8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 2, 2016

EQUITY COMMONWEALTH

(Exact Name of Registrant as Specified in Its Charter)

Maryland

(State or Other Jurisdiction of Incorporation)

	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)

(312) 646-2800

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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))

Item 2.02. Results of Operations and Financial Condition.

On November 2, 2016, Equity Commonwealth, or the Company, issued a press release setting forth the Company’s results of operations and financial condition for the quarter and nine months ended September 30, 2016, and also provided certain supplemental operating and financial data for the quarter and nine months ended September 30, 2016.  Copies of the Company’s press release and supplemental operating and financial data are furnished as Exhibits 99.1 and 99.2 hereto, respectively.

Item 9.01.  Financial Statements and Exhibits.

(d)          Exhibits

99.1         Press release dated November 2, 2016.

99.2         Third Quarter 2016 Supplemental Operating and Financial Data.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EQUITY COMMONWEALTH
By:	/s/ Adam S. Markman
Name:	Adam S. Markman
Title:	Executive Vice President, Chief
	Financial Officer and Treasurer

Date: November 2, 2016

EX-99.1

Exhibit 99.1

Two North Riverside Plaza, Suite 2100, Chicago, Illinois 60606

Equity Commonwealth Reports Third Quarter 2016 Results

Chicago - November 2, 2016 - Equity Commonwealth (NYSE: EQC) today reported financial results for the quarter ended September 30, 2016. All per share results are reported on a diluted basis.

Financial results for the quarter ended September 30, 2016

Operating income was $22.9 million for the quarter ended September 30, 2016. This compares to $28.9 million for the quarter ended September 30, 2015. The decline in operating income was primarily due to property sales.

Net income attributable to common shareholders was $84.4 million, or $0.67 per share, for the quarter ended September 30, 2016. This compares to net income attributable to common shareholders of $23.5 million, or $0.18 per share, for the quarter ended September 30, 2015. The increase in net income was primarily due to an increase in gains from property sales.

Funds from Operations (FFO), as defined by the National Association of Real Estate Investment Trusts, for the quarter ended September 30, 2016, were $31.1 million, or $0.25 per share. This compares to FFO for the quarter ended September 30, 2015 of $24.2 million, or $0.19 per share.

Normalized FFO was $28.9 million, or $0.23 per share. This compares to Normalized FFO for the quarter ended September 30, 2015 of $46.4 million, or $0.36 per share. The following items impacted Normalized FFO for the quarter ended September 30, 2016, compared to the corresponding 2015 period:

• ($0.19) per share of income from properties sold;

• $0.04 per share of preferred distribution savings; and

• $0.03 per share of interest expense savings.

Normalized FFO begins with FFO and eliminates certain items that, by their nature, are not comparable from period to period, non-cash items, and items that tend to obscure the company’s operating performance. Definitions of FFO, Normalized FFO and reconciliations to net income, determined in accordance with U.S. generally accepted accounting principles, or GAAP, are included at the end of this press release.

The weighted average number of diluted common shares outstanding for the quarter ended September 30, 2016 was 126,568,096 shares, compared to 129,878,396 for the quarter ended September 30, 2015.

Same property results for the quarter ended September 30, 2016

The company’s same property portfolio consisted of 37 properties totaling 16.7 million square feet, which excluded one property designated as held for sale at the end of the quarter that has subsequently been sold. Operating results were as follows:

• The same property portfolio was 91.2% leased as of September 30, 2016, compared to 91.3% as of June 30, 2016, and 92.5% as of September 30, 2015.

• The company entered into leases for approximately 237,000 square feet, including renewal leases for approximately 46,000 square feet and new leases for approximately 191,000 square feet.

• GAAP rental rates on new and renewal leases were 9.0% higher compared to prior GAAP rental rates for the same space.

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• Cash rental rates on new and renewal leases were 5.8% lower compared to prior cash rental rates for the same space.

• Same property NOI increased 3.5% when compared to 2015, due to a one-time parking charge and a non-cash item related to a tenant bankruptcy totaling $2.8 million in 2015.

• Same property cash NOI decreased 0.1% when compared to 2015, which included $1.7 million from the one-time parking charge in 2015.

The definitions and reconciliations of same property NOI and same property cash NOI to operating income, determined in accordance with GAAP, are included at the end of this press release. The same property portfolio includes properties continuously owned from July 1, 2015 through September 30, 2016 and excludes properties owned during this period that are designated as held for sale.

Significant events during the quarter ended September 30, 2016

• The company sold 11 properties totaling 5,182,694 square feet for a gross sales price of $728.6 million at a weighted average cap rate in the mid-7% range. Proceeds after credits for rent abatements and contractual lease costs were $663.7 million.

Subsequent Events

• The company closed on the sale of 7800 Shoal Creek Boulevard a 151,917 square foot 4-building property in Austin, TX for a gross sale price of $29.2 million. This property was held for sale as of September 30, 2016.

• The company called the $250 million 6.25% senior unsecured notes due June 2017 for redemption on December 15, 2016.

Disposition Update

The company continues to pursue its previously announced plan to reposition its portfolio through active asset management and dispositions. Year-to-date, through November 2, 2016, the company has sold $1.2 billion of properties at a weighted average cap rate in the high 6% range. Since the change in management in 2014, the company has sold $4.1 billion of assets. Proceeds generated from these sales are creating capacity for future opportunities. The company currently has 12 properties totaling 5 million square feet in various stages of the sale process.

Earnings Conference Call & Supplemental Data

Equity Commonwealth will host a conference call to discuss third quarter results on Thursday, November 3, 2016, at 9:00 A.M. CDT. The conference call will be available via live audio webcast on the Investor Relations section of the company’s website (www.eqcre.com). A replay of the audio webcast will also be available following the call.

A copy of EQC’s Third Quarter 2016 Supplemental Operating and Financial Data is available for download on the Investor Relations section of EQC’s website at www.eqcre.com.

About Equity Commonwealth

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties throughout the United States. EQC’s portfolio is comprised of 37 properties and 16.7 million square feet.

Forward-Looking Statements

Some of the statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding the redemption of the company’s 6.25% senior unsecured notes due June 2017, marketing the company’s properties for sale, consummating asset sales and identifying future investment opportunities. Any forward-looking statements contained in this press release are intended to be made pursuant to the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,”“will,”“should,”“expects,”“intends,”“plans,”“anticipates,”“believes,”“estimates,”“predicts,”“potential,” or the negative of these words and phrases or similar words or phrases which

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are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this press release reflect the company’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause the company’s actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

While forward-looking statements reflect the company’s good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent Annual Report on Form 10-K and in the company’s Quarterly Reports on Form 10-Q for subsequent quarters.

Contact:

Sarah Byrnes, Investor Relations

(312) 646-2801

ir@eqcre.com

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CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

	September 30, 2016			December 31, 2015
ASSETS
Real estate properties:
Land	$	293,225		$	389,410
Buildings and improvements	2,642,588			3,497,942
	2,935,813			3,887,352
Accumulated depreciation	(751,882		)	(898,939		)
	2,183,931			2,988,413
Properties held for sale	13,463			—
Acquired real estate leases, net	52,017			88,760
Cash and cash equivalents	2,405,174			1,802,729
Restricted cash	36,755			32,245
Rents receivable, net of allowance for doubtful accounts of $4,515 and $7,715, respectively	150,728			174,676
Other assets, net	123,699			144,341
Total assets	$	4,965,767		$	5,231,164
LIABILITIES AND SHAREHOLDERS’ EQUITY
Revolving credit facility	$	—		$	—
Senior unsecured debt, net	1,313,267			1,450,606
Mortgage notes payable, net	243,993			246,510
Liabilities related to properties held for sale	667			—
Accounts payable and accrued expenses	87,003			123,587
Assumed real estate lease obligations, net	2,140			4,296
Rent collected in advance	21,529			27,340
Security deposits	8,128			10,338
Total liabilities	$	1,676,727		$	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; 0 and 11,000,000 shares issued and outstanding, respectively, aggregate liquidation preference $0 and $275,000, respectively	—			265,391
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 125,532,523 and 126,349,914 shares issued and outstanding, respectively	1,255			1,263
Additional paid in capital	4,402,927			4,414,611
Cumulative net income	2,554,343			2,333,709
Cumulative other comprehensive loss	(1,117		)	(3,687		)
Cumulative common distributions	(3,111,868		)	(3,111,868		)
Cumulative preferred distributions	(675,763		)	(650,195		)
Total shareholders’ equity	$	3,289,040		$	3,368,487
Total liabilities and shareholders’ equity	$	4,965,767		$	5,231,164

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenues:
Rental income	$	92,722		$	125,459		$	324,345		$	457,128
Tenant reimbursements and other income	21,910			33,749			72,789			118,829
Total revenues	$	114,632		$	159,208		$	397,134		$	575,957
Expenses:
Operating expenses	$	49,313		$	73,571		$	157,964		$	261,128
Depreciation and amortization	29,184			40,522			102,766			156,858
General and administrative	13,277			16,249			38,766			43,718
Loss on asset impairment	—			—			43,736			17,162
Total expenses	$	91,774		$	130,342		$	343,232		$	478,866
Operating income	$	22,858		$	28,866		$	53,902		$	97,091
Interest and other income	3,013			637			7,184			4,813
Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $948, $171, $2,880 and $23, respectively)	(21,427		)	(25,111		)	(65,074		)	(82,926		)
(Loss) gain on early extinguishment of debt	—			(3,887		)	(118		)	6,111
Foreign currency exchange loss	—			(9,809		)	(5		)	(8,953		)
Gain on sale of properties	82,169			39,793			225,210			42,953
Income before income taxes	86,613			30,489			221,099			59,089
Income tax expense	(225		)	(23		)	(465		)	(2,377		)
Net income	$	86,388		$	30,466		$	220,634		$	56,712
Preferred distributions	(1,997		)	(6,981		)	(15,959		)	(20,943		)
Excess fair value of consideration paid over carrying value of preferred shares (1)	—			—			(9,609		)	—
Net income attributable to Equity Commonwealth common shareholders	$	84,391		$	23,485		$	195,066		$	35,769

Weighted average common shares outstanding — basic	125,533		128,739		125,627		129,386
Weighted average common shares outstanding — diluted (2)	126,568		129,878		127,009		130,093
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.67	$	0.18	$	1.55	$	0.28
Diluted	$	0.67	$	0.18	$	1.54	$	0.27

(1)

On May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, for a total of $275.0 million, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date). We recorded $9.6 million related to the excess fair value of consideration paid over the carrying value of the preferred shares as a reduction to net income attributable to Equity Commonwealth common shareholders for the nine months ended September 30, 2016.

