONE YEAR'S ADVANCE NOTICE, • 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 CREDIT FACILITIES WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH FACILITIES, • WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE, • THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN MAY BE INCREASED TO UP TO $2.2 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN 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, • WE RECEIVED AN ASSESSMENT FROM THE STATE OF WASHINGTON FOR REAL ESTATE EXCISE TAX, INTEREST AND PENALTIES OF $2.8 MILLION ON CERTAIN PROPERTIES WE ACQUIRED IN CONNECTION WITH OUR ACQUISITION OF COLE CORPORATE INCOME TRUST, INC. IN JANUARY 2015. ALTHOUGH WE BELIEVE WE ARE NOT LIABLE FOR THIS TAX AND ARE DISPUTING THIS ASSESSMENT, WE MAY NOT SUCCEED IN HAVING ALL OR ANY PART OF THIS ASSESSMENT NULLIFIED, • 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., GOV, 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, • RMR INC. MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US, AND • THE PREMIUMS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND TERM LOAN AND THE FACILITY FEE PAYABLE ON OUR REVOLVING CREDIT FACILITY ARE BASED ON OUR CREDIT RATINGS. FUTURE CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE. CURRENTLY UNEXPECTED RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS ACTS OF TERRORISM, NATURAL DISASTERS, CHANGES IN OUR TENANTS’ FINANCIAL CONDITIONS, THE MARKET DEMAND FOR LEASED SPACE OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY. THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION "RISK FACTORS" IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. WARNING CONCERNING FORWARD LOOKING STATEMENTS (CONTINUED)


 
6 2300 & 2400 Yorkmont Road, Charlotte, NC Square Feet: 284,039 Compass Group U.S. Headquarters CORPORATE INFORMATION 6


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 7 COM PAN Y PROFIL E Corporate Headquarters: Two Newton Place 255 Washington Street, Suite 300 Newton, MA 02458-1634 (t) (617) 796-8303 (f) (617) 796-8335 Stock Exchange Listing: Nasdaq Trading Symbol: Common Shares: SIR Issuer Ratings: Moody’s: Baa2 Standard & Poor’s: BBB- The Company: Select Income REIT, or SIR, we, our or us, is a real estate investment trust, or REIT, which owns properties that are primarily leased to single tenants. As of September 30, 2017, we owned 366 buildings with approximately 45.5 million rentable square feet located in 36 states, including 229 buildings, leasable land parcels and easements with approximately 17.8 million rentable square feet which are primarily leasable industrial and commercial lands located in Hawaii. We have been investment grade rated since 2014, and we are included in the Russell 2000® Index and the MSCI US REIT Index. COMPANY PROFILE Management: SIR is managed by The RMR Group LLC, the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR). RMR is an alternative asset management company that was founded in 1986 to manage real estate companies and related businesses. RMR primarily provides management services to four publicly owned REITs and three real estate related operating businesses. In addition to managing SIR, RMR manages Hospitality Properties Trust, a REIT that owns hotels and travel centers, Senior Housing Properties Trust, a REIT that primarily owns healthcare, senior living and medical office buildings, and Government Properties Income Trust, a REIT that primarily owns properties leased to the U.S. and state governments. RMR also provides management services to TravelCenters of America LLC, a publicly traded operator of travel centers along the U.S. Interstate Highway System, convenience stores and restaurants, Five Star Senior Living Inc., a publicly traded operator of senior living communities, and Sonesta International Hotels Corporation, a privately owned franchisor and operator of hotels and cruise ships. RMR also manages publicly traded securities of real estate companies, a publicly traded mortgage REIT and private commercial real estate debt funds through wholly owned SEC registered investment advisory subsidiaries. As of September 30, 2017, RMR had $28.5 billion of real estate assets under management and the combined RMR managed companies had approximately $11 billion of annual revenues, over 1,400 properties and approximately 53,000 employees. We believe that being managed by RMR is a competitive advantage for SIR because of RMR’s depth of management and experience in the real estate industry. We also believe RMR provides management services to us at costs that are lower than we would have to pay for similar quality services. (1) Includes 229 buildings, leasable land parcels and easements with approximately 17.8 million square feet which are primarily leasable industrial and commercial lands located in Hawaii. (2) See page 25 for the calculation of FFO attributed to SIR and Normalized FFO attributed to SIR and a reconciliation of net income attributed to SIR determined in accordance with U.S. generally accepted accounting principles, or GAAP, to those amounts. Key Data (as of September 30, 2017): (dollars and sq. ft. in 000s) Total buildings (1) 366 Total sq. ft. 45,496 Percent leased 96.2% Q3 2017 total revenues $ 118,014 Q3 2017 net income attributed to SIR $ 31,442 Q3 2017 Normalized FFO attributed to SIR (2) $ 60,677


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 8 INVES TOR INFORM ATIO N INVESTOR INFORMATION Board of Trustees Donna D. Fraiche William A. Lamkin Jeffrey P. Somers Independent Trustee Independent Trustee Independent Trustee Adam D. Portnoy Barry M. Portnoy Managing Trustee Managing Trustee Senior Management David M. Blackman John C. Popeo President and Chief Operating Officer Chief Financial Officer and Treasurer Contact Information Investor Relations Inquiries Select Income REIT Financial inquiries should be directed to John C. Popeo, Two Newton Place Chief Financial Officer and Treasurer, at (617) 796-8303 255 Washington Street, Suite 300 or jpopeo@sirreit.com. Newton, MA 02458-1634 (t) (617) 796-8303 Investor and media inquiries should be directed to (f) (617) 796-8335 Christopher Ranjitkar, Director, Investor Relations, (e-mail) info@sirreit.com at (617) 796-8320 or cranjitkar@sirreit.com.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 9 RESEARCH COVERAG E RESEARCH COVERAGE Equity Research Coverage Bank of America / Merrill Lynch James Feldman (646) 855-5808 james.feldman@baml.com FBR Capital Markets & Co. Bryan Maher (646) 885-5423 bmaher@fbr.com JMP Securities Mitch Germain (212) 906-3546 mgermain@jmpsecurities.com Morgan Stanley Vikram Malhotra (212) 761-7064 vikram.malhotra@morganstanley.com RBC Capital Markets Michael Carroll (440) 715-2649 michael.carroll@rbccm.com SIR is followed by the analysts and its credit is rated by the rating agencies listed above. Please note that any opinions, estimates or forecasts regarding SIR’s performance made by these analysts or agencies do not represent opinions, forecasts or predictions of SIR or its management. SIR does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies. Rating Agencies Moody’s Investors Service Griselda Bisono (212) 553-4985 griselda.bisono@moodys.com Standard & Poor’s Michael Souers (212) 438-2508 michael.souers@standardandpoors.com


 
10 FINANCIALS 10 2555 Grand Boulevard, Kansas City, MO Square Feet: 595,607 Shook, Hardy & Bacon LLP Headquarters


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 11 KE Y FINANCIA L D AT A KEY FINANCIAL DATA (dollars in thousands, except per share data) As of and For the Three Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 Selected Balance Sheet Data: Total gross assets (1) $ 4,972,896 $ 4,949,024 $ 4,876,465 $ 4,882,310 $ 4,880,238 Total assets $ 4,677,395 $ 4,673,590 $ 4,614,065 $ 4,639,682 $ 4,657,256 Total liabilities $ 2,655,096 $ 2,642,336 $ 2,562,862 $ 2,565,720 $ 2,565,322 Total shareholders' equity $ 2,022,299 $ 2,031,254 $ 2,051,203 $ 2,073,962 $ 2,091,934 Selected Income Statement Data: Total revenues $ 118,014 $ 115,870 $ 116,294 $ 114,835 $ 115,036 Net income $ 31,442 $ 26,661 $ 6,728 $ 24,222 $ 28,568 NOI (2) $ 91,876 $ 91,511 $ 92,584 $ 90,551 $ 89,887 Adjusted EBITDA (3) $ 85,695 $ 85,534 $ 73,797 $ 84,444 $ 83,322 FFO attributed to SIR (4) $ 66,155 $ 61,207 $ 40,468 $ 63,228 $ 61,934 Normalized FFO attributed to SIR (4) $ 60,677 $ 62,127 $ 52,361 $ 63,463 $ 61,947 Per Common Share Data: Net income attributed to SIR - basic and diluted $ 0.35 $ 0.30 $ 0.08 $ 0.27 $ 0.32 FFO attributed to SIR - basic (4) $ 0.74 $ 0.69 $ 0.45 $ 0.71 $ 0.69 FFO attributed to SIR - diluted (4) $ 0.74 $ 0.68 $ 0.45 $ 0.71 $ 0.69 Normalized FFO attributed to SIR - basic and diluted (4) $ 0.68 $ 0.70 $ 0.59 (5) $ 0.71 $ 0.69 Dividends: Annualized dividends paid per share $ 2.04 $ 2.04 $ 2.04 $ 2.04 $ 2.04 Annualized dividend yield (at end of period) (5) 8.7% 8.5% 7.9% 8.1% 7.6% Normalized FFO payout ratio (4) 75.0% 72.9% 86.4% (6) 71.8% 73.9% (1) Total gross assets is total assets plus accumulated depreciation. (2) See page 22 for the calculation of NOI and a reconciliation of net income determined in accordance with GAAP to that amount. (3) See page 24 for the calculation of Adjusted EBITDA and a reconciliation of net income determined in accordance with GAAP to that amount. (4) See page 25 for the calculation of FFO attributed to SIR and Normalized FFO attributed to SIR and a reconciliation of net income attributed to SIR determined in accordance with GAAP to those amounts. (5) Annualized dividend yield is the annualized dividend paid during the period divided by the closing price of our common shares at the end of the period. (6) Excluding the non-cash write-off of straight line rents receivable of $12,517 recorded during the three months ended March 31, 2017, Normalized FFO attributed to SIR would have been $0.73 per common share and the Normalized FFO payout ratio would have been 69.9%.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 12 CONDENSED CONSOLID ATED BALANCE SHEET S CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2017 2016 ASSETS Real estate properties: Land $ 1,041,739 $ 1,038,686 Buildings and improvements 3,176,330 3,103,734 4,218,069 4,142,420 Accumulated depreciation (295,501) (242,628) 3,922,568 3,899,792 Properties held for sale 5,829 — Acquired real estate leases, net 493,780 506,298 Cash and cash equivalents 18,155 22,127 Restricted cash 103 44 Rents receivable, including straight line rents of $117,403 and $117,008, respectively, net of allowance for doubtful accounts of $1,149 and $873, respectively 122,292 124,089 Deferred leasing costs, net 11,443 10,051 Other assets, net 103,225 77,281 Total assets $ 4,677,395 $ 4,639,682 LIABILITIES AND SHAREHOLDERS' EQUITY Unsecured revolving credit facility $ 102,000 $ 327,000 Unsecured term loan, net 348,746 348,373 Senior unsecured notes, net 1,776,087 1,430,300 Mortgage notes payable, net 227,772 245,643 Accounts payable and other liabilities 92,783 101,605 Assumed real estate lease obligations, net 70,989 77,622 Rents collected in advance 20,127 18,815 Security deposits 8,411 11,887 Due to related persons 8,181 4,475 Total liabilities 2,655,096 2,565,720 Commitments and contingencies Shareholders' equity: Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,487,371 and 89,427,869 shares issued and outstanding, respectively 895 894 Additional paid in capital 2,180,845 2,179,669 Cumulative net income 506,138 441,307 Cumulative other comprehensive income 39,633 20,472 Cumulative common distributions (705,212) (568,380) Total shareholders' equity 2,022,299 2,073,962 Total liabilities and shareholders' equity $ 4,677,395 $ 4,639,682 (dollars in thousands, except per share data)


