Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Office Properties Income Trust | |
Entity Central Index Key | 0001456772 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 48,090,108 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Real estate properties: | ||
Land | $ 918,992 | $ 924,164 |
Buildings and improvements | 3,001,385 | 3,020,472 |
Total real estate properties, gross | 3,920,377 | 3,944,636 |
Accumulated depreciation | (386,688) | (375,147) |
Total real estate properties, net | 3,533,689 | 3,569,489 |
Assets of properties held for sale | 23,999 | 253,501 |
Investment in unconsolidated joint ventures | 42,505 | 43,665 |
Acquired real estate leases, net | 1,000,960 | 1,056,558 |
Cash and cash equivalents | 20,153 | 35,349 |
Restricted cash | 4,464 | 3,594 |
Rents receivable, net | 67,776 | 72,051 |
Deferred leasing costs, net | 30,788 | 25,672 |
Other assets, net | 202,864 | 178,704 |
Total assets | 4,927,198 | 5,238,583 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Unsecured revolving credit facility | 80,000 | 175,000 |
Unsecured term loans, net | 234,674 | 387,152 |
Senior unsecured notes, net | 2,360,063 | 2,357,497 |
Mortgage notes payable, net | 326,202 | 335,241 |
Liabilities of properties held for sale | 178 | 4,271 |
Accounts payable and other liabilities | 114,613 | 145,536 |
Due to related persons | 5,626 | 34,887 |
Assumed real estate lease obligations, net | 18,838 | 20,031 |
Total liabilities | 3,140,194 | 3,459,615 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,091,903 and 48,082,903 shares issued and outstanding, respectively | 481 | 481 |
Additional paid in capital | 2,610,666 | 2,609,801 |
Cumulative net income | 180,901 | 146,882 |
Cumulative other comprehensive income (loss) | (297) | 106 |
Cumulative common distributions | (1,004,747) | (978,302) |
Total shareholders’ equity | 1,787,004 | 1,778,968 |
Total liabilities and shareholders’ equity | $ 4,927,198 | $ 5,238,583 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
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) | 200,000,000 | 200,000,000 |
Common shares of beneficial interest, shares issued (in shares) | 48,091,903 | 48,082,903 |
Common shares of beneficial interest, shares outstanding (in shares) | 48,091,903 | 48,082,903 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Rental income | $ 174,777 | $ 108,717 |
Expenses: | ||
Real estate taxes | 18,392 | 12,964 |
Utility expenses | 9,381 | 6,690 |
Other operating expenses | 30,136 | 22,837 |
Depreciation and amortization | 77,521 | 44,204 |
Loss on impairment of real estate | 3,204 | 6,116 |
Acquisition and transaction related costs | 584 | 0 |
General and administrative | 8,723 | 9,606 |
Total expenses | 147,941 | 102,417 |
Gain on sale of real estate | 22,092 | 0 |
Dividend income | 980 | 304 |
Unrealized gain on equity securities | 22,128 | 12,931 |
Interest income | 248 | 116 |
Interest expense (including net amortization of debt premiums and discounts and debt issuance costs of $2,841 and $965, respectively) | (37,133) | (22,766) |
Loss on early extinguishment of debt | (414) | 0 |
Income before income tax expense and equity in earnings of an investee | 34,737 | (3,115) |
Income tax expense | (483) | (32) |
Equity in net losses of investees | (235) | (577) |
Income (loss) from continuing operations | 34,019 | (3,724) |
Income from discontinued operations | 0 | 10,289 |
Net income | 34,019 | 6,565 |
Other comprehensive loss: | ||
Unrealized loss on financial instrument | (98) | 0 |
Equity in unrealized gain (loss) of investees | 66 | (41) |
Other comprehensive loss | (32) | (41) |
Comprehensive income | 33,987 | 6,524 |
Net income | 34,019 | 6,565 |
Comprehensive income | 0 | (278) |
Net income (loss) available for common shareholders | $ 34,019 | $ 6,287 |
Weighted average common shares outstanding (basic) (in shares) | 48,031 | 24,760 |
Weighted average common shares outstanding (diluted) (in shares) | 48,046 | 24,760 |
Income from discontinued operations | ||
Income (loss) from continuing operations (basic and diluted) (in dollars per share) | $ 0.71 | $ (0.16) |
Income from discontinued operations (in dollars per share) | 0 | 0.42 |
Net income available for common shareholders (basic and diluted) (in dollars per share) | $ 0.71 | $ 0.25 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Net amortization of debt premiums and discounts and deferred financing fees | $ 2,841 | $ 965 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 34,019 | $ 6,565 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 23,629 | 17,172 |
Net amortization of debt premiums, discounts and issuance costs | 2,841 | 965 |
Gain on sale of real estate | (22,092) | 0 |
Loss on early extinguishment of debt | 414 | 0 |
Straight line rental income | (6,794) | (3,091) |
Amortization of acquired real estate leases | 53,837 | 26,790 |
Amortization of deferred leasing costs | 1,350 | 1,120 |
Other non-cash expenses, net | 593 | (334) |
Loss on impairment of real estate | 3,204 | 6,116 |
Unrealized gain on equity securities | (22,128) | (12,931) |
Equity in net losses of investees | 235 | 577 |
Equity in earnings of Select Income REIT included in discontinued operations | 0 | (10,289) |
Distributions of earnings from Select Income REIT | 0 | 10,289 |
Change in assets and liabilities: | ||
Deferred leasing costs | (7,985) | (2,091) |
Rents receivable | 14,390 | (1,893) |
Other assets | 2,873 | 2,296 |
Accounts payable and other liabilities | (30,387) | (9,679) |
Due to related persons | (29,257) | 3,685 |