(2)

As of September 30, 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 September 30, 2016, and 2015, 1,035 and 1,139 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,035 and 1,139 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 September 30, 2016 and 2015, respectively, and 1,382 and 707 common shares are reflected in these measures for the nine months ended September 30, 2016 and 2015 respectively.

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CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO

(amounts in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Calculation of FFO
Net income	$	86,388		$	30,466		$	220,634		$	56,712
Real estate depreciation and amortization	28,907			40,522			102,015			156,858
Loss on asset impairment	—			—			43,736			17,162
Gain on sale of properties	(82,169		)	(39,793		)	(225,210		)	(42,953		)
FFO attributable to Equity Commonwealth	33,126			31,195			141,175			187,779
Preferred distributions	(1,997		)	(6,981		)	(15,959		)	(20,943		)
Excess fair value of consideration paid over carrying value of preferred shares (1)	—			—			(9,609		)	—
FFO attributable to EQC Common Shareholders	$	31,129		$	24,214		$	115,607		$	166,836
Calculation of Normalized FFO
FFO attributable to EQC common shareholders	$	31,129		$	24,214		$	115,607		$	166,836
Lease value amortization	882			2,766			5,870			6,033
Straight line rent adjustments	(2,954		)	(1,901		)	(12,384		)	(3,584		)
Loss (gain) on early extinguishment of debt	—			3,887			118			(6,111		)
Minimum cash rent from direct financing lease (2)	—			2,032			—			6,096
Interest earned from direct financing lease	—			(96		)	—			(356		)
Shareholder litigation and transition related expenses (3)	(138		)	5,474			999			8,731
Transition services fee	—			198			—			2,613
Gain on sale of securities	—			—			—			(3,080		)
Foreign currency exchange loss	—			9,809			5			8,953
Excess fair value of consideration paid over carrying value of preferred shares (1)	—			—			9,609			—
Normalized FFO attributable to EQC Common Shareholders	$	28,919		$	46,383		$	119,824		$	186,131
Weighted average common shares outstanding -- basic	125,533			128,739			125,627			129,386
Weighted average common shares outstanding -- diluted (4)	126,568			129,878			127,009			130,093
FFO attributable to EQC common shareholders per share -- basic	$	0.25		$	0.19		$	0.92		$	1.29
FFO attributable to EQC common shareholders per share -- diluted	$	0.25		$	0.19		$	0.91		$	1.28
Normalized FFO attributable to EQC common shareholders per share -- basic	$	0.23		$	0.36		$	0.95		$	1.44
Normalized FFO attributable to EQC common shareholders per share -- diluted	$	0.23		$	0.36		$	0.94		$	1.43

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CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO

(amounts in thousands, except per share data)

(1	)	On May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, for a total of $275.0 million, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date). We recorded $9.6 million related to the excess fair value of consideration paid over the carrying value of the preferred shares as a reduction to FFO attributable to Equity Commonwealth common shareholders for the nine months ended September 30, 2016.
(2	)	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 $104 and $379 for the three and nine months ended September 30, 2015, respectively.
(3	)	Shareholder litigation and transition related expenses within general and administrative for the three and nine months ended September 30, 2016 is primarily related to 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 in August 2016 and 2015, we reimbursed $8.2 million and $8.4 million, respectively, to Related/Corvex under the terms of the shareholder-approved agreement. As of September 30, 2016, there is no future obligation to pay any amounts under the shareholder-approved agreement to Related/Corvex. No shareholder litigation related expenses were incurred during 2016.
(4	)	As of September 30, 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 September 30, 2016, and 2015, 1,035 and 1,139 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,035 and 1,139 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 September 30, 2016 and 2015, respectively, and 1,382 and 707 common shares are reflected in these measures for the nine months ended September 30, 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 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.

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CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI

(amounts in thousands)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Calculation of Same Property NOI and Same Property Cash Basis NOI:
Rental income	$	92,722		$	125,459		$	324,345		$	457,128
Tenant reimbursements and other income	21,910			33,749			72,789			118,829
Operating expenses	(49,313		)	(73,571		)	(157,964		)	(261,128		)
NOI	$	65,319		$	85,637		$	239,170		$	314,829
Straight line rent adjustments	(2,954		)	(1,901		)	(12,384		)	(3,584		)
Lease value amortization	882			2,766			5,870			6,033
Lease termination fees	(1,825		)	(1,759		)	(19,569		)	(7,875		)
Cash Basis NOI	$	61,422		$	84,743		$	213,087		$	309,403
Cash Basis NOI from non-same properties (1)	(5,866		)	(29,142		)	(44,264		)	(134,062		)
Same Property Cash Basis NOI	$	55,556		$	55,601		$	168,823		$	175,341
Non-cash rental income and lease termination fees from same properties	2,393			411			10,554			(1,007		)
Same Property NOI	$	57,949		$	56,012		$	179,377		$	174,334
Reconciliation of Same Property NOI to GAAP Operating Income:
Same Property NOI	$	57,949		$	56,012		$	179,377		$	174,334
Non-cash rental income and lease termination fees from same properties	(2,393		)	(411		)	(10,554		)	1,007
Same Property Cash Basis NOI	$	55,556		$	55,601		$	168,823		$	175,341
Cash Basis NOI from non-same properties (1)	5,866			29,142			44,264			134,062
Cash Basis NOI	$	61,422		$	84,743		$	213,087		$	309,403
Straight line rent adjustments	2,954			1,901			12,384			3,584
Lease value amortization	(882		)	(2,766		)	(5,870		)	(6,033		)
Lease termination fees	1,825			1,759			19,569			7,875
NOI	$	65,319		$	85,637		$	239,170		$	314,829
Depreciation and amortization	(29,184		)	(40,522		)	(102,766		)	(156,858		)
General and administrative	(13,277		)	(16,249		)	(38,766		)	(43,718		)
Loss on asset impairment	—			—			(43,736		)	(17,162		)
Operating Income	$	22,858		$	28,866		$	53,902		$	97,091

(1 ) Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale.

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CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI

(amounts in thousands)

NOI is income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level 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 July 1, 2015 through September 30, 2016. The year-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2015 through September 30, 2016. Properties classified as held for sale within our condensed consolidated balance sheets are excluded from the same property versions of these measures.

We consider these measures to be appropriate supplemental measures to net income because they help 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. Cash Basis NOI is among the factors considered with respect to acquisition, disposition and financing decisions. 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.

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EX-99.2

Exhibit 99.2

Supplemental Operating and Financial Data

Third Quarter 2016

Corporate Headquarters                                Investor Relations

Two North Riverside Plaza                                Sarah Byrnes

Suite 2100                                        (312) 646-2801

Chicago, IL 60606                                    ir@eqcre.com

(312) 646-2800                                        www.eqcre.com

TABLE OF CONTENTS

Corporate Information
	Company Profile and Investor Information	3
Financial Information
	Key Financial Data	4
	Condensed Consolidated Balance Sheets	5
	Additional Balance Sheet Information	6
	Condensed Consolidated Statements of Operations	7
	Additional Income Statement Information	8
	Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI	9
	Same Property Results of Operations	10
	Calculation of EBITDA and Adjusted EBITDA	11
	Calculation of Funds from Operations (FFO) and Normalized FFO	12
	Debt Summary	13
	Debt Maturity Schedule	14
	Leverage Ratios, Coverage Ratios and Public Debt Covenants	15
	Acquisitions and Dispositions	16
Portfolio Information
	Top Properties by Annualized Rental Revenue	17
	Leasing Summary	18
	Same Property Leasing Summary	19
	Occupancy and Leasing Analysis	20
	Capital Summary - Expenditures & Leasing Commitments	21
	Tenants Representing 1% or More of Annualized Rental Revenue	22
	Same Property Lease Expiration Schedule	23
	Property Detail	24
	Disposed Property Detail	26
Additional Support
	Common & Potential Common Shares	27
	Definitions	28
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.

2

COMPANY PROFILE AND INVESTOR INFORMATION

Equity Commonwealth (NYSE: EQC) is an internally managed and self-advised real estate investment trust (REIT) with commercial office properties throughout the United States.

Same Property Statistics
No. of		%
Properties	Sq. Feet	Leased
37	16,710	91.2%

Senior Unsecured Debt Ratings	NYSE Trading Symbols
Moody's: Baa3	Common Stock: EQC
Standard & Poor's: BBB-	Preferred Stock Series D: EQCPD
	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
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.

