1-9317 | 04-6558834 | ||||
(Commission File Number) | (IRS Employer Identification No.) | ||||
Two North Riverside Plaza, Suite 2100, Chicago, IL | 60606 | ||||
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
EQUITY COMMONWEALTH | ||
By: | /s/ Adam S. Markman | |
Name: | Adam S. Markman | |
Title: | Executive Vice President, Chief | |
Financial Officer and Treasurer |
• | ($0.29) per share of income from properties sold as part of the company’s previously announced repositioning plan; |
• | ($0.02) per share of same property cash NOI; and |
• | $0.06 per share of interest expense savings |
• | The same property portfolio was 91.4% leased as of March 31, 2016, compared to 92.2% as of December 31, 2015, and 90.7% as of March 31, 2015. |
• | The company entered into leases for approximately 1,853,000 square feet, including renewal leases for approximately 1,569,000 square feet and new leases for approximately 284,000 square feet. |
• | Same property cash NOI decreased 3.8% when compared to the same period in 2015. |
• | Same property NOI increased 2.5% when compared to the same period in 2015. |
• | Cash rental rates on new and renewal leases were 1.3% lower compared to prior cash rental rates for the same space. |
• | GAAP rental rates on new and renewal leases were 11.2% higher compared to prior GAAP rental rates for the same space. |
• | The company sold three properties totaling 857,000 square feet for a gross sales price of $122.6 million at a weighted average cap rate in the mid 3% range. |
• | The company repurchased 983,789 of its common shares at an average price of $25.94 per share, for a total investment of $25.5 million. |
• | The Board of Trustees authorized the repurchase of an additional $150 million of the company’s common shares. The company has $236.6 million available for future share repurchases, including this new $150 million authorization. |
• | The company redeemed, at par, the $139.1 million outstanding 6.25% senior unsecured notes due August 2016. |
• | The company purchased a $400 million interest rate cap with a LIBOR strike price of 2.50% through March 1, 2019. |
• | The company called for redemption all $275 million of its outstanding 7.25% Series E Cumulative Redeemable Preferred Shares on May 15, 2016. |
• | The company closed on the sale of 633 Ahua Street, a self-storage facility in Honolulu, HI, for a gross sale price of $29.0 million. This property was held for sale as of March 31, 2016. |
• | The company closed on the sale of 1525 Locust Street, a 98,009 square foot boutique office property in Philadelphia, PA for a gross sale price of $17.7 million. This property was held for sale as of March 31, 2016. |
• | The company entered into a contract to sell its leasehold interest in 111 River Street, a 566,215 square foot property in Hoboken, NJ, for a gross sales price of $235 million. Closing is subject to consents required under the ground lease and customary closing conditions. There is no certainty these conditions will be met or that this transaction will close. |
March 31, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Real estate properties: | |||||||
Land | $ | 372,714 | $ | 389,410 | |||
Buildings and improvements | 3,399,909 | 3,497,942 | |||||
3,772,623 | 3,887,352 | ||||||
Accumulated depreciation | (880,678 | ) | (898,939 | ) | |||
2,891,945 | 2,988,413 | ||||||
Properties held for sale | 20,347 | — | |||||
Acquired real estate leases, net | 83,121 | 88,760 | |||||
Cash and cash equivalents | 1,742,128 | 1,802,729 | |||||
Restricted cash | 36,190 | 32,245 | |||||
Rents receivable, net of allowance for doubtful accounts of $4,193 and $7,715, respectively | 176,740 | 174,676 | |||||
Other assets, net | 152,678 | 144,341 | |||||
Total assets | $ | 5,103,149 | $ | 5,231,164 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Revolving credit facility | $ | — | $ | — | |||
Senior unsecured debt, net | 1,312,148 | 1,450,606 | |||||
Mortgage notes payable, net | 245,691 | 246,510 | |||||
Liabilities related to properties held for sale | 169 | — | |||||
Accounts payable and accrued expenses | 120,888 | 123,587 | |||||
Assumed real estate lease obligations, net | 3,624 | 4,296 | |||||
Rent collected in advance | 23,588 | 27,340 | |||||
Security deposits | 9,670 | 10,338 | |||||
Total liabilities | $ | 1,715,778 | $ | 1,862,677 | |||
Shareholders’ equity: | |||||||
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; | |||||||
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880 | $ | 119,263 | $ | 119,263 | |||
Series E preferred shares; 7 1/4% cumulative redeemable on or after May 15, 2016; 11,000,000 shares issued and outstanding, aggregate liquidation preference $275,000 (1) | 265,391 | 265,391 | |||||
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 125,502,748 and 126,349,914 shares issued and outstanding, respectively | 1,255 | 1,263 | |||||
Additional paid in capital | 4,393,409 | 4,414,611 | |||||
Cumulative net income | 2,380,111 | 2,333,709 | |||||
Cumulative other comprehensive loss | (3,014 | ) | (3,687 | ) | |||
Cumulative common distributions | (3,111,868 | ) | (3,111,868 | ) | |||
Cumulative preferred distributions | (657,176 | ) | (650,195 | ) | |||
Total shareholders’ equity | $ | 3,387,371 | $ | 3,368,487 | |||
Total liabilities and shareholders’ equity | $ | 5,103,149 | $ | 5,231,164 |
(1) | On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date). |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
Rental income | $ | 109,888 | $ | 167,972 | |||
Tenant reimbursements and other income | 27,247 | 45,083 | |||||
Total revenues | $ | 137,135 | $ | 213,055 | |||
Expenses: | |||||||
Operating expenses | $ | 57,258 | $ | 97,871 | |||
Depreciation and amortization | 36,251 | 62,699 | |||||
General and administrative | 13,312 | 16,558 | |||||
Loss on asset impairment | — | 1,904 | |||||
Total expenses | $ | 106,821 | $ | 179,032 | |||
Operating income | $ | 30,314 | $ | 34,023 | |||
Interest and other income | 1,967 | 3,448 | |||||
Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $983 and $29, respectively) | (22,347 | ) | (29,842 | ) | |||
Loss on early extinguishment of debt | (118 | ) | (428 | ) | |||
Foreign currency exchange loss | (5 | ) | — | ||||
Gain on sale of properties | 36,666 | 5,868 | |||||
Income before income taxes | 46,477 | 13,069 | |||||
Income tax (expense) benefit | (75 | ) | 561 | ||||
Net income | $ | 46,402 | $ | 13,630 | |||
Preferred distributions | (6,981 | ) | (6,981 | ) | |||
Net income attributable to Equity Commonwealth common shareholders | $ | 39,421 | $ | 6,649 |
Weighted average common shares outstanding — basic (1) | 125,840 | 129,696 | |||||
Weighted average common shares outstanding — diluted (1) | 127,522 | 129,874 | |||||
Earnings per common share attributable to Equity Commonwealth common shareholders: | |||||||
Basic | $ | 0.31 | $ | 0.05 | |||
Diluted | $ | 0.31 | $ | 0.05 |
(1) | As of March 31, 2016, we had granted RSUs to certain employees, officers, and the Chairman of the Board of Trustees. The RSUs contain both service and market-based vesting components. None of the RSUs have vested. If the market-based vesting component was measured as of March 31, 2016, and 2015, 1,754 and 254 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,682 and 178 common shares are reflected in diluted earnings per common share for the three months ended March 31, 2016 and 2015, respectively. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Calculation of FFO | |||||||
Net income | $ | 46,402 | $ | 13,630 | |||
Real estate depreciation and amortization | 36,044 | 62,699 | |||||
Loss on asset impairment | — | 1,904 | |||||
Gain on sale of properties | (36,666 | ) | (5,868 | ) | |||
FFO attributable to Equity Commonwealth | 45,780 | 72,365 | |||||
Preferred distributions | (6,981 | ) | (6,981 | ) | |||
FFO attributable to EQC Common Shareholders | $ | 38,799 | $ | 65,384 | |||
Calculation of Normalized FFO | |||||||
FFO attributable to EQC common shareholders | $ | 38,799 | $ | 65,384 | |||
Recurring adjustments: | |||||||
Lease value amortization | 1,121 | 1,474 | |||||
Straight line rent adjustments | (3,831 | ) | 181 | ||||
Loss on early extinguishment of debt | 118 | 428 | |||||
Minimum cash rent from direct financing lease (1) | — | 2,032 | |||||
Interest earned from direct financing lease | — | (141 | ) | ||||
Other items which affect comparability: | |||||||
Shareholder litigation and transition related expenses (2) | 1,102 | 3,472 | |||||
Transition services fee | — | 2,235 | |||||
Gain on sale of securities | — | (3,080 | ) | ||||
Foreign currency exchange loss | 5 | — | |||||
Normalized FFO attributable to EQC Common Shareholders | $ | 37,314 | $ | 71,985 | |||
Weighted average common shares outstanding -- basic (3) | 125,840 | 129,696 | |||||
Weighted average common shares outstanding -- diluted (3) | 127,522 | 129,874 | |||||
FFO attributable to EQC common shareholders per share -- basic (3) | $ | 0.31 | $ | 0.50 | |||
FFO attributable to EQC common shareholders per share -- diluted(3) | $ | 0.30 | $ | 0.50 | |||
Normalized FFO attributable to EQC common shareholders per share -- basic (3) | $ | 0.30 | $ | 0.56 | |||
