10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended September 30, 2022

OR

☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9317

EQUITY COMMONWEALTH

(Exact Name of Registrant as Specified in Its Charter)

Maryland	04-6558834
(State or Other Jurisdiction of Incorporation or Organization)	(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)

 Securities registered pursuant to Section 12(b) of the Exchange Act:

Title Of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest	EQC	The New York Stock Exchange
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest	EQCpD	The New York Stock Exchange

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ý  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ý

Number of registrant’s common shares of beneficial interest, $0.01 par value per share, outstanding as of October 21, 2022:  109,428,252.

EQUITY COMMONWEALTH

FORM 10-Q

September 30, 2022

INDEX

 

		Page
PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II	Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signatures	29

EXPLANATORY NOTE

References in this Quarterly Report on Form 10-Q to the “Company,” “EQC,” “we,” “us” or “our,” refer to Equity Commonwealth and its consolidated subsidiaries as of September 30, 2022, unless the context indicates otherwise.

i

PART I.      Financial Information

Item 1.         Financial Statements.

EQUITY COMMONWEALTH

 CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

	September 30, 2022		December 31, 2021
			(audited)
ASSETS
Real estate properties:
Land	$	44,060	$	44,060
Buildings and improvements	363,782		362,042
	407,842		406,102
Accumulated depreciation	(166,379)		(156,439)
	241,463		249,663
Cash and cash equivalents	2,692,354		2,800,998
Rents receivable	16,234		15,549
Other assets, net	18,469		15,173
Total assets	$	2,968,520	$	3,081,383
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	$	21,704	$	19,762
Rent collected in advance	2,637		3,986
Distributions payable	113,584		2,365
Total liabilities	137,925		26,113
Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
Series D preferred shares; 6.50% cumulative convertible; 4,915,196 shares issued and    outstanding, aggregate liquidation preference of $122,880	119,263		119,263
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized;    110,651,571 and 115,205,818 shares issued and outstanding, respectively	1,106		1,152
Additional paid in capital	4,005,125		4,128,656
Cumulative net income	3,814,940		3,798,552
Cumulative common distributions	(4,393,290)		(4,281,195)
Cumulative preferred distributions	(723,691)		(717,700)
Total shareholders’ equity	2,823,453		3,048,728
Noncontrolling interest	7,142		6,542
Total equity	2,830,595		3,055,270
Total liabilities and equity	$	2,968,520	$	3,081,383

See accompanying notes.

1

EQUITY COMMONWEALTH

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Rental revenue	$	13,869	$	13,141	$	44,135	$	41,424
Other revenue	1,257		740		3,218		2,183
Total revenues	15,126		13,881		47,353		43,607
Expenses:
Operating expenses	6,073		6,102		17,198		19,311
Depreciation and amortization	4,451		4,588		13,176		13,371
General and administrative	7,593		7,572		23,241		30,691
Total expenses	18,117		18,262		53,615		63,373
Interest and other income, net	15,145		1,599		22,682		5,068
Gain on sale of properties, net	90		—		90		—
Income (loss) before income taxes	12,244		(2,782)		16,510		(14,698)
Income tax expense	(23)		(32)		(81)		(94)
Net income (loss)	12,221		(2,814)		16,429		(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Net income (loss) attributable to Equity Commonwealth	12,190		(2,808)		16,388		(14,762)
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Net income (loss) attributable to Equity Commonwealth common shareholders	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Weighted average common shares outstanding — basic	111,305		122,190		112,341		122,128
Weighted average common shares outstanding — diluted	112,596		122,190		113,383		122,128
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Diluted	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Distributions declared per common share	$	1.00	$	—	$	1.00	$	—

See accompanying notes.

2

EQUITY COMMONWEALTH

 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(amounts in thousands, except share data)

(unaudited)

	Equity Commonwealth Shareholders
	Number of Series D Preferred Shares	Series D Preferred Shares		Number of Common Shares	Common Shares		Additional Paid in Capital		Cumulative Net Income		Cumulative Common Distributions		Cumulative Preferred Distributions		Noncontrolling Interest		Total
Balance at July 1, 2022	4,915,196	$	119,263	111,241,842	$	1,112	$	4,018,440	$	3,802,750	$	(4,281,442)	$	(721,694)	$	7,393	$	2,945,822
Net income	—	—		—	—		—		12,190		—		—		31		12,221
Repurchase of shares	—	—		(590,271)	(6)		(16,022)		—		—		—		—		(16,028)
Share-based compensation	—	—		—	—		2,498		—		—		—		387		2,885
Distributions	—	—		—	—		—		—		(111,848)		(1,997)		(460)		(114,305)
Adjustment for noncontrolling interest	—	—		—	—		209		—		—		—		(209)		—
Balance at September 30, 2022	4,915,196	$	119,263	110,651,571	$	1,106	$	4,005,125	$	3,814,940	$	(4,393,290)	$	(723,691)	$	7,142	$	2,830,595
Balance at January 1, 2022	4,915,196	$	119,263	115,205,818	$	1,152	$	4,128,656	$	3,798,552	$	(4,281,195)	$	(717,700)	$	6,542	$	3,055,270
Net income	—	—		—	—		—		16,388		—		—		41		16,429
Repurchase of shares	—	—		(4,887,327)	(49)		(127,278)		—		—		—		—		(127,327)
Surrender of shares for tax withholding	—	—		(160,506)	(2)		(4,158)		—		—		—		—		(4,160)
Share-based compensation	—	—		493,586	5		7,956		—		—		—		1,093		9,054
Contributions	—	—		—	—		—		—		—		—		1		1
Distributions	—	—		—	—		—		—		(112,095)		(5,991)		(586)		(118,672)
Adjustment for noncontrolling interest	—	—		—	—		(51)		—		—		—		51		—
Balance at September 30, 2022	4,915,196	$	119,263	110,651,571	$	1,106	$	4,005,125	$	3,814,940	$	(4,393,290)	$	(723,691)	$	7,142	$	2,830,595

3

EQUITY COMMONWEALTH

 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)

(amounts in thousands, except share data)

(unaudited)

	Equity Commonwealth Shareholders
	Number of Series D Preferred Shares	Series D Preferred Shares		Number of Common Shares	Common Shares		Additional Paid in Capital		Cumulative Net Income		Cumulative Common Distributions		Cumulative Preferred Distributions		Noncontrolling Interest		Total
Balance at July 1, 2021	4,915,196	$	119,263	121,940,355	$	1,219	$	4,297,197	$	3,802,994	$	(4,281,670)	$	(713,706)	$	6,539	$	3,231,836
Net loss	—	—		—	—		—		(2,808)		—		—		(6)		(2,814)
Repurchase of shares	—	—		(430,871)	(4)		(18,041)		—		—		—		—		(18,045)
Surrender of shares for tax withholding	—	—		(1,186)	—		(31)		—		—		—		—		(31)
Share-based compensation	—	—		2,804	—		2,801		—		—		—		187		2,988
Distributions	—	—		—	—		—		—		(84)		(1,997)		(19)		(2,100)
Adjustment for noncontrolling interest	—	—		—	—		180		—		—		—		(180)		—
Balance at September 30, 2021	4,915,196	$	119,263	121,511,102	$	1,215	$	4,282,106	$	3,800,186	$	(4,281,754)	$	(715,703)	$	6,521	$	3,211,834
Balance at January 1, 2021	4,915,196	$	119,263	121,522,555	$	1,215	$	4,294,632	$	3,814,948	$	(4,283,668)	$	(709,712)	$	6,486	$	3,243,164
Net loss	—	—		—	—		—		(14,762)		—		—		(30)		(14,792)
Repurchase of shares	—	—		(430,871)	(4)		(18,041)		—		—		—		—		(18,045)
Surrender of shares for tax withholding	—	—		(245,215)	(2)		(7,070)		—		—		—		—		(7,072)
Share-based compensation	—	—		664,633	6		11,889		—		—		—		694		12,589
Distributions	—	—		—	—		—		—		1,914		(5,991)		67		(4,010)
Adjustment for noncontrolling interest	—	—		—	—		696		—		—		—		(696)		—
Balance at September 30, 2021	4,915,196	$	119,263	121,511,102	$	1,215	$	4,282,106	$	3,800,186	$	(4,281,754)	$	(715,703)	$	6,521	$	3,211,834

See accompanying notes.

4

EQUITY COMMONWEALTH

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	16,429	$	(14,792)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	11,267		11,471
Straight-line rental income	(151)		(1,277)
Other amortization	1,909		1,900
Share-based compensation	9,054		12,589
Net gain on sale of properties	(90)		—
Change in assets and liabilities:
Rents receivable and other assets	(5,710)		407
Accounts payable, accrued expenses and other	1,024		735
Rent collected in advance	(1,349)		(504)
Net cash provided by operating activities	32,383		10,529
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate improvements	(3,189)		(5,979)
Proceeds from sale of properties, net	90		—
Net cash used in investing activities	(3,099)		(5,979)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase and retirement of common shares	(130,476)		(18,163)
Contributions from holders of noncontrolling interest	1		—
Distributions to common shareholders	(1,462)		(6,024)
Distributions to preferred shareholders	(5,991)		(5,991)
Distributions to holders of noncontrolling interest	—		(33)
Net cash used in financing activities	(137,928)		(30,211)
Decrease in cash and cash equivalents	(108,644)		(25,661)
Cash and cash equivalents at beginning of period	2,800,998		2,987,225
Cash and cash equivalents at end of period	$	2,692,354	$	2,961,564

See accompanying notes.

5

EQUITY COMMONWEALTH 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(amounts in thousands)

(unaudited)

	Nine Months Ended September 30,
	2022		2021
SUPPLEMENTAL CASH FLOW INFORMATION:
Taxes paid, net	$	108	$	244
NON-CASH INVESTING ACTIVITIES:
Accrued capital expenditures	$	269	$	169
NON-CASH FINANCING ACTIVITIES:
Distributions payable	$	113,584	$	2,954

See accompanying notes.

6

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Business

Equity Commonwealth, or the Company, is a real estate investment trust, or REIT, formed in 1986 under the laws of the State of Maryland. Our business is primarily the ownership and operation of office properties in the United States.

The Company operates in an umbrella partnership real estate investment trust, or UPREIT, and conducts substantially all of its activities through EQC Operating Trust, a Maryland real estate investment trust, or the Operating Trust. The Company beneficially owned 99.75% of the outstanding shares of beneficial interest, designated as units, in the Operating Trust, or OP Units, as of September 30, 2022, and the Company is the sole trustee of the Operating Trust.  As the sole trustee, the Company generally has the power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units.

At September 30, 2022, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet. As of September 30, 2022, we had $2.7 billion of cash and cash equivalents.

Note 2.  Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements of EQC have been prepared without audit.  Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are appropriate.  The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2021.  Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.

In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.  All intercompany transactions and balances with or among our subsidiaries have been eliminated.  Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.  Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts.  Actual results could differ from those estimates.  Significant estimates in the condensed consolidated financial statements include the assessment of the collectability of rental revenue, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

Dollar amounts presented may be approximate. Share amounts are presented in whole numbers, except where noted.

Note 3.  Real Estate Properties

During the nine months ended September 30, 2022 and 2021, we made improvements, excluding tenant-funded improvements, to our properties totaling $2.9 million and $5.2 million, respectively.

Property Dispositions:

We did not sell any properties during the nine months ended September 30, 2022 or 2021.

7

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Lease Payments

Rental revenue consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Lease payments	$	9,381	$	8,989	$	28,792	$	27,438
Variable lease payments	4,488		4,152		15,343		13,986
Rental revenue	$	13,869	$	13,141	$	44,135	$	41,424

Note 4.  Shareholders’ Equity

Common Share Issuances:

See Note 7 for information regarding equity issuances related to share-based compensation.