3

KEY FINANCIAL DATA

(amounts in thousands, except per share data)

		As of and for the Three Months Ended
		9/30/2016			6/30/2016			3/31/2016			12/31/2015			9/30/2015
OPERATING INFORMATION
	Ending property count (1)	37			45			60			65			67
	Ending square footage (1)(2)	16,710			20,675			23,037			23,952			25,258
	Percent leased (1)	91.2		%	90.3		%	91.4		%	91.4		%	91.9		%
	Total revenues	$	114,632		$	145,367		$	137,135		$	138,934		$	159,208
	Net income	86,388			87,844			46,402			43,145			30,466
	Net income attributable to EQC common shareholders	84,391			71,254			39,421			36,164			23,485
	NOI	65,319			93,974			79,877			75,114			85,637
	Cash Basis NOI	61,422			74,809			76,856			74,543			84,743
	Adjusted EBITDA	54,917			84,036			69,634			64,755			75,697
	NOI margin	57.0		%	64.6		%	58.2		%	54.1		%	53.8		%
	Cash Basis NOI margin	55.5		%	59.3		%	57.3		%	53.9		%	53.5		%
	FFO attributable to EQC common shareholders	31,129			45,679			38,799			31,839			24,214
	Normalized FFO attributable to EQC common shareholders	28,919			53,591			37,314			34,439			46,383
SHARES OUTSTANDING AND PER SHARE DATA (3)
	Shares Outstanding at End of Period
	Common stock outstanding - basic (includes unvested restricted shares)	125,533			125,533			125,503			126,350			126,350
	Dilutive restricted share units ("RSU"s) (3)	1,035			1,429			1,754			1,143			1,139
	Dilutive Series D Convertible Preferred Shares outstanding(4)	—			—			—			—			—
	Preferred Stock outstanding (4) (5)	4,915			4,915			15,915			15,915			15,915
	Weighted Average Shares Outstanding
	Weighted average common shares outstanding - basic	125,533			125,508			125,840			126,350			128,739
	Weighted average common shares outstanding - diluted	126,568			126,937			127,522			127,493			129,878
	Net income attributable to EQC common shareholders - basic	$	0.67		$	0.57		$	0.31		$	0.29		$	0.18
	Net income attributable to EQC common shareholders - diluted	0.67			0.56			0.31			0.28			0.18
	Normalized FFO attributable to EQC common shareholders - diluted	0.23			0.42			0.29			0.27			0.36
BALANCE SHEET
	Total assets	$	4,965,767		$	4,911,775		$	5,103,149		$	5,231,164		$	5,310,063
	Total liabilities	1,676,727			1,713,137			1,715,778			1,862,677			1,982,855
ENTERPRISE VALUE
	Total debt (book value)	$	1,557,260		$1,557,557			$1,557,839			$1,697,116			$1,813,893
	Less: Cash and cash equivalents	(2,405,174		)	(1,772,337		)	(1,742,128		)	(1,802,729		)	(1,649,162		)
	Plus: Market value of preferred shares (at end of period)	133,202			128,434			402,991			403,792			400,702
	Plus: Market value of diluted common shares (at end of period)	3,824,864			3,698,408			3,591,179			3,535,381			3,472,798
	Total enterprise value	$	3,110,152		$	3,612,062		$	3,809,881		$	3,833,560		$	4,038,231
RATIOS
	Net debt / enterprise value	(27.3		)%	(5.9		)%	(4.8		)%	(2.8		)%	4.1		%
	Net debt / annualized adjusted EBITDA (6)	(3.9)x			(0.6)x			(0.7)x			(0.4)x			0.5x
	Adjusted EBITDA (6) / interest expense	2.6x			3.9x			3.1x			2.7x			3.0x

(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 September 30, 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 September 30, 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 May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date).
(6)	Refer to the Calculation of EBITDA and Adjusted EBITDA for a reconciliation of these measures to Net income.

4

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

	September 30, 2016			December 31, 2015
ASSETS
Real estate properties:
Land	$	293,225		$	389,410
Buildings and improvements	2,642,588			3,497,942
	2,935,813			3,887,352
Accumulated depreciation	(751,882		)	(898,939		)
	2,183,931			2,988,413
Properties held for sale	13,463			—
Acquired real estate leases, net	52,017			88,760
Cash and cash equivalents	2,405,174			1,802,729
Restricted cash	36,755			32,245
Rents receivable, net of allowance for doubtful accounts of $4,515 and $7,715, respectively	150,728			174,676
Other assets, net	123,699			144,341
Total assets	$	4,965,767		$	5,231,164
LIABILITIES AND SHAREHOLDERS’ EQUITY
Revolving credit facility	$	—		$	—
Senior unsecured debt, net	1,313,267			1,450,606
Mortgage notes payable, net	243,993			246,510
Liabilities related to properties held for sale	667			—
Accounts payable and accrued expenses	87,003			123,587
Assumed real estate lease obligations, net	2,140			4,296
Rent collected in advance	21,529			27,340
Security deposits	8,128			10,338
Total liabilities	$	1,676,727		$	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; 0 and 11,000,000 shares issued and outstanding, respectively, aggregate liquidation preference $0 and $275,000, respectively	—			265,391
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 125,532,523 and 126,349,914 shares issued and outstanding, respectively	1,255			1,263
Additional paid in capital	4,402,927			4,414,611
Cumulative net income	2,554,343			2,333,709
Cumulative other comprehensive loss	(1,117		)	(3,687		)
Cumulative common distributions	(3,111,868		)	(3,111,868		)
Cumulative preferred distributions	(675,763		)	(650,195		)
Total shareholders’ equity	$	3,289,040		$	3,368,487
Total liabilities and shareholders’ equity	$	4,965,767		$	5,231,164

5

ADDITIONAL BALANCE SHEET INFORMATION

(amounts in thousands)

	September 30, 2016		December 31, 2015
Additional Balance Sheet Information
Straight-line rents receivable, net of allowance for doubtful accounts	$	142,606	$	157,600
Accounts receivable, net of allowance for doubtful accounts	8,122		17,076
Rents receivable, net of allowance for doubtful accounts	$	150,728	$	174,676
Capitalized lease incentives, net	$	7,299	$	9,124
Deferred financing fees, net	3,768		4,980
Deferred leasing costs, net	88,324		110,228
Other	24,308		20,009
Other assets, net	$	123,699	$	144,341
Accounts payable	$	4,898	$	5,321
Accrued interest	12,792		19,971
Accrued taxes	22,508		36,724
Accrued capital expenditures	18,278		21,136
Accrued leasing costs	2,997		802
Other accrued liabilities	25,530		39,633
Accounts payable and accrued expenses	$	87,003	$	123,587

6

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Revenues:
Rental income	$	92,722		$	125,459		$	324,345		$	457,128
Tenant reimbursements and other income	21,910			33,749			72,789			118,829
Total revenues	$	114,632		$	159,208		$	397,134		$	575,957
Expenses:
Operating expenses	$	49,313		$	73,571		$	157,964		$	261,128
Depreciation and amortization	29,184			40,522			102,766			156,858
General and administrative	13,277			16,249			38,766			43,718
Loss on asset impairment	—			—			43,736			17,162
Total expenses	$	91,774		$	130,342		$	343,232		$	478,866
Operating income	$	22,858		$	28,866		$	53,902		$	97,091
Interest and other income	3,013			637			7,184			4,813
Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $948, $171, $2,880 and $23, respectively)	(21,427		)	(25,111		)	(65,074		)	(82,926		)
(Loss) gain on early extinguishment of debt	—			(3,887		)	(118		)	6,111
Foreign currency exchange loss	—			(9,809		)	(5		)	(8,953		)
Gain on sale of properties	82,169			39,793			225,210			42,953
Income before income taxes	86,613			30,489			221,099			59,089
Income tax expense	(225		)	(23		)	(465		)	(2,377		)
Net income	$	86,388		$	30,466		$	220,634		$	56,712
Preferred distributions	(1,997		)	(6,981		)	(15,959		)	(20,943		)
Excess fair value of consideration paid over carrying value of preferred shares (1)	—			—			(9,609		)	—
Net income attributable to Equity Commonwealth common shareholders	$	84,391		$	23,485		$	195,066		$	35,769

Weighted average common shares outstanding — basic (2)	125,533		128,739		125,627		129,386
Weighted average common shares outstanding — diluted (2)	126,568		129,878		127,009		130,093
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.67	$	0.18	$	1.55	$	0.28
Diluted	$	0.67	$	0.18	$	1.54	$	0.27

(1	)	On May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, for a total of $275.0 million, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date). We recorded $9.6 million related to the excess fair value of consideration paid over the carrying value of the preferred shares as a reduction to net income attributable to Equity Commonwealth common shareholders for the nine months ended September 30, 2016.
(2	)	Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

7

ADDITIONAL INCOME STATEMENT INFORMATION

(amounts in thousands, except per share data)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016		2015
Additional Income Statement Information
Non-recurring general and administrative
Shareholder litigation and transition related expenses (1)	$	(138	)	$	5,474	$	999	$	8,731
Transition services fee paid to RMR (2)	—			198		—		2,613
Gain on sale of properties
Gain excluding reclassification of accumulated foreign currency translation adjustment	$	82,169		$	39,793	$	225,210	$	106,160
Reclassification of accumulated foreign currency translation adjustment	—			—		—		(63,207		)
Total gain on sale of properties	$	82,169		$	39,793	$	225,210	$	42,953

(1	)	Shareholder litigation and transition related expenses within general and administrative for the three and nine months ended September 30, 2016 is primarily related to 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 in August 2016 and 2015, we reimbursed $8.2 million and $8.4 million, respectively, to Related/Corvex under the terms of the shareholder-approved agreement. As of September 30, 2016, there is no future obligation to pay any amounts under the shareholder-approved agreement to Related/Corvex. 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.