Normalized FFO attributable to EQC common shareholders per share -- diluted (3) | $ | 0.29 | $ | 0.55 |
(1 | ) | Amounts relate to contractual cash payments (including management fees) from one tenant at Arizona Center. Arizona Center was sold during the fourth quarter of 2015. Our calculation of Normalized FFO reflects the cash payments received from this tenant. The terms of this tenant's lease required us to classify the lease as a direct financing (or capital) lease. As such, the revenue recognized on a GAAP basis within our condensed consolidated statements of operations was $141 for the three months ended March 31, 2015. |
(2 | ) | Shareholder litigation and transition related expenses within general and administrative for the three months ended March 31, 2016 includes $1.1 million for the shareholder-approved liability for the reimbursement of expenses incurred by Related/Corvex since February 2013 in connection with their consent solicitations to remove the former Trustees, elect the new Board of Trustees and engage in related litigation. Approximately $16.7 million was reimbursed to Related/Corvex during 2014, and on August 4, 2015, we reimbursed $8.4 million to Related/Corvex under the terms of the shareholder-approved agreement. An additional $8.4 million will be reimbursed only if the average closing price of our common shares is at least $26.00 (as adjusted for any share splits or share dividends) from August 1, 2015 through July 31, 2016. As of March 31, 2016, the fair value of this liability is $8.3 million. No shareholder litigation related expenses were incurred during 2016. |
(3 | ) | As of March 31, 2016, we had granted RSUs to certain employees, officers, and the Chairman of the Board of Trustees. The RSUs contain both service and market-based vesting components. None of the RSUs have vested. If the market-based vesting component was measured as of March 31, 2016, and 2015, 1,754 and 254 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,682 and 178 common shares are reflected in diluted FFO per common share, and diluted Normalized FFO per common share for the three months ended March 31, 2016 and 2015, respectively. |
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate, and our portion of these items related to equity investees and noncontrolling interests. Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating activities. |
We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to Equity Commonwealth common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income, net income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do. |
For the Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Calculation of Same Property NOI and Same Property Cash Basis NOI: | |||||||
Rental income | $ | 109,888 | $ | 167,972 | |||
Tenant reimbursements and other income | 27,247 | 45,083 | |||||
Operating expenses | (57,258 | ) | (97,871 | ) | |||
NOI | $ | 79,877 | $ | 115,184 | |||
Straight line rent adjustments | (3,831 | ) | 181 | ||||
Lease value amortization | 1,121 | 1,474 | |||||
Lease termination fees | (311 | ) | (1,949 | ) | |||
Cash Basis NOI | $ | 76,856 | $ | 114,890 | |||
Cash Basis NOI from non-same properties (1) | (2,769 | ) | (37,871 | ) | |||
Same Property Cash Basis NOI | $ | 74,087 | $ | 77,019 | |||
Non-cash rental and termination income from same properties | 2,998 | (1,805 | ) | ||||
Same Property NOI | $ | 77,085 | $ | 75,214 | |||
Reconciliation of Same Property NOI to GAAP Operating Income: | |||||||
Same Property NOI | $ | 77,085 | $ | 75,214 | |||
Non-cash rental and termination income from same properties | (2,998 | ) | 1,805 | ||||
Same Property Cash Basis NOI | $ | 74,087 | $ | 77,019 | |||
Cash Basis NOI from non-same properties (1) | 2,769 | 37,871 | |||||
Cash Basis NOI | $ | 76,856 | $ | 114,890 | |||
Straight line rent adjustments | 3,831 | (181 | ) | ||||
Lease value amortization | (1,121 | ) | (1,474 | ) | |||
Lease termination fees | 311 | 1,949 | |||||
NOI | $ | 79,877 | $ | 115,184 | |||
Depreciation and amortization | (36,251 | ) | (62,699 | ) | |||
General and administrative | (13,312 | ) | (16,558 | ) | |||
Loss on asset impairment | — | (1,904 | ) | ||||
Operating Income | $ | 30,314 | $ | 34,023 |
(1 | ) | Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale. |
NOI is total revenues minus operating expenses. Cash Basis NOI is NOI excluding the effects of straight line rent adjustments, lease value amortization, and lease termination fees. The quarter-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2015 through March 31, 2016. Properties classified as held for sale within our condensed consolidated balance sheets are excluded. |
We consider these measures to be appropriate supplemental measures to net income because they may help both investors and management to understand the operations of our properties. We use these measures internally to evaluate property level performance, and we believe that they provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, net income attributable to Equity Commonwealth common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income, net income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate these measures differently than we do. |
Corporate Information | ||
Company Profile and Investor Information | ||
Financial Information | ||
Key Financial Data | ||
Condensed Consolidated Balance Sheets | ||
Additional Balance Sheet Information | ||
Condensed Consolidated Statements of Operations | ||
Additional Income Statement Information | ||
Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI | ||
Same Property Results of Operations | ||
Calculation of EBITDA and Adjusted EBITDA | ||
Calculation of Funds from Operations (FFO) and Normalized FFO | ||
Debt Summary | ||
Debt Maturity Schedule | ||
Leverage Ratios, Coverage Ratios and Public Debt Covenants | ||
Acquisitions and Dispositions | ||
Portfolio Information | ||
Top 30 Properties by Annualized Rental Revenue | ||
Leasing Summary | ||
Same Property Leasing Summary | ||
Occupancy and Leasing Analysis | ||
Capital Summary - Expenditures & Leasing Commitments | ||
Tenants Representing 1% or More of Annualized Rental Revenue | ||
Same Property Lease Expiration Schedule | ||
Property Detail | ||
Disposed Property Detail | ||
Additional Support | ||
Common & Potential Common Shares | ||
Definitions | ||
Forward-Looking Statements | ||
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws. Any forward-looking statements contained in this presentation are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions are forward-looking statements. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. | ||
The forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the sections entitled “Risk Factors” in our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q. |
Same Property Statistics | |||
2016 Q1 | |||
No. of | % | Cash Basis | |
Properties | Sq. Feet | Leased | NOI |
60 | 23,037 | 91.4% | 74,087 |
Senior Unsecured Debt Ratings | NYSE Trading Symbols | ||
Moody's -- Baa3 | Common Stock -- EQC | ||
Standard & Poor's -- BBB- | Preferred Stock Series D -- EQC-PD | ||
Preferred Stock Series E -- EQC-PE | |||
5.75% Senior Notes due 2042 -- EQCO |
Board of Trustees | ||||
Sam Zell (Chairman) | David A. Helfand | Kenneth Shea | ||
James S. Corl | Peter Linneman | Gerald A. Spector | ||
Martin L. Edelman | James L. Lozier, Jr. | James A. Star | ||
Edward A. Glickman | Mary Jane Robertson | |||
Senior Management | ||||
David A. Helfand | David S. Weinberg | |||
President and Chief Executive Officer | Executive Vice President, | |||
Chief Operating Officer | ||||
Adam S. Markman | Orrin S. Shifrin | |||
Executive Vice President, | Executive Vice President, | |||
Chief Financial Officer and Treasurer | General Counsel and Secretary |
Equity Research Coverage (1) | |||
Bank of America / Merrill Lynch | James Feldman | (646) 855-5808 | james.feldman@baml.com |
Citigroup | Michael Bilerman | (212) 816-1383 | michael.bilerman@citi.com |
Green Street Advisors | Jed Reagan | (949) 640-8780 | jreagan@greenstreetadvisors.com |
JMP Securities | Mitch Germain | (212) 906-3546 | mgermain@jmpsecurities.com |
RBC Capital Markets | Rich Moore | (440) 715-2646 | rich.moore@rbccm.com |
Stifel Nicolaus | John Guinee | (443) 224-1307 | jwguinee@stifel.com |
Debt Research Coverage (1) | |||
Credit Suisse | John Giordano | (212) 538-4935 | john.giordano@credit-suisse.com |
J.P.Morgan | Mark Streeter | (212) 834-5086 | mark.streeter@jpmorgan.com |
Wells Fargo Securities | Thierry Perrein | (704) 410-3262 | thierry.perrein@wellsfargo.com |
Rating Agencies (1) | |||
Moody's Investors Service | Lori Marks | (212) 553-1098 | lori.marks@moodys.com |
Standard & Poor's | Anita Ogbara | (212) 438-5077 | anita.ogbara@standardandpoors.com |
Certain terms are defined in the definitions section of this document. | |
(1) | Any opinions, estimates or forecasts regarding EQC's performance made by these analysts or agencies do not represent opinions, forecasts or predictions of EQC or its management. EQC does not by its reference to the analysts and agencies above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies. |
