Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Government Properties Income Trust | |
Entity Central Index Key | 1,456,772 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 96,195,178 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Real estate properties: | ||
Land | $ 269,410 | $ 267,855 |
Buildings and improvements | 1,652,535 | 1,620,905 |
Total real estate properties, gross | 1,921,945 | 1,888,760 |
Accumulated depreciation | (320,005) | (296,804) |
Total real estate properties, net | 1,601,940 | 1,591,956 |
Equity investment in Select Income REIT | 477,233 | 487,708 |
Assets of discontinued operations | 12,534 | 12,541 |
Acquired real estate leases, net | 108,927 | 124,848 |
Cash and cash equivalents | 12,907 | 29,941 |
Restricted cash | 344 | 530 |
Rents receivable, net | 47,717 | 48,458 |
Deferred leasing costs, net | 21,251 | 21,079 |
Other assets, net | 82,256 | 68,005 |
Total assets | 2,365,109 | 2,385,066 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Unsecured revolving credit facility | 155,000 | 160,000 |
Unsecured term loans, net | 547,511 | 547,171 |
Senior unsecured notes, net | 647,584 | 646,844 |
Mortgage notes payable, net | 26,991 | 27,837 |
Liabilities of discontinued operations | 81 | 45 |
Accounts payable and other liabilities | 64,479 | 54,019 |
Due to related persons | 5,361 | 3,520 |
Assumed real estate lease obligations, net | 9,423 | 10,626 |
Total liabilities | 1,456,430 | 1,450,062 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Common shares of beneficial interest, $.01 par value: 150,000,000 and 100,000,000 shares authorized, 71,195,178 and 71,177,906 shares issued and outstanding, respectively | 712 | 712 |
Additional paid in capital | 1,473,936 | 1,473,533 |
Cumulative net income | 115,420 | 96,329 |
Cumulative other comprehensive income | 42,350 | 26,957 |
Cumulative common distributions | (723,739) | (662,527) |
Total shareholders’ equity | 908,679 | 935,004 |
Total liabilities and shareholders’ equity | $ 2,365,109 | $ 2,385,066 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares of beneficial interest, shares authorized (in shares) | 150,000,000 | 100,000,000 |
Common shares of beneficial interest, shares issued (in shares) | 71,195,178 | 71,177,906 |
Common shares of beneficial interest, shares outstanding (in shares) | 71,195,178 | 71,177,906 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Rental income | $ 69,887 | $ 64,061 | $ 139,183 | $ 127,672 |
Expenses: | ||||
Real estate taxes | 7,941 | 7,566 | 16,118 | 15,219 |
Utility expenses | 4,172 | 3,673 | 8,778 | 7,847 |
Other operating expenses | 15,187 | 13,266 | 29,179 | 26,177 |
Depreciation and amortization | 20,663 | 17,985 | 41,168 | 36,309 |
Acquisition related costs | 0 | 64 | 0 | 216 |
General and administrative | 5,086 | 4,008 | 9,048 | 7,534 |
Total expenses | 53,049 | 46,562 | 104,291 | 93,302 |
Operating income | 16,838 | 17,499 | 34,892 | 34,370 |
Dividend income | 303 | 363 | 607 | 363 |
Interest income | 67 | 10 | 128 | 16 |
Interest expense (including net amortization of debt premiums and discounts and debt issuance costs of $808, $747, $1,615 and $1,219, respectively) | (13,963) | (10,314) | (27,544) | (19,678) |
Gain on early extinguishment of debt | 0 | 0 | 0 | 104 |
Gain on issuance of shares by Select Income REIT | 21 | 16 | 21 | 16 |
Income from continuing operations before income taxes and equity in earnings of investees | 3,266 | 7,574 | 8,104 | 15,191 |
Income tax expense | (25) | (35) | (43) | (50) |
Equity in earnings of investees | 8,581 | 9,400 | 11,320 | 19,334 |
Income from continuing operations | 11,822 | 16,939 | 19,381 | 34,475 |
Loss from discontinued operations | (145) | (126) | (289) | (275) |
Net income | 11,677 | 16,813 | 19,092 | 34,200 |
Other comprehensive income: | ||||
Unrealized gain (loss) on investment in available for sale securities | (1,032) | 7,237 | 11,110 | 20,108 |
Equity in unrealized gain (loss) of investees | (332) | 2,606 | 4,283 | 7,150 |
Other comprehensive income (loss) | (1,364) | 9,843 | 15,393 | 27,258 |
Comprehensive income | $ 10,313 | $ 26,656 | $ 34,485 | $ 61,458 |
Weighted average common shares outstanding (basic) (in shares) | 71,088 | 71,038 | 71,083 | 71,034 |
Weighted average common shares outstanding (diluted) (in shares) | 71,119 | 71,061 | 71,109 | 71,046 |
Per common share amounts (basic and diluted): | ||||
Income from continuing operations (in dollars per share) | $ 0.17 | $ 0.24 | $ 0.27 | $ 0.49 |
Loss from discontinued operations (in dollars per share) | 0 | 0 | 0 | 0 |
Net income (in dollars per share) | $ 0.16 | $ 0.24 | $ 0.27 | $ 0.48 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement [Abstract] | ||||
Net amortization of debt premiums and discounts and deferred financing fees | $ 808 | $ 747 | $ 1,615 | $ 1,219 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 19,092 | $ 34,200 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation | 23,398 | 20,781 |
Net amortization of debt premiums and discounts and debt issuance costs | 1,615 | 1,219 |
Gain on early extinguishment of debt | 0 | (104) |
Straight line rental income | (2,404) | (584) |
Amortization of acquired real estate leases | 17,209 | 14,842 |
Amortization of deferred leasing costs | 1,797 | 1,475 |
Other non-cash expenses (income), net | 193 | 302 |
Equity in earnings of investees | (11,320) | (19,334) |
Gain on issuance of shares by Select Income REIT | (21) | (16) |
Distributions of earnings from Select Income REIT | 9,345 | 17,760 |
Change in assets and liabilities: | ||
Restricted cash | 186 | 678 |
Deferred leasing costs | (2,087) | (3,409) |
Rents receivable | 2,872 | 1,428 |
Other assets | (3,071) | 1,120 |
Accounts payable and accrued expenses | 9,871 | 971 |
Due to related persons | 1,841 | 692 |
Net cash provided by operating activities | 68,516 | 72,021 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions and deposits | (12,648) | (79,285) |
Real estate improvements | (21,996) | (14,149) |
Distributions in excess of earnings from Select Income REIT | 16,072 | 7,158 |
Net cash used in investing activities | (18,572) | (86,276) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of mortgage notes payable | (761) | (107,202) |
Proceeds from issuance of senior notes | 0 | 310,000 |
Borrowings on unsecured revolving credit facility | 45,000 | 229,000 |
Repayments on unsecured revolving credit facility | (50,000) | (346,000) |
Payment of debt issuance costs | 0 | (10,138) |
Repurchase of common shares | (5) | 0 |
Distributions to common shareholders | (61,212) | (61,169) |
Net cash (used in) provided by financing activities | (66,978) | 14,491 |
Increase (decrease) in cash and cash equivalents | (17,034) | 236 |
Cash and cash equivalents at beginning of period | 29,941 | 8,785 |
Cash and cash equivalents at end of period | 12,907 | 9,021 |
Supplemental cash flow information: | ||
Interest paid | 25,747 | 17,343 |
Income taxes paid | $ 82 | $ 76 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Government Properties Income Trust and its subsidiaries, or GOV, we, us or our, are unaudited. Certain information and 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 adequate to make the information presented not misleading. However, 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 for the year ended December 31, 2016 , or 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 consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year’s presentation. The preparation of these 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 purchase price allocations, useful lives of fixed assets, impairment of real estate and equity method investments and the valuation of intangible assets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2017, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-01, Clarifying the Definition of a Business , which provides additional guidance on evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or of a business. This update defines three requirements for a set of assets and activities (collectively referred to as a “set”) to be considered a business: inputs, processes and outputs. As a result of the implementation of this update, certain property acquisitions, which under previous guidance were accounted for as business combinations, are now accounted for as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized as opposed to expensed under the previous guidance. On January 1, 2017, we adopted FASB ASU No. 2016-09, Compensation - Stock Compensation , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the condensed statement of cash flows. The adoption of ASU No. 2016-09 did not have a material impact in our condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In August 2015, the FASB provided for a one-year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We are continuing to evaluate ASU No. 2014-09 (and related clarifying guidance issued by the FASB); however, we do not expect its adoption to have a significant impact on the amount or timing of our revenue recognition in our consolidated financial statements with the exception of profit recognition on real estate sales. We currently have recorded a deferred gain on sale of real estate of $712 that under current guidance would be recognized upon repayment of a promissory note we received in connection with the sale but will be recognized in its entirety upon adoption of ASU No. 2014-09. We currently expect to adopt the standard using the modified retrospective approach. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. ASU No. 2016-01 states that these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale securities we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-15 will have in our condensed consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which clarifies how companies should present restricted cash and restricted cash equivalents. Companies will show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon the adoption of ASU No. 2016-18, we will reconcile both cash and cash equivalents and restricted cash and restricted cash equivalents, whereas under the current guidance we explain the changes during the period for cash and cash equivalents only. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting , which clarifies which changes to the terms or conditions of a share-based payment award are subject to the guidance on modification accounting under ASC 718. Entities would apply the modification accounting guidance unless the value, vesting requirements and classification of a share-based payment award are the same immediately before and after a change to the terms or conditions of the award. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are continuing to evaluate ASU No. 2017-09; however, we do not expect its adoption to have a material impact in our condensed consolidated financial statements. |
Weighted Average Common Shares
Weighted Average Common Shares | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Weighted Average Common Shares | Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): For the Three Months For the Six Months Ended June 30, Ended June 30, 2017 2016 2017 2016 Weighted average common shares for basic earnings per share 71,088 71,038 71,083 71,034 Effect of dilutive securities: unvested share awards 31 23 26 12 Weighted average common shares for diluted earnings per share 71,119 71,061 71,109 71,046 |