Common Share Repurchases:

During the nine months ended September 30, 2022, we repurchased and retired an aggregate of 4,887,327 of our common shares at a weighted average price of $25.81 per share, for a total investment of $126.1 million. As of September 30, 2022, we had $149.7 million of remaining availability under our share repurchase program, which is scheduled to expire on June 30, 2023.

During the nine months ended September 30, 2022 and 2021, certain of our employees and former employees surrendered 160,506 and 244,029 common shares owned by them, respectively, to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares pursuant to our equity compensation plans.

Common Share and Unit Distribution:

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

In February 2022, the number of earned awards for recipients of the Company’s restricted stock units granted in January 2019 was determined. Pursuant to the terms of such awards, we paid a one-time catch-up cash distribution to these recipients in the aggregate amount of $1.5 million for distributions to common shareholders declared by our Board of Trustees during such awards’ performance measurement period.

Series D Preferred Shares:

Our series D preferred shares are convertible, at the holder’s option, into our common shares at a conversion rate of 0.6846 common shares per series D preferred share, which is equivalent to a conversion price of $36.52 per common share, or 3,364,943 additional common shares at September 30, 2022. The conversion rate changed from 0.6585 to 0.6846 common shares per series D preferred share effective September 30, 2022 as a result of the common share distribution declared by our Board of Trustees in 2022.

8

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Preferred Share Distributions:

In 2022, our Board of Trustees declared distributions on our series D preferred shares to date as follows:

Declaration Date	Record Date	Payment Date	Series D Dividend Per Share
January 11, 2022	January 28, 2022	February 15, 2022	$	0.40625
April 11, 2022	April 29, 2022	May 16, 2022	$	0.40625
July 14, 2022	July 29, 2022	August 15, 2022	$	0.40625
October 14, 2022	October 31, 2022	November 15, 2022	$	0.40625

Note 5.  Noncontrolling Interest

Noncontrolling interest represents the portion of the OP Units not beneficially owned by the Company. The ownership of an OP Unit and a common share of beneficial interest have essentially the same economic characteristics. Distributions with respect to OP Units will generally mirror distributions with respect to the Company’s common shares. Unitholders (other than the Company) generally have the right, commencing six months from the date of issuance of such OP Units, to cause the Operating Trust to redeem their OP Units in exchange for cash or, at the option of the Company, common shares of the Company on a one-for-one basis. As sole trustee, the Company has the sole discretion to elect whether the redemption right will be satisfied by the Company in cash or the Company’s common shares. As a result, the Noncontrolling interest is classified as permanent equity. As of September 30, 2022, the portion of the Operating Trust not beneficially owned by the Company is in the form of OP Units and LTIP Units (see Note 7 for a description of LTIP Units). LTIP Units may be subject to additional vesting requirements.

The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the nine months ended September 30, 2022:

	Common Shares	OP Units and LTIP Units	Total
Outstanding at January 1, 2022	115,205,818	247,217	115,453,035
Repurchase and surrender of shares	(5,047,833)	—	(5,047,833)
Share-based compensation grants and vesting, net of forfeitures	493,586	32,675	526,261
Outstanding at September 30, 2022	110,651,571	279,892	110,931,463
Noncontrolling ownership interest in the Operating Trust			0.25	%

The carrying value of the Noncontrolling interest is allocated based on the number of OP Units and LTIP Units in proportion to the number of OP Units and LTIP Units plus the number of common shares. We adjust the Noncontrolling interest balance at the end of each period to reflect the noncontrolling partners’ interest in the net assets of the Operating Trust. Net income is allocated to the Noncontrolling interest in the Operating Trust based on the weighted average ownership percentage during the period. Equity Commonwealth’s weighted average ownership interest in the Operating Trust was 99.75% and 99.76% for the three and nine months ended September 30, 2022, respectively.

Note 6.  Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and are generally not subject to federal and state income taxes provided we distribute a sufficient amount of our taxable income to our shareholders and meet other requirements for qualifying as a REIT.  However, we are subject to certain state and local taxes without regard to our REIT status.

On August 31, 2022, the Company completed an internal restructuring intended to comply with Section 351 of the Internal Revenue Code. As a result, the Operating Trust recognized an $82.0 million taxable gain for federal income tax purposes. The resulting gain eliminates in the Company’s condensed consolidated financial statements and has no impact on the Company’s provision for income taxes for the three and nine months ended September 30, 2022.

9

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Our provision for income taxes consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Current:
State and local	$	(23)	$	(32)	$	(81)	$	(94)
Income tax expense	$	(23)	$	(32)	$	(81)	$	(94)

Note 7. Share-Based Compensation

Recipients of the Company’s restricted shares have the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder.  The restricted shares are service based awards and vest over a service period determined by the Compensation Committee of our Board of Trustees, or the Compensation Committee.

Recipients of the Company’s restricted stock units, or RSUs, are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market-based awards with a service condition and recipients may earn RSUs based on the Company’s total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards will be determined. The earned awards vest in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Compensation Committee determines the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient’s continued employment. Compensation expense for the RSUs is determined using a Monte Carlo simulation model and is recognized ratably from the grant date to the vesting date of each tranche.

LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries. Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time.

2022 Equity Award Activity

During the nine months ended September 30, 2022, 382,993 RSUs vested, and, as a result, we issued 382,993 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 4).

On June 21, 2022, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2022-2023 year of service on the Board of Trustees. These awards equated to 3,604 shares or time-based LTIP Units per Trustee, for a total of 18,020 shares and 3,604 time-based LTIP Units, valued at $27.75 per share and unit, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on that day. These shares and time-based LTIP Units vest one year after the date of the award, on June 21, 2023.

On January 26, 2022, the Compensation Committee approved grants in the aggregate amount of 29,071 time-based LTIP Units, 59,024 market-based LTIP Units at target (147,117 market-based LTIP Units at maximum), 92,573 restricted shares and 187,951 RSUs at target (468,468 RSUs at maximum) to the Company’s officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2021. The restricted shares and time-based LTIP Units were valued at $25.50 per share/unit, the closing price of our common shares on the NYSE on the grant date. The assumptions and fair value for the RSUs and market-based LTIP Units granted during the nine months ended September 30,

10

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2022 are included in the following table on a per share/unit basis.

	2022
Fair value of market-based awards granted	$	35.11
Expected term (years)	4
Expected volatility	17.04		%
Risk-free rate	1.39		%

2021 Equity Award Activity

During the nine months ended September 30, 2021, 523,662 RSUs vested, and, as a result, we issued 523,662 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations.

On June 23, 2021, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2021-2022 year of service on the Board of Trustees. These awards equated to 3,701 shares or time-based LTIP Units per Trustee, for a total of 18,505 shares and 3,701 time-based LTIP Units, valued at $27.02 per share and unit, the closing price of our common shares on the NYSE on that day. These shares and time-based LTIP Units vested on June 23, 2022.

On January 25, 2021, the Compensation Committee approved grants in the aggregate amount of 122,466 restricted shares and 248,646 RSUs at target (619,750 RSUs at maximum) to the Company’s officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2020. The restricted shares were valued at $28.25 per share, the closing price of our common shares on the NYSE on the grant date. The RSUs were valued at $37.87 per share, their fair value on the grant date.

Outstanding Equity Awards

As of September 30, 2022, the estimated future compensation expense for all unvested restricted shares and time-based LTIP Units was $5.9 million. Compensation expense for the restricted share and time-based LTIP Unit awards is being recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The weighted average period over which the future compensation expense will be recorded for the restricted shares and time-based LTIP Units is approximately 2.4 years.

As of September 30, 2022, the estimated future compensation expense for all unvested RSUs and market-based LTIP Units was $12.8 million. The weighted average period over which the future compensation expense will be recorded for the RSUs and market-based LTIP Units is approximately 2.3 years.

During the three months ended September 30, 2022 and 2021, we recorded $2.9 million and $3.0 million, respectively, and during the nine months ended September 30, 2022 and 2021, we recorded $9.1 million and $12.6 million, respectively, of compensation expense, net of forfeitures, in general and administrative expense for grants to our trustees, eligible consultants and employees related to our equity compensation plans. Compensation expense recorded during the three months ended September 30, 2022 and 2021 includes $0 and $0.1 million, respectively, of accelerated vesting due to staffing reductions, and compensation expense recorded during the nine months ended September 30, 2022 and 2021 includes $0.4 million and $3.5 million, respectively, of accelerated vesting due to staffing reductions. Forfeitures are recognized as they occur. At September 30, 2022, 1,126,571 shares/units remain available for issuance under the Equity Commonwealth 2015 Omnibus Incentive Plan, as amended.

Note 8.  Fair Value of Assets and Liabilities

As of September 30, 2022, we do not have any assets or liabilities measured at fair value.

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EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Financial Instruments

Our financial instruments include our cash and cash equivalents.  At September 30, 2022 and December 31, 2021, the fair value of these financial instruments was not different from their carrying values.

Other financial instruments that potentially subject us to concentrations of credit risk consist principally of rents receivable. As of September 30, 2022, no single tenant of ours is responsible for more than 10% of our consolidated revenues.

Note 9.  Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator for earnings per common share - basic:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Numerator for net income (loss) per share - basic	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Numerator for earnings per common share - diluted:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Numerator for net income (loss) per share - diluted	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding - basic(1)	111,305		122,190		112,341		122,128
RSUs(2)	1,111		—		875		—
LTIP Units(3)	180		—		167		—
Weighted average number of common shares outstanding - diluted	112,596		122,190		113,383		122,128
Net income (loss) per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Diluted	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Anti-dilutive securities(4):
Effect of Series D preferred shares; 6.50% cumulative convertible	3,365		3,237		3,365		3,237
Effect of RSUs(2)	—		490		—		601
Effect of LTIP Units(3)	—		66		—		93
Effect of OP Units(5)	280		223		275		203

(1) The three months ended September 30, 2022 and 2021, include 86 and 262 weighted-average, unvested, earned RSUs, respectively, and the nine months ended September 30, 2022 and 2021, include 111 and 255 weighted-average, unvested, earned RSUs, respectively.

12

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(2) Represents the weighted-average number of common shares that would have been issued if the quarter-end was the measurement date for unvested, unearned RSUs.

(3) Represents the weighted-average dilutive shares issuable from LTIP Units if the quarter-end was the measurement date for the periods shown.

(4) The Series D preferred shares are excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2022 and 2021, because including the Series D preferred shares would also require that the preferred distributions be added back to net income (loss), resulting in anti-dilution. The RSUs and market-based LTIP Units are excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2021 because including them results in anti-dilution.

(5) Beneficial interests in the Operating Trust.

Note 10.  Segment Information

Our primary business is the ownership and operation of office properties, and we currently have one reportable segment.  One hundred percent of our revenues for the nine months ended September 30, 2022 were from office properties. 

Note 11.  Related Person Transactions

The following discussion includes a description of our related person transactions for the nine months ended September 30, 2022 and 2021.

Two North Riverside Plaza Joint Venture Limited Partnership: We entered into a lease on July 20, 2015 with Two North Riverside Plaza Joint Venture Limited Partnership, an entity associated with Mr. Zell, our Chairman, to occupy office space on the twentieth and twenty-first floors of Two North Riverside Plaza in Chicago, Illinois (20th/21st Floor Office Lease). The initial term of the lease was approximately five years, expiring on December 31, 2020. We made improvements to the office space utilizing the $0.7 million tenant improvement allowance pursuant to the lease. In connection with the 20th/21st Floor Office Lease, we also had a storage lease with Two North Riverside Plaza Joint Venture Limited Partnership for storage space in the basement of Two North Riverside Plaza, which we terminated, effective August 31, 2020.

In December 2020, we entered into an amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2021, with no renewal options. The lease payment for the extended term was $0.3 million. In December 2021, we entered into a second amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2022, with no renewal options. The lease payment for the second extended term is $0.4 million.