As of and for the Three Months Ended | ||||||||||||||||||||
3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | ||||||||||||||||
OPERATING INFORMATION | ||||||||||||||||||||
Ending property count (1) | 60 | 65 | 67 | 86 | 154 | |||||||||||||||
Ending square footage (1)(2) | 23,037 | 23,952 | 25,258 | 29,357 | 42,724 | |||||||||||||||
Percent leased (1) | 91.4 | % | 91.4 | % | 91.9 | % | 90.6 | % | 85.9 | % | ||||||||||
Total revenues | $ | 137,135 | $ | 138,934 | $ | 159,208 | $ | 203,694 | $ | 213,055 | ||||||||||
NOI | 79,877 | 75,114 | 85,637 | 114,008 | 115,184 | |||||||||||||||
Cash Basis NOI | 76,856 | 74,543 | 84,743 | 109,770 | 114,890 | |||||||||||||||
Adjusted EBITDA | 69,634 | 64,755 | 75,697 | 103,790 | 107,781 | |||||||||||||||
NOI margin | 58.2 | % | 54.1 | % | 53.8 | % | 56.0 | % | 54.1 | % | ||||||||||
Cash Basis NOI margin | 57.3 | % | 53.9 | % | 53.5 | % | 55.0 | % | 54.0 | % | ||||||||||
Net income | 46,402 | 43,145 | 30,466 | 12,616 | 13,630 | |||||||||||||||
Net income attributable to EQC common shareholders | 39,421 | 36,164 | 23,485 | 5,635 | 6,649 | |||||||||||||||
FFO attributable to EQC common shareholders | 38,799 | 31,839 | 24,214 | 77,238 | 65,384 | |||||||||||||||
Normalized FFO attributable to EQC common shareholders | 37,314 | 34,439 | 46,383 | 67,763 | 71,985 | |||||||||||||||
SHARES OUTSTANDING AND PER SHARE DATA (3) | ||||||||||||||||||||
Shares Outstanding at End of Period | ||||||||||||||||||||
Common stock outstanding - basic (includes unvested restricted shares) | 125,503 | 126,350 | 126,350 | 129,760 | 129,734 | |||||||||||||||
Dilutive restricted share units ("RSU"s) (3) | 1,754 | 1,143 | 1,139 | 803 | 254 | |||||||||||||||
Dilutive Series D Convertible Preferred Shares outstanding(4) | — | — | — | — | — | |||||||||||||||
Preferred Stock outstanding (4) (5) | 15,915 | 15,915 | 15,915 | 15,915 | 15,915 | |||||||||||||||
Weighted Average Shares Outstanding | ||||||||||||||||||||
Weighted average common shares outstanding - basic | 125,840 | 126,350 | 128,739 | 129,733 | 129,696 | |||||||||||||||
Weighted average common shares outstanding - diluted | 127,522 | 127,493 | 129,878 | 130,537 | 129,874 | |||||||||||||||
Net income attributable to EQC common shareholders - basic | $ | 0.31 | $ | 0.29 | $ | 0.18 | $ | 0.04 | $ | 0.05 | ||||||||||
Net income attributable to EQC common shareholders - diluted | 0.31 | 0.28 | 0.18 | 0.04 | 0.05 | |||||||||||||||
Normalized FFO attributable to EQC common shareholders - diluted | 0.29 | 0.27 | 0.36 | 0.52 | 0.55 | |||||||||||||||
BALANCE SHEET | ||||||||||||||||||||
Total assets | $5,103,149 | $5,231,164 | $5,310,063 | $5,532,959 | $5,717,924 | |||||||||||||||
Total liabilities | 1,715,778 | 1,862,677 | 1,982,855 | 2,145,729 | 2,406,746 | |||||||||||||||
ENTERPRISE VALUE | ||||||||||||||||||||
Total debt (book value) | $ | 1,557,839 | $1,697,116 | $1,813,893 | $1,958,605 | $ | 2,188,703 | |||||||||||||
Less: Cash and cash equivalents | (1,742,128) | (1,802,729) | (1,649,162 | ) | (1,286,902 | ) | (421,736 | ) | ||||||||||||
Plus: Market value of preferred shares (at end of period) | 402,991 | 403,792 | 400,702 | 400,246 | 407,335 | |||||||||||||||
Plus: Market value of dilutive common shares (at end of period) | 3,591,179 | 3,535,381 | 3,472,798 | 3,351,558 | 3,451,175 | |||||||||||||||
Total enterprise value | $3,809,881 | $3,833,560 | $ | 4,038,231 | $ | 4,423,507 | $ | 5,625,477 | ||||||||||||
RATIOS | ||||||||||||||||||||
Net debt / enterprise value | (4.8 | )% | (2.8 | )% | 4.1 | % | 15.2 | % | 31.4 | % | ||||||||||
Net debt / annualized adjusted EBITDA | (0.7)x | (0.4)x | 0.5x | 1.6x | 4.1x | |||||||||||||||
Adjusted EBITDA / interest expense | 3.1x | 2.7x | 3.0x | 3.7x | 3.6x |
(1) | Excludes properties classified as held for sale. |
(2) | Changes in total square footage result from remeasurement and property dispositions. |
(3) | We grant restricted share units ("RSU"s) to certain employees, officers, and the Chairman of the Board of Trustees. The RSUs contain both service and market-based vesting components. None of the RSUs have vested. Refer to the schedule of Common & Potential Common Shares for information regarding RSUs and their impact on weighted average shares outstanding. |
(4) | As of March 31, 2016, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 common shares. We exclude these shares from dilutive shares outstanding on March 31, 2016, given this conversion ratio relative to our current common stock price. Refer to the schedule of Common & Potential Common Shares for information regarding the series D preferred shares and their impact on diluted weighted average shares outstanding for EPS, FFO per share and Normalized FFO per share. |
(5) | On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date). |
March 31, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Real estate properties: | |||||||
Land | $ | 372,714 | $ | 389,410 | |||
Buildings and improvements | 3,399,909 | 3,497,942 | |||||
3,772,623 | 3,887,352 | ||||||
Accumulated depreciation | (880,678 | ) | (898,939 | ) | |||
2,891,945 | 2,988,413 | ||||||
Properties held for sale | 20,347 | — | |||||
Acquired real estate leases, net | 83,121 | 88,760 | |||||
Cash and cash equivalents | 1,742,128 | 1,802,729 | |||||
Restricted cash | 36,190 | 32,245 | |||||
Rents receivable, net of allowance for doubtful accounts of $4,193 and $7,715, respectively | 176,740 | 174,676 | |||||
Other assets, net | 152,678 | 144,341 | |||||
Total assets | $ | 5,103,149 | $ | 5,231,164 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Revolving credit facility | $ | — | $ | — | |||
Senior unsecured debt, net | 1,312,148 | 1,450,606 | |||||
Mortgage notes payable, net | 245,691 | 246,510 | |||||
Liabilities related to properties held for sale | 169 | — | |||||
Accounts payable and accrued expenses | 120,888 | 123,587 | |||||
Assumed real estate lease obligations, net | 3,624 | 4,296 | |||||
Rent collected in advance | 23,588 | 27,340 | |||||
Security deposits | 9,670 | 10,338 | |||||
Total liabilities | $ | 1,715,778 | $ | 1,862,677 | |||
Shareholders’ equity: | |||||||
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; | |||||||
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880 | $ | 119,263 | $ | 119,263 | |||
Series E preferred shares; 7 1/4% cumulative redeemable on or after May 15, 2016; 11,000,000 shares issued and outstanding, aggregate liquidation preference $275,000 (1) | 265,391 | 265,391 | |||||
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 125,502,748 and 126,349,914 shares issued and outstanding, respectively | 1,255 | 1,263 | |||||
Additional paid in capital | 4,393,409 | 4,414,611 | |||||
Cumulative net income | 2,380,111 | 2,333,709 | |||||
Cumulative other comprehensive loss | (3,014 | ) | (3,687 | ) | |||
Cumulative common distributions | (3,111,868 | ) | (3,111,868 | ) | |||
Cumulative preferred distributions | (657,176 | ) | (650,195 | ) | |||
Total shareholders’ equity | $ | 3,387,371 | $ | 3,368,487 | |||
Total liabilities and shareholders’ equity | $ | 5,103,149 | $ | 5,231,164 |
(1) | On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date). |
March 31, 2016 | December 31, 2015 | |||||
Additional Balance Sheet Information | ||||||
Straight-line rents receivable, net of allowance for doubtful accounts | $ | 158,564 | $ | 157,600 | ||
Accounts receivable, net of allowance for doubtful accounts | 18,176 | 17,076 | ||||
Rents receivable, net of allowance for doubtful accounts | $ | 176,740 | $ | 174,676 | ||
Capitalized lease incentives, net | $ | 9,006 | $ | 9,124 | ||
Deferred financing fees, net | 4,576 | 4,980 | ||||
Deferred leasing costs, net | 112,876 | 110,228 | ||||
Other | 26,220 | 20,009 | ||||
Other assets, net | $ | 152,678 | $ | 144,341 | ||
Accounts payable | $ | 5,047 | $ | 5,321 | ||
Accrued interest | 12,793 | 19,971 | ||||
Accrued taxes | 34,836 | 36,724 | ||||
Accrued capital expenditures | 27,218 | 21,136 | ||||
Accrued leasing costs | 5,525 | 802 | ||||
Other accrued liabilities | 35,469 | 39,633 | ||||
Accounts payable and accrued expenses | $ | 120,888 | $ | 123,587 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
Rental income | $ | 109,888 | $ | 167,972 | |||
Tenant reimbursements and other income | 27,247 | 45,083 | |||||
Total revenues | $ | 137,135 | $ | 213,055 | |||
Expenses: | |||||||
Operating expenses | $ | 57,258 | $ | 97,871 | |||
Depreciation and amortization | 36,251 | 62,699 | |||||
General and administrative | 13,312 | 16,558 | |||||
Loss on asset impairment | — | 1,904 | |||||
Total expenses | $ | 106,821 | $ | 179,032 | |||
Operating income | $ | 30,314 | $ | 34,023 | |||
Interest and other income | 1,967 | 3,448 | |||||
Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $983 and $29, respectively) | (22,347 | ) | (29,842 | ) | |||
Loss on early extinguishment of debt | (118 | ) | (428 | ) | |||
Foreign currency exchange loss | (5 | ) | — | ||||
Gain on sale of properties | 36,666 | 5,868 | |||||
Income before income taxes | 46,477 | 13,069 | |||||
Income tax (expense) benefit | (75 | ) | 561 | ||||
Net income | $ | 46,402 | $ | 13,630 | |||
Preferred distributions | (6,981 | ) | (6,981 | ) | |||