Real Estate Properties
Real Estate Properties | 6 Months Ended |
Jun. 30, 2017 | |
Real Estate [Abstract] | |
Real Estate Properties | Real Estate Properties As of June 30, 2017 , we owned 74 properties ( 96 buildings), with an undepreciated carrying value of $1,921,945 , excluding one property ( one building) classified as discontinued operations with an undepreciated carrying value of $12,259 . We generally lease space at our properties on a gross lease or modified gross lease basis pursuant to fixed term contracts expiring between 2017 and 2032. Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the three months ended June 30, 2017 , we entered into 16 leases for 288,428 rentable square feet, for a weighted (by rentable square feet) average lease term of 7.2 years and we made commitments for $2,465 of leasing related costs. During the six months ended June 30, 2017 , we entered into 28 leases for 648,531 rentable square feet, for a weighted (by rentable square feet) average lease term of 9.1 years and we made commitments for $4,706 of leasing related costs. As of June 30, 2017 , we have estimated unspent leasing related obligations of $24,873 , and we have committed to redevelop and expand an existing property prior to commencement of the lease with an estimated remaining cost to complete as of June 30, 2017 of $5,503 . During the six months ended June 30, 2017 , we capitalized $172 of interest expense related to the redevelopment and expansion of that existing property. Acquisition Activities During the six months ended June 30, 2017 , we acquired an office property ( one building) located in Manassas, VA with 69,374 rentable square feet. This property was 100% leased to Prince William County on the date of acquisition. This transaction was accounted for as an acquisition of assets. The purchase price was $12,648 , including capitalized acquisition costs of $28 . Our allocation of the purchase price of this acquisition based on the estimated fair values of the acquired assets and assumed liabilities is presented in the table below. Number of Buildings Other Acquisition Properties/ Square Purchase and Assumed Date Location Type Buildings Feet Price Land Improvements Assets Jan-17 Manassas, VA Office 1/1 69,374 $ 12,648 $ 1,562 $ 8,244 $ 2,842 In June 2017, we and two of our wholly owned subsidiaries entered a definitive Agreement and Plan of Merger, or the Merger Agreement, to acquire First Potomac Realty Trust, a Maryland REIT, or FPO, and its operating partnership First Potomac Realty Investment Limited Partnership, or FPO LP. The transactions contemplated by the Merger Agreement are collectively referred to herein as the FPO Transaction. Pursuant to the terms and subject to the conditions and limitations set forth in the Merger Agreement: (i) at the effective time of the REIT Merger, or the REIT Merger Effective Time, each of the common shares of beneficial interest of FPO, par value $0.001 per share, or FPO Common Shares, issued and outstanding immediately prior to the REIT Merger Effective Time will be converted into the right to receive an amount equal to $11.15 in cash, without interest, or the REIT Per Share Merger Consideration; and (ii) at the effective time of the Partnership Merger, or the Partnership Merger Effective Time, each unit of limited partnership interests in FPO LP issued and outstanding immediately prior to the Partnership Merger Effective Time will be converted into the right to receive an amount in cash equal to the REIT Per Share Merger Consideration, without interest, or the Partnership Per Unit Merger Consideration, except that each holder of FPO LP limited partnership interests may elect, in lieu of the Partnership Per Unit Merger Consideration, to have such holder’s units of limited partnership interests in FPO LP converted into an equal number of units of preferred limited partnership interests in the surviving limited partnership. The FPO Transaction is subject to approval by the holders of at least a majority of the outstanding FPO Common Shares, and each party’s obligation to consummate the FPO Transaction is subject to certain other customary conditions provided for in the Merger Agreement. We currently expect the FPO Transaction to close prior to December 31, 2017; however, some of the closing conditions may be delayed or may not be satisfied, accordingly, the FPO Transaction may not close by year end December 31, 2017 or at all, or the terms of the FPO Transaction may change. As part of the FPO Transaction, we will acquire FPO's full property portfolio, which includes 39 office and industrial properties ( 74 buildings) with 6,454,382 rentable square feet, including two joint venture properties which are 50% and 51% owned by FPO. The estimated total consideration for the FPO Transaction is approximately $1,387,265 , including the expected payment of $11.15 per FPO common share outstanding, or approximately $683,372 , the expected repayment of approximately $417,800 of FPO debt, the expected assumption of approximately $231,360 of FPO mortgage debt and the payment of estimated transaction fees and expenses. In August 2016, we entered an agreement to acquire transferable development rights that would allow us to expand a property we own in Washington, D.C. for a purchase price of $2,030 , excluding acquisition costs. This acquisition is subject to conditions; accordingly, this acquisition may be delayed, its terms may change or it may not be consummated. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives. Disposition Activities – Discontinued Operations In March 2016, we entered an agreement to sell an office property ( one building) in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,282 at June 30, 2017 . We agreed to extend the closing date for this sale and increased the sale price by $225 , which we received as a non-refundable deposit. The contract sale price is now $13,523 , excluding closing costs and we expect this transaction to close in the third quarter of 2017. This sale is subject to conditions; accordingly, this sale may be delayed, its terms may change or it may not be consummated. Results of operations for this property, which qualified as held for sale prior to our adoption in 2014 of ASU No. 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity , are classified as discontinued operations in our condensed consolidated financial statements. Summarized balance sheet and income statement information for this property is as follows: Balance Sheets June 30, December 31, 2017 2016 Real estate properties, net $ 12,259 $ 12,260 Other assets 275 281 Assets of discontinued operations $ 12,534 $ 12,541 Other liabilities $ 81 $ 45 Liabilities of discontinued operations $ 81 $ 45 Statements of Operations Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Rental income $ 5 $ 28 $ 12 $ 56 Real estate taxes (25 ) (23 ) (49 ) (46 ) Utility expenses (34 ) (29 ) (80 ) (79 ) Other operating expenses (62 ) (73 ) (115 ) (149 ) General and administrative (29 ) (29 ) (57 ) (57 ) Loss from discontinued operations $ (145 ) $ (126 ) $ (289 ) $ (275 ) |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2017 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue Recognition We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. Certain of our leases with government tenants provide the tenant the right to terminate before the lease expiration date if the legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of early terminations to be remote contingencies based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis. We increased rental income to record revenue on a straight line basis by $1,104 and $435 for the three months ended June 30, 2017 and 2016 , respectively, and $2,404 and $584 for the six months ended June 30, 2017 and 2016 , respectively. Rents receivable include $24,090 and $21,686 of straight line rent receivables, net of allowance for doubtful accounts of $148 and $155 , at June 30, 2017 and December 31, 2016 , respectively. |
Concentration
Concentration | 6 Months Ended |
Jun. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration | Concentration Tenant and Credit Concentration We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. The U.S. Government, 13 state governments, and four other government tenants combined were responsible for 87.6% and 92.7% of our annualized rental income, excluding one property ( one building) classified as discontinued operations, as of June 30, 2017 and 2016 , respectively. The U.S. Government is our largest tenant by annualized rental income and was responsible for 59.6% and 64.1% of our annualized rental income, excluding one property classified as discontinued operations, as of June 30, 2017 and 2016 , respectively. Geographic Concentration At June 30, 2017 , our 74 properties ( 96 buildings), excluding one property ( one building) classified as discontinued operations, were located in 31 states and the District of Columbia. Properties located in Virginia, California, the District of Columbia, Georgia, New York, Maryland and Massachusetts were responsible for 14.8% , 14.8% , 9.5% , 8.6% , 7.2% , 7.0% and 4.9% of our annualized rental income as of June 30, 2017 , respectively. |
Indebtedness
Indebtedness | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Our principal debt obligations at June 30, 2017 were: (1) $155,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) an aggregate outstanding principal amount of $550,000 of unsecured term loans; (3) an aggregate outstanding principal amount of $660,000 of public issuances of senior unsecured notes; and (4) $26,747 aggregate principal amount of mortgage notes. Our $750,000 revolving credit facility, our $300,000 term loan and our $250,000 term loan are governed by a credit agreement with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. This credit agreement also includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2,500,000 on a combined basis in certain circumstances. Our $750,000 revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is January 31, 2019 and, subject to the payment of an extension fee and meeting other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity. We are required to pay interest at a rate of LIBOR plus a premium, which was 125 basis points per annum at June 30, 2017 , on borrowings under our revolving credit facility. We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2017 . Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of June 30, 2017 , the annual interest rate payable on borrowings under our revolving credit facility was 2.4% and the weighted average annual interest rate for borrowings under our revolving credit facility was 2.2% and 1.7% for the three months ended June 30, 2017 and 2016 , respectively, and 2.1% and 1.7% for the six months ended June 30, 2017 and 2016 , respectively. As of June 30, 2017 and July 31, 2017 , we had $155,000 and zero outstanding under our revolving credit facility, respectively. Our $300,000 term loan, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at June 30, 2017 , on the amount outstanding under our $300,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2017 , the annual interest rate for the amount outstanding under our $300,000 term loan was 2.6% . The weighted average annual interest rate under our $300,000 term loan was 2.4% and 1.8% for the three months ended June 30, 2017 and 2016 , respectively, and 2.3% and 1.8% for the six months ended June 30, 2017 and 2016 , respectively. Our $250,000 term loan, which matures on March 31, 2022, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum as of June 30, 2017 , on the amount outstanding under our $250,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 2017 , the annual interest rate for the amount outstanding under our $250,000 term loan was 3.0% . The weighted average annual interest rate under our $250,000 term loan was 2.8% and 2.2% , respectively, for the three months ended June 30, 2017 and 2016 and 2.7% and 2.2% for the six months ended June 30, 2017 and 2016 , respectively. Our credit agreement and senior notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC, or RMR LLC, ceasing to act as our business and property manager. Our credit agreement and our senior notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts, require us to maintain certain financial ratios and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior notes indentures and their supplements at June 30, 2017 . At June 30, 2017 , three of our properties ( three buildings) with an aggregate net book value of $50,825 are encumbered by three mortgages for an aggregate principal amount of $26,747 . Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants. On July 20, 2017, we issued $300,000 of 4.000% senior unsecured notes due 2022 in an underwritten public offering. The net proceeds from this offering of $295,404 , after payment of the underwriters' discount and other offering expenses, are expected to finance, in part, the FPO Transaction. In the event the FPO Transaction is not consummated on or prior to December 31, 2017, or the Merger Agreement is terminated on or at any time prior to that date, we will be required to redeem these notes at 101% of the principal amount of such notes plus accrued and unpaid interest. Concurrently with the execution of the Merger Agreement, we entered a commitment letter, or the Commitment Letter, with a group of institutional lenders for a 364 -day senior unsecured bridge loan facility in an initial aggregate principal amount of up to $750,000 , or the Bridge Loan Facility. On July 20, 2017, we and the lenders terminated the Commitment Letter and the Bridge Loan Facility as a result of our issuance of senior unsecured notes described above and proceeds from the sale of our common shares in July 2017 (see Note 9 for more information regarding this sale) and we recognized a loss on extinguishment of debt of $1,655 at that time which will be reported in the third quarter of 2017 in connection with that termination. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets measured at fair value at June 30, 2017 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Fair Value at Reporting Date Using Quoted Prices in Significant Estimated Active Markets for Significant Other Unobservable Fair Identical Assets Observable Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements Assets: Investment in RMR Inc. (1) $ 59,072 $ 59,072 $ — $ — Non-Recurring Fair Value Measurements Assets: Property held for sale and classified as discontinued operations (2) $ 12,259 $ — $ — $ 12,259 (1) Our 1,214,225 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $26,888 as of June 30, 2017 . The net unrealized gain of $32,184 for these shares as of June 30, 2017 is included in cumulative other comprehensive income in our condensed consolidated balance sheets. (2) We estimated the fair value of this property at June 30, 2017 based upon broker estimates of value less estimated sale costs (Level 3 inputs as defined in the fair value hierarchy under GAAP). In addition to the assets described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, mortgage notes receivable, accounts payable, a revolving credit facility, term loans, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At June 30, 2017 and December 31, 2016 , the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows: As of June 30, 2017 As of December 31, 2016 Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ 347,524 $ 353,386 $ 346,952 $ 354,078 Senior unsecured notes, 5.875% interest rate, due in 2046 300,060 321,036 299,892 292,268 Mortgage note payable, 5.88% interest rate, due in 2021 (2) 13,731 14,528 13,841 14,492 Mortgage note payable, 7.00% interest rate, due in 2019 (2) 8,587 8,902 8,778 9,188 Mortgage note payable, 8.15% interest rate, due in 2021 (2) 4,673 4,988 5,218 5,575 $ 674,575 $ 702,840 $ 674,681 $ 675,601 (1) Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts. (2) We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. We estimated the fair value of our senior unsecured notes due 2019 using an average of the bid and ask price of the notes as of the measurement date (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair value of our senior unsecured notes due 2046 based on the closing price on The NASDAQ Stock Market LLC, or Nasdaq, (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Distributions On February 23, 2017 , we paid a regular quarterly distribution to common shareholders of record on January 23, 2017 of $0.43 per share, or $30,606 . On May 22, 2017 , we paid a regular quarterly distribution to common shareholders of record on April 21, 2017 of $0.43 per share, or $30,606 . On July 12, 2017 , we declared a regular quarterly distribution payable to common shareholders of record on July 24, 2017 of $0.43 per share, or $41,364 . We expect to pay this distribution on or about August 21, 2017 using cash on hand. Sale of Shares On July 5, 2017, we sold 25,000,000 of our common shares at a price of $18.50 per share in an underwritten public offering. In connection with this offering, we granted the underwriters a 30 day option to purchase up to an additional 3,750,000 of our common shares at a price of $18.50 per share. On July 28, 2017, the underwriters partially exercised this purchase option for 2,907,029 of our common shares. This purchase is expected to be completed on August 3, 2017. The aggregate net proceeds from these sales will be $493,838 , after payment of the underwriters' discount and other offering expenses. Share Grants and Purchases On May 17, 2017 , we granted 3,000 of our common shares, valued at $21.75 per share, the closing price of our common shares on the Nasdaq on that day, to each of our six Trustees as part of their annual compensation. On May 17, 2017 , we withheld 450 of our common shares awarded to one of our Trustees to fund that Trustee's resulting minimum required tax withholding obligation. The aggregate value of the withheld shares was $10 , which is reflected as a decrease to shareholders equity in our condensed consolidated balance sheets. On June 30, 2017 , we purchased 278 of our common shares valued at $18.31 per common share, the closing price of our common shares on the Nasdaq on that day, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with vesting of awards of common shares. Cumulative Other Comprehensive Income Cumulative other comprehensive income (loss) represents the unrealized gain on the RMR Inc. shares we own and our share of the comprehensive income of our equity method investees, Select Income REIT, or SIR, and Affiliates Insurance Company, or AIC. The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the three and six months ended June 30, 2017 : Three Months Ended June 30, 2017 Unrealized Gain Equity in (Loss) on Investment Unrealized Gain in Available for (Loss) of Sale Securities Investees Total Balance at March 31, 2017 $ 33,216 $ 10,498 $ 43,714 Other comprehensive loss before reclassifications (1,032 ) (328 ) (1,360 ) Amounts reclassified from cumulative other comprehensive loss to net income (1) — (4 ) (4 ) Net current period other comprehensive loss (1,032 ) (332 ) (1,364 ) Balance at June 30, 2017 $ 32,184 $ 10,166 $ 42,350 Six Months Ended June 30, 2017 Unrealized Gain Equity in on Investmen t Unrealized Gain in Available for o f Sale Securities Investees Total December 31, 2016 $ 21,074 $ 5,883 $ 26,957 Other comprehensive income before reclassifications 11,110 4,271 15,381 Amounts reclassified from cumulative other comprehensive income to net income (1) — 12 12 Net current period other comprehensive income 11,110 4,283 15,393 Balance at June 30, 2017 $ 32,184 $ 10,166 $ 42,350 (1) Amounts reclassified from cumulative other comprehensive income (loss) are included in equity in earnings of investees in our condensed consolidated statements of comprehensive income. |
Business and Property Managemen
Business and Property Management Agreements with RMR LLC | 6 Months Ended |
Jun. 30, 2017 | |
Property Management Fee [Abstract] | |
Business and Property Management Agreements with RMR LLC | Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $3,646 and $2,534 for the three months ended June 30, 2017 and 2016 , respectively, and $6,350 and $5,042 for the six months ended June 30, 2017 and 2016 , respectively. The business management fees for the three and six months ended June 30, 2017 include estimated 2017 incentive fees of $893 based on our common share total return, as defined, as of June 30, 2017. Although we recognized estimated incentive fees in accordance with GAAP, the actual amount of incentive fees payable to RMR LLC for 2017, if any, will be based on our common share total return, as defined, for the three year period ending December 31, 2017, and will be payable in 2018. The net business management fees we recognized are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $2,567 and $2,277 for the three months ended June 30, 2017 and 2016 , respectively, and $5,033 and $4,386 for the six months ended June 30, 2017 and 2016 , respectively. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses, including certain payroll and related costs incurred by RMR LLC, are generally incorporated into rents charged to our tenants. We reimbursed RMR LLC $3,655 and $2,966 for property management related expenses for the three months ended June 30, 2017 and 2016 , respectively, and $7,046 and $5,910 for the six months ended June 30, 2017 and 2016 , respectively, which amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. In addition, we are responsible for our share of RMR LLC’s costs for providing our internal audit function. The amount recognized as expense for internal audit costs was $67 for both the three months ended June 30, 2017 and 2016 , respectively, and $135 and $134 for the six months ended June 30, 2017 and 2016 , respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. |
Related Person Transactions