Net cash provided by operating activities | 18,742 | 35,267 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate improvements | (12,969) | (11,020) |
Distributions in excess of earnings from Select Income REIT | 0 | 2,419 |
Distributions in excess of earnings from unconsolidated joint ventures | 521 | 823 |
Proceeds from sale of properties, net | 262,779 | 18,797 |
Net cash provided by investing activities | 250,331 | 11,019 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of mortgage notes payable | (8,954) | (899) |
Repayment of unsecured term loans | (153,000) | 0 |
Borrowings on unsecured revolving credit facility | 85,000 | 25,000 |
Repayments on unsecured revolving credit facility | (180,000) | (25,000) |
Repurchase of common shares | 0 | (11) |
Preferred units of limited partnership distributions | 0 | (278) |
Distributions to common shareholders | (26,445) | (42,632) |
Net cash used in financing activities | (283,399) | (43,820) |
Increase (decrease) in cash, cash equivalents and restricted cash | (14,326) | 2,466 |
Cash, cash equivalents and restricted cash at beginning of period | 38,943 | 19,680 |
Cash, cash equivalents and restricted cash at end of period | $ 24,617 | $ 22,146 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Shares | Additional Paid In Capital | Cumulative Net Income | Cumulative Other Comprehensive Income (Loss) | Cumulative Common Distributions |
Increase (Decrease) in Shareholders' Equity | ||||||
Adjusted balance | $ 1,330,755 | $ 248 | $ 1,968,960 | $ 169,137 | $ 146 | $ (807,736) |
Balance beginning at Dec. 31, 2017 | 1,330,043 | $ 248 | 1,968,960 | 108,144 | 60,427 | (807,736) |
Balance (in shares) at Dec. 31, 2017 | 24,786,479 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Net current period other comprehensive loss | (41) | (41) | ||||
Shares forfeitures or repurchases | (11) | (11) | ||||
Shares forfeitures or repurchases (in shares) | (153) | |||||
Net income (loss) available for common shareholders | 6,287 | 6,287 | ||||
Distributions to common shareholders | (42,632) | (42,632) | ||||
Balance ending at Mar. 31, 2018 | 1,294,358 | $ 248 | 1,968,949 | 175,424 | 105 | (850,368) |
Balance (in shares) at Mar. 31, 2018 | 24,786,326 | |||||
Balance beginning at Dec. 31, 2018 | 1,778,968 | $ 481 | 2,609,801 | 146,882 | 106 | (978,302) |
Balance (in shares) at Dec. 31, 2018 | 48,082,903 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Share grants | 865 | 865 | ||||
Amounts reclassified from cumulative other comprehensive income to net income | (371) | |||||
Net current period other comprehensive loss | (32) | (32) | ||||
Share grants (in shares) | 9,000 | |||||
Net income (loss) available for common shareholders | 34,019 | 34,019 | ||||
Distributions to common shareholders | (26,445) | (26,445) | ||||
Balance ending at Mar. 31, 2019 | $ 1,787,004 | $ 481 | $ 2,610,666 | $ 180,901 | $ (297) | $ (1,004,747) |
Balance (in shares) at Mar. 31, 2019 | 48,091,903 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental Cash Flow - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Supplemental cash flow information | ||
Interest paid | $ 49,545 | $ 27,733 |
Income taxes paid | 7 | 0 |
Supplemental disclosure of cash and cash equivalents and restricted cash | ||
Cash and cash equivalents | 20,153 | 17,380 |
Restricted cash | 4,464 | 4,766 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ 24,617 | $ 22,146 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Office Properties Income Trust and its subsidiaries, or the Company, OPI, 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, 2018 , or our 2018 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period 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, assessment of impairment of real estate and equity method investments and the valuation of intangible assets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases . In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements . In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors . Collectively, these standards set 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. ASU No. 2016-02 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. These standards were effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that has allowed us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11, which has allowed us to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the adoption period, although we did not have an adjustment. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our condensed consolidated financial statements. Upon adoption, (i) allowances for bad debts are now recognized as a direct reduction of rental income, and (ii) legal costs associated with the execution of our leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred. Subsequent to January 1, 2019, provisions for credit losses are now included in "rental income" in our condensed consolidated financial statements. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our condensed consolidated financial statements and prior periods are not reclassified to conform to the current presentation. Revenue Recognition. We are a lessor of commercial office properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the physical space specified in the leases, therefore we have determined to evaluate our leases as lease arrangements. Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $23,394 for the three months ended March 31, 2019. Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments. We have determined that all of our leases qualify for the practical expedient to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components. We apply Accounting Standards Codification 842, Leases to the combined component. Income derived by our leases is recorded in rental income in our condensed consolidated statements of comprehensive income. Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These obligations, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our condensed consolidated financial statements. To the extent any tenant responsible for any such obligations under the applicable lease defaults on such lease or if it is deemed probable that the tenant will fail to pay for such obligations, we would record a liability for such obligations. The following table presents our operating lease maturity analysis as of March 31, 2019 : Year Amount 2019 $ 409,264 2020 504,511 2021 476,943 2022 435,405 2023 390,252 Thereafter 1,286,197 Total $ 3,502,572 Right of Use Asset and Lease Liability . For leases where we are the lessee, we are required to record a right of use asset and lease liability for all leases with a term greater than 12 months. As of March 31, 2019 , we had one lease that met this criterion where we are the lessee which expires on January 31, 2021. The value of the right of use asset and related liability representing our future obligation under the lease arrangement for which we are the lessee was $3,466 as of March 31, 2019 . The right of use asset and related lease liability are included within other assets, net and accounts payable and other liabilities, respectively, within our condensed consolidated balance sheets. 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 will be 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 although lease related receivables are governed by the lease standards referred to above and are not subject to ASU No. 2016-13. We currently expect to adopt the standard using the modified retrospective approach. |
Weighted Average Common Shares
Weighted Average Common Shares | 3 Months Ended |
Mar. 31, 2019 | |
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 Ended March 31, 2019 2018 Weighted average common shares for basic earnings per share 48,031 24,760 Effect of dilutive securities: unvested share awards 15 — Weighted average common shares for diluted earnings per share (1) 48,046 24,760 (1) For the three months ended March 31, 2018, two unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive. |
Real Estate Properties
Real Estate Properties | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Real Estate Properties | Real Estate Properties As of March 31, 2019 , our wholly owned properties were comprised of 212 buildings with approximately 30,134,000 rentable square feet, with an aggregate undepreciated carrying value of $3,955,529 , and we had a noncontrolling ownership interest in three buildings totaling approximately 443,900 rentable square feet through two unconsolidated joint ventures in which we own 50% and 51% interests. We generally lease space at our properties on a gross lease or modified gross lease basis pursuant to fixed term contracts expiring between 2019 and 2039 . 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 March 31, 2019 , we entered into 32 leases for 825,475 rentable square feet, for a weighted (by rentable square feet) average lease term of 7.5 years and we made commitments for $28,804 of leasing related costs. As of March 31, 2019 , we have estimated unspent leasing related obligations of $63,580 . 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 evaluating for 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 On February 8, 2019, we sold a property portfolio consisting of 34 buildings located in Northern Virginia and Maryland with 1,635,868 rentable square feet for $198,500 in aggregate, excluding closing costs. As of December 31, 2018, this property portfolio was included in assets held for sale and we recorded a $447 loss on impairment of real estate during the three months ended March 31, 2019 as a result of this sale. On March 18, 2019, we sold an office building located in Washington, D.C. with 129,035 rentable square feet for $70,000 , excluding closing costs. As of December 31, 2018, this building was included in assets held for sale and we recorded a $ 22,092 gain on sale of real estate during the three months ended March 31, 2019 as a result of this sale. The sales of these properties do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift. The results of operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income. As of March 31, 2019 , we had two properties with an aggregate undepreciated carrying value of $35,152 classified as held for sale in our condensed consolidated balance sheet. The operating results of these two properties are included in continuing operations in our condensed consolidated statements of comprehensive income. The following table summarizes the properties held for sale as of March 31, 2019. Date of Sale Agreement Number of Office Buildings Location Square Feet Gross (1) November 2018 (2) 1 Kapolei, HI 416,956 $ 7,100 April 2019 (3) 1 Buffalo, NY 121,711 17,350 Total 2 538,667 $ 24,450 (1) Gross sale price includes purchase price adjustments, if any, and excludes closing costs. (2) Comprises of a leasable land parcel acquired from SIR in the SIR Merger (each as defined below). We expect this sale to close in the second quarter of 2019. (3) During the three months ended March 31, 2019, we recorded a $2,757 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value