Net income attributable to Equity Commonwealth common shareholders | $ | 39,421 | $ | 6,649 |
Weighted average common shares outstanding — basic (1) | 125,840 | 129,696 | |||||
Weighted average common shares outstanding — diluted (1) | 127,522 | 129,874 | |||||
Earnings per common share attributable to Equity Commonwealth common shareholders: | |||||||
Basic | $ | 0.31 | $ | 0.05 | |||
Diluted | $ | 0.31 | $ | 0.05 |
(1 | ) | Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding. |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Additional Income Statement Information | |||||||
Non-recurring general and administrative | |||||||
Shareholder litigation and transition related expenses (1) | $ | 1,102 | $ | 3,472 | |||
Transition services fee paid to RMR (2) | — | 2,235 | |||||
(1 | ) | Shareholder litigation and transition related expenses within general and administrative for the three months ended March 31, 2016 includes $1.1 million for the shareholder-approved liability for the reimbursement of expenses incurred by Related/Corvex since February 2013 in connection with their consent solicitations to remove the former Trustees, elect the new Board of Trustees and engage in related litigation. Approximately $16.7 million was reimbursed to Related/Corvex during 2014, and on August 4, 2015, we reimbursed $8.4 million to Related/Corvex under the terms of the shareholder-approved agreement. An additional $8.4 million will be reimbursed only if the average closing price of our common shares is at least $26.00 (as adjusted for any share splits or share dividends) from August 1, 2015 through July 31, 2016. As of March 31, 2016, the fair value of this liability is $8.3 million. No shareholder litigation related expenses were incurred during 2016. |
(2 | ) | Amounts represent general and administrative expenses under our now-terminated business management agreement with our former manager. |
For the Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Calculation of Same Property NOI and Same Property Cash Basis NOI: | |||||||
Rental income | $ | 109,888 | $ | 167,972 | |||
Tenant reimbursements and other income | 27,247 | 45,083 | |||||
Operating expenses | (57,258 | ) | (97,871 | ) | |||
NOI | $ | 79,877 | $ | 115,184 | |||
Straight line rent adjustments | (3,831 | ) | 181 | ||||
Lease value amortization | 1,121 | 1,474 | |||||
Lease termination fees | (311 | ) | (1,949 | ) | |||
Cash Basis NOI | $ | 76,856 | $ | 114,890 | |||
Cash Basis NOI from non-same properties (1) | (2,769 | ) | (37,871 | ) | |||
Same Property Cash Basis NOI | $ | 74,087 | $ | 77,019 | |||
Non-cash rental and termination income from same properties | 2,998 | (1,805 | ) | ||||
Same Property NOI | $ | 77,085 | $ | 75,214 | |||
Reconciliation of Same Property NOI to GAAP Operating Income: | |||||||
Same Property NOI | $ | 77,085 | $ | 75,214 | |||
Non-cash rental and termination income from same properties | (2,998 | ) | 1,805 | ||||
Same Property Cash Basis NOI | $ | 74,087 | $ | 77,019 | |||
Cash Basis NOI from non-same properties (1) | 2,769 | 37,871 | |||||
Cash Basis NOI | $ | 76,856 | $ | 114,890 | |||
Straight line rent adjustments | 3,831 | (181 | ) | ||||
Lease value amortization | (1,121 | ) | (1,474 | ) | |||
Lease termination fees | 311 | 1,949 | |||||
NOI | $ | 79,877 | $ | 115,184 | |||
Depreciation and amortization | (36,251 | ) | (62,699 | ) | |||
General and administrative | (13,312 | ) | (16,558 | ) | |||
Loss on asset impairment | — | (1,904 | ) | ||||
Operating Income | $ | 30,314 | $ | 34,023 |
(1) | Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale. |
As of and for the Three Months Ended March 31, | ||||||||||
2016 | 2015 | % Change | ||||||||
Properties | 60 | 60 | ||||||||
Square Feet (1) | 23,037 | 22,904 | ||||||||
% Leased | 91.4 | % | 90.7 | % | 0.7 | % | ||||
Total revenue | $ | 132,608 | $ | 128,787 | 3.0 | % | ||||
Operating expenses | (55,523 | ) | (53,573 | ) | 3.6 | % | ||||
NOI | $ | 77,085 | $ | 75,214 | 2.5 | % | ||||
NOI Margin | 58.1 | % | 58.4 | % | ||||||
Straight line rent adjustment | $ | (3,815 | ) | $ | 1,991 | |||||
Lease value amortization | 1,128 | 1,402 | ||||||||
Lease termination fees | (311 | ) | (1,588 | ) | ||||||
Cash Basis NOI | $ | 74,087 | $ | 77,019 | (3.8 | )% | ||||
Cash Basis NOI Margin | 57.2 | % | 59.0 | % | ||||||
(1 | ) | The change in total square footage results from remeasurement. |
For the Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 46,402 | $ | 13,630 | |||
Interest expense | 22,347 | 29,842 | |||||
Income tax expense (benefit) | 75 | (561 | ) | ||||
Depreciation and amortization | 36,251 | 62,699 | |||||
EBITDA | $ | 105,075 | $ | 105,610 | |||
Loss on asset impairment | — | 1,904 | |||||
Loss on early extinguishment of debt | 118 | 428 | |||||
Shareholder litigation costs and transition-related expenses | 1,102 | 3,472 | |||||
Transition services fee | — | 2,235 | |||||
Gain on sale of properties | (36,666 | ) | (5,868 | ) | |||
Foreign currency exchange loss | 5 | — | |||||
Adjusted EBITDA | $ | 69,634 | $ | 107,781 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Calculation of FFO | |||||||
Net income | $ | 46,402 | $ | 13,630 | |||
Real estate depreciation and amortization | 36,044 | 62,699 | |||||
Loss on asset impairment | — | 1,904 | |||||
Gain on sale of properties | (36,666 | ) | (5,868 | ) | |||
FFO attributable to Equity Commonwealth | 45,780 | 72,365 | |||||
Preferred distributions | (6,981 | ) | (6,981 | ) | |||
FFO attributable to EQC Common Shareholders | $ | 38,799 | $ | 65,384 | |||
Calculation of Normalized FFO | |||||||
FFO attributable to EQC common shareholders | $ | 38,799 | $ | 65,384 | |||
Recurring adjustments: | |||||||
Lease value amortization | 1,121 | 1,474 | |||||
Straight line rent adjustments | (3,831 | ) | 181 | ||||
Loss on early extinguishment of debt | 118 | 428 | |||||
Minimum cash rent from direct financing lease (1) | — | 2,032 | |||||
Interest earned from direct financing lease | — | (141 | ) | ||||
Other items which affect comparability: | |||||||
Shareholder litigation and transition related expenses (2) | 1,102 | 3,472 | |||||
Transition services fee | — | 2,235 | |||||
Gain on sale of securities | — | (3,080 | ) | ||||
Foreign currency exchange loss | 5 | — | |||||
Normalized FFO attributable to EQC Common Shareholders | $ | 37,314 | $ | 71,985 | |||
Weighted average common shares outstanding -- basic (3) | 125,840 | 129,696 | |||||
Weighted average common shares outstanding -- diluted (3) | 127,522 | 129,874 | |||||
FFO attributable to EQC common shareholders per share -- basic (3) | $ | 0.31 | $ | 0.50 | |||
FFO attributable to EQC common shareholders per share -- diluted(3) | $ | 0.30 | $ | 0.50 | |||
Normalized FFO attributable to EQC common shareholders per share -- basic (3) | $ | 0.30 | $ | 0.56 | |||
Normalized FFO attributable to EQC common shareholders per share -- diluted (3) | $ | 0.29 | $ | 0.55 |
(1) | Amounts relate to contractual cash payments (including management fees) from one tenant at Arizona Center. Arizona Center was sold during the fourth quarter of 2015. Our calculation of Normalized FFO reflects the cash payments received from this tenant. The terms of this tenant's lease required us to classify the lease as a direct financing (or capital) lease. As such, the revenue recognized on a GAAP basis within our condensed consolidated statements of operations was $141 for the three months ended March 31, 2015. |
(2) | Refer to the Additional Income Statement Information for a discussion of expenses related to the shareholder-approved Related/Corvex consent solicitation liability. No shareholder litigation related expenses were incurred during 2016. |
(3) | Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding. |
Interest Rate | Principal Balance | Maturity Date | Due at Maturity | Years to Maturity | |||||||||||
Unsecured Debt: | |||||||||||||||
Unsecured Floating Rate Debt: | |||||||||||||||
Revolving credit facility (LIBOR + 125 bps) (1) | 1.69 | % | $ | — | 1/28/2019 | $ | — | 2.8 | |||||||
Term loan (LIBOR + 140 bps) (2) | 1.84 | % | 200,000 | 1/28/2020 | 200,000 | 3.8 | |||||||||
Term loan (LIBOR + 180 bps) (2) | 2.24 | % | 200,000 | 1/28/2022 | 200,000 | 5.8 | |||||||||
Total / weighted average unsecured floating rate debt | 2.04 | % | $ | 400,000 | $ | 400,000 | 4.8 | ||||||||
Unsecured Fixed Rate Debt: | |||||||||||||||
6.25% Senior Unsecured Notes Due 2017 | 6.25 | % | 250,000 | 6/15/2017 | 250,000 | 1.2 | |||||||||
6.65% Senior Unsecured Notes Due 2018 | 6.65 | % | 250,000 | 1/15/2018 | 250,000 | 1.8 | |||||||||
5.875% Senior Unsecured Notes Due 2020 | 5.88 | % | 250,000 | 9/15/2020 | 250,000 | 4.5 | |||||||||
5.75% Senior Unsecured Notes Due 2042 | 5.75 | % | 175,000 | 8/1/2042 | 175,000 | 26.4 | |||||||||
Total / weighted average unsecured fixed rate debt | 6.16 | % | $ | 925,000 | $ | 925,000 | 7.0 | ||||||||
Secured Fixed Rate Debt: | |||||||||||||||
Parkshore Plaza | 5.67 | % | 41,275 | 5/1/2017 | 41,275 | 1.1 | |||||||||
1735 Market Street (3) | 5.66 | % | 169,119 | 12/2/2019 | 160,710 | 3.7 | |||||||||
206 East 9th Street | 5.69 | % | 27,397 | 1/5/2021 | 24,836 | 4.8 | |||||||||