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 13 CONDENSED CONSOLID ATED S TA TEMENTS OF INCOM E CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended September 30, For the Nine Months Ended September 30, 2017 2016 2017 2016 Revenues: Rental income $ 98,635 $ 96,037 $ 293,020 $ 290,512 Tenant reimbursements and other income 19,379 18,999 57,158 56,660 Total revenues 118,014 115,036 350,178 347,172 Expenses: Real estate taxes 11,489 10,755 33,168 31,565 Other operating expenses 14,649 14,394 41,039 39,987 Depreciation and amortization 34,713 33,366 102,770 100,240 Acquisition related costs — 13 — 71 General and administrative (1) 1,589 7,553 24,658 21,903 Write-off of straight line rents receivable, net (2) — — 12,517 — Loss on asset impairment (2) — — 4,047 — Loss on impairment of real estate assets — — 229 — Total expenses 62,440 66,081 218,428 193,766 Operating income 55,574 48,955 131,750 153,406 Dividend income 397 397 1,190 872 Interest expense (including net amortization of debt issuance costs, premiums and discounts of $1,716, $1,374, $4,688 and $4,124, respectively) (24,383) (20,690) (68,278) (61,883) Income before income tax expense and equity in earnings of an investee 31,588 28,662 64,662 92,395 Income tax expense (177) (107) (364) (370) Equity in earnings of an investee 31 13 533 107 Net income 31,442 28,568 64,831 92,132 Net income allocated to noncontrolling interest — — — (33) Net income attributed to SIR $ 31,442 $ 28,568 $ 64,831 $ 92,099 Weighted average common shares outstanding - basic 89,355 89,308 89,341 89,295 Weighted average common shares outstanding - diluted 89,379 89,334 89,364 89,318 Net income attributed to SIR per common share - basic and diluted $ 0.35 $ 0.32 $ 0.73 $ 1.03 Additional Data: General and administrative expenses (1) / total revenues 1.3% 6.6% 7.0% 6.3% General and administrative expenses (1) / total assets (at end of period) 0.0% 0.2% 0.5% 0.5% Non-cash straight line rent adjustments included in rental income (3) $ 5,581 $ 6,483 $ 16,361 $ 19,054 Lease value amortization included in rental income (3) $ 547 $ 443 $ 1,508 $ 1,298 Lease termination fees included in rental income (3) $ — $ — $ 101 $ — Non-cash amortization included in other operating expenses (4) $ 213 $ 213 $ 639 $ 639 Non-cash amortization included in general and administrative expenses (4) $ 345 $ 345 $ 1,034 $ 1,034 (dollars in thousands, except per share data)


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 14 CONDENSED CONSOLID ATED S TA TEMENTS OF INCOME (CONTINUED ) CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) (dollars in thousands, except per share data) (1) General and administrative expenses include (i) the reversal of $5,478 of previously accrued estimated business management incentive fees for the three months ended September 30, 2017 and (ii) estimated business management incentive fee expense of $3,288 for the nine months ended September 30, 2017. (2) In March 2017, one of our tenants filed for bankruptcy and rejected two leases with us: (i) a lease for a property located in Huntsville, AL with approximately 1.4 million rentable square feet and an original lease term until August 2032 and (ii) a lease for a property in Hanover, PA with approximately 502,000 rentable square feet and an original lease term until September 2028. The Huntsville, AL property is occupied by a subtenant of our former tenant who is now contractually obligated to pay rent to us in an amount equal to the rent under the former tenant's lease for a term that runs concurrently with the former tenant’s original lease term, but subject to certain tenant termination rights. We expect that the lost rents plus carrying costs, such as real estate taxes, insurance, security and other operating costs, from a fully vacant Hanover, PA property may total approximately $3,800 per year. The bankruptcy court overseeing this matter recently granted us permission to offset our damages with a $3,739 security deposit held from the bankrupt former tenant with respect to the Hanover, PA property. During the three months ended March 31, 2017. We recorded a non-cash charge of $12,517 to write off straight line rents receivable (net of the $3,739 security deposit) related to the rejected leases with the bankrupt former tenant at both properties plus an impairment charge of $4,047 related to the write-off of lease intangibles related to the property located in Hanover, PA. (3) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any. (4) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to business management fees and property management fees expense, which are included in general and administrative and other operating expenses, respectively.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 15 CONDENSED CONSOLID ATED S TA TEMENTS OF CASH FLOW S CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 64,831 $ 92,132 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 59,994 58,482 Net amortization of debt issuance costs, premiums and discounts 4,688 4,124 Amortization of acquired real estate leases and assumed real estate lease obligations 40,308 39,582 Amortization of deferred leasing costs 1,170 1,037 Write-off of straight line rents and provision for losses on rents receivable 12,856 431 Straight line rental income (16,361) (19,054) Impairment losses 4,276 — Other non-cash expenses, net (453) (215) Equity in earnings of an investee (533) (107) Change in assets and liabilities: Restricted cash — (32) Rents receivable 1,563 767 Deferred leasing costs (2,591) (3,794) Other assets (7,355) (4,627) Accounts payable and other liabilities (4,910) (11,137) Rents collected in advance 1,312 2,662 Security deposits 263 (60) Due to related persons 3,706 1,016 Net cash provided by operating activities 162,764 161,207 CASH FLOWS FROM INVESTING ACTIVITIES: Real estate acquisitions and deposits (117,458) (10,200) Real estate improvements (11,723) (6,739) Cash placed in escrow for investing activities (59) — Net cash used in investing activities (129,240) (16,939) (dollars in thousands)


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 16 CONDENSED CONSOLID ATED S TA TEMENTS OF CASH FLOWS (CONTINUED ) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the Nine Months Ended September 30, 2017 2016 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of senior unsecured notes, after discounts 345,394 — Proceeds from borrowings 220,000 135,000 Payments of borrowings (462,552) (141,207) Payment of debt issuance costs (3,197) — Distributions to common shareholders (136,832) (134,961) Repurchase of common shares (309) (305) Purchase of noncontrolling interest — (3,908) Distributions to noncontrolling interest — (66) Net cash used in financing activities (37,496) (145,447) Decrease in cash and cash equivalents (3,972) (1,179) Cash and cash equivalents at beginning of period 22,127 17,876 Cash and cash equivalents at end of period $ 18,155 $ 16,697 (dollars in thousands) SUPPLEMENTAL DISCLOSURES: Interest paid $ 71,913 $ 71,374 Income taxes paid $ 373 $ 409