During the three months ended September 30, 2022 and 2021, we recognized expense of $0.1 million and $0.1 million, respectively, and during the nine months ended September 30, 2022 and 2021, we recognized expense of $0.3 million and $0.2 million, respectively, pursuant to the 20th/21st Floor Office Lease. As of September 30, 2022 and December 31, 2021, we did not have any amounts due to Two North Riverside Plaza Joint Venture Limited Partnership pursuant to the 20th/21st Floor Office Lease.

Note 12.  Subsequent Events

Preferred Share Distribution

On October 14, 2022, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on November 15, 2022 to shareholders of record on October 31, 2022.

Commons Share Distribution

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million (see Note 5).

13

EQUITY COMMONWEALTH

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Common Share Repurchases

From October 1, 2022 through October 24, 2022, we repurchased 1,223,319 of our common shares at a weighted average price of $23.99 per share, for a total investment of $29.3 million. We have $120.4 million of remaining authorization available under our share repurchase program.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, and in our Annual Report.

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to our anticipated business strategies, goals, policies and objectives, capital resources and financing, portfolio performance, lease expiration schedules, results of operations or anticipated market conditions, including our statements regarding remote working trends and the overall impact of COVID-19, and changing laws, statutes, regulations, and the interpretations thereof, on the foregoing. Any forward-looking statements contained in this Quarterly Report on Form 10-Q 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. You can identify forward-looking statements by the use of forward-looking terminology, including but not limited to, “may,” “will,” “should,” “could,” “would,” “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.

Any forward-looking statements contained in this Quarterly Report on Form 10-Q 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 section entitled “Risk Factors” in our most recent Annual Report and in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.

OVERVIEW

We are an internally managed and self-advised REIT primarily engaged in the ownership and operation of office properties in the United States. We were formed in 1986 under Maryland law. The Company operates as an UPREIT, conducting substantially all of its activities through the Operating Trust. As of September 30, 2022, the Company beneficially owned 99.75% of the outstanding OP Units.

At September 30, 2022, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet. As of September 30, 2022, we had $2.7 billion of cash and cash equivalents.

We use leasing and occupancy metrics to evaluate the performance of our properties. We believe these metrics provide useful information to investors because they reflect the leasing activity and vacant space at the properties and may facilitate comparisons of our leasing and occupancy metrics with other REITs and real estate companies.

As of September 30, 2022, our overall portfolio was 83.4% leased. During the three months ended September 30, 2022, we entered into leases for 55,000 square feet, including lease renewals for 30,000 square feet and new leases for 25,000 square feet. The renewal leases entered into during the three months ended September 30, 2022 had cash and GAAP rental rates that were approximately 3.3% lower and 2.2% higher, respectively, compared to prior rental rates for the same space. The new leases entered into during the three months ended September 30, 2022 were excluded from the weighted average cash and GAAP rental rate calculations because the suites were vacant longer than two years. The change in GAAP rents is different than the change in cash rents due to differences in the amount of rent abatements, the magnitude and timing of contractual rent increases over the lease term, and the length of term for the newly executed leases compared to the prior leases. Percent change in GAAP and cash rents is a comparison of current rent, including estimated tenant expense reimbursements, if any, to the rent, including actual/projected tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. Cash rent during the reporting period is calculated before deducting any initial period free rent.

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On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

We have engaged CBRE, Inc., or CBRE, to provide property management services. We pay CBRE a property-by-property management fee and may engage CBRE from time-to-time to perform project management services, such as coordinating and overseeing the completion of tenant improvements and other capital projects at the properties. We reimburse CBRE for certain expenses incurred in the performance of its duties, including certain personnel and equipment costs. For the three months ended September 30, 2022 and 2021, we incurred expenses of $0.7 million and $0.7 million, respectively, and for the nine months ended September 30, 2022 and 2021, we incurred expenses of $2.2 million and $2.2 million, respectively, related to our property management agreement with CBRE, for property management fees, typically calculated as a percentage of the properties’ revenues, and salary and benefits reimbursements for property personnel, such as property managers, engineers and maintenance staff.  As of September 30, 2022 and December 31, 2021, we had amounts payable pursuant to these services of $0.3 million and $0.3 million, respectively.

After executing on our disposition strategy, and evaluating a variety of opportunities to invest our capital, on May 4, 2021, we entered into a merger agreement to acquire Monmouth Real Estate Investment Corporation, or Monmouth, a publicly-traded industrial REIT. On August 31, 2021, following Monmouth’s failure to obtain shareholder approval of the merger, in accordance with the terms of the merger agreement, we terminated the merger agreement.

Following the termination of the merger agreement with Monmouth, we shifted our focus to capital allocation and are continuing to evaluate investment opportunities. We are seeking to use the strength and liquidity of our balance sheet for investments in high-quality assets or businesses in a range of property types that offer a compelling risk-reward profile. We may also determine to sell, liquidate or otherwise exit our business if we believe doing so will maximize shareholder value.

Our business has been and is continuing to be impacted by the COVID-19 virus as well as tenant uncertainty regarding office space needs given the evolving remote working trends. Many of our employees and the majority of our tenants' employees are currently working at least in part remotely. Overall, our business has experienced a significant reduction in leasing interest and activity when compared to pre-pandemic levels. As of September 30, 2022 and December 31, 2019, our comparable property portfolio was 83.4% and 91.5% leased, respectively. The duration of these business disruptions continues to be unknown at this time, and we currently are not able to estimate the full impact of the COVID-19 virus and remote working trends on our business.

Property Operations

Leased occupancy data for 2022 and 2021 are as follows (square feet in thousands):

	All Properties				Comparable Properties(1)
	As of September 30,				As of September 30,
	2022		2021		2022		2021
Total properties	4		4		4		4
Total square feet	1,507		1,507		1,507		1,507
Percent leased(2)	83.4	%	82.5	%	83.4	%	82.5	%

(1)Based on properties owned continuously from January 1, 2021 through September 30, 2022.

(2)Percent leased is the percent of space subject to signed leases. Percent leased is disclosed to quantify the ratio of leased square feet to rentable square feet and we believe provides useful information as to the proportion of rentable square feet subject to a lease.

The weighted average lease term based on square feet for leases entered into during the three months ended September 30, 2022 was 4.4 years.  Commitments made for leasing expenditures and concessions, such as tenant improvements and leasing commissions, for the leases entered into during the three months ended September 30, 2022 totaled $1.6 million, or $29.49 per square foot on average (approximately $6.73 per square foot per year of the lease term).

As of September 30, 2022, approximately 1.1% of our leased square feet and 1.1% of our annualized rental revenue, determined as set forth below, are included in leases scheduled to expire through December 31, 2022.  Renewal and new leases and rental rates at which available space may be relet in the future will depend on prevailing market conditions at the times these leases are negotiated.  We believe that the in-place cash rents for leases expiring for the remainder of 2022, that have not

16

been backfilled, are above market. Lease expirations by year, as of September 30, 2022, are as follows (square feet and dollars in thousands):

Year	Number of Tenants Expiring(1)	Leased Square  Feet Expiring(2)	% of Leased Square Feet Expiring(2)		Cumulative % of Leased Square Feet Expiring(2)		Annualized Rental Revenue Expiring(3)		% of Annualized Rental Revenue Expiring		Cumulative % of Annualized Rental Revenue Expiring
2022	3	14	1.1	%	1.1	%	$	620	1.1	%	1.1	%
2023	16	179	14.2	%	15.3	%	8,416		14.3	%	15.4	%
2024	18	227	18.2	%	33.5	%	10,774		18.4	%	33.8	%
2025	12	155	12.3	%	45.8	%	7,277		12.4	%	46.2	%
2026	9	72	5.7	%	51.5	%	3,554		6.0	%	52.2	%
2027	15	197	15.7	%	67.2	%	9,561		16.2	%	68.4	%
2028	10	111	8.8	%	76.0	%	4,180		7.1	%	75.5	%
2029	7	145	11.5	%	87.5	%	7,134		12.1	%	87.6	%
2030	6	87	6.9	%	94.4	%	3,140		5.3	%	92.9	%
2031	1	12	1.0	%	95.4	%	590		1.0	%	93.9	%
Thereafter	4	58	4.6	%	100.0	%	3,603		6.1	%	100.0	%
	101	1,257	100.0	%			$	58,849	100.0	%
Weighted average remaining lease term (in years):		4.0					4.1

(1)Tenants with leases expiring in multiple years are counted in each year they expire.

(2)Leased Square Feet as of September 30, 2022 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. The Leased Square Feet Expiring corresponds to the latest-expiring signed lease for a given suite. Thus, backfilled suites expire in the year stipulated by the new lease. 

(3)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of September 30, 2022, plus estimated recurring expense reimbursements; 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.  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.

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The principal source of funds for our operations is rents from tenants at our properties.  Rents are generally received from our tenants monthly in advance.  As of September 30, 2022, tenants representing 2.5% or more of our total annualized rental revenue were as follows (square feet in thousands):

Tenant		Square Feet(1)	% of Total Leased Square Feet(1)		% of Annualized Rental Revenue(2)		Weighted Average Remaining Lease Term
1.	Equinor Energy Services, Inc.	80	6.4	%	6.0	%	1.3
2.	KPMG, LLP	71	5.6	%	5.2	%	6.7
3.	Salesforce.com, Inc.	65	5.2	%	5.1	%	3.2
4.	Crowdstrike, Inc.	36	2.9	%	3.8	%	2.1
5.	CBRE, Inc.	40	3.2	%	3.5	%	5.5
6.	RSM US LLP	32	2.5	%	3.2	%	9.7
7.	SonarSource US, Inc.	28	2.2	%	2.9	%	4.9
8.	Alden Torch Financial, LLC	34	2.7	%	2.6	%	4.4
9.	New York Life Insurance Company	32	2.5	%	2.5	%	2.8
	Total	418	33.2	%	34.8	%	4.2

(1)Total Leased Square Feet as of September 30, 2022 includes space subject to leases that have commenced, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. 

(2)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of September 30, 2022, plus estimated recurring expense reimbursements; 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.  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.

Regulation FD Disclosures

We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the Company to monitor these distribution channels for material disclosures. Our website address is included in this Quarterly Report as a textual reference only and the information on the website is not incorporated by reference into this Quarterly Report.

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RESULTS OF OPERATIONS 

Three Months Ended September 30, 2022, Compared to Three Months Ended September 30, 2021

	Comparable Properties Results(1)								Other Properties Results(2)				Consolidated Results
	Three Months Ended September 30,
	2022		2021		$ Change		% Change		2022		2021		2022		2021		$ Change		% Change
	(dollars in thousands)
Rental revenue	$	13,868	$	13,142	$	726	5.5	%	$	1	$	(1)	$	13,869	$	13,141	$	728	5.5	%
Other revenue	1,252		739		513		69.4	%	5		1		1,257		740		517		69.9	%
Operating expenses	(6,019)		(6,090)		71		(1.2)	%	(54)		(12)		(6,073)		(6,102)		29		(0.5)	%
Net operating income(3)	$	9,101	$	7,791	$	1,310	16.8	%	$	(48)	$	(12)	9,053		7,779		1,274		16.4	%
Other expenses:
Depreciation and amortization													4,451		4,588		(137)		(3.0)	%
General and administrative													7,593		7,572		21		0.3	%
Total other expenses													12,044		12,160		(116)		(1.0)	%
Interest and other income, net													15,145		1,599		13,546		847.2	%
Gain on sale of properties, net													90		—		90		N/A
Income (loss) before income taxes													12,244		(2,782)		15,026		(540.1)	%
Income tax expense													(23)		(32)		9		(28.1)	%
Net income (loss)													12,221		(2,814)		15,035		(534.3)	%
Net (income) loss attributable to noncontrolling interest													(31)		6		(37)		(616.7)	%
Net income (loss) attributable to Equity Commonwealth													12,190		(2,808)		14,998		(534.1)	%
Preferred distributions													(1,997)		(1,997)		—		—	%
Net income (loss) attributable to Equity Commonwealth common shareholders													$	10,193	$	(4,805)	$	14,998	(312.1)	%

(1)Comparable properties consist of four properties we owned continuously from October 1, 2021 to September 30, 2022.