33 Stiles Lane | 6.75 | % | 2,694 | 3/1/2022 | — | 5.9 | |||||||||
97 Newberry Road | 5.71 | % | 6,259 | 3/1/2026 | — | 9.9 | |||||||||
Total / weighted average secured fixed rate debt | 5.68 | % | $ | 246,744 | $ | 226,821 | 3.6 | ||||||||
Total / weighted average (4) | 5.04 | % | $ | 1,571,744 | $ | 1,551,821 | 5.9 | ||||||||
(1) | Represents amounts outstanding on EQC's $750,000 revolving credit facility as of March 31, 2016. The interest rate presented is as of March 31, 2016, and equals LIBOR plus 1.25%. We also pay a 25 basis point facility fee annually. The spread over LIBOR and the facility fee vary depending upon EQC's credit rating. |
(2) | Represents amounts outstanding on EQC's term loans as of March 31, 2016. The interest rate presented is as of March 31, 2016, and equals LIBOR plus 1.4% for the loan maturing on January 28, 2020, and LIBOR plus 1.8% for the loan maturing January 28, 2022. The spreads over LIBOR vary depending upon EQC's credit rating. We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019. |
(3) | Interest is payable at a rate equal to LIBOR plus 2.625% but has been fixed by a cash flow hedge, which sets the rate at approximately 5.66% until December 1, 2016. |
(4) | Total debt outstanding as of March 31, 2016, including net unamortized premiums, discounts, and deferred financing fees was $1,557,839. Net unamortized deferred financing fees related to our revolving credit facility of $4,576 are included in other assets, net on our condensed consolidated balance sheets as of March 31, 2016. |
Scheduled Payments During Period | ||||||||||||||||||
Year | Unsecured Floating Rate Debt | Unsecured Fixed Rate Debt | Secured Fixed Rate Debt | Total | Weighted Average Interest Rate | |||||||||||||
2016 | $ | — | $ | — | $ | 2,528 | $ | 2,528 | 5.8 | % | ||||||||
2017 | — | 250,000 | 44,865 | 294,865 | 6.2 | % | ||||||||||||
2018 | — | 250,000 | 3,847 | 253,847 | 6.6 | % | ||||||||||||
2019 | — | — | 164,613 | (2) | 164,613 | 5.7 | % | |||||||||||
2020 | 200,000 | (1) | 250,000 | 1,674 | 451,674 | 4.1 | % | |||||||||||
2021 | — | — | 25,982 | 25,982 | 5.7 | % | ||||||||||||
2022 | 200,000 | (1) | — | 799 | 200,799 | 2.3 | % | |||||||||||
2023 | — | — | 702 | 702 | 5.7 | % | ||||||||||||
2024 | — | — | 743 | 743 | 5.7 | % | ||||||||||||
2025 | — | — | 787 | 787 | 5.7 | % | ||||||||||||
Thereafter | — | 175,000 | 204 | 175,204 | 5.7 | % | ||||||||||||
Total | $ | 400,000 | $ | 925,000 | $ | 246,744 | $ | 1,571,744 | (3) | 5.0 | % | |||||||
Percent | 25.4 | % | 58.9 | % | 15.7 | % | 100.0 | % |
(1) | Represents amounts outstanding on EQC's term loans as of March 31, 2016. The interest rate presented is as of March 31, 2016, and equals LIBOR plus 1.4% for the loan maturing on January 28, 2020, and LIBOR plus 1.8% for the loan maturing January 28, 2022. The spreads over LIBOR vary depending upon EQC's credit rating. We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019. |
(2) | Interest is payable at a rate equal to LIBOR plus 2.625% but has been fixed by a cash flow hedge, which sets the rate at approximately 5.66% until December 1, 2016. |
(3) | Total debt outstanding as of March 31, 2016, including net unamortized premiums, discounts, and deferred financing fees was $1,557,839. Net unamortized deferred financing fees related to our revolving credit facility of $4,576 are included in other assets, net on our condensed consolidated balance sheets as of March 31, 2016. |
As of and for the Three Months Ended | ||||||||||||||
3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | ||||||||||
Leverage Ratios | ||||||||||||||
Total debt / total assets | 30.5 | % | 32.4 | % | 34.2 | % | 35.4 | % | 38.3 | % | ||||
Total debt / total market capitalization | 28.1 | % | 30.1 | % | 31.9 | % | 34.3 | % | 36.2 | % | ||||
Total debt + preferred stock / total market capitalization | 35.3 | % | 37.3 | % | 38.9 | % | 41.3 | % | 42.9 | % | ||||
Total debt / annualized adjusted EBITDA | 5.6x | 6.6x | 6.0x | 4.7x | 5.1x | |||||||||
Total debt + preferred stock / annualized adjusted EBITDA | 7.0x | 8.1x | 7.3x | 5.7x | 6.0x | |||||||||
Net debt / enterprise value | (4.8 | )% | (2.8 | )% | 4.1 | % | 15.2 | % | 31.4 | % | ||||
Net debt + preferred stock / enterprise value | 5.7 | % | 7.8 | % | 14.0 | % | 24.2 | % | 38.7 | % | ||||
Net debt / annualized adjusted EBITDA | (0.7)x | (0.4)x | 0.5x | 1.6x | 4.1x | |||||||||
Net debt + preferred stock / annualized adjusted EBITDA | 0.8x | 1.2x | 1.9x | 2.6x | 5.0x | |||||||||
Secured debt / total assets | 4.8 | % | 4.7 | % | 6.9 | % | 9.2 | % | 10.5 | % | ||||
Variable rate debt (1) / total debt | 25.7 | % | 23.6 | % | 22.1 | % | 20.4 | % | 18.3 | % | ||||
Variable rate debt (1) / total assets | 7.8 | % | 7.6 | % | 7.5 | % | 7.2 | % | 7.0 | % | ||||
Coverage Ratios | ||||||||||||||
Adjusted EBITDA / interest expense | 3.1x | 2.7x | 3.0x | 3.7x | 3.6x | |||||||||
Adjusted EBITDA / interest expense + preferred distributions | 2.4x | 2.1x | 2.4x | 3.0x | 2.9x | |||||||||
Public Debt Covenants | ||||||||||||||
Debt / adjusted total assets (2) (maximum 60%) | 26.4 | % | 27.9 | % | 29.5 | % | 29.9 | % | 30.9 | % | ||||
Secured debt / adjusted total assets (2) (maximum 40%) | 4.1 | % | 4.0 | % | 5.9 | % | 7.8 | % | 8.5 | % | ||||
Consolidated income available for debt service / debt service (minimum 1.5x) | 3.1x | 2.9x | 3.1x | 3.3x | 3.9x | |||||||||
Total unencumbered assets (2) / unsecured debt (minimum 150% / 200%) | 412.7 | % | 386.9 | % | 378.3 | % | 394.7 | % | 386.5 | % |
(1) | We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019. |
(2) | Adjusted total assets and total unencumbered assets includes original cost of real estate assets plus capital improvements, both calculated in accordance with GAAP, and excludes depreciation and amortization, accounts receivable, other intangible assets and impairment write downs, if any. |
Acquisitions |
None |
Dispositions | |||||||||||||||||||||
Property/Portfolio | City | State | No. of Properties | Sq. Feet (1) | % Leased(1) | Gross Sales Price | Net Book Value (1) | Annualized Rental Revenue (1) | |||||||||||||
Executive Park | Atlanta | GA | 1 | 427,443 | 72.8 | % | $ | 50,865 | $ | 29,365 | $ | 4,990 | |||||||||
3330 N Washington Blvd | Arlington | VA | 1 | 55,719 | 15.3 | % | 11,250 | 5,519 | 273 | ||||||||||||
111 East Kilbourn Avenue | Milwaukee | WI | 1 | 373,669 | 81.1 | % | 60,500 | 44,577 | 8,169 | ||||||||||||
Total Q1 Dispositions | 3 | 856,831 | 72.7 | % | $ | 122,615 | $ | 79,461 | $ | 13,432 | |||||||||||
(1 | ) | As of or for the quarter-ended preceding each sale. |
Property | City | State | No. of Buildings | Sq. Feet | % Leased | Annualized Rental Revenue | Undepreciated Book Value | Net Book Value | Year Acquired | Weighted Average Year Built or Substantially Renovated (2) | ||||||||||||||||||||||
1 | 600 West Chicago Avenue | Chicago | IL | 2 | 1,511,849 | 98.3 | % | $ | 46,587 | $ | 370,472 | $ | 332,606 | 2011 | 2001 | |||||||||||||||||
2 | 1500 Market Street | Philadelphia | PA | 1 | 1,773,967 | 94.2 | % | 35,973 | 294,695 | 213,981 | 2002 | 1974 | ||||||||||||||||||||
3 | 1735 Market Street | Philadelphia | PA | 1 | 1,290,678 | 79.8 | % | 30,855 | 298,479 | 179,385 | 1998 | 1990 | ||||||||||||||||||||
4 | 111 Monument Circle | Indianapolis | IN | 2 | 1,121,764 | 82.1 | % | 23,780 | 176,314 | 162,025 | 2012 | 1990 | ||||||||||||||||||||
5 | 111 River Street (3) | Hoboken | NJ | 1 | 566,215 | 100.0 | % | 23,408 | 137,448 | 114,933 | 2009 | 2002 | ||||||||||||||||||||
6 | 1225 Seventeenth Street | Denver | CO | 1 | 672,465 | 96.8 | % | 20,942 | 152,381 | 129,777 | 2009 | 1982 | ||||||||||||||||||||
7 | 333 108th Avenue NE | Bellevue | WA | 1 | 440,565 | 100.0 | % | 19,337 | 152,583 | 129,629 | 2009 | 2008 | ||||||||||||||||||||
8 | 1600 Market Street | Philadelphia | PA | 1 | 825,968 | 84.4 | % | 19,086 | 133,626 | 77,265 | 1998 | 1983 | ||||||||||||||||||||
9 | 8750 Bryn Mawr Avenue | Chicago | IL | 2 | 631,518 | 89.0 | % | 16,896 | 91,787 | 79,411 | 2010 | 2005 | ||||||||||||||||||||
10 | 6600 North Military Trail | Boca Raton | FL | 3 | 639,830 | 100.0 | % | 16,577 | 145,808 | 128,772 | 2011 | 2008 | ||||||||||||||||||||
11 | North Point Office Complex | Cleveland | OH | 2 | 873,335 | 78.7 | % | 15,509 | 124,635 | 101,336 | 2008 | 1988 | ||||||||||||||||||||
12 | 101-115 W. Washington Street | Indianapolis | IN | 1 | 634,058 | 94.0 | % | 13,050 | 91,323 | 66,601 | 2005 | 1977 | ||||||||||||||||||||
13 | 111 Market Place | Baltimore | MD | 1 | 569,617 | 99.3 | % | 12,582 | 77,400 | 52,157 | 2003 | 1990 | ||||||||||||||||||||
14 | Foster Plaza | Pittsburgh | PA | 8 | 727,365 | 84.1 | % | 12,429 | 75,040 | 55,182 | 2005 | 1993 | ||||||||||||||||||||
15 | Research Park | Austin | TX | 4 | 1,110,007 | 98.0 | % | 11,709 | 90,635 | 60,388 | 1998 | 1976 | ||||||||||||||||||||
16 | Bridgepoint Square | Austin | TX | 5 | 440,007 | 94.1 | % | 11,391 | 88,434 | 50,733 | 1997 | 1995 | ||||||||||||||||||||
17 | 100 East Wisconsin Avenue | Milwaukee | WI | 1 | 435,067 | 89.7 | % | 11,118 | 83,008 | 70,873 | 2010 | 1989 | ||||||||||||||||||||
18 | 109 Brookline Avenue | Boston | MA | 1 | 285,556 | 99.7 | % | 10,579 | 46,140 | 27,141 | 1995 | 1915 | ||||||||||||||||||||