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 17 DEBT SUMMA RY DEBT SUMMARY (dollars in thousands) Coupon Interest Principal Maturity Due at Years to Rate (1) Rate (2) Balance (3) Date Maturity Maturity As of September 30, 2017: Unsecured Floating Rate Debt: Revolving credit facility (LIBOR + 105 bps) (4) (6) 2.244% 2.244% $ 102,000 3/29/2019 $ 102,000 1.5 Term loan (LIBOR + 115 bps) (5) (6) 2.387% 2.387% 350,000 3/31/2020 350,000 2.5 Subtotal / weighted average unsecured floating rate debt 2.355% 2.355% 452,000 452,000 2.3 Unsecured Fixed Rate Debt: Senior notes due 2018 2.850% 2.985% 350,000 2/1/2018 350,000 0.3 Senior notes due 2020 3.600% 3.775% 400,000 2/1/2020 400,000 2.3 Senior notes due 2022 4.150% 4.360% 300,000 2/1/2022 300,000 4.3 Senior notes due 2024 4.250% 4.471% 350,000 5/15/2024 350,000 6.6 Senior notes due 2025 4.500% 4.755% 400,000 2/1/2025 400,000 7.3 Subtotal / weighted average unsecured fixed rate debt 3.872% 4.072% 1,800,000 1,800,000 4.2 Secured Fixed Rate Debt: One property (one building) in Harvey, IL 4.500% 3.280% 1,959 6/1/2019 1,902 1.7 One property (one building) in Columbus, OH 4.500% 3.280% 2,351 6/1/2019 2,282 1.7 One property (one building) in Ankeny, IA 3.870% 3.380% 12,360 7/19/2020 12,360 2.8 One property (one building) in Philadelphia, PA (7) 3.237% 4.160% 41,000 8/3/2020 39,635 2.8 One property (one building) in Chester, VA 3.990% 3.480% 48,750 11/1/2020 48,750 3.1 One property (three buildings) in Seattle, WA 3.550% 3.790% 71,000 5/1/2023 71,000 5.6 One property (one building) in Chicago, IL 3.700% 3.590% 50,000 6/1/2023 50,000 5.7 Subtotal / weighted average secured fixed rate debt 3.656% 3.714% 227,420 225,929 4.4 Total / weighted average debt 3.576% 3.726% $ 2,479,420 $ 2,477,929 3.9 (1) Reflects the interest rate stated in, or determined pursuant to, the contract terms. (2) Includes the effect of interest rate protection and mark to market accounting for certain mortgages and discounts on senior unsecured notes. Excludes upfront transaction costs. (3) Principal balance excludes unamortized premiums, discounts and certain issuance costs related to these debts. Total debt outstanding as of September 30, 2017, net of unamortized premiums, discounts and certain issuance costs totaling $24,815, was $2,454,605. (4) We have a $750,000 revolving credit facility which has a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 105 basis points and a facility fee of 20 basis points. Both the interest rate premium and the facility fee for our revolving credit facility are subject to adjustment based on changes to our credit ratings. Upon the payment of an extension fee and meeting other conditions, we have the option to extend the maturity date to March 29, 2020. Principal balance represents the amount outstanding on our $750,000 revolving credit facility at September 30, 2017. Interest rate is as of September 30, 2017 and excludes the 20 basis points facility fee. (5) We have a $350,000 term loan with a maturity date of March 31, 2020 and an interest rate on the amount outstanding of LIBOR plus 115 basis points. The interest rate premium for our term loan is subject to adjustment based on changes to our credit ratings. Principal balance represents the amount outstanding on our $350,000 term loan at September 30, 2017. Interest rate is as of September 30, 2017. (6) The maximum borrowing availability under our revolving credit facility and term loan, combined, may be increased to up to $2,200,000 in certain circumstances. (7) Interest is payable at a rate equal to LIBOR plus a premium. The interest charge has been fixed by a cash flow hedge which sets the interest rate at approximately 4.16% until August 3, 2020, which is the maturity date of the mortgage note. Coupon rate is as of September 30, 2017.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 18 DEBT M ATURIT Y SCHEDUL E DEBT MATURITY SCHEDULE (dollars in thousands) Scheduled Principal Payments as of September 30, 2017 Unsecured Unsecured Secured Floating Fixed Fixed Year Rate Debt Rate Debt Rate Debt Total (3) 10/1/2017 - 12/31/2017 $ — $ — $ 18 $ 18 2018 — 350,000 304 350,304 2019 102,000 (1) — 4,926 106,926 2020 350,000 (2) 400,000 101,172 851,172 2021 — — — — 2022 — 300,000 — 300,000 2023 — — 121,000 121,000 2024 — 350,000 — 350,000 2025 — 400,000 — 400,000 Total $ 452,000 $ 1,800,000 $ 227,420 $ 2,479,420 Percent 18.2% 72.6% 9.2% 100.0% (1) Represents the amount outstanding on our $750,000 revolving credit facility at September 30, 2017. We have a $750,000 revolving credit facility which has a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 105 basis points and a facility fee of 20 basis points. Both the interest rate premium and the facility fee for our revolving credit facility are subject to adjustment based on changes to our credit ratings. Upon the payment of an extension fee and meeting other conditions, we have the option to extend the maturity date to March 29, 2020. (2) Represents the amount outstanding on our $350,000 term loan at September 30, 2017. We have a $350,000 term loan with a maturity date of March 31, 2020 and an interest rate on the amount outstanding of LIBOR plus 115 basis points. The interest rate premium for our term loan is subject to adjustment based on changes to our credit ratings. (3) Total debt outstanding as of September 30, 2017, net of unamortized premiums, discounts and certain issuance costs totaling $24,815, was $2,454,605.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 19 LEVERAGE R ATIOS, COVERAGE R ATIOS AND PUBLIC DEBT COVENANT S LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS As of and For the Three Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 Leverage Ratios: Total debt (book value) (1) / total gross assets (2) 49.4% 49.2% 48.5% 48.2% 48.4% Total debt (book value) (1) / gross book value of real estate assets (3) 50.5% 50.6% 49.9% 49.6% 49.9% Total debt (book value) (1) / total market capitalization (4) 53.9% 53.1% 50.7% 51.1% 49.5% Secured debt (book value) (1) / total assets 4.9% 5.2% 5.3% 5.3% 6.1% Variable rate debt (book value) (1) / total debt (book value) (1) 18.4% 17.1% 29.2% 28.7% 29.0% Coverage Ratios: Adjusted EBITDA (5) / interest expense 3.5x 3.8x 3.5x (6) 4.1x 4.0x Total debt (book value) (1) / annualized Adjusted EBITDA (5) 7.2x 7.1x 8.0x (6) 7.0x 7.1x Public Debt Covenants: Total debt / adjusted total assets (7) (maximum 60%) 50.0% 49.9% 49.3% 49.2% 49.6% Secured debt / adjusted total assets (7) (maximum 40%) 4.6% 5.0% 5.1% 5.1% 5.9% Consolidated income available for debt service (8) / annual debt service (minimum 1.50x) 3.8x 3.7x 4.1x 4.4x 4.5x Total unencumbered assets (7) / unsecured debt (minimum 150%) 199.9% 201.0% 203.7% 203.9% 202.5% (1) Debt amounts are net of unamortized premiums, discounts and certain issuance costs. (2) Total gross assets is total assets plus accumulated depreciation. (3) Gross book value of real estate assets is real estate properties at cost, plus certain acquisition costs, if any, before depreciation and purchase price allocations, less impairment writedowns, if any. (4) Total market capitalization is total debt plus the market value of our common shares at the end of each period. (5) See page 24 for the calculation of Adjusted EBITDA and for a reconciliation of net income determined in accordance with GAAP to that amount. (6) Excluding the non-cash write-off of straight line rents receivable of $12.5 million recorded during the three months ended March 31, 2017, the ratios of Adjusted EBITDA to interest expense and total debt (book value) to annualized Adjusted EBITDA would have been 4.1x and 6.9x, respectively. (7) Adjusted total assets and total unencumbered assets include original cost of real estate assets calculated in accordance with GAAP and exclude depreciation and amortization, accounts receivable, other intangible assets and impairment writedowns, if any. (8) Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, taxes, impairment losses and gains and losses on acquisitions and sales of assets and early extinguishment of debt, if any, determined together with debt service on a pro forma basis for the four consecutive fiscal quarters most recently ended.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 20 CAPI TA L EXPENDITURES SUMMA RY CAPITAL EXPENDITURES SUMMARY (dollars in thousands) For the Three Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 Tenant improvements (1) $ 378 $ 61 $ 328 $ 3,046 $ 1,343 Leasing costs (2) 403 630 1,402 627 227 Building improvements (3) 1,323 1,209 694 946 561 Recurring capital expenditures 2,104 1,900 2,424 4,619 2,131 Development, redevelopment and other activities (4) 2,583 2,451 721 1,274 613 Total capital expenditures $ 4,687 $ 4,351 $ 3,145 $ 5,893 $ 2,744 (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, legal costs and tenant inducements. (3) Building improvements generally include (i) expenditures to replace obsolete building components and (ii) 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 revenues.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 21 PROPERT Y ACQUISITIONS AND DISPOSITIONS INFORM ATION SINCE 1/1/17 PROPERTY ACQUISITIONS AND DISPOSITIONS INFORMATION SINCE 1/1/17 (sq. ft. and dollars in thousands) Acquisitions(1): Dispositions: SIR has not disposed of any properties since January 1, 2017. (1) In January 2017, we also acquired a land parcel adjacent to one of our properties located in McAlester, OK for $226, excluding acquisition related costs, in order to expand the building for the existing tenant. (2) Represents the gross purchase price, including assumed mortgage debt, if any, and excluding acquisition related costs and purchase price allocations. (3) Represents the ratio of (x) annual straight line rental income, excluding the impact of above and below market lease amortization, based on existing leases as of the date of acquisition, less estimated annual property operating expenses that we expected to pay as of the date of acquisition, excluding depreciation and amortization expense, to (y) the acquisition purchase price, including the principal amount of any assumed debt and excluding acquisition related costs. (4) Average remaining lease term in years is weighted based on rental revenues as of the date acquired. (5) Percent leased is as of the date acquired. Weighted Average Purchase Remaining Date Number of Number of Purchase Price (2) / Cap Lease Term Percent Acquired Location Properties Buildings Sq. Ft. Price (2) Sq. Ft. Rate (3) in Years (4) Leased (5) Tenant 4/28/2017 Norfolk, VA 1 1 289 $ 55,108 $ 191 7.8% 10.2 100% Automatic Data Processing, Inc. 5/12/2017 Houston, TX 1 1 84 20,300 242 7.9% 10.6 100% Lyondell Chemical Company 7/19/2017 Indianapolis, IN 1 2 275 41,050 149 10.0% 10.0 100% Interactive Intelligence Group, Inc. Total / Weighted Average 3 4 648 $ 116,458 $ 180 8.6% 10.2 100%


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 22 CALCUL ATION OF PROPERT Y NET OPER ATING INCOME (NOI) AND CASH BASIS NO I CALCULATION OF PROPERTY NET OPERATING INCOME (NOI) AND CASH BASIS NOI (1) (dollars in thousands) (1) See Definitions of Certain Non-GAAP Financial Measures on page 26 for the definitions of NOI and Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (2) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any. (3) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our 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 are included in other operating expenses. (4) During the three months ended March 31, 2017, we recorded a $12,517 non-cash write-off of straight line rents receivable related to leases associated with a tenant bankruptcy at two properties located in Huntsville, AL and Hanover, PA and a $4,047 loss on asset impairment for unamortized lease intangibles related to a lease associated with this tenant bankruptcy at the property located in Hanover, PA. For the Three Months Ended For the Nine Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 9/30/2017 9/30/2016 Calculation of NOI and Cash Basis NOI: Rental income $ 98,635 $ 97,041 $ 97,344 $ 96,503 $ 96,037 $ 293,020 $ 290,512 Tenant reimbursements and other income 19,379 18,829 18,950 18,332 18,999 57,158 56,660 Real estate taxes (11,489) (10,836) (10,843) (11,314) (10,755) (33,168) (31,565) Other operating expenses (14,649) (13,523) (12,867) (12,970) (14,394) (41,039) (39,987) NOI 91,876 91,511 92,584 90,551 89,887 275,971 275,620 Non-cash straight line rent adjustments included in rental income (2) (5,581) (5,389) (5,391) (5,690) (6,483) (16,361) (19,054) Lease value amortization included in rental income (2) (547) (527) (434) (434) (443) (1,508) (1,298) Lease termination fees included in rental income (2) — (101) — — — (101) — Non-cash amortization included in other operating expenses (3) (213) (213) (213) (213) (213) (639) (639) Cash Basis NOI $ 85,535 $ 85,281 $ 86,546 $ 84,214 $ 82,748 $ 257,362 $ 254,629 Reconciliation of Net Income to NOI and Cash Basis NOI: Net income $ 31,442 $ 26,661 $ 6,728 $ 24,222 $ 28,568 $ 64,831 $ 92,132 Equity in earnings of an investee (31) (374) (128) (30) (13) (533) (107) Income tax expense 177 85 102 78 107 364 370 Income before income tax expense and equity in earnings of an investee 31,588 26,372 6,702 24,270 28,662 64,662 92,395 Interest expense 24,383 22,808 21,087 20,737 20,690 68,278 61,883 Dividend income (397) (396) (397) (396) (397) (1,190) (872) Operating income 55,574 48,784 27,392 44,611 48,955 131,750 153,406 Loss on impairment of real estate assets — 229 — 5,484 — 229 — Loss on asset impairment (4) — — 4,047 — — 4,047 — Write-off of straight line rents receivable, net (4) — — 12,517 — — 12,517 — General and administrative 1,589 8,181 14,888 6,699 7,553 24,658 21,903 Acquisition related costs — — — 235 13 — 71 Depreciation and amortization 34,713 34,317 33,740 33,522 33,366 102,770 100,240 NOI 91,876 91,511 92,584 90,551 89,887 275,971 275,620 Non-cash straight line rent adjustments included in rental income (2) (5,581) (5,389) (5,391) (5,690) (6,483) (16,361) (19,054) Lease value amortization included in rental income (2) (547) (527) (434) (434) (443) (1,508) (1,298) Lease termination fees included in rental income (2) — (101) — — — (101) — Non-cash amortization included in other operating expenses (3) (213) (213) (213) (213) (213) (639) (639) Cash Basis NOI $ 85,535 $ 85,281 $ 86,546 $ 84,214 $ 82,748 $ 257,362 $ 254,629