(2)Other properties consist of properties sold.

(3)We define net operating income, or NOI, as 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.  For a discussion of why we consider NOI to be an appropriate supplemental measure to net income (loss) as well as a reconciliation of NOI to net income (loss), the most directly comparable financial measure under GAAP reported on our consolidated financial statements, please see the section entitled “- Liquidity and Capital Resources - Property Net Operating Income (NOI).”

Rental revenue. Rental revenue increased $0.7 million, or 5.5%, in the 2022 period, compared to the 2021 period, primarily due to a $0.4 million increase in base rent and a $0.3 million increase in lease termination fees.

Other revenue. Other revenue, which primarily includes parking revenue, increased $0.5 million, or 69.9%, in the 2022 period, compared to the 2021 period, primarily due to an increase in parking demand.

Operating expenses. Operating expenses decreased in the 2022 period, compared to the 2021 period, primarily due to the decrease at the comparable properties. Operating expenses decreased $0.1 million, or 1.2%, at the comparable properties in the 2022 period, compared to the 2021 period, primarily due to a $0.4 million decrease in real estate tax expense, partially offset by a $0.2 million increase in heating, ventilation and air condition expenses and a $0.1 million increase in utilities.

General and administrative. General and administrative expenses slightly increased in the 2022 period, compared to the 2021 period, primarily due to a $0.5 million increase in legal expenses due to an internal restructuring, partially offset by a $0.5 million decrease in compensation expenses related to severance.

Interest and other income, net. Interest and other income, net increased $13.5 million, or 847.2% in the 2022 period, compared to the 2021 period, primarily due to more interest received from higher average interest rates, partially offset by lower average cash balances.

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Gain on sale of properties. Gain on sale of properties, net of $0.1 million in the 2022 period relates to adjustments to prior period sales. We did not have any gain on sale of properties, net in the 2021 period.

Net (income) loss attributable to noncontrolling interest. From 2017 through 2022, we granted LTIP Units to certain of our trustees and employees. Net (income) loss attributable to noncontrolling interest of $(31,000) in the 2022 period and $6,000 in the 2021 period relates to the allocation of (income) loss to the LTIP/OP Unit holders.

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RESULTS OF OPERATIONS 

Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021

	Comparable Properties Results(1)								Other Properties Results(2)				Consolidated Results
	Nine Months Ended September 30,
	2022		2021		$ Change		% Change		2022		2021		2022		2021		$ Change		% Change
	(dollars in thousands)
Rental revenue	$	44,283	$	41,282	$	3,001	7.3	%	$	(148)	$	142	$	44,135	$	41,424	$	2,711	6.5	%
Other revenue	3,203		2,182		1,021		46.8	%	15		1		3,218		2,183		1,035		47.4	%
Operating expenses	(18,955)		(19,258)		303		(1.6)	%	1,757		(53)		(17,198)		(19,311)		2,113		(10.9)	%
Net operating income(3)	$	28,531	$	24,206	$	4,325	17.9	%	$	1,624	$	90	30,155		24,296		5,859		24.1	%
Other expenses:
Depreciation and amortization													13,176		13,371		(195)		(1.5)	%
General and administrative													23,241		30,691		(7,450)		(24.3)	%
Total other expenses													36,417		44,062		(7,645)		(17.4)	%
Interest and other income, net													22,682		5,068		17,614		347.6	%
Gain on sale of properties, net													90		—		90		N/A
Income (loss) before income taxes													16,510		(14,698)		31,208		(212.3)	%
Income tax expense													(81)		(94)		13		(13.8)	%
Net income (loss)													16,429		(14,792)		31,221		(211.1)	%
Net (income) loss attributable to noncontrolling interests													(41)		30		(71)		(236.7)	%
Net income (loss) attributable to Equity Commonwealth													16,388		(14,762)		31,150		(211.0)	%
Preferred distributions													(5,991)		(5,991)		—		—	%
Net income (loss) attributable to Equity Commonwealth common shareholders													$	10,397	$	(20,753)	$	31,150	(150.1)	%

(1)Comparable properties consist of four properties we owned continuously from January 1, 2021 to September 30, 2022.

(2)Other properties consist of properties sold.

(3)We define net operating income, or NOI, as 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.  For a discussion of why we consider NOI to be an appropriate supplemental measure to net income as well as a reconciliation of NOI to net income, the most directly comparable financial measure under GAAP reported on our consolidated financial statements, please see the section entitled “- Liquidity and Capital Resources - Property Net Operating Income (NOI).”

Rental revenue. Rental revenue increased $2.7 million, or 6.5%, in the 2022 period, compared to the 2021 period, primarily due to the increase in rental revenue at the comparable properties. Rental revenue at the comparable properties increased $3.0 million, or 7.3%, in the 2022 period, compared to the 2021 period, due to the $1.9 million collection of a previously reserved receivable and a $0.8 million increase in lease termination fees.

Other revenue. Other revenue, which primarily includes parking revenue, increased $1.0 million, or 47.4%, in the 2022 period, compared to the 2021 period, primarily due to an increase in parking demand.

Operating expenses. Operating expenses decreased $2.1 million, or 10.9%, in the 2022 period, compared to the 2021 period, primarily due to a $1.8 million real estate tax refund received at a sold property. Operating expenses decreased $0.3 million, or 1.6%, at the comparable properties in the 2022 period, compared to the 2021 period, primarily due to a $0.9 million decrease in real estate tax expense, partially offset by a $0.3 million increase in utilities, a $0.1 million increase in maintenance and repairs and a $0.1 million increase in cleaning expense.

General and administrative. General and administrative expenses decreased $7.5 million, or 24.3%, in the 2022 period, compared to the 2021 period, primarily due to a $7.1 million decrease in compensation expenses related to severance, a $0.4 million decrease in payroll taxes primarily due to refunds received in 2022, a $0.3 million decrease in share-based compensation expenses, a $0.3 million decrease in payroll expense and a $0.2 million decrease in trustee related expenses due to fewer trustees in 2022, partially offset by a $0.8 million increase in legal expense due to an internal restructuring.

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Interest and other income, net. Interest and other income, net increased $17.6 million, or 347.6%, in the 2022 period, compared to the 2021 period, primarily due to more interest received from higher average interest rates, partially offset by lower average cash balances.

Gain on sale of properties. Gain on sale of properties, net of $0.1 million in the 2022 period relates to adjustments to prior period sales. We did not have any gain on sale of properties, net in the 2021 period.

Net (income) loss attributable to noncontrolling interest. From 2017 through 2022, we granted LTIP Units to certain of our trustees and employees. Net (income) loss attributable to noncontrolling interest of $(41,000) in the 2022 period and $30,000 in the 2021 period relates to the allocation of (income) loss to the LTIP/OP Unit holders.

22

LIQUIDITY AND CAPITAL RESOURCES

Our Operating Liquidity and Resources

As of September 30, 2022, we had $2.7 billion of cash and cash equivalents.  We expect to use our cash balances, cash flow from our operations and proceeds of any future property sales to fund our operations, make distributions, repurchase our common shares, make investments in properties or businesses, fund tenant improvements and leasing costs and for other general business purposes.  We believe our cash balances and the cash flow from our operations will be sufficient to fund our ordinary course activities.

Our future cash flows from operating activities will depend on our ability to collect rent from our current tenants under their leases. Our ability to collect rent and generate parking revenue in the near term may continue to be adversely impacted by the market disruption caused by remote working trends and the COVID-19 virus. We cannot predict the ultimate impact of the pandemic on our results of operations.

Our future cash flows from operating activities will also depend upon our:

•ability to maintain or improve the occupancy of, and the rental rates at, our properties;

•ability to control operating and financing expense increases at our properties; and

•ability to purchase additional properties, which produce rents, less property operating expenses, in excess of our costs of acquisition capital.

In addition, our future cash flows will also depend in part on interest income earned on our invested cash balances.

Volatility in energy costs and real estate taxes may cause our future operating expenses to fluctuate; however, the impact of these fluctuations is expected to be partially offset by the pass through of operating expenses to our tenants pursuant to lease terms, although there can be no assurance that we will be able to successfully offset these expenses or that doing so would not negatively impact our competitive position or business. 

Net cash flows provided by (used in) operating, investing and financing activities were $32.4 million, $(3.1) million and $(137.9) million, respectively, for the nine months ended September 30, 2022, and $10.5 million, $(6.0) million and $(30.2) million, respectively, for the nine months ended September 30, 2021.  Changes in these three categories of our cash flows between 2022 and 2021 are primarily related to an increase in property net operating income, an increase in interest income as a result of higher average interest rates partially offset by lower average balances in 2022, repurchase of our common shares and distributions to common shareholders.

Our Investment and Financing Liquidity and Resources

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

During the nine months ended September 30, 2022, we paid an aggregate of $6.0 million of distributions on our series D preferred shares.  On October 14, 2022, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on November 15, 2022 to shareholders of record on October 31, 2022.

During the nine months ended September 30, 2022, we repurchased and retired an aggregate of 4,887,327 of our common shares at a weighted average price of $25.81 per share, for a total investment of $126.1 million. As of September 30, 2022, we had $149.7 million of remaining availability under our share repurchase program, which is scheduled to expire on June 30, 2023.

We may utilize various types of financings, including debt or equity, to fund future investments and to pay any debt we may incur and other obligations as they become due. Although we are not currently rated by the debt rating agencies, the completion and the costs of any future debt transactions will depend primarily upon market conditions and our credit ratings at such time, if any. We have no control over market conditions. Any credit ratings will depend upon evaluations by credit rating agencies of our business practices and plans and, in particular, whether we appear to have the ability to maintain our earnings,

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to space any debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably foreseeable adverse changes. We intend to conduct our business activities in a manner which will continue to afford us reasonable access to capital for investment and financing activities. However, there can be no assurance regarding our ability to complete any debt or equity offerings or that our cost of any future public or private financings will not increase.

During the three and nine months ended September 30, 2022 and 2021, amounts capitalized at our properties for tenant improvements, leasing costs and building improvements were as follows (amounts in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Tenant improvements(1)	$	557	$	1,001	$	2,583	$	4,614
Leasing costs(2)	501		34		1,922		803
Building improvements(3)	59		219		366		548

(1)Tenant improvements include capital expenditures to improve tenants’ spaces.

(2)Leasing costs include leasing commissions and related legal expenses.

(3)Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. Tenant-funded capital expenditures are excluded.

During the three months ended September 30, 2022, commitments made for expenditures in connection with leasing space at our properties were as follows (dollar and square foot measures in thousands):

	New Leases		Renewals		Total
Square feet leased during the period	25		30		55
Tenant improvements and leasing commissions	$	1,073	$	556	$	1,629
Tenant improvements and leasing commissions per square foot	$	42.92	$	18.53	$	29.49
Weighted average lease term by square foot (years)(1)	5.5		3.5		4.4
Tenant improvements and leasing commissions per square foot per year	$	7.81	$	5.34	$	6.73

(1)For renewal lease terms, if the existing rents of an original lease term are modified, the new term starts at the rent modification date. Weighted average lease term generally excludes renewal options.