8

CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI

(amounts in thousands)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Calculation of Same Property NOI and Same Property Cash Basis NOI:
Rental income	$	92,722		$	125,459		$	324,345		$	457,128
Tenant reimbursements and other income	21,910			33,749			72,789			118,829
Operating expenses	(49,313		)	(73,571		)	(157,964		)	(261,128		)
NOI	$	65,319		$	85,637		$	239,170		$	314,829
Straight line rent adjustments	(2,954		)	(1,901		)	(12,384		)	(3,584		)
Lease value amortization	882			2,766			5,870			6,033
Lease termination fees	(1,825		)	(1,759		)	(19,569		)	(7,875		)
Cash Basis NOI	$	61,422		$	84,743		$	213,087		$	309,403
Cash Basis NOI from non-same properties (1)	(5,866		)	(29,142		)	(44,264		)	(134,062		)
Same Property Cash Basis NOI	$	55,556		$	55,601		$	168,823		$	175,341
Non-cash rental income and lease termination fees from same properties	2,393			411			10,554			(1,007		)
Same Property NOI	$	57,949		$	56,012		$	179,377		$	174,334
Reconciliation of Same Property NOI to GAAP Operating Income:
Same Property NOI	$	57,949		$	56,012		$	179,377		$	174,334
Non-cash rental income and lease termination fees from same properties	(2,393		)	(411		)	(10,554		)	1,007
Same Property Cash Basis NOI	$	55,556		$	55,601		$	168,823		$	175,341
Cash Basis NOI from non-same properties (1)	5,866			29,142			44,264			134,062
Cash Basis NOI	$	61,422		$	84,743		$	213,087		$	309,403
Straight line rent adjustments	2,954			1,901			12,384			3,584
Lease value amortization	(882		)	(2,766		)	(5,870		)	(6,033		)
Lease termination fees	1,825			1,759			19,569			7,875
NOI	$	65,319		$	85,637		$	239,170		$	314,829
Depreciation and amortization	(29,184		)	(40,522		)	(102,766		)	(156,858		)
General and administrative	(13,277		)	(16,249		)	(38,766		)	(43,718		)
Loss on asset impairment	—			—			(43,736		)	(17,162		)
Operating Income	$	22,858		$	28,866		$	53,902		$	97,091

(1) Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale.

9

SAME PROPERTY RESULTS OF OPERATIONS

(dollars and square feet in thousands)

	As of and for the Three Months Ended September 30,								As of and for the Nine Months Ended September 30,
	2016			2015			% Change		2016			2015			% Change
Properties	37			37					37			37
Square Feet(1)	16,710			16,635					16,710			16,635
% Leased	91.2		%	92.5		%	(1.3	)%	91.2		%	92.5		%	(1.3	)%
Rents, tenant reimbursements and other income	$	97,964		$	97,831		0.1	%	$	289,307		$	297,411		(2.7	)%
Straight line rent adjustment	3,036			1,092					11,861			(1,076		)
Lease value amortization	(708		)	(1,674		)			(2,071		)	(3,395		)
Lease termination fees	65			993					764			3,464
Total revenue	100,357			98,242			2.2	%	299,861			296,404			1.2	%
Operating expenses	(42,408		)	(42,230		)	0.4	%	(120,484		)	(122,070		)	(1.3	)%
NOI	$	57,949		$	56,012		3.5	%	$	179,377		$	174,334		2.9	%
NOI Margin	57.7		%	57.0		%			59.8		%	58.8		%
Straight line rent adjustment	$	(3,036	)	$	(1,092	)			$	(11,861	)	$	1,076
Lease value amortization	708			1,674					2,071			3,395
Lease termination fees	(65		)	(993		)			(764		)	(3,464		)
Cash Basis NOI	$	55,556		$	55,601		(0.1	)%	168,823			175,341			(3.7	)%
Cash Basis NOI Margin	56.7		%	56.8		%			58.4		%	59.0		%

(1 ) The change in total square footage results from remeasurement.

10

CALCULATION OF EBITDA AND ADJUSTED EBITDA

(amounts in thousands)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net income	$	86,388		$	30,466		$	220,634		$	56,712
Interest expense	21,427			25,111			65,074			82,926
Income tax expense	225			23			465			2,377
Depreciation and amortization	29,184			40,522			102,766			156,858
EBITDA	$	137,224		$	96,122		$	388,939		$	298,873
Loss on asset impairment	—			—			43,736			17,162
Loss (gain) on early extinguishment of debt	—			3,887			118			(6,111		)
Shareholder litigation costs and transition-related expenses	(138		)	5,474			999			8,731
Transition services fee	—			198			—			2,613
Gain on sale of properties	(82,169		)	(39,793		)	(225,210		)	(42,953		)
Foreign currency exchange loss	—			9,809			5			8,953
Adjusted EBITDA	$	54,917		$	75,697		$	208,587		$	287,268

11

CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO

(amounts in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Calculation of FFO
Net income	$	86,388		$	30,466		$	220,634		$	56,712
Real estate depreciation and amortization	28,907			40,522			102,015			156,858
Loss on asset impairment	—			—			43,736			17,162
Gain on sale of properties	(82,169		)	(39,793		)	(225,210		)	(42,953		)
FFO attributable to Equity Commonwealth	33,126			31,195			141,175			187,779
Preferred distributions	(1,997		)	(6,981		)	(15,959		)	(20,943		)
Excess fair value of consideration paid over carrying value of preferred shares (1)	—			—			(9,609		)	—
FFO attributable to EQC Common Shareholders	$	31,129		$	24,214		$	115,607		$	166,836
Calculation of Normalized FFO
FFO attributable to EQC common shareholders	$	31,129		$	24,214		$	115,607		$	166,836
Lease value amortization	882			2,766			5,870			6,033
Straight line rent adjustments	(2,954		)	(1,901		)	(12,384		)	(3,584		)
Loss (gain) on early extinguishment of debt	—			3,887			118			(6,111		)
Minimum cash rent from direct financing lease (2)	—			2,032			—			6,096
Interest earned from direct financing lease	—			(96		)	—			(356		)
Shareholder litigation and transition related expenses (3)	(138		)	5,474			999			8,731
Transition services fee	—			198			—			2,613
Gain on sale of securities	—			—			—			(3,080		)
Foreign currency exchange loss	—			9,809			5			8,953
Excess fair value of consideration paid over carrying value of preferred shares (1)	—			—			9,609			—
Normalized FFO attributable to EQC Common Shareholders	$	28,919		$	46,383		$	119,824		$	186,131
Weighted average common shares outstanding -- basic (4)	125,533			128,739			125,627			129,386
Weighted average common shares outstanding -- diluted (4)	126,568			129,878			127,009			130,093
FFO attributable to EQC common shareholders per share -- basic	$	0.25		$	0.19		$	0.92		$	1.29
FFO attributable to EQC common shareholders per share -- diluted	$	0.25		$	0.19		$	0.91		$	1.28
Normalized FFO attributable to EQC common shareholders per share -- basic	$	0.23		$	0.36		$	0.95		$	1.44
Normalized FFO attributable to EQC common shareholders per share -- diluted	$	0.23		$	0.36		$	0.94		$	1.43

(1)	On May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, for a total of $275.0 million, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date). We recorded $9.6 million related to the excess fair value of consideration paid over the carrying value of the preferred shares as a reduction to FFO attributable to Equity Commonwealth common shareholders for the nine months ended September 30, 2016.
(2)	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 $104 and $379 for the three and nine months ended September 30, 2015, respectively.
(3)	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.
(4)	Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

12

DEBT SUMMARY

As of September 30, 2016

(dollars in thousands)

	Interest Rate		Principal Balance		Maturity Date	Open at Par Date	Due at Maturity		Years to Maturity
Unsecured Debt:
Unsecured Floating Rate Debt:
Revolving credit facility (LIBOR + 125 bps) (1)	1.78	%	$	—	1/28/2019	Open	$	—	2.3
Term loan (LIBOR + 140 bps) (2)	1.93	%	200,000		1/28/2020	Open	200,000		3.3
Term loan (LIBOR + 180 bps) (2)	2.33	%	200,000		1/28/2022	Open	200,000		5.3
Total / weighted average unsecured floating rate debt	2.13	%	$	400,000			$	400,000	4.3
Unsecured Fixed Rate Debt:
6.25% Senior Unsecured Notes Due 2017 (3)	6.25	%	250,000		6/15/2017	12/15/2016	250,000		0.7
6.65% Senior Unsecured Notes Due 2018	6.65	%	250,000		1/15/2018	7/15/2017	250,000		1.3
5.875% Senior Unsecured Notes Due 2020	5.88	%	250,000		9/15/2020	3/15/2020	250,000		4.0
5.75% Senior Unsecured Notes Due 2042	5.75	%	175,000		8/1/2042	8/1/2017	175,000		25.9
Total / weighted average unsecured fixed rate debt	6.16	%	$	925,000			$	925,000	6.5
Secured Debt:
Secured Fixed Rate Debt:
Parkshore Plaza	5.67	%	41,275		5/1/2017	12/1/2016	41,275		0.6
1735 Market Street (4)	5.66	%	168,103		12/2/2019	12/1/2016	160,710		3.2
206 East 9th Street	5.69	%	27,164		1/5/2021	7/5/2020	24,836		4.3
33 Stiles Lane	6.75	%	2,510		3/1/2022	12/1/2021	—		5.4
97 Newberry Road	5.71	%	6,024		3/1/2026	None	—		9.4
Total / weighted average secured fixed rate debt	5.68	%	$	245,076			$	226,821	3.1
Total / weighted average (5)	5.06	%	$	1,570,076			$	1,551,821	5.4

(1)	Represents amounts outstanding on EQC's $750,000 revolving credit facility as of September 30, 2016. The interest rate presented is as of September 30, 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 September 30, 2016. The interest rate presented is as of September 30, 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)	On November 1, 2016, we delivered notice of our intent to redeem at par our $250 million 6.25% senior unsecured notes due 2017 on December 15, 2016.  The notes will be redeemed for cash at a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest up to, but excluding, the redemption date.
(4)	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. The open at par date in the table above reflects the swap expiration date, as the debt at 1735 Market Street is otherwise open for repayment.
(5)	Total debt outstanding as of September 30, 2016, including net unamortized premiums, discounts, and deferred financing fees was $1,557,260. Net unamortized deferred financing fees related to our revolving credit facility of $3,768 are included in other assets, net on our condensed consolidated balance sheets as of September 30, 2016.