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 23RECONCILI ATION OF NOI TO SAME PROPERT Y NOI AND CALCUL ATION OF SAME PROPERT Y CASH BASIS NO I RECONCILIATION OF NOI TO SAME PROPERTY NOI AND CALCULATION OF SAME PROPERTY CASH BASIS NOI (1) (dollars in thousands) For the Three Months Ended For the Nine Months Ended 9/30/2017 9/30/2016 9/30/2017 9/30/2016 Reconciliation of NOI to Same Property NOI (2)(3): Rental income $ 98,635 $ 96,037 $ 293,020 $ 290,512 Tenant reimbursements and other income 19,379 18,999 57,158 56,660 Real estate taxes (11,489) (10,755) (33,168) (31,565) Other operating expenses (14,649) (14,394) (41,039) (39,987) NOI 91,876 89,887 275,971 275,620 Less: NOI of properties not included in same property results (2,375) (170) (4,495) (170) Same property NOI $ 89,501 $ 89,717 $ 271,476 $ 275,450 Calculation of Same Property Cash Basis NOI (2)(3): Same property NOI $ 89,501 $ 89,717 $ 271,476 $ 275,450 Less: Non-cash straight line rent adjustments included in rental income (4) (4,700) (6,459) (14,442) (19,030) Lease value amortization included in rental income (4) (556) (443) (1,536) (1,298) Lease termination fees included in rental income (4) — — (101) — Non-cash amortization included in other operating expenses (5) (213) (213) (639) (639) Same property Cash Basis NOI $ 84,032 $ 82,602 $ 254,758 $ 254,483 (1) See Definitions of Certain Non-GAAP Financial Measures on page 26 for the definitions of NOI and Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (2) For the three months ended September 30, 2017, same property NOI and Cash Basis NOI are based on properties we owned as of September 30, 2017, and which we owned continuously since July 1, 2016. (3) For the nine months ended September 30, 2017, same property NOI and Cash Basis NOI are based on properties we owned as of September 30, 2017, and which we owned continuously since January 1, 2016. (4) We report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any. (5) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our 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 are included in other operating expenses.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 24 CALCUL ATION OF EBITD A AND ADJUSTED EBITD A CALCULATION OF EBITDA AND ADJUSTED EBITDA (1) (dollars in thousands) For the Three Months Ended For the Nine Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 9/30/2017 9/30/2016 Net income $ 31,442 $ 26,661 $ 6,728 $ 24,222 $ 28,568 $ 64,831 $ 92,132 Plus: interest expense 24,383 22,808 21,087 20,737 20,690 68,278 61,883 Plus: income tax expense 177 85 102 78 107 364 370 Plus: depreciation and amortization 34,713 34,317 33,740 33,522 33,366 102,770 100,240 EBITDA 90,715 83,871 61,657 78,559 82,731 236,243 254,625 Plus: acquisition related costs — — — 235 13 — 71 Plus: general and administrative expense paid in common shares (2) 458 514 247 166 578 1,219 1,457 Plus: estimated business management incentive fees (3) (5,478) 920 7,846 — — 3,288 — Plus: loss on asset impairment (4) — — 4,047 — — 4,047 — Plus: loss on impairment of real estate assets (5) — 229 — 5,484 — 229 — Adjusted EBITDA $ 85,695 $ 85,534 $ 73,797 (6) $ 84,444 $ 83,322 $ 245,026 $ 256,153 (1) See Definitions of Certain Non-GAAP Financial Measures on page 26 for the definitions of EBITDA and Adjusted EBITDA and a description of why we believe they are appropriate supplemental measures. (2) Amount represents equity based compensation to our trustees and our officers and certain other employees of RMR’s operating subsidiary, RMR LLC. (3) Incentive fees under our 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 expense in our condensed consolidated statements of income. In calculating net income 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, we do not include such expense in the calculation of Adjusted EBITDA until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. (4) During the three months ended March 31, 2017, we recorded a $4,047 loss on asset impairment for unamortized lease intangibles related to a lease associated with a tenant bankruptcy at a property located in Hanover, PA. (5) We recorded losses on impairment of real estate assets of $229 during the three months ended June 30, 2017 and $5,484 during the three months ended December 31, 2016 in connection with one vacant property located in Maynard, MA. (6) Excluding the non-cash write-off of straight line rents receivable of $12,517 recorded during the three months ended March 31, 2017, Adjusted EBITDA would have been $86,314.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 25CALCUL ATION OF FUNDS FROM OPER ATIONS (FFO) A TTRIBUTED TO SIR AND NORMALIZE D FFO A TTRIBUTED TO SI R CALCULATION OF FUNDS FROM OPERATIONS (FFO) ATTRIBUTED TO SIR AND NORMALIZED FFO ATTRIBUTED TO SIR (1) (amounts in thousands, except per share data) For the Three Months Ended For the Nine Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 9/30/2017 9/30/2016 Net income attributed to SIR $ 31,442 $ 26,661 $ 6,728 $ 24,222 $ 28,568 $ 64,831 $ 92,099 Plus: depreciation and amortization 34,713 34,317 33,740 33,522 33,366 102,770 100,240 Plus: loss on impairment of real estate assets — 229 — 5,484 — 229 — Plus: net income allocated to noncontrolling interest — — — — — — 33 Less: FFO allocated to noncontrolling interest — — — — — — (77) FFO attributed to SIR 66,155 61,207 40,468 63,228 61,934 167,830 192,295 Plus: acquisition related costs — — — 235 13 — 71 Plus: estimated business management incentive fees (2) (5,478) 920 7,846 — — 3,288 — Plus: loss on asset impairment (3) — — 4,047 — — 4,047 — Normalized FFO attributed to SIR $ 60,677 $ 62,127 $ 52,361 $ 63,463 $ 61,947 $ 175,165 $ 192,366 Weighted average common shares outstanding - basic 89,355 89,338 89,331 89,331 89,308 89,341 89,295 Weighted average common shares outstanding - diluted 89,379 89,362 89,348 89,335 89,334 89,364 89,318 Net income attributed to SIR per common share - basic and diluted $ 0.35 $ 0.30 $ 0.08 $ 0.27 $ 0.32 $ 0.73 $ 1.03 FFO attributed to SIR per common share - basic $ 0.74 $ 0.69 $ 0.45 $ 0.71 $ 0.69 $ 1.88 $ 2.15 FFO attributed to SIR per common share - diluted $ 0.74 $ 0.68 $ 0.45 $ 0.71 $ 0.69 $ 1.88 $ 2.15 Normalized FFO attributed to SIR per common share - basic and diluted $ 0.68 $ 0.70 $ 0.59 (4) $ 0.71 $ 0.69 $ 1.96 $ 2.15 (1) See Definitions of Certain Non-GAAP Financial Measures on page 26 for a definition of FFO attributed to SIR and Normalized FFO attributed to SIR, a description of why we believe they are appropriate supplemental measures and a description of how we use these measures. (2) Incentive fees under our 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 expense in our condensed consolidated statements of income. In calculating net income 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, we do not include such expense in the calculation of Normalized FFO attributed to SIR until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. (3) During the three months ended March 31, 2017, we recorded a $4,047 loss on asset impairment for unamortized lease intangibles related to a lease associated with a tenant bankruptcy at a property located in Hanover, PA. (4) Excluding the non-cash write-off of straight line rents receivable of $12,517 recorded during the three months ended March 31, 2017, Normalized FFO attributed to SIR would have been $0.73 per common share.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 26 DEFINITIONS OF CER TAIN NON-GAA P FINANCIA L MEASURE S DEFINITIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES NOI and Cash Basis NOI: The calculations of NOI and Cash Basis NOI exclude certain components of net income in order to provide results that are more closely related to our property level results of operations. We calculate NOI and Cash Basis NOI as shown on page 22. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We define Cash Basis NOI as NOI excluding non-cash straight line rent adjustments, lease value amortization, lease termination fees, if any, and non-cash amortization included in other operating expenses. We consider NOI and Cash Basis NOI 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 NOI and Cash Basis NOI to evaluate individual and company wide property level performance, and we believe that NOI and Cash Basis NOI provide useful information to investors regarding our 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 our operating performance between periods and with other REITs. NOI and 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 attributed to SIR 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 attributed to SIR and operating income as presented in our condensed consolidated statements of income. Other real estate companies and REITs may calculate NOI and Cash Basis NOI differently than we do. EBITDA and Adjusted EBITDA: We calculate EBITDA and Adjusted EBITDA as shown on page 24. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our operating performance, along with net income, net income attributed to SIR and operating income. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with our past operating performance. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income attributed to SIR or operating income as indicators of operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income, net income attributed to SIR and operating income as presented in our condensed consolidated statements of income. Other real estate companies and REITs may calculate EBITDA and Adjusted EBITDA differently than we do. FFO Attributed to SIR and Normalized FFO Attributed to SIR: We calculate FFO attributed to SIR and Normalized FFO attributed to SIR as shown on page 25. FFO attributed to SIR is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, calculated in accordance with GAAP, plus real estate depreciation and amortization, loss on impairment of real estate assets and the difference between net income and FFO allocated to noncontrolling interest, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO attributed to SIR differs from NAREIT’s definition of FFO because 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 acquisition related costs expensed under GAAP, loss on asset impairment and Normalized FFO, net of FFO, from noncontrolling interest, if any. We consider FFO attributed to SIR and Normalized FFO attributed to SIR to be appropriate supplemental measures of operating performance for a REIT, along with net income, net income attributed to a REIT and operating income. We believe that FFO attributed to SIR and Normalized FFO attributed to SIR provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO attributed to SIR and Normalized FFO attributed to SIR may facilitate a comparison of our operating performance between periods and with other REITs. FFO attributed to SIR and Normalized FFO attributed to SIR 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 and our expected needs and availability of cash to pay our obligations. FFO attributed to SIR and Normalized FFO attributed to SIR do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income attributed to SIR 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 attributed to SIR and operating income as presented in our condensed consolidated statements of income. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.