19 | East Eisenhower Parkway | Ann Arbor | MI | 2 | 410,464 | 92.4 | % | 10,559 | 55,293 | 48,123 | 2010 | 2006 | ||||||||||||||||||||
20 | 1601 Dry Creek Drive | Longmont | CO | 1 | 552,865 | 97.0 | % | 8,664 | 34,055 | 24,688 | 2004 | 1982 | ||||||||||||||||||||
21 | 1250 H Street, NW | Washington | DC | 1 | 196,489 | 79.8 | % | 7,553 | 71,673 | 45,029 | 1998 | 1992 | ||||||||||||||||||||
22 | 25 S. Charles Street | Baltimore | MD | 1 | 343,815 | 93.7 | % | 7,221 | 38,504 | 25,695 | 2004 | 1972 | ||||||||||||||||||||
23 | 5073, 5075, & 5085 S. Syracuse Street | Denver | CO | 1 | 248,493 | 100.0 | % | 7,164 | 63,610 | 54,899 | 2010 | 2007 | ||||||||||||||||||||
24 | Danac Stiles Business Park | Rockville | MD | 3 | 276,637 | 85.4 | % | 6,899 | 65,564 | 46,100 | 2004 | 2002 | ||||||||||||||||||||
25 | 600 108th Avenue NE | Bellevue | WA | 1 | 256,829 | 96.3 | % | 6,837 | 48,364 | 36,432 | 2004 | 2012 | ||||||||||||||||||||
26 | Georgetown-Green and Harris Buildings | Washington | DC | 2 | 240,475 | 100.0 | % | 6,325 | 60,023 | 54,100 | 2009 | 2006 | ||||||||||||||||||||
27 | Cherrington Corporate Center | Moon Township | PA | 7 | 454,890 | 63.8 | % | 6,070 | 72,525 | 51,588 | 1998; 1999 | 1997 | ||||||||||||||||||||
28 | 206 East 9th Street | Austin | TX | 1 | 170,052 | 95.9 | % | 6,039 | 48,850 | 44,870 | 2012 | 1984 | ||||||||||||||||||||
29 | 1200 Lakeside Drive | Bannockburn | IL | 1 | 260,084 | 100.0 | % | 4,407 | 67,350 | 54,293 | 2005 | 1999 | ||||||||||||||||||||
30 | 802 Delaware Avenue | Wilmington | DE | 1 | 240,780 | 100.0 | % | 4,280 | 43,467 | 20,095 | 1998 | 1986 | ||||||||||||||||||||
Subtotal (30 properties) | 60 | 18,201,704 | 91.3 | % | $ | 433,826 | $ | 3,299,486 | $ | 2,538,107 | ||||||||||||||||||||||
All other properties (30 properties) | 54 | 4,835,121 | 91.8 | % | 53,417 | 473,137 | 353,838 | |||||||||||||||||||||||||
Total (60 properties) | 114 | 23,036,825 | 91.4 | % | $ | 487,243 | $ | 3,772,623 | $ | 2,891,945 | ||||||||||||||||||||||
Same Property NOI & Cash Basis NOI Composition | Q1 2016 NOI | % of NOI | Q1 2016 Cash Basis NOI | % of Cash Basis NOI | ||||||||||||||||||||||||||||
Top 30 Properties | $ | 66,200 | 85.9 | % | $ | 63,496 | 85.7 | % | ||||||||||||||||||||||||
All other properties (30 properties) | 10,885 | 14.1 | % | 10,591 | 14.3 | % | ||||||||||||||||||||||||||
Total (60 properties) | $ | 77,085 | 100.0 | % | $ | 74,087 | 100.0 | % |
(1) | Excludes properties classified as held for sale. |
(2) | Weighted based on square feet. |
(3) | Property is subject to a ground lease. |
As of and for the Three Months Ended | ||||||||||||||||||||
3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | ||||||||||||||||
Properties (1) | 60 | 65 | 67 | 86 | 154 | |||||||||||||||
Total square feet (1)(2) | 23,037 | 23,952 | 25,258 | 29,357 | 42,724 | |||||||||||||||
Percentage leased | 91.4 | % | 91.4 | % | 91.9 | % | 90.6 | % | 85.9 | % | ||||||||||
Total Leasing Activity | ||||||||||||||||||||
Square feet | 1,853 | 984 | 1,384 | 1,030 | 1,478 | |||||||||||||||
Lease term (years) | 7.8 | 6.7 | 6.3 | 5.5 | 6.6 | |||||||||||||||
Starting cash rent | $ | 29.48 | $ | 24.57 | $ | 29.89 | $ | 21.37 | $ | 21.70 | ||||||||||
Percent change in cash rent (3) | (1.3 | )% | 5.6 | % | 3.2 | % | (1.9 | )% | 0.0 | % | ||||||||||
Percent change in GAAP rent (3) | 11.2 | % | 15.5 | % | 9.1 | % | 5.4 | % | 5.6 | % | ||||||||||
Total TI & LC per square foot (4) | $ | 25.44 | $ | 38.44 | $ | 39.35 | $ | 22.63 | $ | 27.61 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 3.27 | $ | 5.74 | $ | 6.22 | $ | 4.11 | $ | 4.20 | ||||||||||
Renewal Leases | ||||||||||||||||||||
Square feet | 1,569 | 585 | 955 | 518 | 758 | |||||||||||||||
Lease term (years) | 7.4 | 4.0 | 5.0 | 5.2 | 4.5 | |||||||||||||||
Starting cash rent | $ | 28.92 | $ | 23.58 | $ | 28.95 | $ | 22.55 | $ | 19.99 | ||||||||||
Percent change in cash rent (3) | 0.3 | % | 5.4 | % | 3.1 | % | (3.4 | )% | (2.8 | )% | ||||||||||
Percent change in GAAP rent (3) | 13.2 | % | 15.3 | % | 8.5 | % | 5.3 | % | (0.1 | )% | ||||||||||
Total TI & LC per square foot (4) | $ | 17.33 | $ | 15.13 | $ | 29.74 | $ | 19.37 | $ | 12.09 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 2.33 | $ | 3.81 | $ | 5.89 | $ | 3.74 | $ | 2.70 | ||||||||||
New Leases | ||||||||||||||||||||
Square feet | 284 | 399 | 429 | 512 | 720 | |||||||||||||||
Lease term (years) | 9.7 | 10.7 | 9.2 | 5.8 | 8.8 | |||||||||||||||
Starting cash rent | $ | 32.55 | $ | 26.03 | $ | 31.98 | $ | 20.18 | $ | 23.49 | ||||||||||
Percent change in cash rent (3) | (8.9 | )% | 6.4 | % | 3.6 | % | 0.7 | % | 3.6 | % | ||||||||||
Percent change in GAAP rent (3) | 1.9 | % | 16.3 | % | 11.4 | % | 5.5 | % | 12.7 | % | ||||||||||
Total TI & LC per square foot (4) | $ | 69.13 | $ | 72.68 | $ | 60.72 | $ | 25.93 | $ | 43.95 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 7.15 | $ | 6.78 | $ | 6.62 | $ | 4.44 | $ | 4.99 |
The above leasing summary is based on leases executed during the periods indicated. | |
(1) | Excludes properties classified as held for sale. |
(2) | Changes in total square footage result from remeasurement and property dispositions. |
(3) | Percent change in GAAP and cash rent is a comparison of current rent (including tenant expense reimbursements, if any, and excluding any initial period free rent), to the rent (including tenant expense reimbursements, if any) last received for the same space during EQC's ownership on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years were excluded from the calculation. |
(4) | Includes tenant improvements (TI) and leasing commissions (LC). |
As of and for the Three Months Ended | ||||||||||||||||||||
3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | ||||||||||||||||
Properties | 60 | 60 | 60 | 60 | 60 | |||||||||||||||
Total square feet | 23,037 | 22,904 | 22,904 | 22,904 | 22,904 | |||||||||||||||
Percentage leased | 91.4 | % | 92.2 | % | 92.3 | % | 92.1 | % | 90.7 | % | ||||||||||
Total Leasing Activity | ||||||||||||||||||||
Square feet | 1,853 | 970 | 1,337 | 782 | 739 | |||||||||||||||
Lease term (years) | 7.8 | 6.7 | 6.3 | 6.0 | 8.6 | |||||||||||||||
Starting cash rent | $ | 29.48 | $ | 24.60 | $ | 30.28 | $ | 22.10 | $ | 24.49 | ||||||||||
Percent change in cash rent (1) | (1.3 | )% | 5.8 | % | 3.2 | % | (0.4 | )% | 3.3 | % | ||||||||||
Percent change in GAAP rent (1) | 11.2 | % | 15.8 | % | 9.1 | % | 7.0 | % | 12.1 | % | ||||||||||
Total TI & LC per square foot (2) | $ | 25.44 | $ | 38.65 | $ | 40.39 | $ | 25.99 | $ | 42.09 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (2) | $ | 3.27 | $ | 5.79 | $ | 6.43 | $ | 4.33 | $ | 4.90 | ||||||||||
Renewal Leases | ||||||||||||||||||||
Square feet | 1,569 | 573 | 934 | 335 | 125 | |||||||||||||||
Lease term (years) | 7.4 | 3.9 | 5.1 | 6.2 | 5.8 | |||||||||||||||
Starting cash rent | $ | 28.92 | $ | 23.59 | $ | 29.18 | $ | 24.27 | $ | 26.41 | ||||||||||
Percent change in cash rent (1) | 0.3 | % | 5.7 | % | 3.1 | % | (3.6 | )% | 3.2 | % | ||||||||||
Percent change in GAAP rent (1) | 13.2 | % | 15.6 | % | 8.5 | % | 6.4 | % | 10.0 | % | ||||||||||
Total TI & LC per square foot (2) | $ | 17.33 | $ | 14.93 | $ | 30.42 | $ | 25.53 | $ | 19.64 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (2) | $ | 2.33 | $ | 3.86 | $ | 6.00 | $ | 4.14 | $ | 3.37 | ||||||||||
New Leases | ||||||||||||||||||||
Square feet | 284 | 398 | 402 | 447 | 615 | |||||||||||||||
Lease term (years) | 9.7 | 10.7 | 9.1 | 5.9 | 9.1 | |||||||||||||||
Starting cash rent | $ | 32.55 | $ | 26.04 | $ | 32.84 | $ | 20.47 | $ | 24.10 | ||||||||||
Percent change in cash rent (1) | (8.9 | )% | 6.4 | % | 3.7 | % | 2.0 | % | 3.3 | % | ||||||||||
Percent change in GAAP rent (1) | 1.9 | % | 16.3 | % | 11.6 | % | 7.7 | % | 12.7 | % | ||||||||||
Total TI & LC per square foot (2) | $ | 69.13 | $ | 72.81 | $ | 63.52 | $ | 26.33 | $ | 46.63 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (2) | $ | 7.15 | $ | 6.79 | $ | 6.99 | $ | 4.49 | $ | 5.10 |
The above leasing summary is based on leases executed during the periods indicated. | |
(1) | Percent change in GAAP and cash rent is a comparison of current rent (including tenant expense reimbursements, if any, and excluding any initial period free rent), to the rent (including tenant expense reimbursements, if any) last received for the same space during EQC's ownership on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years were excluded from the calculation. |
(2) | Includes tenant improvements (TI) and leasing commissions (LC). |
Square Footage Leased - Three Months Ended March 31, 2016 | Total Properties | |||||
Square Feet | % Leased | |||||
Total Portfolio - December 31, 2015 | 21,897 | 91.4 | % | |||
Less: Leased SF of Sold Properties and Properties Held for Sale | 788 | 75.2 | % | |||
Same Property - December 31, 2015 | 21,109 | 92.2 | % | |||
Net impact of remeasurements | 102 | (0.1 | )% | |||
Expirations | (2,009 | ) | (8.7 | )% | ||
Renewal Leases | 1,569 | 6.8 | % | |||
New Leases | 284 | 1.2 | % | |||
Total Leasing Activity | 1,853 | 8.0 | % | |||
Same Property - March 31, 2016 | 21,055 | 91.4 | % | |||
Total Square Feet Owned as of | ||