Related Person Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., SIR, AIC and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also our Trustees or officers. Our Manager, RMR LLC. See Note 10 for further information regarding our management agreements with RMR LLC. RMR Inc. RMR LLC is a subsidiary of RMR Inc. and RMR Inc. is the managing member of RMR LLC. The controlling shareholder of RMR Inc., ABP Trust, is owned by our Managing Trustees. As of June 30, 2017 , we owned 1,214,225 shares of class A common stock of RMR Inc. See Note 8 for further information regarding our investment in RMR Inc. SIR . As of June 30, 2017 , we owned 24,918,421 of SIR's common shares, or approximately 27.9% of its outstanding common shares. Our Managing Trustees also serve as managing trustees of SIR, and our President and Chief Operating Officer also serves as the president and chief operating officer of SIR. RMR LLC provides management services to SIR and us. See Note 12 for further information regarding our investment in SIR. AIC . We, SIR, ABP Trust and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We currently expect to pay aggregate annual premiums, including taxes and fees, of approximately $757 in connection with this insurance program for the policy year ending June 30, 2018, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. As of June 30, 2017 and December 31, 2016, our investment in AIC had a carrying value of $7,917 and $7,235 , respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income related to our investment in AIC, which amounts are presented as equity in earnings of investees in our condensed consolidated statements of comprehensive income. Our other comprehensive income includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report. |
Equity Investment in Select Inc
Equity Investment in Select Income REIT | 6 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Investment in Select Income REIT | Equity Investment in Select Income REIT As described in Note 11, as of June 30, 2017 , we owned 24,918,421 , or approximately 27.9% , of the then outstanding SIR common shares. SIR is a REIT which owns properties that are primarily leased to single tenants. We account for our investment in SIR under the equity method. Under the equity method, we record our proportionate share of SIR’s net income as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. We recorded $8,207 and $9,383 of equity in the earnings of SIR for the three months ended June 30, 2017 and 2016 , respectively, and $10,818 and $19,240 of equity in the earnings of SIR for the six months ended June 30, 2017 and 2016 , respectively. Our other comprehensive income includes our proportionate share of SIR’s unrealized gains (losses) of ($389) and $2,563 for the three months ended June 30, 2017 and 2016 , respectively, and $4,103 and $7,055 for the six months ended June 30, 2017 and 2016 , respectively. The adjusted GAAP cost basis of our investments in SIR was less than our proportionate share of SIR’s total shareholders’ equity book value on the dates we acquired the shares. As of June 30, 2017 , our remaining basis difference was $88,713 and as required under GAAP, we are accreting this basis difference to earnings over the estimated remaining useful lives of certain real estate assets and intangible assets and liabilities owned by SIR. This accretion increased our equity in the earnings of SIR by $736 and $740 for the three months ended June 30, 2017 and 2016 , respectively, and $1,472 and $1,480 for the six months ended June 30, 2017 and 2016 , respectively. As of June 30, 2017 , our investment in SIR had a carrying value of $477,233 and a market value, based on the closing price of SIR common shares on the Nasdaq on June 30, 2017 , of $598,790 . We periodically evaluate our equity investment in SIR for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time the market value of our investment is below our cost basis, the financial condition of SIR, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we may record an impairment charge to adjust the basis of the investment to its fair value. We received cash distributions from SIR totaling $12,708 and $12,459 during the three months ended June 30, 2017 and 2016 , respectively, and $25,416 and $24,918 during the six months ended June 30, 2017 and 2016 , respectively. The following are summarized financial data of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 , or the SIR Quarterly Report. References in our condensed consolidated financial statements to the SIR Quarterly Report are included as references to the source of the data only, and the information in the SIR Quarterly Report is not incorporated by reference into our condensed consolidated financial statements. Condensed Consolidated Balance Sheets June 30, December 31, 2017 2016 Real estate properties, net $ 3,892,729 $ 3,899,792 Acquired real estate leases, net 496,792 506,298 Properties held for sale 23,089 — Cash and cash equivalents 21,683 22,127 Rents receivable, net 114,430 124,089 Other assets, net 124,867 87,376 Total assets $ 4,673,590 $ 4,639,682 Unsecured revolving credit facility $ 67,000 $ 327,000 Unsecured term loan, net 348,622 348,373 Senior unsecured notes, net 1,774,769 1,430,300 Mortgage notes payable, net 245,235 245,643 Assumed real estate lease obligations, net 73,200 77,622 Other liabilities 133,510 136,782 Shareholders' equity 2,031,254 2,073,962 Total liabilities and shareholders' equity $ 4,673,590 $ 4,639,682 Condensed Consolidated Statements of Income Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Rental income $ 97,041 $ 96,615 $ 194,385 $ 194,475 Tenant reimbursements and other income 18,829 18,289 37,779 37,661 Total revenues 115,870 114,904 232,164 232,136 Real estate taxes 10,836 10,522 21,679 20,810 Other operating expenses 13,523 12,635 26,390 25,593 Depreciation and amortization 34,317 33,405 68,057 66,874 Acquisition related costs — — — 58 General and administrative 8,181 7,374 23,069 14,350 Write-off of straight line rents receivable, net — — 12,517 — Loss on asset impairment — — 4,047 — Loss on impairment of real estate assets 229 — 229 — Total expenses 67,086 63,936 155,988 127,685 Operating income 48,784 50,968 76,176 104,451 Dividend income 396 475 793 475 Interest expense (22,808 ) (20,584 ) (43,895 ) (41,193 ) Income before income tax expense and equity in earnings of an investee 26,372 30,859 33,074 63,733 Income tax expense (85 ) (124 ) (187 ) (263 ) Equity in earnings of an investee 374 17 502 94 Net income 26,661 30,752 33,389 63,564 Net income allocated to noncontrolling interest — — — (33 ) Net income attributed to SIR $ 26,661 $ 30,752 $ 33,389 $ 63,531 Weighted average common shares outstanding (basic) 89,338 89,292 89,334 89,289 Weighted average common shares outstanding (diluted) $ 89,362 $ 89,315 $ 89,356 $ 89,306 Net income attributed to SIR per common share (basic and diluted) $ 0.30 $ 0.34 $ 0.37 $ 0.71 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We operate in two separate reportable business segments: direct ownership of real estate properties and our equity method investment in SIR. Three Months Ended June 30, 2017 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 69,887 $ — $ — $ 69,887 Expenses: Real estate taxes 7,941 — — 7,941 Utility expenses 4,172 — — 4,172 Other operating expenses 15,187 — — 15,187 Depreciation and amortization 20,663 — — 20,663 General and administrative — — 5,086 5,086 Total expenses 47,963 — 5,086 53,049 Operating income (loss) 21,924 — (5,086 ) 16,838 Dividend income — — 303 303 Interest income 48 — 19 67 Interest expense (405 ) — (13,558 ) (13,963 ) Gain on issuance of shares by Select Income REIT — 21 — 21 Income (loss) from continuing operations before income taxes and equity in earnings of investees 21,567 21 (18,322 ) 3,266 Income tax expense — — (25 ) (25 ) Equity in earnings of investees — 8,207 374 8,581 Income (loss) from continuing operations 21,567 8,228 (17,973 ) 11,822 Loss from discontinued operations (145 ) — — (145 ) Net income (loss) $ 21,422 $ 8,228 $ (17,973 ) $ 11,677 Six Months Ended June 30, 2017 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 139,183 $ — $ — $ 139,183 Expenses: Real estate taxes 16,118 — — 16,118 Utility expenses 8,778 — — 8,778 Other operating expenses 29,179 — — 29,179 Depreciation and amortization 41,168 — — 41,168 General and administrative — — 9,048 9,048 Total expenses 95,243 — 9,048 104,291 Operating income (loss) 43,940 — (9,048 ) 34,892 Dividend income — — 607 607 Interest income 94 — 34 128 Interest expense (837 ) — (26,707 ) (27,544 ) Gain on issuance of shares by Select Income REIT — 21 — 21 Income (loss) from continuing operations before income taxes and equity in earnings of investees 43,197 21 (35,114 ) 8,104 Income tax expense — — (43 ) (43 ) Equity in earnings of investees — 10,818 502 11,320 Income (loss) from continuing operations 43,197 10,839 (34,655 ) 19,381 Loss from discontinued operations (289 ) — — (289 ) Net income (loss) $ 42,908 $ 10,839 $ (34,655 ) $ 19,092 As of June 30, 2017 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ 1,800,454 $ 477,233 $ 87,422 $ 2,365,109 Three Months Ended June 30, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 64,061 $ — $ — $ 64,061 Expenses: Real estate taxes 7,566 — — 7,566 Utility expenses 3,673 — — 3,673 Other operating expenses 13,266 — — 13,266 Depreciation and amortization 17,985 — — 17,985 Acquisition related costs 64 — — 64 General and administrative — — 4,008 4,008 Total expenses 42,554 — 4,008 46,562 Operating income (loss) 21,507 — (4,008 ) 17,499 Dividend income — — 363 363 Interest income — — 10 10 Interest expense (429 ) — (9,885 ) (10,314 ) Gain on issuance of shares by Select Income REIT — 16 — 16 Income (loss) from continuing operations before income taxes and equity in earnings of investees 21,078 16 (13,520 ) 7,574 Income tax expense — — (35 ) (35 ) Equity in earnings of investees — 9,383 17 9,400 Income (loss) from continuing operations 21,078 9,399 (13,538 ) 16,939 Loss from discontinued operations (126 ) — — (126 ) Net income (loss) $ 20,952 $ 9,399 $ (13,538 ) $ 16,813 Six Months Ended June 30, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 127,672 $ — $ — $ 127,672 Expenses: Real estate taxes 15,219 — — 15,219 Utility expenses 7,847 — — 7,847 Other operating expenses 26,177 — — 26,177 Depreciation and amortization 36,309 — — 36,309 Acquisition related costs 216 — — 216 General and administrative — — 7,534 7,534 Total expenses 85,768 — 7,534 93,302 Operating income (loss) 41,904 — (7,534 ) 34,370 Dividend income — — 363 363 Interest income — — 16 16 Interest expense (1,524 ) — (18,154 ) (19,678 ) Gain on early extinguishment of debt 104 — — 104 Gain on issuance of shares by Select Income REIT — 16 — 16 Income (loss) from continuing operations before income taxes and equity in earnings of investees 40,484 16 (25,309 ) 15,191 Income tax expense — — (50 ) (50 ) Equity in earnings of investees — 19,240 94 19,334 Income (loss) from continuing operations 40,484 19,256 (25,265 ) 34,475 Loss from discontinued operations (275 ) — — (275 ) Net income (loss) $ 40,209 $ 19,256 $ (25,265 ) $ 34,200 As of December 31, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ 1,807,560 $ 487,708 $ 89,798 $ 2,385,066 |
Recent Accounting Pronounceme20
Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2017, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-01, Clarifying the Definition of a Business , which provides additional guidance on evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or of a business. This update defines three requirements for a set of assets and activities (collectively referred to as a “set”) to be considered a business: inputs, processes and outputs. As a result of the implementation of this update, certain property acquisitions, which under previous guidance were accounted for as business combinations, are now accounted for as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized as opposed to expensed under the previous guidance. On January 1, 2017, we adopted FASB ASU No. 2016-09, Compensation - Stock Compensation , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the condensed statement of cash flows. The adoption of ASU No. 2016-09 did not have a material impact in our condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In August 2015, the FASB provided for a one-year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We are continuing to evaluate ASU No. 2014-09 (and related clarifying guidance issued by the FASB); however, we do not expect its adoption to have a significant impact on the amount or timing of our revenue recognition in our consolidated financial statements with the exception of profit recognition on real estate sales. We currently have recorded a deferred gain on sale of real estate of $712 that under current guidance would be recognized upon repayment of a promissory note we received in connection with the sale but will be recognized in its entirety upon adoption of ASU No. 2014-09. We currently expect to adopt the standard using the modified retrospective approach. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. ASU No. 2016-01 states that these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale securities we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-15 will have in our condensed consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which clarifies how companies should present restricted cash and restricted cash equivalents. Companies will show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon the adoption of ASU No. 2016-18, we will reconcile both cash and cash equivalents and restricted cash and restricted cash equivalents, whereas under the current guidance we explain the changes during the period for cash and cash equivalents only. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting , which clarifies which changes to the terms or conditions of a share-based payment award are subject to the guidance on modification accounting under ASC 718. Entities would apply the modification accounting guidance unless the value, vesting requirements and classification of a share-based payment award are the same immediately before and after a change to the terms or conditions of the award. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are continuing to evaluate ASU No. 2017-09; however, we do not expect its adoption to have a material impact in our condensed consolidated financial statements. |
Weighted Average Common Shares
Weighted Average Common Shares (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Weighted Average Common Share Amounts | The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): For the Three Months For the Six Months Ended June 30, Ended June 30, 2017 2016 2017 2016 Weighted average common shares for basic earnings per share 71,088 71,038 71,083 71,034 Effect of dilutive securities: unvested share awards 31 23 26 12 Weighted average common shares for diluted earnings per share 71,119 71,061 71,109 71,046 |
Real Estate Properties (Tables)
Real Estate Properties (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Real Estate [Abstract] | |
Schedule of purchase prices of acquisitions allocated based on the estimated fair values of the acquired assets and assumed liabilities | Our allocation of the purchase price of this acquisition based on the estimated fair values of the acquired assets and assumed liabilities is presented in the table below. Number of Buildings Other Acquisition Properties/ Square Purchase and Assumed Date Location Type Buildings Feet Price Land Improvements Assets Jan-17 Manassas, VA Office 1/1 69,374 $ 12,648 $ 1,562 $ 8,244 $ 2,842 |
Summarized balance sheet and income statement information for properties classified as discontinued operations | Summarized balance sheet and income statement information for this property is as follows: Balance Sheets June 30, December 31, 2017 2016 Real estate properties, net $ 12,259 $ 12,260 Other assets 275 281 Assets of discontinued operations $ 12,534 $ 12,541 Other liabilities $ 81 $ 45 Liabilities of discontinued operations $ 81 $ 45 Statements of Operations Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Rental income $ 5 $ 28 $ 12 $ 56 Real estate taxes (25 ) (23 ) (49 ) (46 ) Utility expenses (34 ) (29 ) (80 ) (79 ) Other operating expenses (62 ) (73 ) (115 ) (149 ) General and administrative (29 ) (29 ) (57 ) (57 ) Loss from discontinued operations $ (145 ) $ (126 ) $ (289 ) $ (275 ) |
Fair Value of Assets and Liab23
Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets measured on a recurring and non-recurring basis at fair value, categorized by the level of inputs used in the valuation assets | The table below presents certain of our assets measured at fair value at June 30, 2017 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Fair Value at Reporting Date Using Quoted Prices in Significant Estimated Active Markets for Significant Other Unobservable Fair Identical Assets Observable Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements Assets: Investment in RMR Inc. (1) $ 59,072 $ 59,072 $ — $ — Non-Recurring Fair Value Measurements Assets: Property held for sale and classified as discontinued operations (2) $ 12,259 $ — $ — $ 12,259 (1) Our 1,214,225 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $26,888 as of June 30, 2017 . The net unrealized gain of $32,184 for these shares as of June 30, 2017 is included in cumulative other comprehensive income in our condensed consolidated balance sheets. (2) We estimated the fair value of this property at June 30, 2017 based upon broker estimates of value less estimated sale costs (Level 3 inputs as defined in the fair value hierarchy under GAAP). |
Schedule of fair value and carrying value of financial instruments | At June 30, 2017 and December 31, 2016 , the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows: As of June 30, 2017 As of December 31, 2016 Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ 347,524 $ 353,386 $ 346,952 $ 354,078 Senior unsecured notes, 5.875% interest rate, due in 2046 300,060 321,036 299,892 292,268 Mortgage note payable, 5.88% interest rate, due in 2021 (2) 13,731 14,528 13,841 14,492 Mortgage note payable, 7.00% interest rate, due in 2019 (2) 8,587 8,902 8,778 9,188 Mortgage note payable, 8.15% interest rate, due in 2021 (2) 4,673 4,988 5,218 5,575 $ 674,575 $ 702,840 $ 674,681 $ 675,601 (1) Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts. (2) We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Schedule of changes in each component of cumulative other comprehensive income (loss) | The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the three and six months ended June 30, 2017 : Three Months Ended June 30, 2017 Unrealized Gain Equity in (Loss) on Investment Unrealized Gain in Available for (Loss) of Sale Securities Investees Total Balance at March 31, 2017 $ 33,216 $ 10,498 $ 43,714 Other comprehensive loss before reclassifications (1,032 ) (328 ) (1,360 ) Amounts reclassified from cumulative other comprehensive loss to net income (1) — (4 ) (4 ) Net current period other comprehensive loss (1,032 ) (332 ) (1,364 ) Balance at June 30, 2017 $ 32,184 $ 10,166 $ 42,350 Six Months Ended June 30, 2017 Unrealized Gain Equity in on Investmen t Unrealized Gain in Available for o f Sale Securities Investees Total December 31, 2016 $ 21,074 $ 5,883 $ 26,957 Other comprehensive income before reclassifications 11,110 4,271 15,381 Amounts reclassified from cumulative other comprehensive income to net income (1) — 12 12 Net current period other comprehensive income 11,110 4,283 15,393 Balance at June 30, 2017 $ 32,184 $ 10,166 $ 42,350 (1) Amounts reclassified from cumulative other comprehensive income (loss) are included in equity in earnings of investees in our condensed consolidated statements of comprehensive income. |
Equity Investment in Select I25
Equity Investment in Select Income REIT (Tables) - SIR | 6 Months Ended |
Jun. 30, 2017 | |
Schedule Of Summarized Balance Sheet Information Of Equity Method Investee | Condensed Consolidated Balance Sheets June 30, December 31, 2017 2016 Real estate properties, net $ 3,892,729 $ 3,899,792 Acquired real estate leases, net 496,792 506,298 Properties held for sale 23,089 — Cash and cash equivalents 21,683 22,127 Rents receivable, net 114,430 124,089 Other assets, net 124,867 87,376 Total assets $ 4,673,590 $ 4,639,682 Unsecured revolving credit facility $ 67,000 $ 327,000 Unsecured term loan, net 348,622 348,373 Senior unsecured notes, net 1,774,769 1,430,300 Mortgage notes payable, net 245,235 245,643 Assumed real estate lease obligations, net 73,200 77,622 Other liabilities 133,510 136,782 Shareholders' equity 2,031,254 2,073,962 Total liabilities and shareholders' equity $ 4,673,590 $ 4,639,682 |
Schedule Of Summarized Income Statement Information Of Equity Method Investee | Condensed Consolidated Statements of Income Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Rental income $ 97,041 $ 96,615 $ 194,385 $ 194,475 Tenant reimbursements and other income 18,829 18,289 37,779 37,661 Total revenues 115,870 114,904 232,164 232,136 Real estate taxes 10,836 10,522 21,679 20,810 Other operating expenses 13,523 12,635 26,390 25,593 Depreciation and amortization 34,317 33,405 68,057 66,874 Acquisition related costs — — — 58 General and administrative 8,181 7,374 23,069 14,350 Write-off of straight line rents receivable, net — — 12,517 — Loss on asset impairment — — 4,047 — Loss on impairment of real estate assets 229 — 229 — Total expenses 67,086 63,936 155,988 127,685 Operating income 48,784 50,968 76,176 104,451 Dividend income 396 475 793 475 Interest expense (22,808 ) (20,584 ) (43,895 ) (41,193 ) Income before income tax expense and equity in earnings of an investee 26,372 30,859 33,074 63,733 Income tax expense (85 ) (124 ) (187 ) (263 ) Equity in earnings of an investee 374 17 502 94 Net income 26,661 30,752 33,389 63,564 Net income allocated to noncontrolling interest — — — (33 ) Net income attributed to SIR $ 26,661 $ 30,752 $ 33,389 $ 63,531 Weighted average common shares outstanding (basic) 89,338 89,292 89,334 89,289 Weighted average common shares outstanding (diluted) $ 89,362 $ 89,315 $ 89,356 $ 89,306 Net income attributed to SIR per common share (basic and diluted) $ 0.30 $ 0.34 $ 0.37 $ 0.71 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Three Months Ended June 30, 2017 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 69,887 $ — $ — $ 69,887 Expenses: Real estate taxes 7,941 — — 7,941 Utility expenses 4,172 — — 4,172 Other operating expenses 15,187 — — 15,187 Depreciation and amortization 20,663 — — 20,663 General and administrative — — 5,086 5,086 Total expenses 47,963 — 5,086 53,049 Operating income (loss) 21,924 — (5,086 ) 16,838 Dividend income — — 303 303 Interest income 48 — 19 67 Interest expense (405 ) — (13,558 ) (13,963 ) Gain on