 
27 PORTFOLIO INFORMATION 27 45101 Warp Drive, Sterling, VA Square Feet: 337,228 Orbital ATK (NYSE: OA) Corporate Headquarters


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 28 PORTFOLIO SUMMA RY B Y PROPERT Y TYP E PORTFOLIO SUMMARY BY PROPERTY TYPE (dollars and sq. ft. in thousands) (1) Includes buildings, leasable land parcels and easements which are primarily leasable industrial and commercial lands located in Hawaii. (2) See page 22 for the calculation of NOI and Cash Basis NOI and a reconciliation of net income determined in accordance with GAAP to those amounts. As of and For the Three Months Ended September 30, 2017 Mainland Mainland Subtotal Mainland Hawaii Key Statistic Office Industrial Properties Properties Total Leasable buildings (1) 91 46 137 229 366 Percent of total 24.9% 12.6% 37.5% 62.5% 100.0% Total square feet 13,368 14,350 27,718 17,778 45,496 Percent of total 29.4% 31.5% 60.9% 39.1% 100.0% Leased square feet 12,983 13,848 26,831 16,922 43,753 Percent leased 97.1% 96.5% 96.8% 95.2% 96.2% Total revenues $ 75,471 $ 19,007 $ 94,478 $ 23,536 $ 118,014 Percent of total 64.0% 16.1% 80.1% 19.9% 100.0% NOI (2) $ 57,437 $ 16,445 $ 73,882 $ 17,994 $ 91,876 Percent of total 62.5% 17.9% 80.4% 19.6% 100.0% Cash Basis NOI (2) $ 52,835 $ 15,729 $ 68,564 $ 16,971 $ 85,535 Percent of total 61.8% 18.4% 80.2% 19.8% 100.0%


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 29 SAME PROPERT Y RESU LTS OF OPER ATION S SAME PROPERTY RESULTS OF OPERATIONS (dollars and sq. ft. in thousands) As of and For the Three Months Ended (1) As of and For the Nine Months Ended (2) 9/30/2017 9/30/2016 9/30/2017 9/30/2016 Leasable Buildings: Mainland Office 85 85 85 85 Mainland Industrial 46 46 46 46 Subtotal Mainland Properties 131 131 131 131 Hawaii Properties (3) 229 229 229 229 Total 360 360 360 360 Square Feet (4): Mainland Office 12,613 12,613 12,613 12,613 Mainland Industrial 14,350 14,315 14,350 14,315 Subtotal Mainland Properties 26,963 26,928 26,963 26,928 Hawaii Properties (3) 17,778 17,778 17,778 17,778 Total 44,741 44,706 44,741 44,706 Percent Leased (5): Mainland Office 96.9% 96.9% 96.9% 96.9% Mainland Industrial 96.5% 100.0% 96.5% 100.0% Subtotal Mainland Properties 96.7% 98.6% 96.7% 98.6% Hawaii Properties 95.2% 94.1% 95.2% 94.1% Total 96.1% 96.8% 96.1% 96.8% Total Revenues: Mainland Office $ 72,015 $ 72,070 $ 215,107 $ 217,619 Mainland Industrial 19,007 20,122 58,413 60,882 Subtotal Mainland Properties 91,022 92,192 273,520 278,501 Hawaii Properties 23,536 22,664 70,405 68,491 Total $ 114,558 $ 114,856 $ 343,925 $ 346,992 (1) Consists of properties that we owned continuously since July 1, 2016. (2) Consists of properties that we owned continuously since January 1, 2016. (3) Includes 229 buildings, leasable land parcels and easements with approximately 17,778 square feet which are primarily leasable industrial and commercial lands located in Hawaii. (4) Subject to modest adjustments when space is re-measured or re-configured for new tenants and when land leases are converted to building leases. (5) Includes (i) space being fitted out for occupancy pursuant to existing leases, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 30 SAME PROPERT Y RESU LTS OF OPER ATIONS (CONTINUED ) SAME PROPERTY RESULTS OF OPERATIONS (CONTINUED) (dollars in thousands) As of and For the Three Months Ended (1) As of and For the Nine Months Ended (2) 9/30/2017 9/30/2016 9/30/2017 9/30/2016 NOI (3): Mainland Office $ 55,062 $ 54,817 $ 165,815 $ 168,554 Mainland Industrial 16,445 17,637 51,091 53,563 Subtotal Mainland Properties 71,507 72,454 216,906 222,117 Hawaii Properties 17,994 17,263 54,570 53,333 Total $ 89,501 $ 89,717 $ 271,476 $ 275,450 Cash Basis NOI (3): Mainland Office $ 51,332 $ 49,921 $ 154,685 $ 154,462 Mainland Industrial 15,729 16,241 48,451 49,261 Subtotal Mainland Properties 67,061 66,162 203,136 203,723 Hawaii Properties 16,971 16,440 51,622 50,760 Total $ 84,032 $ 82,602 $ 254,758 $ 254,483 NOI % Change: Mainland Office 0.4% -1.6% Mainland Industrial -6.8% -4.6% Subtotal Mainland Properties -1.3% -2.3% Hawaii Properties 4.2% 2.3% Total -0.2% -1.4% Cash Basis NOI % Change: Mainland Office 2.8% 0.1% Mainland Industrial -3.2% -1.6% Subtotal Mainland Properties 1.4% -0.3% Hawaii Properties 3.2% 1.7% Total 1.7% 0.1% (1) Consists of properties that we owned continuously since July 1, 2016. (2) Consists of properties that we owned continuously since January 1, 2016. (3) See page 22 for the calculation of NOI and Cash Basis NOI and a reconciliation of net income determined in accordance with GAAP to those amounts, and see page 23 for the calculation and a reconciliation of same property NOI and same property Cash Basis NOI.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 31 LEASING SUMMA RY LEASING SUMMARY (dollars and sq. ft. in thousands, except per sq. ft. data) The above leasing summary is based on leases entered into during the periods indicated. As of and For the Three Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 Leasable buildings (1) 366 364 362 362 361 Total sq. ft. (2) 45,496 45,186 44,813 44,813 44,763 Square feet leased 43,753 43,340 42,967 43,362 43,333 Percentage leased 96.2% 95.9% 95.9% 96.8% 96.8% Leasing Activity (Sq. Ft.): New leases 114 41 234 (3) 100 8 Renewals 152 161 250 253 989 Total 266 202 484 353 997 % Change in GAAP Rent (4): New leases -11.0% -10.7% 23.3% -16.3% 16.4% Renewals 4.9% 3.9% 20.0% 35.4% 4.8% Weighted average 0.5% -2.6% 20.9% 32.0% 4.9% Leasing Costs and Concession Commitments (5): New leases $ 171 $ 2,494 $ 826 $ 52 $ 3 Renewals 299 14 309 35 845 Total $ 470 $ 2,508 $ 1,135 $ 87 $ 848 Leasing Costs and Concession Commitments per Sq. Ft. (5): New leases $ 1.50 $ 60.83 $ 3.53 $ 0.52 $ 0.38 Renewals $ 1.97 $ 0.09 $ 1.24 $ 0.14 $ 0.85 Total $ 1.77 $ 12.42 $ 2.35 $ 0.25 $ 0.85 Weighted Average Lease Term by Sq. Ft. (years): New leases 10.1 12.4 7.1 3.1 7.0 Renewals 7.9 35.9 12.8 23.1 9.1 Total 8.9 31.1 10.0 17.4 9.1 Leasing Costs and Concession Commitments per Sq. Ft. per Year (5) (6): New leases $ 0.15 $ 4.91 $ 0.50 $ 0.17 $ 0.05 Renewals $ 0.25 $ 0.00 $ 0.10 $ 0.01 $ 0.09 Total $ 0.20 $ 0.40 $ 0.23 $ 0.01 $ 0.09 (1) Includes 229 buildings, leasable land parcels and easements with approximately 17,778 square feet which are primarily leasable industrial and commercial lands located in Hawaii. (2) Subject to modest adjustments when space is re-measured or re-configured for new tenants and when land leases are converted to building leases. (3) Includes a 35 square foot expansion substantially completed for a lease that commenced on September 1, 2017. (4) Percent difference in prior rents charged for same space. Rents include estimated recurring expense reimbursements and exclude lease value amortization. (5) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. (6) Amounts are per square foot per year for the weighted average lease term by leased square feet.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 32 OCCU PANC Y AND LEASING ANA LYSIS B Y PROPERT Y TYP E OCCUPANCY AND LEASING ANALYSIS BY PROPERTY TYPE (sq. ft. in thousands) Total Sq. Ft. (1) Sq. Ft. Leases Executed During As of the Three Months Ended 9/30/2017 Property Type 9/30/2017 New Renewals Total Mainland Office 13,368 — 17 17 Mainland Industrial 14,350 35 (2) 37 72 Subtotal Mainland Properties 27,718 35 54 89 Hawaii Properties 17,778 114 98 212 Total 45,496 149 152 301 Sq. Ft. Leased As of 6/30/2017 New and Acquisitions / As of 9/30/2017 Property Type 6/30/2017 % Leased (3) Expired Renewals (Sales) 9/30/2017 % Leased Mainland Office 12,708 97.1% (17) 17 275 12,983 97.1% Mainland Industrial 13,813 96.5% (37) 72 (2) — 13,848 96.5% Subtotal Mainland Properties 26,521 96.8% (54) 89 275 26,831 96.8% Hawaii Properties 16,819 94.6% (109) 212 — 16,922 95.2% Total 43,340 95.9% (163) 301 275 43,753 96.2% (1) Subject to modest adjustments when space is re-measured or re-configured for new tenants and when land leases are converted to building leases. (2) Includes a 35 square foot expansion substantially completed for a lease that commenced on September 1, 2017. (3) Excludes effects of space remeasurements during the period, if any. Percent leased includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 33 TENANT DIVERSIT Y AND CREDIT CHARACTERISTIC S TENANT DIVERSITY AND CREDIT CHARACTERISTICS As of September 30, 2017 % of Annualized Tenant Industry Rental Revenues (1) Technology & Communications 24.5% Retail & Food 18.6% Real Estate & Financial 12.2% Manufacturing & Transportation 11.7% Legal & Consulting 10.7% Energy Services 9.8% Industrial 8.7% Other 3.8% 100.0% % of Annualized Tenant Credit Characteristics Rental Revenues (1) Leased Hawaii lands 15.8%(2) Investment grade rated 36.6%(3) Unrated or non-investment grade 47.6% 100.0% % of Annualized Rental Revenues (1) % of Annualized Rental Revenues (1) (1) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants. (2) Excludes certain Hawaii lands which are leased by investment grade rated tenants and are included in the investment grade rated tenant credit category. (3) Includes certain Hawaii lands which are leased by investment grade rated tenants. Technology & Communications Retail & Food Real Estate & Financial Manufacturing & Transportation Legal & Consulting Energy Services Industrial Other 24.5% 18.6% 12.2% 11.7% 10.7% 9.8% 8.7% 3.8% Leased Hawaii lands (2) Investment grade rated (3) Unrated or non-investment grade 15.8% 36.6% 47.6%