March 31, 2016 | December 31, 2015 | |
23,037 | 23,952 |
CAPITAL SUMMARY | For the Three Months Ended | ||||||||||||||||||
EXPENDITURES | 3/31/2016 | 12/31/2015 | 9/30/2015 | 6/30/2015 | 3/31/2015 | ||||||||||||||
Tenant improvements | $ | 25,391 | $ | 20,874 | $ | 13,497 | $ | 11,734 | $ | 8,167 | |||||||||
Leasing costs | 9,765 | 9,858 | 14,166 | 9,698 | 10,868 | ||||||||||||||
Building improvements (1) | 6,541 | 8,151 | 5,327 | 5,175 | 2,750 | ||||||||||||||
Total capital expenditures | $ | 41,697 | $ | 38,883 | $ | 32,990 | $ | 26,607 | $ | 21,785 | |||||||||
Average square feet during period (2) | 23,590 | 24,605 | 27,308 | 36,041 | 42,808 | ||||||||||||||
Building improvements per average total sq. ft. during period | $ | 0.28 | $ | 0.33 | $ | 0.20 | $ | 0.14 | $ | 0.06 |
CAPITAL SUMMARY | For the Three Months Ended | |||||||||||
LEASING COMMITMENTS | March 31, 2016 | |||||||||||
New Leases | Renewals | Total | ||||||||||
Rentable square feet leased during the period | 284 | 1,569 | 1,853 | |||||||||
Total TI & LC (3) | $ | 19,618 | $ | 27,132 | $ | 46,750 | ||||||
Total TI & LC per square foot (3) | $ | 69.13 | $ | 17.33 | $ | 25.44 | ||||||
Weighted average lease term by square foot (years) | 9.7 | 7.4 | 7.8 | |||||||||
Total TI & LC per sq. ft. per year of lease term (3) | $ | 7.15 | $ | 2.33 | $ | 3.27 |
(1) | Tenant-funded capital expenditures are excluded. |
(2) | Average square feet during each period includes properties held for sale at the end of each period. |
(3) | Includes tenant improvements (TI) and leasing commissions (LC). |
Tenant (1) | Square Feet (2) | % of Total Sq. Ft. (2) | % of Annualized Rental Revenue (3) | Weighted Average Remaining Lease Term | ||||||||||
1 | Expedia, Inc. | 427 | 2.0 | % | 3.8 | % | 3.8 | |||||||
2 | Office Depot, Inc. | 640 | 3.0 | % | 3.4 | % | 7.6 | |||||||
3 | John Wiley & Sons, Inc. | 415 | 2.0 | % | 3.4 | % | 15.9 | |||||||
4 | PNC Financial Services Group | 587 | 2.8 | % | 3.1 | % | 4.9 | |||||||
5 | Groupon, Inc. (3) | 376 | 1.8 | % | 2.4 | % | 9.8 | |||||||
6 | Flextronics International Ltd. | 1,051 | 5.0 | % | 2.2 | % | 3.8 | |||||||
7 | J.P. Morgan Chase & Co. | 380 | 1.8 | % | 2.1 | % | 8.7 | |||||||
8 | Jones Day | 343 | 1.6 | % | 1.8 | % | 10.2 | |||||||
9 | Towers Watson & Co | 335 | 1.6 | % | 1.7 | % | 4.2 | |||||||
10 | Ballard Spahr LLP | 217 | 1.0 | % | 1.6 | % | 13.9 | |||||||
11 | Carmike Cinemas, Inc. | 552 | 2.6 | % | 1.6 | % | 14.4 | |||||||
12 | RE/MAX Holdings, Inc. | 248 | 1.2 | % | 1.5 | % | 12.1 | |||||||
13 | Exelon Corporation | 296 | 1.4 | % | 1.4 | % | 2.2 | |||||||
14 | FMC Corporation | 207 | 1.0 | % | 1.3 | % | 0.2 | |||||||
15 | Georgetown University | 240 | 1.1 | % | 1.3 | % | 3.5 | |||||||
16 | University of Pennsylvania Health System | 267 | 1.3 | % | 1.2 | % | 9.6 | |||||||
17 | Wm. Wrigley Jr. Company | 150 | 0.7 | % | 1.1 | % | 5.8 | |||||||
18 | West Corporation | 336 | 1.6 | % | 1.1 | % | 12.9 | |||||||
19 | Truven Health Analytics | 179 | 0.9 | % | 1.0 | % | 0.9 | |||||||
20 | M&T Bank Corporation | 218 | 1.0 | % | 1.0 | % | 2.5 | |||||||
Total | 7,464 | 35.4 | % | 38.0 | % | 7.5 |
(1) | Tenants located in properties classified as held for sale are excluded. |
(2) | Square footage is pursuant to existing leases as of March 31, 2016 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease. |
(3) | Groupon, Inc. statistics include 207,536 square feet that are sublet from Bankers Life and Casualty Company. |
Year | Number of Tenants Expiring | Sq. Ft. Expiring (1) | % of Sq. Ft. Expiring | Cumulative % of Sq. Ft. Expiring | Annualized Rental Revenue Expiring | % of Annualized Rental Revenue Expiring | Cumulative % of Annualized Rental Revenue Expiring | ||||||||||||||
2016 | 115 | 897 | 4.3 | % | 4.3 | % | $ | 19,439 | 4.0 | % | 4.0 | % | |||||||||
2017 | 141 | 1,971 | 9.4 | % | 13.7 | % | 46,786 | 9.6 | % | 13.6 | % | ||||||||||
2018 | 139 | 1,934 | 9.2 | % | 22.9 | % | 44,767 | 9.2 | % | 22.8 | % | ||||||||||
2019 | 114 | 1,675 | 8.0 | % | 30.9 | % | 36,914 | 7.6 | % | 30.4 | % | ||||||||||
2020 | 116 | 4,063 | 19.2 | % | 50.1 | % | 79,031 | 16.2 | % | 46.6 | % | ||||||||||
2021 | 89 | 1,975 | 9.3 | % | 59.4 | % | 48,745 | 10.0 | % | 56.6 | % | ||||||||||
2022 | 38 | 777 | 3.7 | % | 63.1 | % | 25,419 | 5.2 | % | 61.8 | % | ||||||||||
2023 | 49 | 1,672 | 7.9 | % | 71.0 | % | 46,921 | 9.7 | % | 71.5 | % | ||||||||||
2024 | 19 | 608 | 2.9 | % | 73.9 | % | 10,876 | 2.2 | % | 73.7 | % | ||||||||||
2025 | 26 | 1,177 | 5.6 | % | 79.5 | % | 31,829 | 6.5 | % | 80.2 | % | ||||||||||
Thereafter | 50 | 4,306 | 20.5 | % | 100.0 | % | 96,516 | 19.8 | % | 100.0 | % | ||||||||||
Total | 896 | 21,055 | 100.0 | % | $ | 487,243 | 100.0 | % | |||||||||||||
Weighted average remaining | |||||||||||||||||||||
lease term (in years) | 6.0 | 6.1 | |||||||||||||||||||
(1) | Square footage is pursuant to existing leases as of March 31, 2016 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease. |
Office Properties |
Property | City and State | No. of Bldgs. | Sq. Feet | % Leased | Annualized Rental Revenue | Undepreciated Book Value | Net Book Value | Year Acquired | Weighted Average Year Built or Substantially Renovated (2) | |||||||||||||||||||
1 | Parkshore Plaza | Folsom | CA | 4 | 269,281 | 68.4 | % | $ | 3,342 | $ | 49,882 | $ | 44,410 | 2011 | 1999 | |||||||||||||
2 | Sky Park Centre | San Diego | CA | 2 | 63,485 | 100.0 | % | 1,429 | 9,786 | 6,408 | 2002 | 1986 | ||||||||||||||||
3 | 9110 East Nichols Avenue | Centennial | CO | 1 | 143,958 | 99.8 | % | 2,433 | 20,326 | 13,711 | 2001 | 1984 | ||||||||||||||||
4 | 1225 Seventeenth Street | Denver | CO | 1 | 672,465 | 96.8 | % | 20,942 | 152,381 | 129,777 | 2009 | 1982 | ||||||||||||||||
5 | 5073, 5075, & 5085 S. Syracuse Street | Denver | CO | 1 | 248,493 | 100.0 | % | 7,164 | 63,610 | 54,899 | 2010 | 2007 | ||||||||||||||||
6 | 1601 Dry Creek Drive | Longmont | CO | 1 | 552,865 | 97.0 | % | 8,664 | 34,055 | 24,688 | 2004 | 1982 | ||||||||||||||||
7 | 1250 H Street, NW | Washington | DC | 1 | 196,489 | 79.8 | % | 7,553 | 71,673 | 45,029 | 1998 | 1992 | ||||||||||||||||
8 | Georgetown-Green and Harris Buildings | Washington | DC | 2 | 240,475 | 100.0 | % | 6,325 | 60,023 | 54,100 | 2009 | 2006 | ||||||||||||||||
9 | 802 Delaware Avenue | Wilmington | DE | 1 | 240,780 | 100.0 | % | 4,280 | 43,467 | 20,095 | 1998 | 1986 | ||||||||||||||||
10 | 6600 North Military Trail | Boca Raton | FL | 3 | 639,830 | 100.0 | % | 16,577 | 145,808 | 128,772 | 2011 | 2008 | ||||||||||||||||
11 | 1200 Lakeside Drive | Bannockburn | IL | 1 | 260,084 | 100.0 | % | 4,407 | 67,350 | 54,293 | 2005 | 1999 | ||||||||||||||||
12 | 600 West Chicago Avenue | Chicago | IL | 2 | 1,511,849 | 98.3 | % | 46,587 | 370,472 | 332,606 | 2011 | 2001 | ||||||||||||||||
13 | 8750 Bryn Mawr Avenue | Chicago | IL | 2 | 631,518 | 89.0 | % | 16,896 | 91,787 | 79,411 | 2010 | 2005 | ||||||||||||||||
14 | 101-115 W. Washington Street | Indianapolis | IN | 1 | 634,058 | 94.0 | % | 13,050 | 91,323 | 66,601 | 2005 | 1977 | ||||||||||||||||
15 | 111 Monument Circle | Indianapolis | IN | 2 | 1,121,764 | 82.1 | % | 23,780 | 176,314 | 162,025 | 2012 | 1990 | ||||||||||||||||
16 | 109 Brookline Avenue | Boston | MA | 1 | 285,556 | 99.7 | % | 10,579 | 46,140 | 27,141 | 1995 | 1915 | ||||||||||||||||
17 | 111 Market Place | Baltimore | MD | 1 | 569,617 | 99.3 | % | 12,582 | 77,400 | 52,157 | 2003 | 1990 | ||||||||||||||||
18 | 25 S. Charles Street | Baltimore | MD | 1 | 343,815 | 93.7 | % | 7,221 | 38,504 | 25,695 | 2004 | 1972 | ||||||||||||||||
19 | 820 W. Diamond | Gaithersburg | MD | 1 | 134,933 | 88.7 | % | 2,958 | 33,670 | 21,861 | 1997 | 1995 | ||||||||||||||||
20 | Danac Stiles Business Park | Rockville | MD | 3 | 276,637 | 85.4 | % | 6,899 | 65,564 | 46,100 | 2004 | 2002 | ||||||||||||||||
21 | East Eisenhower Parkway | Ann Arbor | MI | 2 | 410,464 | 92.4 | % | 10,559 | 55,293 | 48,123 | 2010 | 2006 | ||||||||||||||||
22 | 4700 Belleview Avenue | Kansas City | MO | 1 | 80,615 | 71.8 | % | 1,079 | 7,157 | 6,061 | 2008 | 1986 | ||||||||||||||||
23 | 111 River Street (3) | Hoboken | NJ | 1 | 566,215 | 100.0 | % | 23,408 | 137,448 | 114,933 | 2009 | 2002 | ||||||||||||||||
24 | North Point Office Complex | Cleveland | OH | 2 | 873,335 | 78.7 | % | 15,509 | 124,635 | 101,336 | 2008 | 1988 | ||||||||||||||||
25 | Cherrington Corporate Center | Moon Township | PA | 7 | 454,890 | 63.8 | % | 6,070 | 72,525 | 51,588 | 1998; 1999 | 1997 | ||||||||||||||||
26 | 1500 Market Street | Philadelphia | PA | 1 | 1,773,967 | 94.2 | % | 35,973 | 294,695 | 213,981 | 2002 | 1974 | ||||||||||||||||
27 | 1600 Market Street | Philadelphia | PA | 1 | 825,968 | 84.4 | % | 19,086 | 133,626 | 77,265 | 1998 | 1983 | ||||||||||||||||
28 | 1735 Market Street | Philadelphia | PA | 1 | 1,290,678 | 79.8 | % | 30,855 | 298,479 | 179,385 | 1998 | 1990 | ||||||||||||||||
29 | Foster Plaza | Pittsburgh | PA | 8 | 727,365 | 84.1 | % | 12,429 | 75,040 | 55,182 | 2005 | 1993 | ||||||||||||||||
30 | 1601 Rio Grande Street | Austin | TX | 1 | 56,219 | 89.6 | % | 1,432 | 8,302 | 5,248 | 1999 | 1985 | ||||||||||||||||
31 | 206 East 9th Street | Austin | TX | 1 | 170,052 | 95.9 | % | 6,039 | 48,850 | 44,870 | 2012 | 1984 | ||||||||||||||||