NON-GAAP MEASURES

Funds from Operations (FFO) and Normalized FFO

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or 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 (loss), net income (loss) attributable to Equity Commonwealth common shareholders 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 (loss), net income (loss) attributable to Equity Commonwealth common shareholders 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 (loss), net income (loss) attributable to Equity Commonwealth common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations 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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The following table provides a reconciliation of net income (loss) to FFO attributable to Equity Commonwealth common shareholders and unitholders and a reconciliation to Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Reconciliation to FFO:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Real estate depreciation and amortization	4,412		4,546		13,058		13,232
Gain on sale of properties, net	(90)		—		(90)		—
FFO attributable to Equity Commonwealth	16,543		1,732		29,397		(1,560)
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
FFO attributable to Equity Commonwealth common shareholders and unitholders	$	14,546	$	(265)	$	23,406	$	(7,551)
Reconciliation to Normalized FFO:
FFO attributable to Equity Commonwealth common shareholders and unitholders	$	14,546	$	(265)	$	23,406	$	(7,551)
Straight-line rent adjustments	(61)		(409)		(151)		(1,277)
Executive severance expense	—		—		—		7,107
Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders	$	14,485	$	(674)	$	23,255	$	(1,721)

Property Net Operating Income (NOI)

We use another non-GAAP measure, property net operating income, or NOI, to evaluate the performance of our properties. We define NOI as 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.

The following table includes the reconciliation of NOI to net income, the most directly comparable financial measure under GAAP reported in our consolidated financial statements.  We consider NOI to be an appropriate supplemental measure to net income (loss) because it may help to understand the operations of our properties.  We use NOI internally to evaluate property level performance, and we believe that NOI provides useful information to investors regarding our results of operations because it reflects 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.  NOI does 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 or cash flow from operating activities, determined in accordance with GAAP, or as an indicator of our financial performance or liquidity, nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs.  This measure should be considered in conjunction with net income, net income attributable to Equity Commonwealth common shareholders and cash flow from operating activities as presented in our consolidated statements of operations and consolidated statements of cash flows.  Other REITs and real estate companies may calculate NOI differently than we do. 

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A reconciliation of NOI to net income (loss) for the three and nine months ended September 30, 2022 and 2021, is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Rental revenue	$	13,869	$	13,141	$	44,135	$	41,424
Other revenue	1,257		740		3,218		2,183
Operating expenses	(6,073)		(6,102)		(17,198)		(19,311)
NOI	$	9,053	$	7,779	$	30,155	$	24,296
NOI	$	9,053	$	7,779	$	30,155	$	24,296
Depreciation and amortization	(4,451)		(4,588)		(13,176)		(13,371)
General and administrative	(7,593)		(7,572)		(23,241)		(30,691)
Interest and other income, net	15,145		1,599		22,682		5,068
Gain on sale of properties, net	90		—		90		—
Income (loss) before income taxes	12,244		(2,782)		16,510		(14,698)
Income tax expense	(23)		(32)		(81)		(94)
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)

Related Person Transactions

For information about our related person transactions, see Note 11 to the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

The Company’s market risk has not changed materially from the amounts and information reported in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report.

Item 4.  Controls and Procedures.

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to the Exchange Act Rule 13a-15 and Rule 15d-15. Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  Other Information

Item 1. Legal Proceedings.

We are or may become a party to various legal proceedings. We are not currently involved in any litigation nor, to our knowledge, is any litigation threatened against us where the outcome would, in our judgment based on information currently available to us, have a material adverse effect on the Company.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Common Share Repurchase Program

The following table provides information with respect to the common share repurchases made by the Company during the three months ended September 30, 2022:

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number or Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
July 2022	—	$	—	—	$	164,734,402
August 2022	—	$	—	—	$	164,734,402
September 2022	590,271	$	25.40	590,271	$	149,741,790
Total	590,271	$	25.40	590,271	$	149,741,790

(1) On August 24, 2015, our Board of Trustees approved a common share repurchase program. On December 14, 2021, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through December 31, 2022. On March 15, 2022, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through June 30, 2023.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6.  Exhibits.

Exhibit  Number	Description
3.1	Articles of Amendment and Restatement of Declaration of Trust of the Company, dated July 1, 1994, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K filed August 1, 2014.)
3.2	Articles Supplementary, dated October 10, 2006. (Incorporated by reference to the Company’s Current Report on Form 8-K filed October 11, 2006.)
3.3	Articles Supplementary, dated May 31, 2011. (Incorporated by reference to the Company’s Current Report on Form 8-K filed May 31, 2011.)
3.4	Articles Supplementary, dated March 14, 2018. (Incorporated by reference to the Company’s Current Report on Form 8-K filed March 15, 2018.)
3.5	Fourth Amended and Restated Bylaws of the Company, adopted April 2, 2020. (Incorporated by reference to the Company’s Current Report on Form 8-K filed April 3, 2020.)
4.1	Form of Common Share Certificate. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)
4.2	Form of 6.50% Series D Cumulative Convertible Preferred Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) related notes to these condensed consolidated financial statements, tagged as blocks of text and in detail. (Filed herewith.)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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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 thereunto duly authorized.

 

EQUITY COMMONWEALTH
By:	/s/ David A. Helfand
	David A. Helfand
	President and Chief Executive Officer
	Dated:	October 26, 2022
By:	/s/ William H. Griffiths
	William H. Griffiths
	Executive Vice President, Chief Financial Officer and Treasurer
	Dated:	October 26, 2022

29

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, David A. Helfand, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Equity Commonwealth;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 26, 2022	/s/ David A. Helfand
		David A. Helfand
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, William H. Griffiths, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Equity Commonwealth;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 26, 2022	/s/ William H. Griffiths
		William H. Griffiths
		Executive Vice President, Chief
		Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Sec. 1350

In connection with the filing by Equity Commonwealth (the “Company”) of the Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David A. Helfand		/s/ William H. Griffiths
David A. Helfand		William H. Griffiths
President and Chief Executive Officer		Executive Vice President, Chief Financial Officer
		and Treasurer
Date:	October 26, 2022

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Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Oct. 21, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	1-9317
Entity Registrant Name	EQUITY COMMONWEALTH
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	04-6558834
Entity Address, Address Line One	Two North Riverside Plaza, Suite 2100
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60606
City Area Code	(312)
Local Phone Number	646-2800
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		109,428,252
Entity Central Index Key	0000803649
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Common Shares of Beneficial Interest
Document Information [Line Items]
Title of 12(b) Security	Common Shares of Beneficial Interest
Trading Symbol	EQC
Security Exchange Name	NYSE
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest
Document Information [Line Items]
Title of 12(b) Security	6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest
Trading Symbol	EQCpD
Security Exchange Name	NYSE

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Real estate properties:
Land	$ 44,060	$ 44,060
Buildings and improvements	363,782	362,042
Total real estate properties, at cost, gross	407,842	406,102
Accumulated depreciation	(166,379)	(156,439)
Total real estate properties, at cost, net	241,463	249,663
Cash and cash equivalents	2,692,354	2,800,998
Rents receivable	16,234	15,549
Other assets, net	18,469	15,173
Total assets	2,968,520	3,081,383
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	21,704	19,762
Rent collected in advance	2,637	3,986
Distributions payable	113,584	2,365
Total liabilities	137,925	26,113
Shareholders’ equity:
Series D preferred shares; 6.50% cumulative convertible; $4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880	119,263	119,263
Common shares of beneficial interest, $0.01 par value: $350,000,000 shares authorized; $110,651,571 and $115,205,818 shares issued and outstanding, respectively	1,106	1,152
Additional paid in capital	4,005,125	4,128,656
Cumulative net income	3,814,940	3,798,552
Cumulative common distributions	(4,393,290)	(4,281,195)
Cumulative preferred distributions	(723,691)	(717,700)
Total shareholders’ equity	2,823,453	3,048,728
Noncontrolling interest	7,142	6,542
Total equity	2,830,595	3,055,270
Total liabilities and equity	$ 2,968,520	$ 3,081,383

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Preferred shares of beneficial interest, shares authorized (in shares)	50,000,000	50,000,000	50,000,000
Preferred shares, dividend percentage	6.50%	6.50%
Preferred shares of beneficial interest, shares issued (in shares)	4,915,196	4,915,196	4,915,196
Preferred shares, of beneficial interest, shares outstanding (in shares)	4,915,196	4,915,196	4,915,196
Preferred shares, aggregate liquidation preference	$ 122,880	$ 122,880	$ 122,880
Common shares of beneficial interest, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common shares of beneficial interest, shares authorized (in shares)	350,000,000	350,000,000	350,000,000
Common shares of beneficial interest, shares issued (in shares)	110,651,571	110,651,571	115,205,818
Common shares of beneficial interest, shares outstanding (in shares)	110,651,571	110,651,571	115,205,818

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Rental revenue	$ 13,869	$ 13,141	$ 44,135	$ 41,424
Other revenue	1,257	740	3,218	2,183
Total revenues	15,126	13,881	47,353	43,607
Expenses:
Operating expenses	6,073	6,102	17,198	19,311
Depreciation and amortization	4,451	4,588	13,176	13,371
General and administrative	7,593	7,572	23,241	30,691
Total expenses	18,117	18,262	53,615	63,373
Interest and other income, net	15,145	1,599	22,682	5,068
Gain on sale of properties, net	90	0	90	0
Income (loss) before income taxes	12,244	(2,782)	16,510	(14,698)
Income tax expense	(23)	(32)	(81)	(94)
Net income (loss)	12,221	(2,814)	16,429	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)	6	(41)	30
Net income (loss) attributable to Equity Commonwealth	12,190	(2,808)	16,388	(14,762)
Preferred distributions	(1,997)	(1,997)	(5,991)	(5,991)
Net income (loss) attributable to Equity Commonwealth common shareholders	$ 10,193	$ (4,805)	$ 10,397	$ (20,753)
Weighted average common shares outstanding — basic (in shares)	111,305	122,190	112,341	122,128
Weighted average common shares outstanding — diluted (in shares)	112,596	122,190	113,383	122,128
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic (in dollars per share)	$ 0.09	$ (0.04)	$ 0.09	$ (0.17)
Diluted (in dollars per share)	0.09	(0.04)	0.09	(0.17)
Distributions declared per common share (in dollars per share)	$ 1.00	$ 0	$ 1.00	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Series D Preferred Shares	Common Shares	Additional Paid in Capital	Cumulative Net Income	Cumulative Common Distributions	Cumulative Preferred Distributions	Noncontrolling Interest
Balance as of beginning of period (in shares) at Dec. 31, 2020		4,915,196	121,522,555
Balance as of beginning of period at Dec. 31, 2020	$ 3,243,164	$ 119,263	$ 1,215	$ 4,294,632	$ 3,814,948	$ (4,283,668)	$ (709,712)	$ 6,486
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(14,792)				(14,762)			(30)
Repurchase of shares (in shares)			(430,871)
Repurchase of shares	(18,045)		$ (4)	(18,041)
Surrender of shares for tax withholding (in shares)			(245,215)
Surrender of shares for tax withholding	(7,072)		$ (2)	(7,070)
Share-based compensation (in shares)			664,633
Share-based compensation	12,589		$ 6	11,889				694
Distributions	(4,010)					1,914	(5,991)	67
Adjustment for noncontrolling interest	0			696				(696)
Balance as of end of period (in shares) at Sep. 30, 2021		4,915,196	121,511,102
Balance as of end of period at Sep. 30, 2021	3,211,834	$ 119,263	$ 1,215	4,282,106	3,800,186	(4,281,754)	(715,703)	6,521
Balance as of beginning of period (in shares) at Jun. 30, 2021		4,915,196	121,940,355
Balance as of beginning of period at Jun. 30, 2021	3,231,836	$ 119,263	$ 1,219	4,297,197	3,802,994	(4,281,670)	(713,706)	6,539
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(2,814)				(2,808)			(6)
Repurchase of shares (in shares)			(430,871)
Repurchase of shares	(18,045)		$ (4)	(18,041)
Surrender of shares for tax withholding (in shares)			(1,186)
Surrender of shares for tax withholding	(31)			(31)
Share-based compensation (in shares)			2,804
Share-based compensation	2,988			2,801				187
Distributions	(2,100)					(84)	(1,997)	(19)
Adjustment for noncontrolling interest	0			180				(180)
Balance as of end of period (in shares) at Sep. 30, 2021		4,915,196	121,511,102
Balance as of end of period at Sep. 30, 2021	3,211,834	$ 119,263	$ 1,215	4,282,106	3,800,186	(4,281,754)	(715,703)	6,521
Balance as of beginning of period (in shares) at Dec. 31, 2021		4,915,196	115,205,818
Balance as of beginning of period at Dec. 31, 2021	3,055,270	$ 119,263	$ 1,152	4,128,656	3,798,552	(4,281,195)	(717,700)	6,542
Increase (Decrease) in Stockholders' Equity
Net income (loss)	16,429				16,388			41
Repurchase of shares (in shares)			(4,887,327)
Repurchase of shares	(127,327)		$ (49)	(127,278)
Surrender of shares for tax withholding (in shares)			(160,506)
Surrender of shares for tax withholding	(4,160)		$ (2)	(4,158)
Share-based compensation (in shares)			493,586
Share-based compensation	9,054		$ 5	7,956				1,093
Contributions	1							1
Distributions	(118,672)					(112,095)	(5,991)	(586)
Adjustment for noncontrolling interest	0			(51)				51
Balance as of end of period (in shares) at Sep. 30, 2022		4,915,196	110,651,571
Balance as of end of period at Sep. 30, 2022	2,830,595	$ 119,263	$ 1,106	4,005,125	3,814,940	(4,393,290)	(723,691)	7,142
Balance as of beginning of period (in shares) at Jun. 30, 2022		4,915,196	111,241,842
Balance as of beginning of period at Jun. 30, 2022	2,945,822	$ 119,263	$ 1,112	4,018,440	3,802,750	(4,281,442)	(721,694)	7,393
Increase (Decrease) in Stockholders' Equity
Net income (loss)	12,221				12,190			31
Repurchase of shares (in shares)			(590,271)
Repurchase of shares	(16,028)		$ (6)	(16,022)
Share-based compensation	2,885			2,498				387
Distributions	(114,305)					(111,848)	(1,997)	(460)
Adjustment for noncontrolling interest	0			209				(209)
Balance as of end of period (in shares) at Sep. 30, 2022		4,915,196	110,651,571
Balance as of end of period at Sep. 30, 2022	$ 2,830,595	$ 119,263	$ 1,106	$ 4,005,125	$ 3,814,940	$ (4,393,290)	$ (723,691)	$ 7,142