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 34 TENANTS REPRESENTING 1% OR MORE OF TO TA L ANNUALIZED REN TA L REVENU E TENANTS REPRESENTING 1% OR MORE OF TOTAL ANNUALIZED RENTAL REVENUE (sq. ft. in thousands) % of Rented % of Total Annualized Rental Tenant Property Type Sq. Ft. (1) Rented Sq. Ft. (1) Revenues (2) 1. Shook, Hardy & Bacon L.L.P. Mainland Office 596 1.4% 3.9% 2. Tellabs, Inc. Mainland Office 820 1.9% 3.6% 3. Amazon.com, Inc. Mainland Industrial 3,048 7.0% 3.4% 4. Noble Energy, Inc. Mainland Office 497 1.1% 3.1% 5. Bank of America, National Association Mainland Office 554 1.3% 3.1% 6. Tesoro Corporation Mainland Office 618 1.4% 2.9% 7. F5 Networks, Inc. Mainland Office 299 0.7% 2.8% 8. WestRock Company Mainland Office 311 0.7% 2.3% 9. Orbital ATK, Inc. Mainland Office 337 0.8% 2.2% 10. Technicolor SA Mainland Industrial 1,371 3.1% 2.1% 11. Tyson Foods, Inc. Mainland Office 248 0.6% 2.1% 12. FedEx Corporation Mainland Office; Mainland Industrial 830 1.9% 1.8% 13. Micro Focus Software Inc. Mainland Office 406 0.9% 1.7% 14. PNC Bank, National Association Mainland Office 441 1.0% 1.4% 15. ServiceNow, Inc. Mainland Office 149 0.3% 1.3% 16. Allstate Insurance Company Mainland Office 458 1.0% 1.3% 17. Church & Dwight Co., Inc. Mainland Office 250 0.6% 1.3% 18. Compass Group USA, Inc. Mainland Office 267 0.6% 1.3% 19. Restoration Hardware, Inc. Mainland Industrial 1,195 2.7% 1.3% 20. Tailored Brands, Inc. Mainland Office 206 0.5% 1.2% 21. Automatic Data Processing, Inc. Mainland Office 289 0.7% 1.2% 22. Primerica Life Insurance Company Mainland Office 344 0.8% 1.1% 23. United Launch Alliance, LLC Mainland Office 168 0.4% 1.1% 24. American Tire Distributors, Inc. Mainland Industrial 722 1.7% 1.1% 25. The Southern Company Mainland Office 448 1.0% 1.0% 26. Red Hat, Inc. Mainland Office 175 0.4% 1.0% Total 15,047 34.5% 50.6% As of September 30, 2017 (1) Rented square feet is pursuant to existing leases as of September 30, 2017 and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 35 THREE YEAR LEASE EXPIR ATION SCHEDULE B Y PROPERT Y TYP E THREE YEAR LEASE EXPIRATION SCHEDULE BY PROPERTY TYPE (dollars and sq. ft. in thousands)As of September 30, 2017 2020 and Total 2017 2018 2019 Thereafter Mainland Office: Total sq. ft. 13,368 Leased sq. ft. (1) 12,983 78 753 206 11,946 Percent 0.6% 5.8% 1.6% 92.0% Annualized rental revenues (2) $ 297,548 $ 1,252 $ 9,443 $ 4,303 $ 282,550 Percent 0.4% 3.2% 1.4% 95.0% Mainland Industrial: Total sq. ft. 14,350 Leased sq. ft. (1) 13,848 93 55 95 13,605 Percent 0.7% 0.4% 0.7% 98.2% Annualized rental revenues (2) $ 77,998 $ 1,438 $ 1,055 $ 603 $ 74,902 Percent 1.8% 1.4% 0.8% 96.0% Subtotal Mainland Properties: Total sq. ft. 27,718 Leased sq. ft. (1) 26,831 171 808 301 25,551 Percent 0.6% 3.0% 1.1% 95.3% Annualized rental revenues (2) $ 375,546 $ 2,690 $ 10,498 $ 4,906 $ 357,452 Percent 0.7% 2.8% 1.3% 95.2% Hawaii Properties: Total sq. ft. 17,778 Leased sq. ft. (1) 16,922 48 226 1,653 14,995 Percent 0.3% 1.3% 9.8% 88.6% Annualized rental revenues (2) $ 93,138 $ 114 $ 1,498 $ 4,194 $ 87,332 Percent 0.1% 1.6% 4.5% 93.8% Total: Total sq. ft. 45,496 Leased sq. ft. (1) 43,753 219 1,034 1,954 40,546 Percent 0.5% 2.4% 4.5% 92.6% Annualized rental revenues (2) $ 468,684 $ 2,804 $ 11,996 $ 9,100 $ 444,784 Percent 0.6% 2.6% 1.9% 94.9% (1) Leased square feet is pursuant to existing leases as of September 30, 2017 and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied, or is being offered for sublease by tenants, if any. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 36 PORTFOLIO LEASE EXPIR ATION SCHEDUL E PORTFOLIO LEASE EXPIRATION SCHEDULE (dollars and sq. ft. in thousands)As of September 30, 2017 Cumulative % of Total Cumulative % % of Total % of Total Rented Rented of Total Rented Annualized Annualized Annualized Number of Square Feet Square Feet Square Feet Rental Revenues Rental Revenues Rental Revenues Period / Year Tenants Expiring (1) Expiring (1) Expiring (1) Expiring (2) Expiring (2) Expiring (2) 10/1/2017 - 12/31/2017 4 219 0.5% 0.5% $ 2,804 0.6% 0.6% 2018 25 1,034 2.4% 2.9% 11,996 2.6% 3.2% 2019 21 1,954 4.5% 7.4% 9,100 1.9% 5.1% 2020 20 939 2.1% 9.5% 7,696 1.6% 6.7% 2021 20 1,404 3.2% 12.7% 12,924 2.8% 9.5% 2022 73 3,948 9.0% 21.7% 50,112 10.7% 20.2% 2023 26 3,043 7.0% 28.7% 40,311 8.6% 28.8% 2024 23 7,001 16.0% 44.7% 69,060 14.7% 43.5% 2025 17 1,770 4.0% 48.7% 26,485 5.7% 49.2% 2026 8 1,701 3.9% 52.6% 26,406 5.6% 54.8% Thereafter 110 20,740 47.4% 100.0% 211,790 45.2% 100.0% Total 347 43,753 100.0% $ 468,684 100.0% Weighted average remaining lease term (in years) 9.9 9.5 (1) Rented square feet is pursuant to existing leases as of September 30, 2017, and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease by tenants, if any. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 37 HA W AII LAND RENT RESET SUMMA RY HAWAII LAND RENT RESET SUMMARY (dollars and sq. ft. in thousands) Historical Hawaii Land Rent Resets: For the Three Months Ended 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 Number of leases reset 1 1 — — 1 Square feet 27 79 — — 86 Percent change in GAAP rent (1) 45.3% 48.9% —% —% 43.0% Scheduled Hawaii Land Rent Resets: As of September 30, 2017 Number Annualized of Resets Sq. Ft. Rental Revenues (2) 10/1/2017 - 12/31/2017 2 118 $ 760 2018 8 380 2,553 2019 20 2,498 10,903 2020 and Thereafter 39 2,823 19,799 Total 69 5,819 $ 34,015 (1) Represents percent change in prior rents charged for same space. Reset rents include estimated recurring expense reimbursements and exclude lease value amortization. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants.