13

DEBT MATURITY SCHEDULE

(dollars in thousands)

Scheduled Payments During Period
Year	Unsecured Floating Rate Debt				Unsecured Fixed Rate Debt				Secured Fixed Rate Debt				Total				Weighted Average Interest Rate
2016	$	—			$	—			$	860			$	860			5.8	%
2017	—				250,000			(1)	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			(3)	250,000				1,674				451,674				4.1	%
2021	—				—				25,982				25,982				5.7	%
2022	200,000			(3)	—				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			$	245,076			$	1,570,076		(4)	5.1	%
Percent	25.5		%		58.9		%		15.6		%		100.0		%

(1)	On November 1, 2016, we delivered notice of our intent to redeem at par our $250 million 6.25% senior unsecured notes due 2017 on December 15, 2016.  The notes will be redeemed for cash at a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest up to, but excluding, the redemption date.
(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)	Represents amounts outstanding on EQC's term loans as of September 30, 2016. The interest rate presented is as of September 30, 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.
(4)	Total debt outstanding as of September 30, 2016, including net unamortized premiums, discounts, and deferred financing fees was $1,557,260. Net unamortized deferred financing fees related to our revolving credit facility of $3,768 are included in other assets, net on our condensed consolidated balance sheets as of September 30, 2016.

14

LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS

(dollars in thousands)

	As of and for the Three Months Ended
	9/30/2016		6/30/2016		3/31/2016		12/31/2015		9/30/2015
Leverage Ratios
Total debt / total assets	31.4	%	31.7	%	30.5	%	32.4	%	34.2	%
Total debt / total market capitalization	28.2	%	28.9	%	28.1	%	30.1	%	31.9	%
Total debt + preferred stock / total market capitalization	30.7	%	31.3	%	35.3	%	37.3	%	38.9	%
Total debt / annualized adjusted EBITDA (1)	7.1x		4.6x		5.6x		6.6x		6.0x
Total debt + preferred stock / annualized adjusted EBITDA (1)	7.7x		5.0x		7.0x		8.1x		7.3x
Net debt / enterprise value	(27.3	)%	(5.9	)%	(4.8	)%	(2.8	)%	4.1	%
Net debt + preferred stock / enterprise value	(23.0	)%	(2.4	)%	5.7	%	7.8	%	14.0	%
Net debt / annualized adjusted EBITDA (1)	(3.9)x		(0.6)x		(0.7)x		(0.4)x		0.5x
Net debt + preferred stock / annualized adjusted EBITDA (1)	(3.3)x		(0.3)x		0.8x		1.2x		1.9x
Secured debt / total assets	4.9	%	5.0	%	4.8	%	4.7	%	6.9	%
Variable rate debt (2) / total debt	25.7	%	25.7	%	25.7	%	23.6	%	22.1	%
Variable rate debt (2) / total assets	8.1	%	8.1	%	7.8	%	7.6	%	7.5	%
Coverage Ratios
Adjusted EBITDA / interest expense (1)	2.6x		3.9x		3.1x		2.7x		3.0x
Adjusted EBITDA / interest expense + preferred distributions (1)	2.3x		3.0x		2.4x		2.1x		2.4x
Public Debt Covenants
Debt / adjusted total assets (3) (maximum 60%)	27.6	%	27.2	%	26.4	%	27.9	%	29.5	%
Secured debt / adjusted total assets (3) (maximum 40%)	4.3	%	4.3	%	4.1	%	4.0	%	5.9	%
Consolidated income available for debt service / debt service (minimum 1.5x)	2.3x		3.0x		3.1x		2.9x		3.1x
Total unencumbered assets (3) / unsecured debt (minimum 150% / 200%)	392.0	%	399.2	%	412.7	%	386.9	%	378.3	%

(1)	Refer to the Calculation of EBITDA and Adjusted EBITDA for a reconciliation of these measures to Net income.
(2)	We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019.
(3)	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.

15

ACQUISITIONS AND DISPOSITIONS

(dollars in thousands)

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
633 Ahua Street	Honolulu	HI	1	93,141	81.5	%	$	29,000		$	12,545	$	1,808
1525 Locust Street	Philadelphia	PA	1	98,009	95.4	%	17,700			7,024		2,337
Downtown Austin Portfolio	Austin	TX	2	115,540	89.9	%	32,600			10,835		3,094
Lakewood on the Park	Austin	TX	1	180,558	84.1	%	37,100			22,371		3,516
Leased Land (Vineyards)	Gonzalez	CA	1	—	—	%	48,450			28,957		2,965
9110 East Nichols Avenue	Centennial	CO	1	143,958	99.8	%	17,200			13,711		2,433
Movie Theaters	Multiple	Multi.	6	551,960	100.0	%	109,100			62,082		7,751
Total Q2 Dispositions			13	1,183,166	94.7	%	$	291,150		$	157,525	$	23,904
111 River Street	Hoboken	NJ	1	566,215	100.0	%	$	235,000	(2)	$	115,428	$	23,440
South Carolina Industrial Portfolio	Multiple	SC	3	803,687	100.0	%	30,000			20,871		2,952
Sky Park Centre	San Diego	CA	1	63,485	100.0	%	13,700			6,385		1,429
Raintree Industrial Park	Solon	OH	1	563,182	81.2	%	11,500			11,259		2,066
8701 N Mopac	Austin	TX	1	121,901	79.1	%	21,500			11,907		2,290
Midwest Portfolio	Multiple	Multi.	4	3,064,224	86.5	%	416,900		(3)	355,125		58,987
Total Q3 Dispositions			11	5,182,694	89.5	%	$	728,600		$	520,975	$	91,164
Total Disposed Year-to-Date			27	7,222,691	88.4	%	$	1,142,365		$	757,961	$	128,500

The dispositions above resulted in a gain on sale of properties of $82.2 million and $225.2 million for the three and nine months ended September 30, 2016, respectively.

(1	)	As of the quarter-ended preceding each sale.
(2	)	Property sale represented a leasehold interest. Proceeds from the sale of 111 River Street, after credits for contractual lease costs, were $210.8 million.
(3	)	Proceeds from the sale of the Midwest Portfolio, after credits for rent abatements and contractual lease costs, were $376.2 million.

16

TOP PROPERTIES BY ANNUALIZED RENTAL REVENUE ⁽¹⁾ 

As of September 30, 2016

(sorted by annualized rental revenue, dollars in thousands)

Property		City	State	No. of Buildings		Square 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		98.6		%	$	47,345		$	390,796	$	347,894	2011	2001
2	1500 Market Street	Philadelphia	PA	1		1,773,967		91.8		%	38,047			298,506		212,560		2002	1974
3	1735 Market Street	Philadelphia	PA	1		1,290,678		66.8		%	27,409			301,048		183,848		1998	1990
4	1225 Seventeenth Street	Denver	CO	1		672,465		91.1		%	23,156			156,641		131,810		2009	1982
5	1600 Market Street	Philadelphia	PA	1		825,968		85.9		%	20,629			134,648		76,236		1998	1983
6	333 108th Avenue NE	Bellevue	WA	1		440,565		100.0		%	20,452			153,067		128,186		2009	2008
7	8750 Bryn Mawr Avenue	Chicago	IL	2		631,518		97.4		%	16,962			92,512		78,793		2010	2005
8	6600 North Military Trail	Boca Raton	FL	3		639,830		100.0		%	16,577			145,808		127,149		2011	2008
9	111 Market Place	Baltimore	MD	1		569,617		98.9		%	12,381			77,832		51,173		2003	1990
10	Bridgepoint Square	Austin	TX	5		440,007		92.8		%	12,118			89,724		50,655		1997	1995
11	Foster Plaza	Pittsburgh	PA	8		727,365		85.4		%	11,847			76,590		55,467		2005	1993
12	Research Park	Austin	TX	4		1,110,007		98.0		%	11,709			90,642		59,030		1998	1976
13	109 Brookline Avenue	Boston	MA	1		285,556		99.7		%	10,696			46,731		26,935		1995	1915
14	East Eisenhower Parkway	Ann Arbor	MI	2		410,464		94.8		%	10,558			56,181		48,339		2010	2006
15	1601 Dry Creek Drive	Longmont	CO	1		552,865		97.0		%	8,761			34,305		24,510		2004	1982
	Subtotal (15 properties)			34		11,882,721		91.6		%	$	288,647		$	2,145,031	$	1,602,585
	All other properties (22 properties)			33		4,827,477		90.2		%	88,395			790,782		581,346
	Total (37 properties)			67		16,710,198		91.2		%	$	377,042		$	2,935,813	$	2,183,931
	Same Property NOI & Cash Basis NOI Composition			Q3 2016 NOI		% of NOI		Q3 2016 Cash Basis NOI			% of Cash Basis NOI
	Top 15 Properties			$	43,183	74.5	%	$	40,777		73.4		%
	All other properties (22 properties)			14,766		25.5	%	14,779			26.6		%
	Total (37 properties)			$	57,949	100.0	%	$	55,556		100.0		%

(1)	Excludes properties classified as held for sale.
(2)	Weighted based on square feet.