issuance of shares by Select Income REIT — 21 — 21 Income (loss) from continuing operations before income taxes and equity in earnings of investees 21,567 21 (18,322 ) 3,266 Income tax expense — — (25 ) (25 ) Equity in earnings of investees — 8,207 374 8,581 Income (loss) from continuing operations 21,567 8,228 (17,973 ) 11,822 Loss from discontinued operations (145 ) — — (145 ) Net income (loss) $ 21,422 $ 8,228 $ (17,973 ) $ 11,677 Six Months Ended June 30, 2017 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 139,183 $ — $ — $ 139,183 Expenses: Real estate taxes 16,118 — — 16,118 Utility expenses 8,778 — — 8,778 Other operating expenses 29,179 — — 29,179 Depreciation and amortization 41,168 — — 41,168 General and administrative — — 9,048 9,048 Total expenses 95,243 — 9,048 104,291 Operating income (loss) 43,940 — (9,048 ) 34,892 Dividend income — — 607 607 Interest income 94 — 34 128 Interest expense (837 ) — (26,707 ) (27,544 ) Gain on issuance of shares by Select Income REIT — 21 — 21 Income (loss) from continuing operations before income taxes and equity in earnings of investees 43,197 21 (35,114 ) 8,104 Income tax expense — — (43 ) (43 ) Equity in earnings of investees — 10,818 502 11,320 Income (loss) from continuing operations 43,197 10,839 (34,655 ) 19,381 Loss from discontinued operations (289 ) — — (289 ) Net income (loss) $ 42,908 $ 10,839 $ (34,655 ) $ 19,092 As of June 30, 2017 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ 1,800,454 $ 477,233 $ 87,422 $ 2,365,109 Three Months Ended June 30, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 64,061 $ — $ — $ 64,061 Expenses: Real estate taxes 7,566 — — 7,566 Utility expenses 3,673 — — 3,673 Other operating expenses 13,266 — — 13,266 Depreciation and amortization 17,985 — — 17,985 Acquisition related costs 64 — — 64 General and administrative — — 4,008 4,008 Total expenses 42,554 — 4,008 46,562 Operating income (loss) 21,507 — (4,008 ) 17,499 Dividend income — — 363 363 Interest income — — 10 10 Interest expense (429 ) — (9,885 ) (10,314 ) Gain on issuance of shares by Select Income REIT — 16 — 16 Income (loss) from continuing operations before income taxes and equity in earnings of investees 21,078 16 (13,520 ) 7,574 Income tax expense — — (35 ) (35 ) Equity in earnings of investees — 9,383 17 9,400 Income (loss) from continuing operations 21,078 9,399 (13,538 ) 16,939 Loss from discontinued operations (126 ) — — (126 ) Net income (loss) $ 20,952 $ 9,399 $ (13,538 ) $ 16,813 Six Months Ended June 30, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ 127,672 $ — $ — $ 127,672 Expenses: Real estate taxes 15,219 — — 15,219 Utility expenses 7,847 — — 7,847 Other operating expenses 26,177 — — 26,177 Depreciation and amortization 36,309 — — 36,309 Acquisition related costs 216 — — 216 General and administrative — — 7,534 7,534 Total expenses 85,768 — 7,534 93,302 Operating income (loss) 41,904 — (7,534 ) 34,370 Dividend income — — 363 363 Interest income — — 16 16 Interest expense (1,524 ) — (18,154 ) (19,678 ) Gain on early extinguishment of debt 104 — — 104 Gain on issuance of shares by Select Income REIT — 16 — 16 Income (loss) from continuing operations before income taxes and equity in earnings of investees 40,484 16 (25,309 ) 15,191 Income tax expense — — (50 ) (50 ) Equity in earnings of investees — 19,240 94 19,334 Income (loss) from continuing operations 40,484 19,256 (25,265 ) 34,475 Loss from discontinued operations (275 ) — — (275 ) Net income (loss) $ 40,209 $ 19,256 $ (25,265 ) $ 34,200 As of December 31, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ 1,807,560 $ 487,708 $ 89,798 $ 2,385,066 |
Recent Accounting Pronounceme27
Recent Accounting Pronouncements (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Accounting Policies [Abstract] | |
Deferred gain on sale of real estate | $ 712 |
Weighted Average Common Share28
Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Weighted average common shares for basic earnings per share (in shares) | 71,088 | 71,038 | 71,083 | 71,034 |
Effect of dilutive securities: unvested share awards (in shares) | 31 | 23 | 26 | 12 |
Weighted average common shares for diluted earnings per share (in shares) | 71,119 | 71,061 | 71,109 | 71,046 |
Real Estate Properties - Narrat
Real Estate Properties - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)ft²leasepropertybuilding | Jun. 30, 2017USD ($)ft²leasepropertybuilding | Dec. 31, 2016USD ($) | Jun. 30, 2016propertybuilding | |
Real Estate Properties [Line Items] | ||||
Number of properties | property | 74 | 74 | ||
Number of buildings | building | 96 | 96 | ||
Carrying value of real estate properties | $ 1,921,945 | $ 1,921,945 | $ 1,888,760 | |
Number of leases entered | lease | 16 | 28 | ||
Rentable square feet (in feet) | ft² | 288,428 | 648,531 | ||
Weighted average lease term | 7 years 2 months 12 days | 9 years 1 month 6 days | ||
Expenditures committed on leases | $ 2,465 | $ 4,706 | ||
Committed but unspent tenant related obligations estimated | $ 24,873 | 24,873 | ||
Square foot expansion cost | 5,503 | |||
Interest costs capitalized | $ 172 | |||
Continuing operations | ||||
Real Estate Properties [Line Items] | ||||
Number of properties | property | 74 | 74 | ||
Number of buildings | building | 96 | 96 | ||
Carrying value of real estate properties | $ 1,921,945 | $ 1,921,945 | ||
Discontinued operations | ||||
Real Estate Properties [Line Items] | ||||
Number of properties | property | 1 | 1 | 1 | |
Number of buildings | building | 1 | 1 | 1 | |
Property held for sale and classified as discontinued operations | $ 12,259 | $ 12,259 |
Real Estate Properties - Acquis
Real Estate Properties - Acquisition Activities (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017USD ($)ft²propertyjoint_venturebuilding$ / shares | Jan. 31, 2017USD ($)ft²propertybuilding | Aug. 31, 2016USD ($) | Jun. 30, 2017USD ($)ft²propertybuilding$ / shares | Jun. 30, 2016USD ($) | Dec. 31, 2016$ / shares | |
Real Estate Properties [Line Items] | ||||||
Purchase price | $ 12,648 | $ 79,285 | ||||
Par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||
Manassas, VA | ||||||
Real Estate Properties [Line Items] | ||||||
Number of properties | property | 1 | 1 | 1 | |||
Number of buildings acquired | building | 1 | 1 | ||||
Rentable square feet of properties (in square feet) | ft² | 69,374 | 69,374 | 69,374 | |||
Percentage of property leased | 100.00% | |||||
Purchase price | $ 12,648 | $ 12,648 | ||||
Capitalized acquisition costs | $ 28 | $ 28 | ||||
Land | 1,562 | |||||
Buildings and Improvement | 8,244 | |||||
Other assumed assets | $ 2,842 | |||||
Transferable Development Rights | Washington D.C. | ||||||
Real Estate Properties [Line Items] | ||||||
Consideration transferred | $ 2,030 | |||||
First Potomac Realty Trust | ||||||
Real Estate Properties [Line Items] | ||||||
Number of properties | property | 39 | 39 | ||||
Number of buildings acquired | building | 74 | |||||
Rentable square feet of properties (in square feet) | ft² | 6,454,382 | 6,454,382 | ||||
Par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Right to receive per common stock (in dollars per share) | $ / shares | $ 11.15 | |||||
Consideration transferred | $ 1,387,265 | |||||
Value of common shares outstanding in acquisition | 683,372 | $ 683,372 | ||||
Expected repayment of debt | 417,800 | |||||
Debt assumed | $ 231,360 | $ 231,360 | ||||
First Potomac Realty Trust | ||||||
Real Estate Properties [Line Items] | ||||||
Number of joint ventures | joint_venture | 2 | |||||
Joint Venture Property 1 | First Potomac Realty Trust | ||||||
Real Estate Properties [Line Items] | ||||||
Ownership percentage | 50.00% | 50.00% | ||||
Joint Venture Property 2 | First Potomac Realty Trust | ||||||
Real Estate Properties [Line Items] | ||||||
Ownership percentage | 51.00% | 51.00% |
Real Estate Properties - Dispos
Real Estate Properties - Disposition Activities (Details) $ in Thousands | 1 Months Ended | ||
Jun. 30, 2017USD ($)propertybuilding | Dec. 31, 2016USD ($) | Mar. 31, 2016ft²propertybuilding | |
Real Estate Properties [Line Items] | |||
Number of properties | property | 74 | ||
Number of buildings | building | 96 | ||
Net book value | $ 1,601,940 | $ 1,591,956 | |
Discontinued Operations, Held-for-sale | One building | Falls Church, VA | Office Building | |||
Real Estate Properties [Line Items] | |||
Number of properties | property | 1 | ||
Number of buildings | building | 1 | ||
Rentable square feet of properties (in square feet) | ft² | 164,746 | ||
Net book value | 12,282 | ||
Non-refundable deposit | 225 | ||
Aggregate sale price of properties sold, excluding closing costs | $ 13,523 |
Real Estate Properties - Balanc
Real Estate Properties - Balance Sheet Information for Disposal of Property (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Assets of discontinued operations | $ 12,534 | $ 12,541 |
Liabilities of discontinued operations | 81 | 45 |
Discontinued Operations, Held-for-sale | Discontinued operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Real estate properties, net | 12,259 | 12,260 |
Other assets | 275 | 281 |
Assets of discontinued operations | 12,534 | 12,541 |
Other liabilities | 81 | 45 |
Liabilities of discontinued operations | $ 81 | $ 45 |
Real Estate Properties - Income
Real Estate Properties - Income Statement Information for Disposal of Property (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss from discontinued operations | $ (145) | $ (126) | $ (289) | $ (275) |
Discontinued operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Rental income | 5 | 28 | 12 | 56 |
Real estate taxes | (25) | (23) | (49) | (46) |
Utility expenses | (34) | (29) | (80) | (79) |
Other operating expenses | (62) | (73) | (115) | (149) |
General and administrative | (29) | (29) | (57) | (57) |
Loss from discontinued operations | $ (145) | $ (126) | $ (289) | $ (275) |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Revenue Recognition [Abstract] | |||||
Increase in rental income to record revenue on straight line basis | $ 1,104 | $ 435 | $ 2,404 | $ 584 | |
Straight line rent receivables | 24,090 | 24,090 | $ 21,686 | ||
Allowance for doubtful accounts | $ 148 | $ 148 | $ 155 |
Concentration (Details)
Concentration (Details) | 6 Months Ended | |
Jun. 30, 2017propertygovernment_tenantstate_governmentstatebuilding | Jun. 30, 2016propertybuilding | |
Concentration | ||
Number of state governments | state_government | 13 | |
Number of other governments | government_tenant | 4 | |
Number of properties | property | 74 | |
Number of buildings | building | 96 | |
Number of states in which acquired properties located | state | 31 | |
Annualized rental income, excluding properties classified as discontinued operations | Virginia | ||
Concentration | ||
Annualized Rental income percent | 14.80% | |
Annualized rental income, excluding properties classified as discontinued operations | California | ||
Concentration | ||
Annualized Rental income percent | 14.80% | |
Annualized rental income, excluding properties classified as discontinued operations | District of Columbia | ||
Concentration | ||
Annualized Rental income percent | 9.50% | |
Annualized rental income, excluding properties classified as discontinued operations | Georgia | ||
Concentration | ||