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 16,429	$ (14,792)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	11,267	11,471
Straight-line rental income	(151)	(1,277)
Other amortization	1,909	1,900
Share-based compensation	9,054	12,589
Net gain on sale of properties	(90)	0
Change in assets and liabilities:
Rents receivable and other assets	(5,710)	407
Accounts payable, accrued expenses and other	1,024	735
Rent collected in advance	(1,349)	(504)
Net cash provided by operating activities	32,383	10,529
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate improvements	(3,189)	(5,979)
Proceeds from sale of properties, net	90	0
Net cash used in investing activities	(3,099)	(5,979)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase and retirement of common shares	(130,476)	(18,163)
Contributions from holders of noncontrolling interest	1	0
Distributions to common shareholders	(1,462)	(6,024)
Distributions to preferred shareholders	(5,991)	(5,991)
Distributions to holders of noncontrolling interest	0	(33)
Net cash used in financing activities	(137,928)	(30,211)
Decrease in cash and cash equivalents	(108,644)	(25,661)
Cash and cash equivalents at beginning of period	2,800,998	2,987,225
Cash and cash equivalents at end of period	2,692,354	2,961,564
SUPPLEMENTAL CASH FLOW INFORMATION:
Taxes paid, net	108	244
NON-CASH INVESTING ACTIVITIES:
Accrued capital expenditures	269	169
NON-CASH FINANCING ACTIVITIES:
Distributions payable	$ 113,584	$ 2,954

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Business

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

Business

Equity Commonwealth, or the Company, is a real estate investment trust, or REIT, formed in 1986 under the laws of the State of Maryland. Our business is primarily the ownership and operation of office properties in the United States.

The Company operates in an umbrella partnership real estate investment trust, or UPREIT, and conducts substantially all of its activities through EQC Operating Trust, a Maryland real estate investment trust, or the Operating Trust. The Company beneficially owned 99.75% of the outstanding shares of beneficial interest, designated as units, in the Operating Trust, or OP Units, as of September 30, 2022, and the Company is the sole trustee of the Operating Trust.  As the sole trustee, the Company generally has the power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units.

At September 30, 2022, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet. As of September 30, 2022, we had $2.7 billion of cash and cash equivalents.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements of EQC have been prepared without audit.  Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are appropriate.  The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2021.  Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.

In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.  All intercompany transactions and balances with or among our subsidiaries have been eliminated.  Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.  Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts.  Actual results could differ from those estimates.  Significant estimates in the condensed consolidated financial statements include the assessment of the collectability of rental revenue, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

Dollar amounts presented may be approximate. Share amounts are presented in whole numbers, except where noted.

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Real Estate Properties

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Real Estate Properties

Real Estate Properties

During the nine months ended September 30, 2022 and 2021, we made improvements, excluding tenant-funded improvements, to our properties totaling $2.9 million and $5.2 million, respectively.

Property Dispositions:

We did not sell any properties during the nine months ended September 30, 2022 or 2021.

Lease Payments

Rental revenue consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Lease payments	$	9,381	$	8,989	$	28,792	$	27,438
Variable lease payments	4,488		4,152		15,343		13,986
Rental revenue	$	13,869	$	13,141	$	44,135	$	41,424

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Shareholders' Equity

9 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Common Share Issuances:

See Note 7 for information regarding equity issuances related to share-based compensation.

Common Share Repurchases:

During the nine months ended September 30, 2022, we repurchased and retired an aggregate of 4,887,327 of our common shares at a weighted average price of $25.81 per share, for a total investment of $126.1 million. As of September 30, 2022, we had $149.7 million of remaining availability under our share repurchase program, which is scheduled to expire on June 30, 2023.

During the nine months ended September 30, 2022 and 2021, certain of our employees and former employees surrendered 160,506 and 244,029 common shares owned by them, respectively, to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares pursuant to our equity compensation plans.

Common Share and Unit Distribution:

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

In February 2022, the number of earned awards for recipients of the Company’s restricted stock units granted in January 2019 was determined. Pursuant to the terms of such awards, we paid a one-time catch-up cash distribution to these recipients in the aggregate amount of $1.5 million for distributions to common shareholders declared by our Board of Trustees during such awards’ performance measurement period.

Series D Preferred Shares:

Our series D preferred shares are convertible, at the holder’s option, into our common shares at a conversion rate of 0.6846 common shares per series D preferred share, which is equivalent to a conversion price of $36.52 per common share, or 3,364,943 additional common shares at September 30, 2022. The conversion rate changed from 0.6585 to 0.6846 common shares per series D preferred share effective September 30, 2022 as a result of the common share distribution declared by our Board of Trustees in 2022.

Preferred Share Distributions:

In 2022, our Board of Trustees declared distributions on our series D preferred shares to date as follows:

Declaration Date	Record Date	Payment Date	Series D Dividend Per Share
January 11, 2022	January 28, 2022	February 15, 2022	$	0.40625
April 11, 2022	April 29, 2022	May 16, 2022	$	0.40625
July 14, 2022	July 29, 2022	August 15, 2022	$	0.40625
October 14, 2022	October 31, 2022	November 15, 2022	$	0.40625

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Noncontrolling Interest

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Noncontrolling Interest

Noncontrolling Interest

Noncontrolling interest represents the portion of the OP Units not beneficially owned by the Company. The ownership of an OP Unit and a common share of beneficial interest have essentially the same economic characteristics. Distributions with respect to OP Units will generally mirror distributions with respect to the Company’s common shares. Unitholders (other than the Company) generally have the right, commencing six months from the date of issuance of such OP Units, to cause the Operating Trust to redeem their OP Units in exchange for cash or, at the option of the Company, common shares of the Company on a one-for-one basis. As sole trustee, the Company has the sole discretion to elect whether the redemption right will be satisfied by the Company in cash or the Company’s common shares. As a result, the Noncontrolling interest is classified as permanent equity. As of September 30, 2022, the portion of the Operating Trust not beneficially owned by the Company is in the form of OP Units and LTIP Units (see Note 7 for a description of LTIP Units). LTIP Units may be subject to additional vesting requirements.

The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the nine months ended September 30, 2022:

	Common Shares	OP Units and LTIP Units	Total
Outstanding at January 1, 2022	115,205,818	247,217	115,453,035
Repurchase and surrender of shares	(5,047,833)	—	(5,047,833)
Share-based compensation grants and vesting, net of forfeitures	493,586	32,675	526,261
Outstanding at September 30, 2022	110,651,571	279,892	110,931,463
Noncontrolling ownership interest in the Operating Trust			0.25	%

The carrying value of the Noncontrolling interest is allocated based on the number of OP Units and LTIP Units in proportion to the number of OP Units and LTIP Units plus the number of common shares. We adjust the Noncontrolling interest balance at the end of each period to reflect the noncontrolling partners’ interest in the net assets of the Operating Trust. Net income is allocated to the Noncontrolling interest in the Operating Trust based on the weighted average ownership percentage during the period. Equity Commonwealth’s weighted average ownership interest in the Operating Trust was 99.75% and 99.76% for the three and nine months ended September 30, 2022, respectively.

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Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and are generally not subject to federal and state income taxes provided we distribute a sufficient amount of our taxable income to our shareholders and meet other requirements for qualifying as a REIT.  However, we are subject to certain state and local taxes without regard to our REIT status.

On August 31, 2022, the Company completed an internal restructuring intended to comply with Section 351 of the Internal Revenue Code. As a result, the Operating Trust recognized an $82.0 million taxable gain for federal income tax purposes. The resulting gain eliminates in the Company’s condensed consolidated financial statements and has no impact on the Company’s provision for income taxes for the three and nine months ended September 30, 2022.

Our provision for income taxes consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Current:
State and local	$	(23)	$	(32)	$	(81)	$	(94)
Income tax expense	$	(23)	$	(32)	$	(81)	$	(94)

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Share-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based Compensation

Recipients of the Company’s restricted shares have the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder.  The restricted shares are service based awards and vest over a service period determined by the Compensation Committee of our Board of Trustees, or the Compensation Committee.

Recipients of the Company’s restricted stock units, or RSUs, are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market-based awards with a service condition and recipients may earn RSUs based on the Company’s total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards will be determined. The earned awards vest in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Compensation Committee determines the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient’s continued employment. Compensation expense for the RSUs is determined using a Monte Carlo simulation model and is recognized ratably from the grant date to the vesting date of each tranche.

LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries. Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time.

2022 Equity Award Activity

During the nine months ended September 30, 2022, 382,993 RSUs vested, and, as a result, we issued 382,993 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 4).

On June 21, 2022, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2022-2023 year of service on the Board of Trustees. These awards equated to 3,604 shares or time-based LTIP Units per Trustee, for a total of 18,020 shares and 3,604 time-based LTIP Units, valued at $27.75 per share and unit, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on that day. These shares and time-based LTIP Units vest one year after the date of the award, on June 21, 2023.

On January 26, 2022, the Compensation Committee approved grants in the aggregate amount of 29,071 time-based LTIP Units, 59,024 market-based LTIP Units at target (147,117 market-based LTIP Units at maximum), 92,573 restricted shares and 187,951 RSUs at target (468,468 RSUs at maximum) to the Company’s officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2021. The restricted shares and time-based LTIP Units were valued at $25.50 per share/unit, the closing price of our common shares on the NYSE on the grant date. The assumptions and fair value for the RSUs and market-based LTIP Units granted during the nine months ended September 30,

2022 are included in the following table on a per share/unit basis.

	2022
Fair value of market-based awards granted	$	35.11
Expected term (years)	4
Expected volatility	17.04		%
Risk-free rate	1.39		%

2021 Equity Award Activity

During the nine months ended September 30, 2021, 523,662 RSUs vested, and, as a result, we issued 523,662 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations.