32 | 4515 Seton Center Parkway | Austin | TX | 1 | 117,265 | 95.1 | % | 3,454 | 23,066 | 13,837 | 1999 | 1997 | ||||||||||||||||
33 | 4516 Seton Center Parkway | Austin | TX | 1 | 120,559 | 94.8 | % | 3,249 | 23,301 | 13,385 | 1999 | 1985 | ||||||||||||||||
34 | 7800 Shoal Creek Boulevard | Austin | TX | 4 | 151,917 | 100.0 | % | 3,594 | 21,272 | 13,374 | 1999 | 1974 | ||||||||||||||||
35 | 812 San Antonio Street | Austin | TX | 1 | 59,321 | 90.1 | % | 1,662 | 8,684 | 5,587 | 1999 | 1987 | ||||||||||||||||
36 | 8701 N Mopac | Austin | TX | 1 | 121,901 | 81.3 | % | 1,535 | 18,430 | 11,650 | 1999 | 1982 | ||||||||||||||||
37 | Bridgepoint Square | Austin | TX | 5 | 440,007 | 94.1 | % | 11,391 | 88,434 | 50,733 | 1997 | 1995 | ||||||||||||||||
38 | Lakewood on the Park | Austin | TX | 2 | 180,558 | 84.1 | % | 3,516 | 36,872 | 22,371 | 1998 | 1998 | ||||||||||||||||
39 | Research Park | Austin | TX | 4 | 1,110,007 | 98.0 | % | 11,709 | 90,635 | 60,388 | 1998 | 1976 |
Property | City and State | No. of Bldgs. | Sq. Feet | % Leased | Annualized Rental Revenue | Undepreciated Book Value | Net Book Value | Year Acquired | Weighted Average Year Built or Substantially Renovated (2) | |||||||||||||||||||
40 | 333 108th Avenue NE | Bellevue | WA | 1 | 440,565 | 100.0 | % | 19,337 | 152,583 | 129,629 | 2009 | 2008 | ||||||||||||||||
41 | 600 108th Avenue NE | Bellevue | WA | 1 | 256,829 | 96.3 | % | $ | 6,837 | $ | 48,364 | $ | 36,432 | 2004 | 2012 | |||||||||||||
42 | 100 East Wisconsin Avenue | Milwaukee | WI | 1 | 435,067 | 89.7 | % | 11,118 | 83,008 | 70,873 | 2010 | 1989 | ||||||||||||||||
Office Properties | 80 | 19,701,716 | 91.0 | % | $ | 463,509 | $ | 3,560,234 | $ | 2,716,010 | 2005 | 1989 | ||||||||||||||||
Other Properties | ||||||||||||||||||||||||||||
Property | City and State | No. of Bldgs. | Sq. Feet | % Leased | Annualized Rental Revenue | Undepreciated Book Value | Net Book Value | Year Acquired | Weighted Average Year Built or Substantially Renovated (2) | |||||||||||||||||||
43 | 97 Newberry Road | East Windsor | CT | 1 | 289,386 | 100.0 | % | $ | 1,816 | $ | 15,350 | $ | 12,407 | 2006 | 1989 | |||||||||||||
44 | 33 Stiles Lane | North Haven | CT | 1 | 175,301 | 52.0 | % | 633 | 9,793 | 7,584 | 2006 | 2002 | ||||||||||||||||
45 | 625 Crane Street | Aurora | IL | 1 | 103,683 | 100.0 | % | 444 | 1,611 | 1,516 | 2007 | 1977 | ||||||||||||||||
46 | 2250 Pilot Knob Road | Mendota Heights | MN | 1 | 87,183 | 100.0 | % | 845 | 6,530 | 3,824 | 1998 | 1995 | ||||||||||||||||
47 | 411 Farwell Avenue | South St. Paul | MN | 1 | 422,727 | 100.0 | % | 1,909 | 16,357 | 12,698 | 2004 | 1970 | ||||||||||||||||
48 | 6200 Glenn Carlson Drive | St. Cloud | MN | 1 | 338,000 | 100.0 | % | 2,196 | 15,753 | 13,510 | 2009 | 2013 | ||||||||||||||||
49 | Raintree Industrial Park | Solon | OH | 12 | 563,182 | 78.5 | % | 2,240 | 12,208 | 11,267 | 2004 | 1975 | ||||||||||||||||
50 | 128 Crews Drive | Columbia | SC | 1 | 185,600 | 100.0 | % | 639 | 3,747 | 3,232 | 2007 | 2011 | ||||||||||||||||
51 | 111 Southchase Boulevard | Fountain Inn | SC | 1 | 168,087 | 100.0 | % | 812 | 6,164 | 4,599 | 2007 | 1987 | ||||||||||||||||
52 | 1043 Global Avenue | Graniteville | SC | 1 | 450,000 | 100.0 | % | 1,484 | 16,886 | 13,226 | 2007 | 1998 | ||||||||||||||||
Industrial/Flex | 21 | 2,783,149 | 92.6 | % | $ | 13,018 | $ | 104,399 | $ | 83,863 | 2006 | 1990 | ||||||||||||||||
53 | 785 Schilinger Road South | Mobile | AL | 1 | 72,000 | 100.0 | % | $ | 1,318 | $ | 11,269 | $ | 9,218 | 2007 | 1998 | |||||||||||||
54 | 401 Vine Street | Delmont | PA | 1 | 53,980 | 100.0 | % | — | 7,117 | 5,952 | 2007 | 1999 | ||||||||||||||||
55 | 633 Frazier Drive | Franklin | TN | 1 | 150,000 | 100.0 | % | 2,402 | 18,980 | 16,187 | 2007 | 1999 | ||||||||||||||||
56 | 9840 Gateway Boulevard North | El Paso | TX | 1 | 72,000 | 100.0 | % | 1,163 | 11,432 | 9,376 | 2007 | 1999 | ||||||||||||||||
57 | 3003 South Expressway 281 | Hidalgo | TX | 1 | 150,000 | 100.0 | % | 2,015 | 17,004 | 13,714 | 2007 | 1999 | ||||||||||||||||
58 | 1331 North Center Parkway | Kennewick | WA | 1 | 53,980 | 100.0 | % | 853 | 9,187 | 7,635 | 2007 | 1999 | ||||||||||||||||
Movie Theaters | 6 | 551,960 | 100.0 | % | $ | 7,751 | $ | 74,989 | $ | 62,082 | 2007 | 1999 | ||||||||||||||||
59 | Cabot Business Park Land | Mansfield | MA | — | — | —% | $ | — | $ | 1,033 | $ | 1,033 | 2003 | — | ||||||||||||||
Land | — | — | 0.0 | % | $ | — | $ | 1,033 | $ | 1,033 | 2003 | — | ||||||||||||||||
60 | Leased Land | Gonzalez | CA | 7 | — | 0.0 | % | $ | 2,965 | $ | 31,968 | $ | 28,957 | 2010 | — | |||||||||||||
Vineyards | 7 | — | 0.0 | % | $ | 2,965 | $ | 31,968 | $ | 28,957 | 2010 | — | ||||||||||||||||
Total Same Properties | 114 | 23,036,825 | 91.4 | % | $ | 487,243 | $ | 3,772,623 | $ | 2,891,945 | 2005 | 1990 |
Properties Held for Sale as of March 31, 2016 (4) | |||||||||||||||||||||||||||||
Property | City and State | No. of Bldgs. | Sq. Feet | % Leased | Annualized Rental Revenue | Undepreciated Book Value | Net Book Value | Year Acquired | Weighted Average Year Built or Substantially Renovated (2) | ||||||||||||||||||||
61 | 633 Ahua Street (5) | Honolulu | HI | 1 | 93,141 | 81.5 | % | $ | 1,808 | $ | 16,401 | $ | 12,545 | 2003 | 2006 | ||||||||||||||
62 | 1525 Locust Street | Philadelphia | PA | 1 | 98,009 | 95.4 | % | 2,337 | 11,208 | 7,024 | 1999 | 1987 | |||||||||||||||||
Total Held for Sale | 2 | 191,150 | 88.6 | % | $ | 4,145 | $ | 27,609 | $ | 19,569 | 2001 | 1996 | |||||||||||||||||
Total Portfolio | 116 | 23,227,975 | 91.4 | % | $ | 491,388 | $ | 3,800,232 | $ | 2,911,514 | 2005 | 1990 |
(1 | ) | Excludes properties disposed prior to April 1, 2016. |
(2 | ) | Weighted based on square feet. |
(3 | ) | Property is subject to a ground lease. |
(4 | ) | All properties held for sale as of March, 31, 2016, have been sold during the second quarter. |
(5 | ) | 633 Ahua Street is a self storage facility with 778 units. |
Property | City and State/Country | No. of Bldgs. | Sq. Feet | % Leased | Annualized Rental Revenue | Undepreciated Book Value | Net Book Value | Year Acquired | Weighted Average Year Built or Substantially Renovated (2) | |||||||||||||||||
1 | Executive Park | Atlanta | GA | 9 | 427,443 | 72.8 | % | $ | 4,990 | $ | 44,224 | $ | 29,365 | 2004; 2007 | 1972 | |||||||||||
2 | 3330 N Washington Boulevard | Arlington | VA | 1 | 55,719 | 15.3 | % | 273 | 8,823 | 5,519 | 1998 | 1987 | ||||||||||||||
3 | 111 East Kilbourn Avenue | Milwaukee | WI | 1 | 373,669 | 81.1 | % | 8,169 | 55,105 | 44,577 | 2008 | 1988 | ||||||||||||||
Q1 2016 Dispositions | 11 | 856,831 | 72.7 | % | $ | 13,432 | $ | 108,152 | $ | 79,461 | 2006 | 1980 | ||||||||||||||
(1 | ) | Statistics for disposed properties are presented as of or for the quarter-ended preceding each sale. |
(2 | ) | Weighted based on square feet. |
For the Three Months Ended | |||||
March 31, | |||||
Weighted Average Share Calculation | 2016 | 2015 | |||
Weighted average EQC common shares outstanding | 124,964 | 128,897 | |||
Weighted average restricted shares outstanding | 876 | 799 | |||
Weighted average common shares outstanding - basic - GAAP EPS, FFO, Normalized FFO | 125,840 | 129,696 | |||
Weighted average number of dilutive RSUs(1) | 1,682 | 178 | |||
Weighted average number of dilutive Series D preferred shares convertible to common shares (2) | — | — | |||
Weighted average common shares outstanding - diluted - GAAP EPS, FFO, & Normalized FFO | 127,522 | 129,874 |
Rollforward of Share Count to March 31, 2016 | Series D Preferred Shares(2) | Series E Preferred Shares(3) | EQC Common Shares(4) | |||||||
Outstanding on December 31, 2015 | 4,915 | 11,000 | 126,350 | |||||||
Issuance of restricted shares | — | — | 137 | |||||||
Repurchase of common shares | — | — | (984 | ) | ||||||
Outstanding on March 31, 2016 | 4,915 | 11,000 | 125,503 | |||||||
Series D preferred shares convertible into common shares on March 31, 2016(2) | 2,363 | |||||||||
Common shares issuable from RSUs as measured on March 31, 2016(1) | 1,754 | |||||||||
Potential common shares as measured on March 31, 2016 | 129,620 |
(1 | ) | As of March 31, 2016, we had granted RSUs to certain employees, officers, and the Chairman of the Board of Trustees. The RSUs contain both service and market-based vesting components. None of the RSUs have vested. If the market-based vesting component was measured as of March 31, 2016, and 2015, 1,754 and 254 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,682 and 178 common shares are reflected in diluted earnings per common share, diluted FFO per common share, and diluted Normalized FFO per common share for the three months ended March 31, 2016 and 2015, respectively. |
(2 | ) | As of March 31, 2016, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 common shares. The series D preferred shares are anti-dilutive for GAAP EPS, FFO per common share and Normalized FFO per common share for all periods presented. |
(3 | ) | On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date). |
(4 | ) | EQC common shares include unvested restricted shares. |
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