 
38EXHIBIT Mapunapuna Ground Leases, Honolulu, HI 129 leasable land parcels and easements Approximate Square Feet: 6,541,000 38


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 39 PROPERT Y DE TAI L PROPERTY DETAIL (dollars and square feet in thousands) EXHIBIT AAs of September 30, 2017 (1) Land parcels include four easements. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants. (3) Excludes the value of real estate intangibles. (4) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in February 2012 in connection with our initial public offering. (5) Weighted based on square feet. Weighted Number of Average Year Buildings, Annualized Built or Land Parcels Rental Undepreciated Depreciated Date Substantially Property City State and Easements (1) Property Type Square Feet % Leased Revenues (2) Carrying Value (3) Carrying Value (3) Acquired (4) Renovated (5) 1. Inverness Center Birmingham AL 3 Mainland Office Building 448 100.0% $ 4,875 $ 38,895 $ 33,366 12/9/2010; 4/17/2015 1985 2. 4905 Moores Mill Road Huntsville AL 1 Mainland Industrial Building 1,371 100.0% 9,790 73,001 64,439 8/31/2012 2007 3. 445 Jan Davis Drive Huntsville AL 1 Mainland Office Building 57 100.0% 971 10,280 10,029 7/22/2016 2007 4. 4501 Industrial Drive Fort Smith AR 1 Mainland Industrial Building 64 100.0% 465 4,385 4,153 1/29/2015 2013 5. 16001 North 28th Avenue Phoenix AZ 1 Mainland Office Building 106 100.0% 1,882 13,704 13,034 4/16/2015 2007 6. 2149 West Dunlap Avenue Phoenix AZ 1 Mainland Office Building 123 100.0% 2,453 20,127 19,161 1/29/2015 1983 7. Regents Center Tempe AZ 2 Mainland Office Building 101 100.0% 1,972 13,183 8,264 6/30/1999 1988 8. Campbell Place Carlsbad CA 2 Mainland Office Building 95 100.0% 2,603 21,314 19,072 9/21/2012 2007 9. Folsom Corporate Center Folsom CA 1 Mainland Office Building 96 100.0% 3,465 28,954 24,650 12/17/2010 2009 10. Bayside Technology Park Fremont CA 1 Mainland Office Building 101 100.0% 2,198 10,775 9,684 3/19/2009 1990 11. 100 Redwood Shores Parkway Redwood City CA 1 Mainland Office Building 63 100.0% 3,127 35,531 33,982 1/29/2015 2014 12. 3875 Atherton Road Rocklin CA 1 Mainland Office Building 19 100.0% 420 4,180 3,915 1/29/2015 1991 13. 2090 Fortune Drive San Jose CA 1 Mainland Office Building 72 100.0% 916 7,698 7,565 1/29/2015 2014 14. 2115 O’Nel Drive San Jose CA 1 Mainland Office Building 99 100.0% 3,168 33,196 31,523 1/29/2015 2013 15. 6448-6450 Via Del Oro San Jose CA 1 Mainland Office Building 76 100.0% 1,739 14,737 13,952 1/29/2015 1983 16. North First Street San Jose CA 1 Mainland Office Building 64 100.0% 2,007 14,494 13,738 12/23/2013 2013 17. Rio Robles San Jose CA 3 Mainland Office Building 186 100.0% 4,554 44,978 42,322 12/23/2013 2011 18. 2450 and 2500 Walsh Avenue Santa Clara CA 2 Mainland Office Building 132 100.0% 4,563 44,898 42,458 1/29/2015 2014 19. 3250 and 3260 Jay Street Santa Clara CA 2 Mainland Office Building 149 100.0% 6,110 63,958 60,488 1/29/2015 2013 20. 350 West Java Drive Sunnyvale CA 1 Mainland Office Building 96 100.0% 2,901 24,012 22,481 11/15/2012 2012 21. 7958 South Chester Street Centennial CO 1 Mainland Office Building 168 100.0% 5,037 31,049 29,484 1/29/2015 2000 22. 350 Spectrum Loop Colorado Springs CO 1 Mainland Office Building 156 100.0% 2,714 23,265 21,921 1/29/2015 2000 23. 955 Aeroplaza Drive Colorado Springs CO 1 Mainland Industrial Building 125 100.0% 901 8,212 7,718 1/29/2015 2012 24. 13400 East 39th Avenue and 3800 Wheeling Street Denver CO 2 Mainland Industrial Building 394 100.0% 1,364 16,101 15,221 1/29/2015 1996 25. 333 Inverness Drive South Englewood CO 1 Mainland Office Building 140 100.0% 2,355 15,446 13,832 6/15/2012 1998 26. 150 Greenhorn Drive Pueblo CO 1 Mainland Industrial Building 54 100.0% 545 4,377 4,098 1/29/2015 2013 27. 2 Tower Drive Wallingford CT 1 Mainland Industrial Building 62 100.0% 404 3,643 3,042 10/24/2006 1978 28. 1 Targeting Center Windsor CT 1 Mainland Office Building 97 100.0% 1,119 9,076 8,143 7/20/2012 1999 29. 235 Great Pond Road Windsor CT 1 Mainland Industrial Building 171 100.0% 1,383 11,869 10,646 7/20/2012 2004 30. 10350 NW 112th Avenue Miami FL 1 Mainland Office Building 79 100.0% 3,051 23,704 22,372 1/29/2015 2002 31. 2100 NW 82nd Avenue Miami FL 1 Mainland Industrial Building 37 100.0% 259 1,895 1,205 3/19/1998 2013


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 40 PROPERT Y DE TAI L (CONTINUED ) PROPERTY DETAIL (CONTINUED) (dollars and square feet in thousands) EXHIBIT AAs of September 30, 2017 (1) Land parcels include four easements. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants. (3) Excludes the value of real estate intangibles. (4) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in February 2012 in connection with our initial public offering. (5) Weighted based on square feet. (6) Excludes annual tenant percentage rent generally received and recognized during the first quarter of each year for the previous year. Percentage rent recognized during the first quarter of 2017 totaled $650. Weighted Number of Average Year Buildings, Annualized Built or Land Parcels Rental Undepreciated Depreciated Date Substantially Property City State and Easements (1) Property Type Square Feet % Leased Revenues (2) Carrying Value (3) Carrying Value (3) Acquired (4) Renovated (5) 32. One Primerica Parkway Duluth GA 1 Mainland Office Building 344 100.0% 5,248 57,332 53,970 1/29/2015 2013 33. King Street Ground Lease Honolulu HI 1 Hawaii Properties Land 21 100.0% 237 1,342 1,342 12/5/2003 — 34. Mapunapuna Ground Leases Honolulu HI 129 Hawaii Properties Land 6,541 100.0% 50,016 344,490 341,112 12/5/2003;11/21/2012 — 35. Safeway Shopping Center Honolulu HI 3 Hawaii Properties Land 158 100.0% 3,416 11,604 11,510 12/5/2003 — 36. Salt Lake Shopping Center Honolulu HI 2 Hawaii Properties Land 334 100.0% 1,722 9,660 9,660 12/5/2003 — 37. Sand Island Buildings Honolulu HI 8 Hawaii Properties Building 295 98.2% 5,072 39,395 32,795 12/5/2003;11/23/2004 1974 38. Sand Island Ground Leases Honolulu HI 40 Hawaii Properties Land 2,152 100.0% 16,854 92,435 92,365 12/5/2003 — 39. Waiwai Ground Leases Honolulu HI 2 Hawaii Properties Land 45 100.0% 414 2,567 2,410 12/5/2003 — 40. Campbell Buildings Kapolei HI 5 Hawaii Properties Building 285 94.6% 3,190 24,405 19,037 6/15/2005 1978 41. Campbell Easements Kapolei HI 3 Hawaii Properties Land — —% — (6) 10,496 10,496 6/15/2005 — 42. Campbell Ground Leases Kapolei HI 35 Hawaii Properties Land 7,901 89.4% 11,964 103,361 103,029 6/15/2005 — 43. Waipahu Ground Lease Waipahu HI 1 Hawaii Properties Land 44 100.0% 252 717 717 12/5/2003 — 44. 5500 SE Delaware Avenue Ankeny IA 1 Mainland Industrial Building 450 100.0% 1,684 19,193 18,061 1/29/2015 2012 45. 951 Trails Road Eldridge IA 1 Mainland Industrial Building 172 100.0% 1,019 8,695 6,644 4/2/2007 2001 46. 8305 NW 62nd Avenue Johnston IA 1 Mainland Office Building 199 100.0% 3,240 34,008 31,908 1/29/2015 2011 47. 2300 N 33rd Ave Newton IA 1 Mainland Industrial Building 317 100.0% 1,458 13,873 10,860 9/29/2008 2008 48. 7121 South Fifth Avenue Pocatello ID 1 Mainland Industrial Building 33 100.0% 370 4,746 4,463 1/29/2015 2007 49. 400 South Jefferson Street Chicago IL 1 Mainland Office Building 248 100.0% 9,648 90,479 85,593 1/29/2015 2012 50. 1230 West 171st Street Harvey IL 1 Mainland Industrial Building 40 100.0% 442 2,473 2,361 1/29/2015 2004 51. 475 Bond Street Lincolnshire IL 1 Mainland Industrial Building 223 100.0% 1,638 20,957 19,887 1/29/2015 2000 52. 1415 West Diehl Road Naperville IL 1 Mainland Office Building 820 100.0% 16,766 188,475 173,187 4/1/2014 2001 53. 5156 American Road Rockford IL 1 Mainland Industrial Building 38 100.0% 173 1,929 1,827 1/29/2015 1996 54. 440 North Fairway Drive Vernon Hills IL 1 Mainland Office Building 100 100.0% 1,692 13,977 12,989 10/15/2013 2009 55. 7601 and 7635 Genesys Way Indianapolis IN 2 Mainland Office Building 275 100.0% 4,322 28,224 28,120 7/19/2017 2006 56. Capitol Tower Topeka KS 1 Mainland Office Building 144 100.0% 2,654 17,674 15,576 7/30/2012 2006 57. The Atrium at Circleport II Erlanger KY 1 Mainland Office Building 86 100.0% 1,255 13,032 8,995 6/30/2003 1999 58. 17200 Manchac Park Lane Baton Rouge LA 1 Mainland Industrial Building 125 100.0% 885 10,560 9,969 1/29/2015 2014 59. 209 South Bud Street Lafayette LA 1 Mainland Industrial Building 60 100.0% 511 5,258 4,955 1/29/2015 2010 60. 300 and 330 Billerica Road Chelmsford MA 2 Mainland Office Building 209 53.1% 1,562 18,647 16,507 1/18/2011;9/27/2012 2001 61. 111 Powdermill Road Maynard MA 1 Mainland Office Building 287 —% — 17,260 17,220 3/30/2007 1990