Annualized Rental income percent | 8.60% | |
Annualized rental income, excluding properties classified as discontinued operations | New York | ||
Concentration | ||
Annualized Rental income percent | 7.20% | |
Annualized rental income, excluding properties classified as discontinued operations | Maryland | ||
Concentration | ||
Annualized Rental income percent | 7.00% | |
Annualized rental income, excluding properties classified as discontinued operations | Massachusetts | ||
Concentration | ||
Annualized Rental income percent | 4.90% | |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government, state governments and Other Three Government | ||
Concentration | ||
Concentration risk percentage | 87.60% | 92.70% |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government | ||
Concentration | ||
Concentration risk percentage | 59.60% | 64.10% |
Discontinued operations | ||
Concentration | ||
Number of properties | property | 1 | 1 |
Number of buildings | building | 1 | 1 |
Indebtedness (Details)
Indebtedness (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jul. 25, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||||||
Borrowings outstanding | $ 155,000 | $ 155,000 | $ 160,000 | |||
Maximum borrowing capacity on revolving credit facility | 2,500,000 | 2,500,000 | ||||
Unsecured term loan, due in 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 300,000 | $ 300,000 | ||||
Interest rate (as a percent) | 2.60% | 2.60% | ||||
The weighted average annual interest rate (as a percent) | 2.40% | 1.80% | 2.30% | 1.80% | ||
Unsecured term loan, due in 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 250,000 | $ 250,000 | ||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||
The weighted average annual interest rate (as a percent) | 2.80% | 2.20% | 2.70% | 2.20% | ||
Unsecured revolving credit facility | ||||||
Debt Instrument [Line Items] | ||||||
Borrowings outstanding | $ 155,000 | $ 155,000 | ||||
Maximum borrowing capacity on revolving credit facility | $ 750,000 | $ 750,000 | ||||
Option to extend the maturity date subject to certain conditions and the payment of a fee | 1 year | |||||
Facility fee (as a percent) | 0.25% | |||||
Interest rate (as a percent) | 2.40% | 2.40% | ||||
The weighted average annual interest rate (as a percent) | 2.20% | 1.70% | 2.10% | 1.70% | ||
Unsecured revolving credit facility | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Borrowings outstanding | $ 0 | |||||
Term loans | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 550,000 | $ 550,000 | ||||
Senior unsecured notes | ||||||
Debt Instrument [Line Items] | ||||||
Face amount | $ 660,000 | $ 660,000 | ||||
LIBOR | Unsecured term loan, due in 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate premium (as a percent) | 1.40% | |||||
LIBOR | Unsecured term loan, due in 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate premium (as a percent) | 1.80% | |||||
LIBOR | Unsecured revolving credit facility | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate premium (as a percent) | 1.25% |
Indebtedness - Narrative (Detai
Indebtedness - Narrative (Details) $ in Thousands | Jul. 20, 2017USD ($) | Jun. 30, 2017USD ($)propertybuilding | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)propertyloanbuilding | Jun. 30, 2016USD ($) |
Debt Instrument [Line Items] | |||||
Number of properties secured by mortgage notes | property | 3 | 3 | |||
Number of buildings secured by mortgage notes | building | 3 | 3 | |||
Aggregate net book value of secured properties | $ 50,825 | $ 50,825 | |||
Number of assumed secured mortgage loans | loan | 3 | ||||
Aggregate principal amount on secured properties | 26,747 | $ 26,747 | |||
Loss on extinguishment of debt | $ 0 | $ 0 | $ 0 | $ (104) | |
Subsequent Event | Senior unsecured notes | 4% Senior Unsecured Notes Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 300,000 | ||||
Interest rate (as a percent) | 4.00% | ||||
Proceeds from issuance of debt | $ 295,404 | ||||
Redemption percentage of principal amount | 101.00% | ||||
Commitment Letter | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Term of debt instrument | 364 days | ||||
Loss on extinguishment of debt | $ 1,655 | ||||
Commitment Letter | Subsequent Event | Bridge Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 750,000 |
Fair Value of Assets and Liab38
Fair Value of Assets and Liabilities - Recurring and Nonrecurring Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value of Assets and Liabilities | ||||
Common shares owned in RMR Inc. (in shares) | 1,214,225 | 1,214,225 | ||
Historical cost | $ 26,888 | $ 26,888 | ||
Unrealized gain (loss) on investment in available for sale securities | (1,032) | $ 7,237 | 11,110 | $ 20,108 |
Recurring | ||||
Fair Value of Assets and Liabilities | ||||
Investment in RMR Inc. | 59,072 | 59,072 | ||
Recurring | Level 1 inputs | ||||
Fair Value of Assets and Liabilities | ||||
Investment in RMR Inc. | 59,072 | 59,072 | ||
Nonrecurring | Discontinued Operations, Held-for-sale | ||||
Fair Value of Assets and Liabilities | ||||
Property held for sale and classified as discontinued operations | 12,259 | 12,259 | ||
Nonrecurring | Level 3 inputs | Discontinued Operations, Held-for-sale | ||||
Fair Value of Assets and Liabilities | ||||
Property held for sale and classified as discontinued operations | $ 12,259 | 12,259 | ||
Other Comprehensive Income (Loss) | ||||
Fair Value of Assets and Liabilities | ||||
Unrealized gain (loss) on investment in available for sale securities | $ 32,184 |
Fair Value of Assets and Liab39
Fair Value of Assets and Liabilities - Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value of Financial Instruments | ||
Senior Notes | $ 647,584 | $ 646,844 |
Mortgage notes payable, net | $ 26,991 | 27,837 |
3.75% Senior unsecured note due In 2019 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 3.75% | |
5.875% Senior unsecured notes due In 2046 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 5.875% | |
5.88% interest rate, due in 2021 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 5.88% | |
7.00% interest rate, due in 2019 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 7.00% | |
8.15% Mortgage notes due in 2021 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 8.15% | |
Carrying Amount | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | $ 674,575 | 674,681 |
Carrying Amount | 3.75% Senior unsecured note due In 2019 | ||
Fair Value of Financial Instruments | ||
Senior Notes | 347,524 | 346,952 |
Carrying Amount | 5.875% Senior unsecured notes due In 2046 | ||
Fair Value of Financial Instruments | ||
Senior Notes | 300,060 | 299,892 |
Carrying Amount | 5.88% interest rate, due in 2021 | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 13,731 | 13,841 |
Carrying Amount | 7.00% interest rate, due in 2019 | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 8,587 | 8,778 |
Carrying Amount | 8.15% Mortgage notes due in 2021 | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 4,673 | 5,218 |
Fair Value | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 702,840 | 675,601 |
Fair Value | 3.75% Senior unsecured note due In 2019 | ||
Fair Value of Financial Instruments | ||
Senior Notes | 353,386 | 354,078 |
Fair Value | 5.875% Senior unsecured notes due In 2046 | ||
Fair Value of Financial Instruments | ||
Senior Notes | 321,036 | 292,268 |
Fair Value | 5.88% interest rate, due in 2021 | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 14,528 | 14,492 |
Fair Value | 7.00% interest rate, due in 2019 | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 8,902 | 9,188 |
Fair Value | 8.15% Mortgage notes due in 2021 | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | $ 4,988 | $ 5,575 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands | Aug. 03, 2017USD ($) | Jul. 28, 2017shares | Jul. 12, 2017USD ($)$ / shares | Jul. 05, 2017$ / sharesshares | Jun. 30, 2017$ / sharesshares | May 22, 2017USD ($)$ / shares | May 17, 2017USD ($)trustee$ / sharesshares | Feb. 23, 2017USD ($)$ / shares |
Distributions | ||||||||
Cash distribution to common shareholders (in dollars per share) | $ / shares | $ 0.43 | $ 0.43 | ||||||
Distribution paid to common shareholders | $ | $ 30,606 | $ 30,606 | ||||||
Number of trustees | trustee | 6 | |||||||
Shares withheld for tax withholding (in shares) | shares | 450 | |||||||
Value of shares withheld for tax withholding | $ | $ 10 | |||||||
Subsequent Event | ||||||||
Distributions | ||||||||
Distribution paid to common shareholders | $ | $ 41,364 | |||||||
Distribution payable to common shareholders (in dollars per share) | $ / shares | $ 0.43 | |||||||
Common shares | Trustees | ||||||||
Distributions | ||||||||
Shares granted to each trustee (in shares) | shares | 3,000 | |||||||
Value of shares granted (in dollars per share) | $ / shares | $ 21.75 | |||||||
Underwritten Public Offering | Subsequent Event | ||||||||
Distributions | ||||||||
Number of shares sold in offering (in shares) | shares | 25,000,000 | |||||||
Price per share in offering (in dollars per share) | $ / shares | $ 18.50 | |||||||
Over-Allotment Option | Subsequent Event | ||||||||
Distributions | ||||||||
Number of shares sold in offering (in shares) | shares | 2,907,029 | |||||||
Price per share in offering (in dollars per share) | $ / shares | $ 18.50 | |||||||
Additional number of shares available (in shares) | shares | 3,750,000 | |||||||
Former Employee of RMR LLC | ||||||||
Distributions | ||||||||
Stock repurchased to satisfy tax withholding obligation (in shares) | shares | 278 | |||||||
Stock repurchased to satisfy tax withholding obligation (in dollars per share) | $ / shares | $ 18.31 | |||||||
Forecast | Underwritten Public Offering | ||||||||
Distributions | ||||||||
Proceeds from offering | $ | $ 493,838 |
Shareholders' Equity - AOCI Rol
Shareholders' Equity - AOCI Roll Forward (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | $ 43,714 | $ 26,957 |
Other comprehensive income (loss) before reclassifications | (1,360) | 15,381 |
Amounts reclassified from cumulative other comprehensive income (loss) to net income | (4) | 12 |
Net current period other comprehensive loss | (1,364) | 15,393 |
Balance at the end of the period | 42,350 | 42,350 |
Unrealized Gain on Investment in Available for Sale Securities | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 33,216 | 21,074 |
Other comprehensive income (loss) before reclassifications | (1,032) | 11,110 |
Amounts reclassified from cumulative other comprehensive income (loss) to net income | 0 | 0 |
Net current period other comprehensive loss | (1,032) | 11,110 |
Balance at the end of the period | 32,184 | 32,184 |
Equity in Unrealized Gain of an Investee | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 10,498 | 5,883 |
Other comprehensive income (loss) before reclassifications | (328) | 4,271 |
Amounts reclassified from cumulative other comprehensive income (loss) to net income | (4) | 12 |
Net current period other comprehensive loss | (332) | 4,283 |
Balance at the end of the period | $ 10,166 | $ 10,166 |
Business and Property Managem42
Business and Property Management Agreements with RMR LLC (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)employeeagreement | Jun. 30, 2016USD ($) | |
RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Number of employees | employee | 0 | |||
Number of agreements | agreement | 2 | |||
Related party expense | $ 3,646 | $ 2,534 | $ 6,350 | $ 5,042 |
Reimbursement expense | 3,655 | 2,966 | 7,046 | 5,910 |
Internal audit costs | 67 | 67 | 135 | 134 |
Business Management Agreement, Incentive Fees | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party expense | 893 | |||
Net Property Management and Construction Supervision Fees | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction amount | $ 2,567 | $ 2,277 | 5,033 | $ 4,386 |
RMR LLC | Business Management Agreement, Incentive Fees | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Related party expense | $ 893 |
Related Person Transactions - R
Related Person Transactions - REITs, for which RMR LLC provides Management Services (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2016 | |
SIR | |||
Related Party Transaction [Line Items] | |||
Shares holding (in shares) | 24,918,421 | ||
Percentage of outstanding shares owned | 27.90% | ||
RMR Inc | Class A common shares | |||
Related Party Transaction [Line Items] | |||
Shares holding (in shares) | 1,214,225 | ||
AIC | |||
Related Party Transaction [Line Items] | |||
Carrying value of equity method investments | $ 7,917 | $ 7,235 | |
Forecast | AIC | |||
Related Party Transaction [Line Items] | |||
Insurance coverage amount | $ 757 |
Equity Investment in Select I44
Equity Investment in Select Income REIT - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||||
Equity in earnings of investees | $ 8,581 | $ 9,400 | $ 11,320 | $ 19,334 | |
Investment at carrying value | $ 477,233 | 477,233 | $ 487,708 | ||
Cash distributions from SIR | $ 9,345 | 17,760 | |||
SIR | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity investments, common shares owned (in shares) | 24,918,421 | 24,918,421 | |||
Percentage of outstanding shares owned | 27.90% | 27.90% | |||
Equity in earnings of investees | $ 8,207 | 9,383 | $ 10,818 | 19,240 | |
Equity in unrealized gain (loss) of investees | (389) | 2,563 | 4,103 | 7,055 | |
The amount of investment in exceed the underlying equity of the investee | 88,713 | 88,713 | |||
Accretion in equity of earnings | 736 | 740 | 1,472 | 1,480 | |
Investment at carrying value | 477,233 | 477,233 | |||
Equity Investments, market value | 598,790 | 598,790 | |||
Cash distributions from SIR | $ 12,708 | $ 12,459 | $ 25,416 | $ 24,918 |
Equity Investment in Select I45
Equity Investment in Select Income REIT - Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Schedule of Equity Method Investments [Line Items] | ||||
Real estate properties, net | $ 1,601,940 | $ 1,591,956 | ||
Acquired real estate leases, net | 108,927 | 124,848 | ||
Cash and cash equivalents | 12,907 | 29,941 | $ 9,021 | $ 8,785 |
Rents receivable, net | 47,717 | 48,458 | ||
Other assets, net | 82,256 | 68,005 | ||
Total assets | 2,365,109 | 2,385,066 | ||
Unsecured revolving credit facility | 155,000 | 160,000 | ||
Unsecured term loan, net | 547,511 | 547,171 | ||
Senior unsecured notes, net | 647,584 | 646,844 | ||
Mortgage notes payable, net | 26,991 | 27,837 | ||
Assumed real estate lease obligations, net | 9,423 | 10,626 | ||
Other liabilities | 64,479 | 54,019 | ||
Shareholders' equity | 908,679 | 935,004 | ||
Total liabilities and shareholders’ equity | 2,365,109 | 2,385,066 | ||
SIR | SIR | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Real estate properties, net | 3,892,729 | 3,899,792 | ||
Acquired real estate leases, net | 496,792 | 506,298 | ||
Properties held for sale | 23,089 | 0 | ||
Cash and cash equivalents | 21,683 | 22,127 | ||
Rents receivable, net | 114,430 | 124,089 | ||
Other assets, net | 124,867 | 87,376 | ||
Total assets | 4,673,590 | 4,639,682 | ||
Unsecured revolving credit facility | 67,000 | 327,000 | ||
Unsecured term loan, net | 348,622 | 348,373 | ||
Senior unsecured notes, net | 1,774,769 | 1,430,300 | ||
Mortgage notes payable, net | 245,235 | 245,643 | ||
Assumed real estate lease obligations, net | 73,200 | 77,622 | ||
Other liabilities | 133,510 | 136,782 | ||
Shareholders' equity | 2,031,254 | 2,073,962 | ||
Total liabilities and shareholders’ equity | $ 4,673,590 | $ 4,639,682 |
Equity Investment in Select I46
Equity Investment in Select Income REIT - Income Statement Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Schedule of Equity Method Investments [Line Items] | ||||
Total revenues | $ 69,887 | $ 64,061 | $ 139,183 | $ 127,672 |
Real estate taxes | 7,941 | 7,566 | 16,118 | 15,219 |
Other operating expenses | 15,187 | 13,266 | 29,179 | 26,177 |
Depreciation and amortization | 20,663 | 17,985 | 41,168 | 36,309 |
Acquisition related costs | 0 | 64 | 0 | 216 |
General and administrative | 5,086 | 4,008 | 9,048 | 7,534 |
Total expenses | 53,049 | 46,562 | 104,291 | 93,302 |
Operating income | 16,838 | 17,499 | 34,892 | 34,370 |
Dividend income | 303 | 363 | 607 | 363 |
Interest expense | (13,963) | (10,314) | (27,544) | (19,678) |
Income from continuing operations before income taxes and equity in earnings of investees | 3,266 | 7,574 | 8,104 | 15,191 |
Income tax expense | (25) | (35) | (43) | (50) |
Equity in earnings of an investee | $ 8,581 | $ 9,400 | $ 11,320 | $ 19,334 |
Weighted average common shares outstanding (basic) (in shares) | 71,088 | 71,038 | 71,083 | 71,034 |
Weighted average common shares outstanding (diluted) (in shares) | 71,119 | 71,061 | 71,109 | 71,046 |
Net income attributed to SIR per common share (basic and diluted) (in dollars per share) | $ 0.16 | $ 0.24 | $ 0.27 | $ 0.48 |
SIR | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Equity in earnings of an investee | $ 8,207 | $ 9,383 | $ 10,818 | $ 19,240 |
SIR | SIR | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Rental income | 97,041 | 96,615 | 194,385 | 194,475 |
Tenant reimbursements and other income | 18,829 | 18,289 | 37,779 | 37,661 |
Total revenues | 115,870 | 114,904 | 232,164 | 232,136 |
Real estate taxes | 10,836 | 10,522 | 21,679 | 20,810 |
Other operating expenses | 13,523 | 12,635 | 26,390 | 25,593 |
Depreciation and amortization | 34,317 | 33,405 | 68,057 | 66,874 |
Acquisition related costs | 0 | 0 | 0 | 58 |
General and administrative | 8,181 | 7,374 | 23,069 | 14,350 |
Write-off of straight line rents receivable, net | 0 | 0 | 12,517 | 0 |
Loss on asset impairment | 0 | 0 | 4,047 | 0 |
Loss on impairment of real estate assets | 229 | 0 | 229 | 0 |
Total expenses | 67,086 | 63,936 | 155,988 | 127,685 |
Operating income | 48,784 | 50,968 | 76,176 | 104,451 |
Dividend income | 396 | 475 | 793 | 475 |
Interest expense | (22,808) | (20,584) | (43,895) | (41,193) |
Income from continuing operations before income taxes and equity in earnings of investees | 26,372 | 30,859 | 33,074 | 63,733 |
Income tax expense | (85) | (124) | (187) | (263) |
Equity in earnings of an investee | 374 | 17 | 502 | 94 |
Net income | 26,661 | 30,752 | 33,389 | 63,564 |
Net income allocated to noncontrolling interest | 0 | 0 | 0 | (33) |
Net income attributed to SIR | $ 26,661 | $ 30,752 | $ 33,389 | $ 63,531 |
Weighted average common shares outstanding (basic) (in shares) | 89,338 | 89,292 | 89,334 | 89,289 |
Weighted average common shares outstanding (diluted) (in shares) | 89,362 | 89,315 | 89,356 | 89,306 |
Net income attributed to SIR per common share (basic and diluted) (in dollars per share) | $ 0.30 | $ 0.34 | $ 0.37 | $ 0.71 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)segment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of segments | segment | 2 | ||||
Rental income | $ 69,887 | $ 64,061 | $ 139,183 | $ 127,672 | |
Expenses: | |||||
Real estate taxes | 7,941 | 7,566 | 16,118 | 15,219 | |
Utility expenses | 4,172 | 3,673 | 8,778 | 7,847 | |
Other operating expenses | 15,187 | 13,266 | 29,179 | 26,177 | |
Depreciation and amortization | 20,663 | 17,985 | 41,168 | 36,309 | |
Acquisition related costs | 0 | 64 | 0 | 216 | |
General and administrative | 5,086 | 4,008 | 9,048 | 7,534 | |
Total expenses | 53,049 | 46,562 | 104,291 | 93,302 | |
Operating income | 16,838 | 17,499 | 34,892 | 34,370 | |
Dividend income | 303 | 363 | 607 | 363 | |
Interest income | 67 | 10 | 128 | 16 | |
Interest expense | (13,963) | (10,314) | (27,544) | (19,678) | |
Gain on early extinguishment of debt | 0 | 0 | 0 | 104 | |
Gain on issuance of shares by Select Income REIT | 21 | 16 | 21 | 16 | |
Income from continuing operations before income taxes and equity in earnings of investees | 3,266 | 7,574 | 8,104 | 15,191 | |
Income tax expense | (25) | (35) | (43) | (50) | |
Equity in earnings of investees | 8,581 | 9,400 | 11,320 | 19,334 | |
Income from continuing operations | 11,822 | 16,939 | 19,381 | 34,475 | |
Loss from discontinued operations | (145) | (126) | (289) | (275) | |
Net income | 11,677 | 16,813 | 19,092 | 34,200 | |
Total assets | 2,365,109 | 2,365,109 | $ 2,385,066 | ||
Operating Segments | Investment in Real Estate | |||||
Segment Reporting Information [Line Items] | |||||
Rental income | 69,887 | 64,061 | 139,183 | 127,672 | |
Expenses: | |||||
Real estate taxes | 7,941 | 7,566 | 16,118 | 15,219 | |
Utility expenses | 4,172 | 3,673 | 8,778 | 7,847 | |
Other operating expenses | 15,187 | 13,266 | 29,179 | 26,177 | |
Depreciation and amortization | 20,663 | 17,985 | 41,168 | 36,309 | |
Acquisition related costs | 64 | 216 | |||
Total expenses | 47,963 | 42,554 | 95,243 | 85,768 | |
Operating income | 21,924 | 21,507 | 43,940 | 41,904 | |
Interest income | 48 | 94 | 0 | ||
Interest expense | (405) | (429) | (837) | (1,524) | |
Gain on early extinguishment of debt | 104 | ||||
Income from continuing operations before income taxes and equity in earnings of investees | 21,567 | 21,078 | 43,197 | 40,484 | |
Income from continuing operations | 21,567 | 21,078 | 43,197 | 40,484 | |
Loss from discontinued operations | (145) | (126) | (289) | (275) | |
Net income | 21,422 | 20,952 | 42,908 | 40,209 | |
Total assets | 1,800,454 | 1,800,454 | 1,807,560 | ||
Operating Segments | Investment in SIR | |||||
Expenses: | |||||
Gain on issuance of shares by Select Income REIT | 21 | 16 | 21 | 16 | |
Income from continuing operations before income taxes and equity in earnings of investees | 21 | 16 | 21 | 16 | |
Equity in earnings of investees | 8,207 | 9,383 | 10,818 | 19,240 | |
Income from continuing operations | 8,228 | 9,399 | 10,839 | 19,256 | |
Net income | 8,228 | 9,399 | 10,839 | 19,256 | |
Total assets | 477,233 | 477,233 | 487,708 | ||
Corporate, Non-Segment | |||||
Expenses: | |||||
Acquisition related costs | 0 | ||||
General and administrative | 5,086 | 4,008 | 9,048 | 7,534 | |
Total expenses | 5,086 | 4,008 | 9,048 | 7,534 | |
Operating income | (5,086) | (4,008) | (9,048) | (7,534) | |
Dividend income | 303 | 363 | 607 | 363 | |
Interest income | 19 | 10 | 34 | 16 | |
Interest expense | (13,558) | (9,885) | (26,707) | (18,154) | |
Income from continuing operations before income taxes and equity in earnings of investees | (18,322) | (13,520) | (35,114) | (25,309) | |
Income tax expense | (25) | (35) | (43) | (50) | |
Equity in earnings of investees | 374 | 17 | 502 | 94 | |
Income from continuing operations | (17,973) | (13,538) | (34,655) | (25,265) | |
Net income | (17,973) | $ (13,538) | (34,655) | $ (25,265) | |
Total assets | $ 87,422 | $ 87,422 | $ 89,798 |