17

LEASING SUMMARY

(dollars and square feet in thousands, except per square foot data)

	As of and for the Three Months Ended
	9/30/2016			6/30/2016			3/31/2016			12/31/2015			9/30/2015
Properties (1)	37			45			60			65			67
Total square feet (1)(2)	16,710			20,675			23,037			23,952			25,258
Percentage leased	91.2		%	90.3		%	91.4		%	91.4		%	91.9		%
Total Leasing Activity
Square feet	237			802			1,853			984			1,384
Lease term (years)	7.4			8.4			7.8			6.7			6.3
Starting cash rent	$	27.30		$	25.73		$	29.48		$	24.57		$	29.89
Percent change in cash rent (3)	(5.8		)%	(3.7		)%	(1.3		)%	5.6		%	3.2		%
Percent change in GAAP rent (3)	9.0		%	6.9		%	11.2		%	15.5		%	9.1		%
Total TI & LC per square foot (4)	$	47.06		$	48.85		$	25.44		$	38.44		$	39.35
Total TI & LC per sq. ft. per year of lease term (4)	$	6.37		$	5.84		$	3.27		$	5.74		$	6.22
Renewal Leases
Square feet	46			307			1,569			585			955
Lease term (years)	4.9			5.5			7.4			4.0			5.0
Starting cash rent	$	37.91		$	23.56		$	28.92		$	23.58		$	28.95
Percent change in cash rent (3)	14.6		%	(1.0		)%	0.3		%	5.4		%	3.1		%
Percent change in GAAP rent (3)	24.2		%	9.3		%	13.2		%	15.3		%	8.5		%
Total TI & LC per square foot (4)	$	24.26		$	18.68		$	17.33		$	15.13		$	29.74
Total TI & LC per sq. ft. per year of lease term (4)	$	4.93		$	3.42		$	2.33		$	3.81		$	5.89
New Leases
Square feet	191			495			284			399			429
Lease term (years)	8.0			10.2			9.7			10.7			9.2
Starting cash rent	$	24.76		$	27.08		$	32.55		$	26.03		$	31.98
Percent change in cash rent (3)	(12.6		)%	(5.4		)%	(8.9		)%	6.4		%	3.6		%
Percent change in GAAP rent (3)	3.4		%	5.5		%	1.9		%	16.3		%	11.4		%
Total TI & LC per square foot (4)	$	52.53		$	67.56		$	69.13		$	72.68		$	60.72
Total TI & LC per sq. ft. per year of lease term (4)	$	6.59		$	6.64		$	7.15		$	6.78		$	6.62

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 (rent before deducting any initial period free rent), including tenant expense reimbursements, if any, to the rent, including tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years was excluded from the calculation.
(4)	Includes tenant improvements (TI) and leasing commissions (LC).

18

SAME PROPERTY LEASING SUMMARY

(dollars and square feet in thousands, except per square foot data)

	As of and for the Three Months Ended
	9/30/2016			6/30/2016			3/31/2016			12/31/2015			9/30/2015
Properties	37			37			37			37			37
Total square feet	16,710			16,710			16,710			16,635			16,635
Percentage leased	91.2		%	91.3		%	92.1		%	92.1		%	92.5		%
Total Leasing Activity
Square feet	237			432			1,083			766			1,158
Lease term (years)	7.4			7.1			5.0			7.2			6.4
Starting cash rent	$	27.30		$	28.85		$	39.01		$	26.65		$	32.47
Percent change in cash rent (1)	(5.8		)%	1.2		%	(2.5		)%	6.1		%	4.4		%
Percent change in GAAP rent (1)	9.0		%	10.3		%	6.9		%	16.4		%	9.9		%
Total TI & LC per square foot (2)	$	47.06		$	42.31		$	26.38		$	44.49		$	44.24
Total TI & LC per sq. ft. per year of lease term (2)	$	6.37		$	5.94		$	5.28		$	6.20		$	6.87
Renewal Leases
Square feet	46			224			839			419			812
Lease term (years)	4.9			5.7			3.4			3.8			5.1
Starting cash rent	$	37.91		$	25.47		$	40.47		$	26.52		$	31.74
Percent change in cash rent (1)	14.6		%	(0.6		)%	(0.3		)%	5.7		%	3.4		%
Percent change in GAAP rent (1)	24.2		%	10.6		%	9.0		%	15.5		%	8.6		%
Total TI & LC per square foot (2)	$	24.26		$	21.10		$	11.30		$	16.28		$	34.31
Total TI & LC per sq. ft. per year of lease term (2)	$	4.93		$	3.68		$	3.32		$	4.32		$	6.67
New Leases
Square feet	191			208			244			347			346
Lease term (years)	8.0			8.6			10.4			11.3			9.5
Starting cash rent	$	24.76		$	32.49		$	33.98		$	26.80		$	34.20
Percent change in cash rent (1)	(12.6		)%	3.3		%	(11.4		)%	7.0		%	8.9		%
Percent change in GAAP rent (1)	3.4		%	10.0		%	(1.0		)%	18.9		%	15.5		%
Total TI & LC per square foot (2)	$	52.53		$	65.15		$	78.25		$	78.53		$	67.52
Total TI & LC per sq. ft. per year of lease term (2)	$	6.59		$	7.56		$	7.49		$	6.96		$	7.11

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 (rent before deducting any initial period free rent), including tenant expense reimbursements, if any, to the rent, including tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years was excluded from the calculation.
(2)	Includes tenant improvements (TI) and leasing commissions (LC).

19

OCCUPANCY AND LEASING ANALYSIS

(square feet in thousands)

Square Footage Leased - Three Months Ended September 30, 2016	Total Properties
	Square Feet		% Leased
Total Portfolio - June 30, 2016	18,678		90.3	%
Less: Leased SF of Sold Properties and Properties Held for Sale	3,418		86.2	%
Same Property - June 30, 2016	15,260		91.3	%
Expirations	(264	)	(1.5	)%
Renewal Leases	46		0.3	%
New Leases	191		1.1	%
Total Leasing Activity	237		1.4	%
Same Property - September 30, 2016	15,233		91.2	%
Square Footage Leased - Nine Months Ended September 30, 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	6,576		89.9	%
Same Property - December 31, 2015	15,321		92.1	%
Net impact of remeasurements	52		(0.1	)%
Expirations	(1,892	)	(11.2	)%
Renewal Leases	1,109		6.6	%
New Leases	643		3.8	%
Total Leasing Activity	1,752		10.4	%
Same Property - September 30, 2016	15,233		91.2	%

Total Square Feet Owned as of
September 30, 2016	June 30, 2016	December 31, 2015
16,710	20,675	23,952

20

CAPITAL SUMMARY

EXPENDITURES & LEASING COMMITMENTS

(dollars and square feet in thousands)

CAPITAL SUMMARY	For the Three Months Ended
EXPENDITURES	9/30/2016		6/30/2016		3/31/2016		12/31/2015		9/30/2015
Tenant improvements	$	20,411	$	19,537	$	25,391	$	20,874	$	13,497
Leasing costs	2,292		10,609		9,765		9,858		14,166
Building improvements (1)	8,942		7,713		6,541		8,151		5,327
Total capital expenditures	$	31,645	$	37,859	$	41,697	$	38,883	$	32,990
Average square feet during period (2)	19,454		22,637		23,590		24,605		27,308
Building improvements per average total sq. ft. during period	$	0.46	$	0.34	$	0.28	$	0.33	$	0.20

CAPITAL SUMMARY	For the Three Months Ended
LEASING COMMITMENTS	September 30, 2016
	New Leases		Renewals		Total
Rentable square feet leased during the period	191		46		237
Total TI & LC (3)	$	9,887	$	1,110	$	10,997
Total TI & LC per square foot (3)	$	52.53	$	24.26	$	47.06
Weighted average lease term by square foot (years)	8.0		4.9		7.4
Total TI & LC per sq. ft. per year of lease term (3)	$	6.59	$	4.93	$	6.37

(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).