less costs to sell. We expect this sale to close in the second quarter of 2019. In April 2019, we entered an agreement to sell an office building located in Hanover, PA with 502,300 rentable square feet for $6,000 , excluding closing costs. This property did not meet the held for sale criteria as of March 31, 2019. This sale is expected to occur in the third quarter of 2019. In May 2019, we entered an agreement to sell an office building located in Maynard, MA with 287,037 rentable square feet for $5,000 , excluding closing costs. This property did not meet the held for sale criteria as of March 31, 2019. This sale is expected to occur in the second quarter of 2019. In addition to the properties discussed above, we are currently marketing for sale 30 office buildings, including properties acquired in the merger of Select Income REIT, or SIR, with and into our wholly owned subsidiary that closed on December 31, 2018, or the SIR Merger, comprising approximately 4.4 million square feet as of March 31, 2019 . We have determined that these properties were not impaired nor did they meet the held for sale criteria as of March 31, 2019 . We cannot be sure we will sell any of our properties that we are marketing for sale or sell them for prices in excess of our carrying values or that we will not recognize impairment losses with respect to these properties. In addition, our pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or their terms will not change. Pro Forma Financial Information On December 31, 2018, we acquired SIR pursuant to an agreement and plan of merger that we and SIR entered into on September 14, 2018, or the Merger Agreement, as a result of which we acquired 99 buildings with approximately 16.5 million rentable square feet. The aggregate transaction value of the SIR Merger was $2,415,053 , excluding closing costs of approximately $27,497 ( $14,508 of which was paid by us and $12,989 of which was paid by SIR) and including the repayment or assumption of $1,719,772 of SIR debt. As a condition of the SIR Merger, on October 9, 2018 , we sold all of the 24,918,421 common shares of SIR we then owned, or the Secondary Sale, in an underwritten public offering at a price of $18.25 per share, raising net proceeds of $435,125 after deducting underwriting discounts and offering expenses. We used the net proceeds from the Secondary Sale to repay amounts outstanding under our revolving credit facility. In addition, as a condition of the SIR Merger, on December 27, 2018, SIR paid a pro rata distribution to SIR's shareholders of record as of the close of business on December 20, 2018 of all 45,000,000 common shares of beneficial interest of Industrial Logistics Properties Trust, or ILPT, that SIR owned, or the ILPT Distribution. For further information about these transactions, refer to our 2018 Annual Report. The following table presents our pro forma results of operations for the three months ended March 31, 2018 as if the SIR Merger, the Secondary Sale and the ILPT Distribution had occurred on January 1, 2018. The SIR results of operations included in this pro forma financial information have been adjusted to remove ILPT's results of operations for the three months ended March 31, 2018. The effect of the adjustments to remove ILPT's results of operations was to decrease pro forma rental income $40,605 for the three months ended March 31, 2018 and to decrease net income $13,312 for the three months ended March 31, 2018 from the amounts that would have otherwise been included in the pro forma results. This unaudited pro forma financial information is not necessarily indicative of what our actual results of operations would have been for the period presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received pursuant to our existing leases or leases we may enter into, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this unaudited pro forma financial information and such differences could be significant. Three Months Ended March 31, 2018 Rental income $ 189,446 Net income $ 9,453 Net income per common share $ 0.20 During the quarter ended March 31, 2018, we did not recognize any revenue or operating income from the assets acquired and liabilities assumed in the SIR Merger. Unconsolidated Joint Ventures We own noncontrolling interests in two joint ventures that own three buildings. We account for these investments under the equity method of accounting. As of March 31, 2019 and December 31, 2018 , our investment in unconsolidated joint ventures consisted of the following: OPI Carrying Value of Investment at Joint Venture OPI Ownership March 31, 2019 December 31, 2018 Number of Office Buildings Location Square Feet Prosperity Metro Plaza 51% $ 23,498 $ 23,969 2 Fairfax, VA 328,456 1750 H Street, NW 50% 19,007 19,696 1 Washington, D.C. 115,411 Total $ 42,505 $ 43,665 3 443,867 The following table provides a summary of the mortgage debt of our unconsolidated joint ventures: Joint Venture Interest Rate (1) Maturity Date Principal Balance at March 31, 2018 (2) Prosperity Metro Plaza 4.09% 12/1/2029 $ 50,000 1750 H Street, NW 3.69% 8/1/2024 32,000 Weighted Average / Total 3.93% $ 82,000 (1) Includes the effect of mark to market purchase accounting. (2) Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint venture we do not own. None of the debt is recourse to us. At March 31, 2019 , the aggregate unamortized basis difference of our unconsolidated joint ventures of $8,320 is primarily attributable to the difference between the amount we paid to purchase our interest in these joint ventures, including transaction costs, and the historical carrying value of the net assets of these joint ventures. This difference is being amortized over the remaining useful life of the properties owned by these joint ventures and the resulting amortization expense is included in equity in net losses of investees in our condensed consolidated statements of comprehensive income. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