On June 23, 2021, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2021-2022 year of service on the Board of Trustees. These awards equated to 3,701 shares or time-based LTIP Units per Trustee, for a total of 18,505 shares and 3,701 time-based LTIP Units, valued at $27.02 per share and unit, the closing price of our common shares on the NYSE on that day. These shares and time-based LTIP Units vested on June 23, 2022.

On January 25, 2021, the Compensation Committee approved grants in the aggregate amount of 122,466 restricted shares and 248,646 RSUs at target (619,750 RSUs at maximum) to the Company’s officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2020. The restricted shares were valued at $28.25 per share, the closing price of our common shares on the NYSE on the grant date. The RSUs were valued at $37.87 per share, their fair value on the grant date.

Outstanding Equity Awards

As of September 30, 2022, the estimated future compensation expense for all unvested restricted shares and time-based LTIP Units was $5.9 million. Compensation expense for the restricted share and time-based LTIP Unit awards is being recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The weighted average period over which the future compensation expense will be recorded for the restricted shares and time-based LTIP Units is approximately 2.4 years.

As of September 30, 2022, the estimated future compensation expense for all unvested RSUs and market-based LTIP Units was $12.8 million. The weighted average period over which the future compensation expense will be recorded for the RSUs and market-based LTIP Units is approximately 2.3 years.

During the three months ended September 30, 2022 and 2021, we recorded $2.9 million and $3.0 million, respectively, and during the nine months ended September 30, 2022 and 2021, we recorded $9.1 million and $12.6 million, respectively, of compensation expense, net of forfeitures, in general and administrative expense for grants to our trustees, eligible consultants and employees related to our equity compensation plans. Compensation expense recorded during the three months ended September 30, 2022 and 2021 includes $0 and $0.1 million, respectively, of accelerated vesting due to staffing reductions, and compensation expense recorded during the nine months ended September 30, 2022 and 2021 includes $0.4 million and $3.5 million, respectively, of accelerated vesting due to staffing reductions. Forfeitures are recognized as they occur. At September 30, 2022, 1,126,571 shares/units remain available for issuance under the Equity Commonwealth 2015 Omnibus Incentive Plan, as amended.

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Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

As of September 30, 2022, we do not have any assets or liabilities measured at fair value.

Financial Instruments

Our financial instruments include our cash and cash equivalents.  At September 30, 2022 and December 31, 2021, the fair value of these financial instruments was not different from their carrying values.

Other financial instruments that potentially subject us to concentrations of credit risk consist principally of rents receivable. As of September 30, 2022, no single tenant of ours is responsible for more than 10% of our consolidated revenues.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator for earnings per common share - basic:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Numerator for net income (loss) per share - basic	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Numerator for earnings per common share - diluted:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Numerator for net income (loss) per share - diluted	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding - basic(1)	111,305		122,190		112,341		122,128
RSUs(2)	1,111		—		875		—
LTIP Units(3)	180		—		167		—
Weighted average number of common shares outstanding - diluted	112,596		122,190		113,383		122,128
Net income (loss) per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Diluted	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Anti-dilutive securities(4):
Effect of Series D preferred shares; 6.50% cumulative convertible	3,365		3,237		3,365		3,237
Effect of RSUs(2)	—		490		—		601
Effect of LTIP Units(3)	—		66		—		93
Effect of OP Units(5)	280		223		275		203

(1) The three months ended September 30, 2022 and 2021, include 86 and 262 weighted-average, unvested, earned RSUs, respectively, and the nine months ended September 30, 2022 and 2021, include 111 and 255 weighted-average, unvested, earned RSUs, respectively.

(2) Represents the weighted-average number of common shares that would have been issued if the quarter-end was the measurement date for unvested, unearned RSUs.

(3) Represents the weighted-average dilutive shares issuable from LTIP Units if the quarter-end was the measurement date for the periods shown.

(4) The Series D preferred shares are excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2022 and 2021, because including the Series D preferred shares would also require that the preferred distributions be added back to net income (loss), resulting in anti-dilution. The RSUs and market-based LTIP Units are excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2021 because including them results in anti-dilution.

(5) Beneficial interests in the Operating Trust.

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Segment Information	9 Months Ended
	Sep. 30, 2022
Segment Reporting [Abstract]
Segment Information	Segment Information Our primary business is the ownership and operation of office properties, and we currently have one reportable segment.  One hundred percent of our revenues for the nine months ended September 30, 2022 were from office properties.

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Related Person Transactions

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Related Person Transactions

Related Person Transactions

The following discussion includes a description of our related person transactions for the nine months ended September 30, 2022 and 2021.

Two North Riverside Plaza Joint Venture Limited Partnership: We entered into a lease on July 20, 2015 with Two North Riverside Plaza Joint Venture Limited Partnership, an entity associated with Mr. Zell, our Chairman, to occupy office space on the twentieth and twenty-first floors of Two North Riverside Plaza in Chicago, Illinois (20th/21st Floor Office Lease). The initial term of the lease was approximately five years, expiring on December 31, 2020. We made improvements to the office space utilizing the $0.7 million tenant improvement allowance pursuant to the lease. In connection with the 20th/21st Floor Office Lease, we also had a storage lease with Two North Riverside Plaza Joint Venture Limited Partnership for storage space in the basement of Two North Riverside Plaza, which we terminated, effective August 31, 2020.

In December 2020, we entered into an amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2021, with no renewal options. The lease payment for the extended term was $0.3 million. In December 2021, we entered into a second amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2022, with no renewal options. The lease payment for the second extended term is $0.4 million.

During the three months ended September 30, 2022 and 2021, we recognized expense of $0.1 million and $0.1 million, respectively, and during the nine months ended September 30, 2022 and 2021, we recognized expense of $0.3 million and $0.2 million, respectively, pursuant to the 20th/21st Floor Office Lease. As of September 30, 2022 and December 31, 2021, we did not have any amounts due to Two North Riverside Plaza Joint Venture Limited Partnership pursuant to the 20th/21st Floor Office Lease.

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Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Preferred Share Distribution

On October 14, 2022, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on November 15, 2022 to shareholders of record on October 31, 2022.

Commons Share Distribution

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million (see Note 5).

Common Share Repurchases

From October 1, 2022 through October 24, 2022, we repurchased 1,223,319 of our common shares at a weighted average price of $23.99 per share, for a total investment of $29.3 million. We have $120.4 million of remaining authorization available under our share repurchase program.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements of EQC have been prepared without audit.  Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are appropriate.  The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2021.  Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.

In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.  All intercompany transactions and balances with or among our subsidiaries have been eliminated.  Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.  Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts.  Actual results could differ from those estimates.  Significant estimates in the condensed consolidated financial statements include the assessment of the collectability of rental revenue, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

Dollar amounts presented may be approximate. Share amounts are presented in whole numbers, except where noted.

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Real Estate Properties (Tables)

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Schedule of Rental Revenue

Rental revenue consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Lease payments	$	9,381	$	8,989	$	28,792	$	27,438
Variable lease payments	4,488		4,152		15,343		13,986
Rental revenue	$	13,869	$	13,141	$	44,135	$	41,424

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Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

Schedule of Declared Distributions

In 2022, our Board of Trustees declared distributions on our series D preferred shares to date as follows:

Declaration Date	Record Date	Payment Date	Series D Dividend Per Share
January 11, 2022	January 28, 2022	February 15, 2022	$	0.40625
April 11, 2022	April 29, 2022	May 16, 2022	$	0.40625
July 14, 2022	July 29, 2022	August 15, 2022	$	0.40625
October 14, 2022	October 31, 2022	November 15, 2022	$	0.40625

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Noncontrolling Interest (Tables)

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Schedule of Issued and Outstanding Common Shares

The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the nine months ended September 30, 2022:

	Common Shares	OP Units and LTIP Units	Total
Outstanding at January 1, 2022	115,205,818	247,217	115,453,035
Repurchase and surrender of shares	(5,047,833)	—	(5,047,833)
Share-based compensation grants and vesting, net of forfeitures	493,586	32,675	526,261
Outstanding at September 30, 2022	110,651,571	279,892	110,931,463
Noncontrolling ownership interest in the Operating Trust			0.25	%

Schedule of Issued and Outstanding Units

The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the nine months ended September 30, 2022:

	Common Shares	OP Units and LTIP Units	Total
Outstanding at January 1, 2022	115,205,818	247,217	115,453,035
Repurchase and surrender of shares	(5,047,833)	—	(5,047,833)
Share-based compensation grants and vesting, net of forfeitures	493,586	32,675	526,261
Outstanding at September 30, 2022	110,651,571	279,892	110,931,463
Noncontrolling ownership interest in the Operating Trust			0.25	%

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Schedule of Provision for Income Taxes

Our provision for income taxes consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Current:
State and local	$	(23)	$	(32)	$	(81)	$	(94)
Income tax expense	$	(23)	$	(32)	$	(81)	$	(94)

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Assumptions and Fair Values for RSUs and Market-based LTIP Units Granted in the Period

The assumptions and fair value for the RSUs and market-based LTIP Units granted during the nine months ended September 30, 2022 are included in the following table on a per share/unit basis.

	2022
Fair value of market-based awards granted	$	35.11
Expected term (years)	4
Expected volatility	17.04		%
Risk-free rate	1.39		%

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator for earnings per common share - basic:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Numerator for net income (loss) per share - basic	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Numerator for earnings per common share - diluted:
Net income (loss)	$	12,221	$	(2,814)	$	16,429	$	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)		6		(41)		30
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)
Numerator for net income (loss) per share - diluted	$	10,193	$	(4,805)	$	10,397	$	(20,753)
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding - basic(1)	111,305		122,190		112,341		122,128
RSUs(2)	1,111		—		875		—
LTIP Units(3)	180		—		167		—
Weighted average number of common shares outstanding - diluted	112,596		122,190		113,383		122,128
Net income (loss) per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Diluted	$	0.09	$	(0.04)	$	0.09	$	(0.17)
Anti-dilutive securities(4):
Effect of Series D preferred shares; 6.50% cumulative convertible	3,365		3,237		3,365		3,237
Effect of RSUs(2)	—		490		—		601
Effect of LTIP Units(3)	—		66		—		93
Effect of OP Units(5)	280		223		275		203

(1) The three months ended September 30, 2022 and 2021, include 86 and 262 weighted-average, unvested, earned RSUs, respectively, and the nine months ended September 30, 2022 and 2021, include 111 and 255 weighted-average, unvested, earned RSUs, respectively.

(2) Represents the weighted-average number of common shares that would have been issued if the quarter-end was the measurement date for unvested, unearned RSUs.

(3) Represents the weighted-average dilutive shares issuable from LTIP Units if the quarter-end was the measurement date for the periods shown.

(4) The Series D preferred shares are excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2022 and 2021, because including the Series D preferred shares would also require that the preferred distributions be added back to net income (loss), resulting in anti-dilution. The RSUs and market-based LTIP Units are excluded from the diluted earnings per share calculation for the three and nine months ended September 30, 2021 because including them results in anti-dilution.

(5) Beneficial interests in the Operating Trust.