21

TENANTS REPRESENTING 1% OR MORE OF ANNUALIZED RENTAL REVENUE

As of September 30, 2016

(square feet in thousands)

	Tenant (1)	Square Feet (2)	% of Total Sq. Ft. (2)		% of Annualized Rental Revenue		Weighted Average Remaining Lease Term
1	Expedia, Inc.	427	2.8	%	5.3	%	3.2
2	Office Depot, Inc.	640	4.2	%	4.4	%	7.1
3	PNC Financial Services Group	368	2.4	%	3.2	%	4.7
4	Groupon, Inc. (3)	376	2.5	%	3.1	%	9.3
5	Flextronics International Ltd.	1,051	6.9	%	2.9	%	3.2
6	University of Pennsylvania Health System	267	1.8	%	2.2	%	9.1
7	Ballard Spahr LLP	217	1.4	%	2.1	%	13.4
8	RE/MAX Holdings, Inc.	248	1.6	%	2.0	%	11.6
9	Exelon Corporation	183	1.2	%	1.8	%	1.7
10	Georgetown University	240	1.6	%	1.7	%	3.0
11	Towers Watson & Co	251	1.6	%	1.7	%	3.5
12	M&T Bank Corporation	211	1.4	%	1.6	%	2.0
13	Wm. Wrigley Jr. Company	150	1.0	%	1.5	%	5.3
14	West Corporation	336	2.2	%	1.4	%	12.4
15	Truven Health Analytics	179	1.2	%	1.3	%	0.4
16	TheraCom, LLC	156	1.0	%	1.2	%	6.3
17	Baxalta, Inc.	260	1.7	%	1.2	%	11.8
18	Level 3 Communications, Inc.	95	0.6	%	1.1	%	9.3
19	Capital One Financial Corp.	241	1.6	%	1.1	%	2.3
20	The United States Government	107	1.6	%	1.1	%	0.9
21	ProQuest, LLC	131	0.9	%	1.1	%	4.6
	Total	6,134	41.2	%	43.0	%	5.9

(1)	Tenants located in properties classified as held for sale are excluded.
(2)	Square footage is pursuant to existing leases as of September 30, 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.

22

SAME PROPERTY LEASE EXPIRATION SCHEDULE

As of September 30, 2016

(dollars and sq. ft. in thousands)

Year	Number of Tenants Expiring	Sq. Ft. Expiring (1)	% of Sq. Ft. Expiring		Cumulative % of Sq. Ft. Expiring		Annualized Rental Revenue Expiring (2)		% of Annualized Rental Revenue Expiring		Cumulative % of Annualized Rental Revenue Expiring
2016	42	221	1.5	%	1.5	%	$	2,448	0.6	%	0.6	%
2017	88	974	6.4	%	7.9	%	26,180		6.9	%	7.5	%
2018	79	1,117	7.3	%	15.2	%	34,152		9.1	%	16.6	%
2019	89	1,269	8.3	%	23.5	%	31,916		8.5	%	25.1	%
2020	80	3,313	21.7	%	45.2	%	63,570		16.9	%	42.0	%
2021	71	1,641	10.8	%	56.0	%	46,947		12.4	%	54.4	%
2022	37	755	5.0	%	61.0	%	26,668		7.1	%	61.5	%
2023	46	1,602	10.5	%	71.5	%	45,963		12.2	%	73.7	%
2024	19	601	3.9	%	75.4	%	10,932		2.9	%	76.6	%
2025	18	729	4.8	%	80.2	%	20,039		5.3	%	81.9	%
Thereafter	44	3,011	19.8	%	100.0	%	68,227		18.1	%	100.0	%
Total	613	15,233	100.0	%			$	377,042	100.0	%
Weighted average remaining
lease term (in years)		5.8					5.6

(1)	Square footage is pursuant to existing leases as of September 30, 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.
(2)	Excludes the Annualized Rental Revenue of space that is leased but not occupied.

23

PROPERTY DETAIL ⁽¹⁾ 

As of September 30, 2016

(sorted by geographic location, dollars in thousands)

Office Properties

	Property	City and State		No. of Bldgs.	Sq. Feet	% Leased		Annualized Rental Revenue		Undepreciated Book Value		Net Book Value		Year Acquired (2)	Weighted Average Year Built or Substantially Renovated (2)
1	Parkshore Plaza	Folsom	CA	4	269,281	70.3	%	$	3,920	$	51,777	$	45,494	2011	1999
2	1225 Seventeenth Street	Denver	CO	1	672,465	91.1	%	23,156		156,641		131,810		2009	1982
3	5073, 5075, & 5085 S. Syracuse Street	Denver	CO	1	248,493	100.0	%	7,379		63,610		54,163		2010	2007
4	1601 Dry Creek Drive	Longmont	CO	1	552,865	97.0	%	8,761		34,305		24,510		2004	1982
5	1250 H Street, NW	Washington	DC	1	196,489	86.1	%	8,005		71,734		43,983		1998	1992
6	Georgetown-Green and Harris Buildings	Washington	DC	2	240,475	100.0	%	6,413		60,023		53,649		2009	2006
7	802 Delaware Avenue	Wilmington	DE	1	240,780	100.0	%	4,280		43,494		19,559		1998	1986
8	6600 North Military Trail	Boca Raton	FL	3	639,830	100.0	%	16,577		145,808		127,149		2011	2008
9	1200 Lakeside Drive	Bannockburn	IL	1	260,084	100.0	%	4,537		70,408		56,207		2005	1999
10	600 West Chicago Avenue	Chicago	IL	2	1,511,849	98.6	%	47,345		390,796		347,894		2011	2001
11	8750 Bryn Mawr Avenue	Chicago	IL	2	631,518	97.4	%	16,962		92,512		78,793		2010	2005
12	109 Brookline Avenue	Boston	MA	1	285,556	99.7	%	10,696		46,731		26,935		1995	1915
13	111 Market Place	Baltimore	MD	1	569,617	98.9	%	12,381		77,832		51,173		2003	1990
14	25 S. Charles Street	Baltimore	MD	1	343,815	93.7	%	8,717		38,504		25,107		2004	1972
15	820 W. Diamond	Gaithersburg	MD	1	134,933	88.7	%	3,025		33,660		21,206		1997	1995
16	Danac Stiles Business Park	Rockville	MD	3	276,637	86.1	%	7,078		65,718		45,285		2004	2002
17	East Eisenhower Parkway	Ann Arbor	MI	2	410,464	94.8	%	10,558		56,181		48,339		2010	2006
18	4700 Belleview Avenue	Kansas City	MO	1	80,615	69.0	%	1,061		7,144		5,922		2008	1986
19	Cherrington Corporate Center	Moon Township	PA	7	454,890	61.3	%	5,996		71,925		50,060		1998; 1999	1997
20	1500 Market Street	Philadelphia	PA	1	1,773,967	91.8	%	38,047		298,506		212,560		2002	1974
21	1600 Market Street	Philadelphia	PA	1	825,968	85.9	%	20,629		134,648		76,236		1998	1983
22	1735 Market Street	Philadelphia	PA	1	1,290,678	66.8	%	27,409		301,048		183,848		1998	1990
23	Foster Plaza	Pittsburgh	PA	8	727,365	85.4	%	11,847		76,590		55,467		2005	1993
24	206 East 9th Street	Austin	TX	1	170,052	97.0	%	6,291		48,827		44,252		2012	1984
25	4515 Seton Center Parkway	Austin	TX	1	117,265	99.4	%	3,648		23,103		13,527		1999	1997
26	4516 Seton Center Parkway	Austin	TX	1	120,559	92.3	%	2,642		24,168		13,848		1999	1985
27	Bridgepoint Square	Austin	TX	5	440,007	92.8	%	12,118		89,724		50,655		1997	1995
28	Research Park	Austin	TX	4	1,110,007	98.0	%	11,709		90,642		59,030		1998	1976
29	333 108th Avenue NE	Bellevue	WA	1	440,565	100.0	%	20,452		153,067		128,186		2009	2008
30	600 108th Avenue NE	Bellevue	WA	1	256,829	99.3	%	7,560		50,257		37,341		2004	2012
Office Properties				61	15,293,918	90.9	%	$	369,199	$	2,869,383	$	2,132,188	2004	1990

24

PROPERTY DETAIL ⁽¹⁾ 

As of September 30, 2016

(sorted by geographic location, dollars in thousands)

Other Properties
	Property	City and State		No. of Bldgs.	Sq. Feet	% Leased		Annualized Rental Revenue		Undepreciated Book Value		Net Book Value		Year Acquired (2)	Weighted Average Year Built or Substantially Renovated (2)
31	97 Newberry Road	East Windsor	CT	1	289,386	100.0	%	$	1,816	$	15,350	$	12,252	2006	1989
32	33 Stiles Lane	North Haven	CT	1	175,301	52.0	%	633		9,793		7,488		2006	2002
33	625 Crane Street	Aurora	IL	1	103,683	100.0	%	444		1,614		1,503		2007	1977
34	2250 Pilot Knob Road	Mendota Heights	MN	1	87,183	100.0	%	845		6,530		3,697		1998	1995
35	411 Farwell Avenue	South St. Paul	MN	1	422,727	100.0	%	1,909		16,357		12,433		2004	1970
36	6200 Glenn Carlson Drive	St. Cloud	MN	1	338,000	100.0	%	2,196		15,753		13,337		2009	2013
Industrial/Flex				6	1,416,280	94.1	%	$	7,843	$	65,397	$	50,710	2006	1990
37	Cabot Business Park Land	Mansfield	MA	—	—	—%		$	—	$	1,033	$	1,033	2003	—
Land				—	—	—	%	$	—	$	1,033	$	1,033	2003	—
Total Same Properties				67	16,710,198	91.2	%	$	377,042	$	2,935,813	$	2,183,931	2004	1990

Properties Held for Sale as of September 30, 2016 (3)
	Property	City and State		No. of Bldgs.	Sq. Feet	% Leased		Annualized Rental Revenue		Undepreciated Book Value		Net Book Value		Year Acquired (2)	Weighted Average Year Built or Substantially Renovated (2)
38	7800 Shoal Creek Boulevard	Austin	TX	4	151,917	99.7	%	$	3,699	$	21,272	$	12,952	1999	1974
Total Held for Sale				4	151,917	99.7	%	$	3,699	$	21,272	$	12,952	1999	1974
Total Portfolio				71	16,862,115	91.3	%	$	380,741	$	2,957,085	$	2,196,883	2004	1990

(1	)	Excludes properties disposed prior to October 1, 2016.
(2	)	Weighted average based on square feet.
(3	)	All properties held for sale as of September 30, 2016, have been sold during the fourth quarter.