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 41 PROPERT Y DE TAI L (CONTINUED ) PROPERTY DETAIL (CONTINUED) (dollars and square feet in thousands) EXHIBIT AAs of September 30, 2017 (1) Land parcels include four easements. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants. (3) Excludes the value of real estate intangibles. (4) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in February 2012 in connection with our initial public offering. (5) Weighted based on square feet. Weighted Number of Average Year Buildings, Annualized Built or Land Parcels Rental Undepreciated Depreciated Date Substantially Property City State and Easements (1) Property Type Square Feet % Leased Revenues (2) Carrying Value (3) Carrying Value (3) Acquired (4) Renovated (5) 62. 314 Littleton Road Westford MA 1 Mainland Office Building 175 100.0% 4,764 33,944 31,914 1/29/2015 2013 63. 7001 Columbia Gateway Drive Columbia MD 1 Mainland Office Building 120 100.0% 3,739 28,292 25,372 12/21/2012 2008 64. 4000 Principio Parkway North East MD 1 Mainland Industrial Building 1,195 100.0% 5,862 75,868 71,099 1/29/2015 2012 65. 3550 Green Court Ann Arbor MI 1 Mainland Office Building 82 100.0% 1,625 13,019 11,735 12/21/2012 1998 66. 3800 Midlink Drive Kalamazoo MI 1 Mainland Industrial Building 158 100.0% 2,184 43,229 40,522 1/29/2015 2014 67. 2401 Cram Avenue SE Bemidji MN 1 Mainland Industrial Building 22 100.0% 183 2,237 2,094 1/29/2015 2013 68. 110 Stanbury Industrial Drive Brookfield MO 1 Mainland Industrial Building 16 100.0% 189 2,059 1,935 1/29/2015 2012 69. 2555 Grand Boulevard Kansas City MO 1 Mainland Office Building 596 100.0% 18,084 79,069 75,050 7/31/2015 2003 70. 628 Patton Avenue Asheville NC 1 Mainland Industrial Building 33 100.0% 199 2,014 1,913 1/29/2015 1994 71. 2300 and 2400 Yorkmont Road Charlotte NC 2 Mainland Office Building 284 100.0% 6,275 48,275 45,330 1/29/2015 1995 72. 3900 NE 6th Street Minot ND 1 Mainland Industrial Building 24 100.0% 310 3,923 3,708 1/29/2015 2013 73. 1415 West Commerce Way Lincoln NE 1 Mainland Industrial Building 222 100.0% 1,094 10,718 10,150 1/29/2015 2000 74. 18010 and 18020 Burt Street Omaha NE 2 Mainland Office Building 203 100.0% 3,991 49,842 46,693 1/29/2015 2012 75. 309 Dulty's Lane Burlington NJ 1 Mainland Industrial Building 634 100.0% 3,387 53,000 49,573 1/29/2015 2001 76. 500 Charles Ewing Boulevard Ewing NJ 1 Mainland Office Building 250 100.0% 5,949 74,374 69,769 1/29/2015 2012 77. 725 Darlington Avenue Mahwah NJ 1 Mainland Industrial Building 167 100.0% 2,301 18,508 17,670 4/9/2014 2010 78. One Jefferson Road Parsippany NJ 1 Mainland Office Building 100 100.0% 4,185 19,107 18,392 11/13/2015 2009 79. 299 Jefferson Road Parsippany NJ 1 Mainland Office Building 151 100.0% 4,016 30,970 29,231 1/29/2015 2011 80. 2375 East Newlands Road Fernley NV 1 Mainland Industrial Building 338 100.0% 1,489 18,700 17,528 1/29/2015 2007 81. 55 Commerce Avenue Albany NY 1 Mainland Industrial Building 125 100.0% 1,089 11,284 10,599 1/29/2015 2013 82. 8687 Carling Road Liverpool NY 1 Mainland Office Building 38 100.0% 750 5,564 4,088 1/6/2006 2007 83. 1212 Pittsford - Victor Road Pittsford NY 1 Mainland Office Building 55 100.0% 1,024 5,531 4,135 11/30/2004 2003 84. 500 Canal View Boulevard Rochester NY 1 Mainland Office Building 95 100.0% 1,552 15,404 10,567 1/6/2006 1997 85. 32150 Just Imagine Drive Avon OH 1 Mainland Industrial Building 645 100.0% 3,479 25,480 20,630 5/29/2009 2000 86. 1415 Industrial Drive Chillicothe OH 1 Mainland Industrial Building 44 100.0% 362 4,465 4,247 1/29/2015 2012 87. 2231 Schrock Road Columbus OH 1 Mainland Office Building 42 100.0% 661 5,459 5,150 1/29/2015 1999 88. 5300 Centerpoint Parkway Groveport OH 1 Mainland Industrial Building 581 100.0% 2,905 32,563 30,572 1/29/2015 2014 89. 200 Orange Point Drive Lewis Center OH 1 Mainland Industrial Building 125 100.0% 1,032 9,913 9,339 1/29/2015 2013 90. 301 Commerce Drive South Point OH 1 Mainland Industrial Building 75 100.0% 487 5,130 4,828 1/29/2015 2013 91. 2820 State Highway 31 McAlester OK 1 Mainland Industrial Building 59 100.0% 786 6,862 6,704 1/29/2015 2012


 
Select Income REIT Supplemental Operating and Financial Data, September 30, 2017 42 PROPERT Y DE TAI L (CONTINUED ) PROPERTY DETAIL (CONTINUED) (dollars and square feet in thousands) EXHIBIT AAs of September 30, 2017 (1) Land parcels include four easements. (2) We define annualized rental revenues as the annualized contractual rents, as of September 30, 2017, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions including free rent and amounts reimbursed to tenants, plus estimated recurring expense reimbursements from tenants. (3) Excludes the value of real estate intangibles. (4) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in February 2012 in connection with our initial public offering. (5) Weighted based on square feet. Weighted Number of Average Year Buildings, Annualized Built or Land Parcels Rental Undepreciated Depreciated Date Substantially Property City State and Easements (1) Property Type Square Feet % Leased Revenues (2) Carrying Value (3) Carrying Value (3) Acquired (4) Renovated (5) 92. 501 Ridge Avenue Hanover PA 1 Mainland Industrial Building 502 —% — 27,030 22,006 9/24/2008 1965 93. 8800 Tinicum Boulevard Philadelphia PA 1 Mainland Office Building 441 100.0% 6,445 71,319 66,844 1/29/2015 2000 94. 9680 Old Bailes Road Fort Mill SC 1 Mainland Office Building 60 100.0% 772 8,857 8,320 1/29/2015 2007 95. 996 Paragon Way Rock Hill SC 1 Mainland Industrial Building 945 100.0% 3,041 38,520 36,125 1/29/2015 2014 96. 510 John Dodd Road Spartanburg SC 1 Mainland Industrial Building 1,016 100.0% 4,644 61,298 57,432 1/29/2015 2012 97. 4836 Hickory Hill Road Memphis TN 1 Mainland Industrial Building 646 100.0% 1,382 12,609 11,853 12/23/2014 2007 98. 2020 Joe B. Jackson Parkway Murfreesboro TN 1 Mainland Industrial Building 1,016 100.0% 5,016 62,759 59,075 1/29/2015 2012 99. 16001 North Dallas Parkway Addison TX 2 Mainland Office Building 554 100.0% 14,314 106,107 94,946 1/16/2013 1996 100. 2115-2116 East Randol Mill Road Arlington TX 1 Mainland Office Building 183 100.0% 1,044 13,242 12,203 1/29/2015 1989 101. Research Park Austin TX 2 Mainland Industrial Building 149 100.0% 2,493 15,486 9,146 6/16/1999 1999 102. 202 North Castlegory Road Houston TX 1 Mainland Office Building 84 100.0% 2,857 13,482 13,351 5/12/2017 2016 103. 1001 Noble Energy Way Houston TX 1 Mainland Office Building 497 100.0% 14,683 122,186 114,300 1/29/2015 2013 104. 10451 Clay Road Houston TX 1 Mainland Office Building 97 100.0% 2,787 27,012 25,558 1/29/2015 2013 105. 6380 Rogerdale Road Houston TX 1 Mainland Office Building 206 100.0% 5,628 46,915 44,698 1/29/2015 2006 106. 4221 W. John Carpenter Freeway Irving TX 1 Mainland Office Building 54 100.0% 646 5,974 3,122 3/19/1998 1995 107. 8675,8701-8711 Freeport Pkwy and 8901 Esters Boulevard Irving TX 3 Mainland Office Building 458 100.0% 6,038 81,610 76,989 1/29/2015 1990 108. 1511 East Common Street New Braunfels TX 1 Mainland Office Building 63 100.0% 1,077 14,412 13,631 1/29/2015 2005 109. 2900 West Plano Parkway Plano TX 1 Mainland Office Building 191 100.0% 1,420 27,491 26,005 1/29/2015 1998 110. 3400 West Plano Parkway Plano TX 1 Mainland Office Building 235 100.0% 1,485 34,403 32,310 1/29/2015 1994 111. 19100 Ridgewood Parkway San Antonio TX 1 Mainland Office Building 618 100.0% 13,809 192,538 180,008 1/29/2015 2008 112. 3600 Wiseman Boulevard San Antonio TX 1 Mainland Office Building 100 100.0% 3,054 15,458 14,081 3/19/2013 2004 113. 1800 Novell Place Provo UT 1 Mainland Office Building 406 100.0% 7,940 85,640 75,114 6/1/2012 2000 114. 4885-4931 North 300 West Provo UT 2 Mainland Office Building 125 100.0% 3,680 29,338 26,366 2/28/2013 2009 115. 1095 South 4800 West Salt Lake City UT 1 Mainland Industrial Building 150 100.0% 1,122 8,413 7,952 1/29/2015 2012 116. 1901 Meadowville Technology Parkway Chester VA 1 Mainland Industrial Building 1,016 100.0% 6,328 71,511 67,010 1/29/2015 2012 117. Two Commercial Place Norfolk VA 1 Mainland Office Building 289 100.0% 5,561 37,002 36,663 4/28/2017 2016 118. 501 South 5th Street Richmond VA 1 Mainland Office Building 311 100.0% 10,868 123,922 112,254 7/2/2013 2009 119. Parham Place Richmond VA 3 Mainland Office Building 89 100.0% 1,586 9,865 9,466 7/20/2015 2013 120. 9201 Forest Hill Avenue Richmond VA 1 Mainland Office Building 50 100.0% 1,106 6,094 5,973 10/12/2016 1985 121. 1751 Blue Hills Drive Roanoke VA 1 Mainland Industrial Building 399 100.0% 1,874 23,760 22,415 1/29/2015 2003 122. Orbital Sciences Campus Sterling VA 3 Mainland Office Building 337 100.0% 10,266 72,165 64,641 11/29/2012 2000 123. 181 Battaile Drive Winchester VA 1 Mainland Industrial Building 308 100.0% 1,467 14,341 10,656 4/20/2006 1987 124. 351, 401, 501 Elliott Ave West Seattle WA 3 Mainland Office Building 300 100.0% 13,283 130,135 123,824 1/29/2015 2000 366 45,496 96.2% $ 468,684 $ 4,223,898 $ 3,928,397 2004