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Business (Details) $ in Thousands, ft² in Millions	Sep. 30, 2022 USD ($) ft² building property	Dec. 31, 2021 USD ($)
Noncontrolling Interest [Line Items]
Cash and cash equivalents | $	$ 2,692,354	$ 2,800,998
Consolidated Properties
Noncontrolling Interest [Line Items]
Number of real estate properties | property	4
Number of buildings | building	8
Square footage (in sqft) | ft²	1.5
Operating Trust
Noncontrolling Interest [Line Items]
Noncontrolling interest, ownership percentage by parent	99.75%

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Real Estate Properties - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Real Estate [Abstract]
Real estate improvements	$ 2.9	$ 5.2

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Real Estate Properties - Rental Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Real Estate [Abstract]
Lease payments	$ 9,381	$ 8,989	$ 28,792	$ 27,438
Variable lease payments	4,488	4,152	15,343	13,986
Rental revenue	$ 13,869	$ 13,141	$ 44,135	$ 41,424

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Shareholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands			1 Months Ended		3 Months Ended		9 Months Ended
	Oct. 18, 2022 USD ($)	Sep. 08, 2022 $ / shares	Oct. 24, 2022 USD ($) $ / shares	Feb. 28, 2022 USD ($)	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 $ / shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 29, 2022
Class of Stock [Line Items]
Distributions declared per common share (in dollars per share) | $ / shares		$ 1.00			$ 1.00	$ 0	$ 1.00	$ 0
Distributions to common shareholders/unitholders				$ 1,500			$ 1,462	$ 6,024
Subsequent event
Class of Stock [Line Items]
Distribution amount	$ 111,000
Common Shares
Class of Stock [Line Items]
Stock repurchased and retired (in shares) | shares							4,887,327
Average cost per share (in dollars per share) | $ / shares							$ 25.81
Stock repurchased and retired, value							$ 126,100
Stock repurchase program, remaining authorized repurchase amount					$ 149,700		$ 149,700
Surrender of shares for tax withholding (in shares) | shares							160,506	244,029
Common Shares | Subsequent event
Class of Stock [Line Items]
Average cost per share (in dollars per share) | $ / shares			$ 23.99
Stock repurchase program, remaining authorized repurchase amount			$ 120,400
Series D Preferred Stock
Class of Stock [Line Items]
Conversion rate					0.6846		0.6846		0.6585
Conversion price (in dollars per share) | $ / shares					$ 36.52		$ 36.52
Additional shares (in shares) | shares					3,364,943		3,364,943

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Shareholders' Equity - Schedule of Declared Distributions (Details) - $ / shares	Nov. 15, 2022	Oct. 14, 2022	Aug. 15, 2022	Jul. 14, 2022	May 16, 2022	Apr. 11, 2022	Feb. 15, 2022	Jan. 11, 2022
Class of Stock [Line Items]
Dividend declared (in dollars per share)				$ 0.40625		$ 0.40625		$ 0.40625
Dividend paid (in dollars per share)			$ 0.40625		$ 0.40625		$ 0.40625
Subsequent event
Class of Stock [Line Items]
Dividend declared (in dollars per share)		$ 0.40625
Dividend paid (in dollars per share)	$ 0.40625

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Noncontrolling Interest - Narrative (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Noncontrolling Interest [Line Items]
Common stock, conversion term		6 months
Common stock, conversion basis		1
Operating Trust
Noncontrolling Interest [Line Items]
Noncontrolling interest, weighted average ownership percentage by parent	99.75%	99.76%

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Noncontrolling Interest - Common Shares and Units Activity (Details)	9 Months Ended
	Sep. 30, 2022 shares
Equity Commonwealth
Increase (Decrease) in Stockholders' Equity
Noncontrolling ownership interest in the Operating Trust	0.25%
Common Shares
Increase (Decrease) in Stockholders' Equity
Balance as of beginning of period (in shares)	115,205,818
Repurchase and surrender of shares (in shares)	(5,047,833)
Share-based compensation grants and vesting, net of forfeitures (in shares)	493,586
Balance as of end of period (in shares)	110,651,571
OP Units and LTIP Units | Noncontrolling Interest
Increase (Decrease) in Stockholders' Equity
Balance as of beginning of period (in shares)	247,217
Repurchase and surrender of shares (in shares)	0
Share-based compensation grants and vesting, net of forfeitures (in shares)	32,675
Balance as of end of period (in shares)	279,892
Common Stock, OP Units, and LTIP Units
Increase (Decrease) in Stockholders' Equity
Balance as of beginning of period (in shares)	115,453,035
Repurchase and surrender of shares (in shares)	(5,047,833)
Share-based compensation grants and vesting, net of forfeitures (in shares)	526,261
Balance as of end of period (in shares)	110,931,463

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Income Taxes - Narrative (Details) $ in Millions	Aug. 31, 2022 USD ($)
Income Tax Disclosure [Abstract]
Taxable gain recognized	$ 82.0

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Current:
State and local	$ (23)	$ (32)	$ (81)	$ (94)
Income tax expense	$ (23)	$ (32)	$ (81)	$ (94)

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Share-Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions					3 Months Ended		9 Months Ended
	Jun. 21, 2022 USD ($) trustee $ / shares shares	Jan. 26, 2022 $ / shares shares	Jun. 23, 2021 USD ($) trustee $ / shares shares	Jan. 25, 2021 $ / shares shares	Sep. 30, 2022 USD ($) shares	Sep. 30, 2021 USD ($) shares	Sep. 30, 2022 USD ($) tranche $ / shares shares	Sep. 30, 2021 USD ($) shares	Dec. 31, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Common stock issued (in shares)					110,651,571		110,651,571		115,205,818
Compensation expense, accelerated vesting due to a staffing reduction | $					$ 0.0	$ 0.1	$ 0.4	$ 3.5
Common shares available for issuance (in shares)					1,126,571		1,126,571
General and Administrative Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense | $					$ 2.9	$ 3.0	$ 9.1	$ 12.6
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							3 years
Number of tranches | tranche							2
Share-based compensation arrangement (in shares)							382,993	523,662
Common stock issued (in shares)					382,993	523,662	382,993	523,662
Granted shares value (in dollars per share) | $ / shares				$ 37.87
RSUs | Vesting in three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percent							50.00%
RSUs | Vesting in four years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							1 year
Vesting percent							50.00%
RSUs at target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards granted (in shares)		187,951		248,646
RSUs at maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards granted (in shares)		468,468		619,750
LTIP Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Conversion basis					1		1
Restricted Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of independent trustees | trustee	6		6
Number of equity awards granted (in shares)	18,020	92,573	18,505	122,466
Granted shares value (in dollars per share) | $ / shares				$ 28.25
Restricted Shares and Time-Based LTIP Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation amount | $	$ 0.1		$ 0.1
Exercise price (in dollars per share) | $ / shares	$ 27.75		$ 27.02
Granted shares value (in dollars per share) | $ / shares		$ 25.50
Estimated future compensation expense for unvested shares | $					$ 5.9		$ 5.9
Weighted average period over which compensation expense will be recorded							2 years 4 months 24 days
Restricted Shares and Time-Based LTIP Units | Independent Trustee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards granted (in shares)	3,604		3,701
Time-based LTIP Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards granted (in shares)	3,604	29,071	3,701
Market-Based LTIP Units, Target
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards granted (in shares)		59,024
Market-Based LTIP Units At Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards granted (in shares)		147,117
RSUs and Market-Based LTIP Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted shares value (in dollars per share) | $ / shares							$ 35.11
Estimated future compensation expense for unvested shares | $					$ 12.8		$ 12.8
Weighted average period over which compensation expense will be recorded							2 years 3 months 18 days

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Share-Based Compensation - Summary of Assumptions and Fair Values for RSUs and Market-based LTIP Units Granted in the Period (Details) - RSUs and Market-Based LTIP Units	9 Months Ended
	Sep. 30, 2022 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Fair value of market-based awards granted	$ 35.11
Expected term (years)	4 years
Expected volatility	17.04%
Risk-free rate	1.39%

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Fair Value of Assets and Liabilities - Narrative (Details)	Sep. 30, 2022 USD ($)
Fair Value Disclosures [Abstract]
Fair value, net asset (liability)	$ 0

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Numerator for earnings per common share - basic:
Net income (loss)	$ 12,221	$ (2,814)	$ 16,429	$ (14,792)
Net (income) loss attributable to noncontrolling interest	(31)	6	(41)	30
Preferred distributions	(1,997)	(1,997)	(5,991)	(5,991)
Net income (loss) attributable to Equity Commonwealth common shareholders	10,193	(4,805)	10,397	(20,753)
Numerator for earnings per common share - diluted:
Net income (loss)	12,221	(2,814)	16,429	(14,792)
Net (income) loss attributable to noncontrolling interest	(31)	6	(41)	30
Preferred distributions	(1,997)	(1,997)	(5,991)	(5,991)
Numerator for net income (loss) per share - diluted	$ 10,193	$ (4,805)	$ 10,397	$ (20,753)
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding — basic (in shares)	111,305	122,190	112,341	122,128
Weighted average number of common shares outstanding — diluted (in shares)	112,596	122,190	113,383	122,128
Net income (loss) per common share attributable to Equity Commonwealth common shareholders:
Basic (in dollars per share)	$ 0.09	$ (0.04)	$ 0.09	$ (0.17)
Diluted (in dollars per share)	$ 0.09	$ (0.04)	$ 0.09	$ (0.17)
Anti-dilutive securities:
Preferred shares, dividend percentage	6.50%	6.50%	6.50%	6.50%
Weighted average number of shares, restricted stock units, unvested (in shares)	86	262	111	255
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest
Anti-dilutive securities:
Effect of anti-dilutive securities (in shares)	3,365	3,237	3,365	3,237
RSUs
Anti-dilutive securities:
Effect of anti-dilutive securities (in shares)	0	490	0	601
LTIP Units
Anti-dilutive securities:
Effect of anti-dilutive securities (in shares)	0	66	0	93
OP Units
Anti-dilutive securities:
Effect of anti-dilutive securities (in shares)	280	223	275	203
RSUs
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding, dilutive adjustment (in shares)	1,111	0	875	0
LTIP Units
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding, dilutive adjustment (in shares)	180	0	167	0

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Segment Information (Details)	9 Months Ended
	Sep. 30, 2022 segment
Segment Reporting [Abstract]
Number of reportable segments	1
Office Building | Total rents | Product Concentration Risk
Segment Reporting Information [Line Items]
Concentration risk	100.00%

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Related Person Transactions (Details) - Two North Riverside Plaza Joint Venture Limited Partnership $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($) option	Jul. 20, 2015
Related Party Transaction [Line Items]
Lease term							5 years
Tenant improvements	$ 0.7		$ 0.7
Renewal term of lease arrangement						1 year
Number of renewal options of lease arrangement | option						0
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
Lease payment					$ 0.4	$ 0.3
Operating lease, expense	$ 0.1	$ 0.1	$ 0.3	$ 0.2

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Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands											1 Months Ended	3 Months Ended		9 Months Ended
	Nov. 15, 2022	Oct. 18, 2022	Oct. 14, 2022	Sep. 08, 2022	Aug. 15, 2022	Jul. 14, 2022	May 16, 2022	Apr. 11, 2022	Feb. 15, 2022	Jan. 11, 2022	Oct. 24, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Subsequent Event [Line Items]
Dividend declared (in dollars per share)						$ 0.40625		$ 0.40625		$ 0.40625
Dividend paid (in dollars per share)					$ 0.40625		$ 0.40625		$ 0.40625
Distributions declared per common share (in dollars per share)				$ 1.00								$ 1.00	$ 0	$ 1.00	$ 0
Repurchase of shares												$ 16,028	$ 18,045	$ 127,327	$ 18,045
Common Shares
Subsequent Event [Line Items]
Average cost per share (in dollars per share)														$ 25.81
Stock repurchase program, remaining authorized repurchase amount												$ 149,700		$ 149,700
Scenario, Forecast
Subsequent Event [Line Items]
Dividend paid (in dollars per share)	$ 0.40625
Subsequent event
Subsequent Event [Line Items]
Dividend declared (in dollars per share)			$ 0.40625
Dividend paid (in dollars per share)	$ 0.40625
Distribution amount		$ 111,000
Subsequent event | Common Shares
Subsequent Event [Line Items]
Shares repurchased (in shares)											1,223,319
Average cost per share (in dollars per share)											$ 23.99
Repurchase of shares											$ 29,300
Stock repurchase program, remaining authorized repurchase amount											$ 120,400