25

DISPOSED PROPERTY DETAIL ⁽¹⁾ 

(dollars in thousands)

	Property	City and State/Country		No. of Bldgs.	Sq. Feet	% Leased		Annualized Rental Revenue		Undepreciated Book Value		Net Book Value		Year Acquired (2)	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
4	633 Ahua Street	Honolulu	HI	1	93,141	81.5	%	$	1,808	$	16,401	$	12,545	2003	2006
5	1525 Locust Street	Philadelphia	PA	1	98,009	95.4	%	2,337		11,208		7,024		1999	1987
6	Lakewood on the Park	Austin	TX	2	180,558	84.1	%	3,516		36,872		22,371		1998	1998
7	812 San Antonio Street	Austin	TX	1	59,321	90.1	%	1,662		8,684		5,587		1999	1987
8	1601 Rio Grande Street	Austin	TX	1	56,219	89.6	%	1,432		8,302		5,248		1999	1985
	Subtotal Downtown Austin Portfolio			2	115,540	89.9	%	3,094		16,986		10,835		1999	1986
9	Leased Land	Gonzalez	CA	7	—	—	%	2,965		31,968		28,957		2010	—
10	9110 East Nichols Avenue	Centennial	CO	1	143,958	99.8	%	2,433		20,326		13,711		2001	1984
11	785 Schilinger Road South	Mobile	AL	1	72,000	100.0	%	1,318		11,269		9,218		2007	1998
12	401 Vine Street	Delmont	PA	1	53,980	100.0	%	—		7,117		5,952		2007	1999
13	633 Frazier Drive	Franklin	TN	1	150,000	100.0	%	2,402		18,980		16,187		2007	1999
14	9840 Gateway Boulevard North	El Paso	TX	1	72,000	100.0	%	1,163		11,432		9,376		2007	1999
15	3003 South Expressway 281	Hidalgo	TX	1	150,000	100.0	%	2,015		17,004		13,714		2007	1999
16	1331 North Center Parkway	Kennewick	WA	1	53,980	100.0	%	853		9,187		7,635		2007	1999
	Subtotal Movie Theaters			6	551,960	100.0	%	7,751		74,989		62,082		2007	1999
	Q2 2016 Dispositions			20	1,183,166	94.7	%	$	23,904	$	208,750	$	157,525	2003	1995
17	111 River Street (3)	Hoboken	NJ	1	566,215	100.0	%	$	23,440	$	138,241	$	115,428	2009	2002
18	128 Crews Drive	Columbia	SC	1	185,600	100.0	%	639		3,747		3,205		2007	2011
19	111 Southchase Boulevard	Fountain Inn	SC	1	168,087	100.0	%	829		6,164		4,564		2007	1987
20	1043 Global Avenue	Graniteville	SC	1	450,000	100.0	%	1,484		16,886		13,102		2007	1998
	Subtotal South Carolina Portfolio			3	803,687	100.0	%	2,952		26,797		20,871		2007	1999
21	Sky Park Centre	San Diego	CA	2	63,485	100.0	%	1,429		9,833		6,385		2002	1986
22	Raintree Industrial Park	Solon	OH	12	563,182	81.2	%	2,066		12,318		11,259		2004	1975
23	8701 N Mopac	Austin	TX	1	121,901	79.1	%	2,290		18,814		11,907		1999	1982
24	101-115 W. Washington Street	Indianapolis	IN	1	634,058	93.9	%	13,221		76,529		51,082		2005	1977
25	111 Monument Circle	Indianapolis	IN	2	1,121,764	86.6	%	19,066		150,354		134,916		2012	1990
26	North Point Office Complex	Cleveland	OH	2	873,335	80.0	%	15,616		125,128		100,912		2008	1988
27	100 East Wisconsin Avenue	Milwaukee	WI	1	435,067	88.2	%	11,084		81,056		68,215		2010	1989
	Subtotal Midwest Portfolio			6	3,064,224	86.5	%	58,987		433,067		355,125		2009	1987
	Q3 2016 Dispositions			25	5,182,694	89.5	%	$	91,164	$	639,070	$	520,975	2008	1989
Total Disposed Year-to-Date				56	7,222,691	88.4	%	$	128,500	$	955,972	$	757,961	2007	1989

(1	)	Statistics for disposed properties are presented as of the quarter-ended preceding each sale.
(2	)	Weighted average based on square feet.
(3	)	Property sale represented a leasehold interest.

26

COMMON & POTENTIAL COMMON SHARES

(share amounts in thousands)

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
Weighted Average Share Calculation	2016	2015	2016	2015
Weighted average EQC common shares outstanding	124,624	127,963	124,727	128,893
Weighted average restricted shares outstanding	909	776	900	803
Weighted average common shares outstanding - basic - GAAP EPS, FFO, Normalized FFO	125,533	128,739	125,627	129,386
Weighted average number of dilutive RSUs(1)	1,035	1,139	1,382	707
Weighted average common shares outstanding - diluted - GAAP EPS, FFO, & Normalized FFO	126,568	129,878	127,009	130,093

Rollforward of Share Count to September 30, 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, net of forfeitures	—	—		167
Repurchase of common shares	—	—		(984	)
Redemption of series E preferred shares	—	(11,000	)	—
Outstanding on September 30, 2016	4,915	—		125,533
Series D preferred shares convertible into common shares on September 30, 2016(2)				2,363
Common shares issuable from RSUs as measured on September 30, 2016(1)				1,035
Potential common shares as measured on September 30, 2016				128,931

(1	)	As of September 30, 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 September 30, 2016, and 2015, 1,035 and 1,139 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,035 and 1,139 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 September 30, 2016 and 2015, respectively, and 1,382 and 707 common shares are reflected in these measures for the nine months ended September 30, 2016 and 2015 respectively.
(2	)	As of September 30, 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 May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date).
(4	)	EQC common shares include unvested restricted shares.

27

DEFINITIONS

Annualized Rental Revenue

Annualized Rental Revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of September 30, 2016, plus estimated recurring expense reimbursements; includes triple net lease rents and excludes lease value amortization, straight line rent adjustments, abated (“free”) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues. The annualized rental revenue of disposed properties is presented for the quarter-ended preceding each disposition.

Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.

Building Improvements

Building improvements are expenditures to replace obsolete building components or extend the useful life of existing assets.

Consolidated Income Available for Debt Service

Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, taxes, and certain items that we view as nonrecurring or impacting comparability from period to period, determined together with debt service on a pro forma basis for the four consecutive fiscal quarters most recently ended.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

We calculate EBITDA as net income (loss) excluding 1) interest expense, 2) income tax expense, and 3) depreciation and amortization. Our calculation of Adjusted EBITDA differs from our calculation of EBITDA because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.

We consider EBITDA and Adjusted EBITDA to be appropriate measures of our operating performance, along with net income, net income attributable to EQC common shareholders, operating income and cash flow from operating activities. 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 attributable to EQC 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 EQC 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 (loss) and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate EBITDA and Adjusted EBITDA differently than we do.

Annualized Adjusted EBITDA

Annualized Adjusted EBITDA is Adjusted EBITDA for the three months ended September 30, 2016 multiplied by four.

Enterprise Value

Enterprise value is net debt plus the market value of our preferred shares plus the market value of our common shares.

Funds from Operations (FFO) and Normalized FFO

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 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

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DEFINITIONS

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.

Leasing Costs

Leasing costs are primarily costs such as leasing commissions ("LC"'s) and related legal expenses.

Net Debt

Net debt is total debt minus cash and cash equivalents.

Net Operating Income (NOI), Same Property NOI, Cash Basis NOI, and Same Property Cash Basis NOI

NOI is income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level 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 July 1, 2015 through September 30, 2016. The year-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2015 through September 30, 2016. Properties classified as held for sale within our condensed consolidated balance sheets are excluded from the same property versions of these measures.

We consider these measures to be appropriate supplemental measures to net income because they help 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. Cash Basis NOI is among the factors considered with respect to acquisition, disposition and financing decisions. 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.

Net Book Value

Net book value represents the carrying value of real estate properties after depreciation and amortization, purchase price allocations, impairment write-downs, and currency adjustments, if any.

NOI Margin

NOI Margin is NOI (or the same property or cash basis derivations of NOI defined above) divided by the total revenues used to calculate NOI (or its derivation).

Percentage Leased

Percentage leased includes: 1) space being fitted out for occupancy pursuant to existing leases and 2) space which is leased but not occupied or is being offered for sublease by tenants.

Same Properties

Our quarter-to-date same property portfolio is comprised of those properties continuously owned from July 1, 2015 through September 30, 2016. Our year-to-date same property portfolio is comprised of those properties continuously owned from January 1, 2015 through September 30, 2016. Properties classified as held for sale within our condensed consolidated balance sheets are excluded.

Tenant Improvements

Tenant improvements are capital expenditures to improve tenant spaces.

Total Debt

Total debt is the aggregate balance of the following line items on our condensed consolidated balance sheets: revolving credit facility, senior unsecured debt, net, and mortgage notes payable, net.

Undepreciated Book Value

Undepreciated book value represents the carrying value of real estate properties after purchase price allocations, impairment write-downs, and currency adjustments, if any.

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