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 provide the tenant the right to terminate before the lease expiration date. In certain circumstances, some leases provide the tenant with the right to terminate if the legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the full 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 $6,794 and $3,091 for the three months ended March 31, 2019 and 2018, respectively. Rents receivable, excluding properties classified as held for sale, include $40,640 and $34,006 of straight line rent receivables at March 31, 2019 and December 31, 2018 , respectively. |
Concentration
Concentration | 3 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration | Concentration Tenant 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. As of March 31, 2019, the U.S. Government, 13 state governments and three other government tenants combined were responsible for approximately 35.9% of our annualized rental income and as of March 31, 2018 the U.S. Government, 13 state governments and four other government tenants combined were responsible for approximately 63.2% of our annualized rental income. The U.S. Government is our largest tenant by annualized rental income and was responsible for approximately 25.8% and 44.0% of our annualized rental income as of March 31, 2019 and 2018 , respectively. Geographic Concentration At March 31, 2019 , our 212 wholly owned buildings were located in 38 states and the District of Columbia. Consolidated properties located in Virginia , California , Texas , the District of Columbia and Maryland were responsible for 15.1% , 11.8% , 11.6% , 9.4% and 7.1% of our annualized rental income as of March 31, 2019 , respectively. Consolidated properties located in the metropolitan Washington, D.C. market area were responsible for approximately 23.5% of our annualized rental income as of March 31, 2019 . |
Indebtedness
Indebtedness | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Our principal debt obligations at March 31, 2019 were: (1) $80,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) $235,000 outstanding principal amount under our unsecured term loan; (3) $2,410,000 aggregate outstanding principal amount of senior unsecured notes; and (4) $329,309 aggregate outstanding principal amount of mortgage notes. Our $750,000 revolving credit facility and our term loan are governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. Our credit agreement also includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2,185,000 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, 2023 and, subject to the payment of an extension fee and meeting other conditions, we have the option to extend the stated maturity date of our revolving credit facility by two additional six month periods. 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 110 basis points per annum at March 31, 2019 , 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 March 31, 2019 . Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of March 31, 2019 and December 31, 2018, the annual interest rate payable on borrowings under our revolving credit facility was 3.5% and 3.6% , respectively. The weighted average annual interest rate for borrowings under our revolving credit facility was 3.5% and 2.8% for the three months ended March 31, 2019 and 2018 , respectively. As of March 31, 2019 and April 30, 2019 , we had $80,000 and $65,000 , respectively, outstanding under our revolving credit facility, and $670,000 and $685,000 , respectively, available for borrowing under our revolving credit facility. Our remaining $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 March 31, 2019 , on the amount outstanding under this term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of both March 31, 2019 and December 31, 2018, the annual interest rate for the amount outstanding under this term loan was 3.9% . The weighted average annual interest rate under this term loan was 3.9% and 3.0% for the three months ended March 31, 2019 and 2018 , respectively. On March 19, 2019, we repaid $65,000 of the principal balance without penalty using proceeds from the sale of a property leaving a principal balance remaining under this term loan of $235,000 . Our $250,000 term loan, which was scheduled to mature on March 31, 2022 and had a principal balance of $88,000 as of December 31, 2018, was repaid in full on February 11, 2019, without penalty, using proceeds from the sale of a property portfolio. The weighted average annual interest rate under this term loan was 4.3% for the period from January 1, 2019 to February 11, 2019, and 3.4% for the three months ended March 31, 2018. As a result of the principal payments of our term loans, we recognized a loss on early extinguishment of debt of $414 for the three months ended March 31, 2019 to write off a proportionate amount of unamortized debt issuance costs. Our credit agreement and senior unsecured 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 unsecured notes indentures and their supplements also contain covenants, including those 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 unsecured notes indentures and their supplements at March 31, 2019 . On March 1, 2019, we repaid at maturity, at par plus accrued interest, a mortgage note secured by one property with an outstanding principal balance of $7,890 using cash on hand. At March 31, 2019 , eleven of our consolidated buildings with an aggregate net book value of $609,048 are encumbered by mortgage notes with an aggregate principal amount of $329,309 . Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 , 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 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Recurring Fair Value Measurements Assets: Investment in RMR Inc. (1) $ 170,808 $ 170,808 $ — $ — Non-Recurring Fair Value Measurements Assets: Assets of properties held for sale (2) $ 16,848 $ — $ 16,848 $ — (1) Our 2,801,061 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 as defined in the fair value hierarchy under GAAP). Our historical cost basis for these shares is $111,117 as of March 31, 2019 . During the three months ended March 31, 2019 and 2018, we recorded an unrealized gain of $22,128 and $12,931 , respectively, to adjust our investment in RMR Inc. to its fair value. (2) We estimated the fair value of one building we have agreed to sell located in Buffalo, NY at March 31, 2019 based upon a negotiated sale agreement with a third party less estimated s ale costs (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 4 for further details. In addition to the assets described in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, a mortgage note receivable, accounts payable, a revolving credit facility, an unsecured term loan, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At March 31, 2019 and December 31, 2018, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows: As of March 31, 2019 As of December 31, 2018 Financial Instrument Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ 349,524 $ 350,586 $ 349,239 $ 348,903 Senior unsecured notes, 3.60% interest rate, due in 2020 399,343 401,040 399,146 399,146 Senior unsecured notes, 4.00% interest rate, due in 2022 296,966 300,845 296,735 295,047 Senior unsecured notes, 4.15% interest rate, due in 2022 297,001 303,428 296,736 296,736 Senior unsecured notes, 4.25% interest rate, due in 2024 338,307 336,137 337,736 337,736 Senior unsecured notes, 4.50% interest rate, due in 2025 378,260 387,404 377,329 377,329 Senior unsecured notes, 5.875% interest rate, due in 2046 300,662 313,100 300,576 274,288 Mortgage notes payable 326,202 328,809 335,241 336,365 Total $ 2,686,265 $ 2,721,349 $ 2,692,738 $ 2,665,550 (1) Includes unamortized debt premiums, discounts and issuance costs. We estimated the fair value of our senior unsecured notes (except for our senior unsecured notes due in 2046) 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, as of the measurement date (Level 1 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market rates 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 | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Awards On February 27, 2019, in connection with the election of three of our Trustees we granted each Trustee 3,000 of our common shares, valued at $29.95 per share, the closing price of our common shares on Nasdaq on that day. Share Purchases On April 5, 2019, we purchased 1,795 of our common shares valued at $28.96 per share, the closing price of our common shares on Nasdaq on that day, from a former officer of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Distributions On February 21, 2019 , we paid a regular quarterly distribution to common shareholders of record on January 28, 2019 of $0.55 per share, or $26,445 . On April 18, 2019 , we declared a regular quarterly distribution to common shareholders of record on April 29, 2019 of $0.55 per share, or approximately $26,450 . We expect to pay this distribution on or about May 16, 2019. Cumulative Other Comprehensive Income Cumulative other comprehensive income represents our share of the comprehensive income of Affiliates Insurance Company, an Indiana insurance company, or AIC. See Note 11 for further information regarding this investment. |
Business and Property Managemen
Business and Property Management Agreements with RMR LLC | 3 Months Ended |
Mar. 31, 2019 | |
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. Prior to completion of the SIR Merger, SIR had similar business and property management agreements with RMR LLC on substantially similar terms, which agreements were terminated in connection with the merger. See Notes 4 and 11 for further information regarding our relationship, agreements and transactions with SIR and RMR LLC. Pursuant to our business management agreement, we recognized net business management fees of $5,722 and $7,309 for the three months ended March 31, 2019 and 2018 , respectively. Based on our common share total return, as defined in our business management agreement, as of March 31, 2019 , no estimated 2019 incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2019 . The actual amount of annual incentive fees for 2019, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2019, and will be payable in 2020. The net business management fees recognized for the three months ended March 31, 2018 included $2,887 of accrued estimated business management incentive fees as of March 31, 2018. No business management incentive fee was payable for the year ended December 31, 2018. We include business management fees in general and administrative expenses in our condensed consolidated statements of comprehensive income. Pursuant to our property management agreement, we recognized aggregate net property management and construction supervision fees of $5,449 and $3,349 for the three months ended March 31, 2019 and 2018 , respectively. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. In addition, we paid RMR LLC $2,185 in January 2019 for SIR’s 2018 business management, property management and construction supervision fees that it had accrued, but not paid, as of December 31, 2018. We also paid RMR LLC a business management incentive fee of $25,817 , which represented the incentive fee incurred, but not paid, by SIR for the year ended December 31, 2018. We had assumed the obligation to pay these amounts as a result of the SIR Merger. We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC's centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, or as otherwise agreed. Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $6,553 and $4,969 for these expenses and costs for the three months ended March 31, 2019 and 2018 , respectively. We included these amounts in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income. |
Related Person Transactions
Related Person Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with SIR (prior to the Merger), RMR LLC, RMR Inc., AIC and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us. See Note 10 for further information regarding our management agreements with RMR LLC. Leases with RMR LLC. We lease office space to RMR LLC in certain of our properties for RMR LLC's property management offices. Pursuant to our lease agreements with RMR LLC, we recognized rental income from RMR LLC for leased office space of $279 and $218 for the three months ended March 31, 2019 and 2018, respectively. RMR Inc. RMR LLC is a majority owned subsidiary of RMR Inc. and RMR Inc. is the managing member of RMR LLC. Adam D. Portnoy, one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., a managing director, president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, also serves as an executive officer of RMR LLC, and each of our other officers is an officer and employee of RMR LLC. As of March 31, 2019 , we owned 2,801,061 shares of class A common stock of RMR Inc. See Note 8 for further information regarding our investment in RMR Inc. SIR . As described further in Note 4, we completed the SIR Merger effective December 31, 2018. Our Managing Trustees and one of our Independent Trustees previously served as managing trustees and independent trustees, respectively, of SIR, our President and Chief Executive Officer also served as SIR’s president and chief executive officer, Jeffrey C. Leer, our Chief Financial Officer and Treasurer, served as SIR’s chief financial officer and treasurer and each of SIR’s officers was also an officer and employee of RMR LLC. RMR LLC provides management services to us and provided management services to SIR until it ceased to exist. See Note 4 for further information regarding the Merger and our previous investment in SIR. AIC . We, ABP Trust and five other companies to which RMR LLC provides management services currently own AIC in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. As of March 31, 2019 and December 31, 2018, our investment in AIC had a carrying value of $9,221 and $8,751 , respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income of $404 and $44 for the three months ended March 31, 2019 and 2018, respectively, which are presented as equity in net losses of investees in our condensed consolidated statements of comprehensive income. Our other comprehensive loss includes our proportionate part of unrealized gains (losses) on fixed income securities, which are owned by AIC, related to our investment in AIC. For further information about these and other such relationships and certain other related person transactions, refer to our 2018 Annual Report. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations We previously accounted for our investment in SIR under the equity method and had previously reported our investment in SIR as a reportable segment. As a result of the Secondary Sale and the elimination of a reportable segment, our equity method investment in SIR is classified as discontinued operations in our condensed consolidated financial statements. See Note 4 for further information regarding the Secondary Sale. For the three months ended March 31, 2018, we recorded $10,289 of equity in earnings of SIR which is included in income from discontinued operations in our condensed consolidated statement of comprehensive income. The following presents a summarized income statement of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, 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. Three Months Ended March 31, 2018 Rental income $ 99,755 Tenant reimbursements and other income 20,874 Total revenues 120,629 Real estate taxes 11,788 Other operating expenses 15,282 Depreciation and amortization 34,946 General and administrative 13,941 Total expenses 75,957 Dividend income 397 Unrealized gain on equity securities 16,900 Interest income 510 Interest expense (23,492 ) Loss on early extinguishment of debt (1,192 ) Income before income tax expense and equity in earnings of an investee 37,795 Income tax expense (160 ) Equity in earnings of an investee 44 Net income 37,679 Net income allocated to noncontrolling interest (4,479 ) Net income attributed to SIR $ 33,200 Weighted average common shares outstanding (basic) 89,382 Weighted average common shares outstanding (diluted) 89,390 Net income attributed to SIR per common share (basic and diluted) $ 0.37 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases . In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements . In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors . Collectively, these standards set 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. ASU No. 2016-02 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. These standards were effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that has allowed us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11, which has allowed us to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the adoption period, although we did not have an adjustment. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component; therefore, the accounting for these leases remained largely unchanged from the previous standard. The adoption of ASU No. 2016-02 and the related improvements did not have a material impact in our condensed consolidated financial statements. Upon adoption, (i) allowances for bad debts are now recognized as a direct reduction of rental income, and (ii) legal costs associated with the execution of our leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred. Subsequent to January 1, 2019, provisions for credit losses are now included in "rental income" in our condensed consolidated financial statements. Provisions for credit losses prior to January 1, 2019 were previously included in other operating expenses in our condensed consolidated financial statements and prior periods are not reclassified to conform to the current presentation. Revenue Recognition. We are a lessor of commercial office properties. Our leases provide our tenants with the contractual right to use and economically benefit from all of the physical space specified in the leases, therefore we have determined to evaluate our leases as lease arrangements. Our leases provide for base rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We do not include in our measurement of our lease receivables certain variable payments, including changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred. Such payments totaled $23,394 for the three months ended March 31, 2019. Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments. We have determined that all of our leases qualify for the practical expedient to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components. We apply Accounting Standards Codification 842, Leases to the combined component. Income derived by our leases is recorded in rental income in our condensed consolidated statements of comprehensive income. Certain tenants are obligated to pay directly their obligations under their leases for insurance, real estate taxes and certain other expenses. These obligations, which have been assumed by the tenants under the terms of their respective leases, are not reflected in our condensed consolidated financial statements. To the extent any tenant responsible for any such obligations under the applicable lease defaults on such lease or if it is deemed probable that the tenant will fail to pay for such obligations, we would record a liability for such obligations. The following table presents our operating lease maturity analysis as of March 31, 2019 : Year Amount 2019 $ 409,264 2020 504,511 2021 476,943 2022 435,405 2023 390,252 Thereafter 1,286,197 Total $ 3,502,572 Right of Use Asset and Lease Liability . For leases where we are the lessee, we are required to record a right of use asset and lease liability for all leases with a term greater than 12 months. As of March 31, 2019 , we had one lease that met this criterion where we are the lessee which expires on January 31, 2021. The value of the right of use asset and related liability representing our future obligation under the lease arrangement for which we are the lessee was $3,466 as of March 31, 2019 . The right of use asset and related lease liability are included within other assets, net and accounts payable and other liabilities, respectively, within our condensed consolidated balance sheets. 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 will be 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 although lease related receivables are governed by the lease standards referred to above and are not subject to ASU No. 2016-13. We currently expect to adopt the standard using the modified retrospective approach. |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Maturity of payments to be received | The following table presents our operating lease maturity analysis as of March 31, 2019 : Year Amount 2019 $ 409,264 2020 504,511 2021 476,943 2022 435,405 2023 390,252 Thereafter 1,286,197 Total $ 3,502,572 |
Weighted Average Common Shares
Weighted Average Common Shares (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 Ended March 31, 2019 2018 Weighted average common shares for basic earnings per share 48,031 24,760 Effect of dilutive securities: unvested share awards 15 — Weighted average common shares for diluted earnings per share (1) 48,046 24,760 (1) For the three months ended March 31, 2018, two unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive. |
Real Estate Properties (Tables)
Real Estate Properties (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Disclosure of Assets held-for-sale | The following table summarizes the properties held for sale as of March 31, 2019. Date of Sale Agreement Number of Office Buildings Location Square Feet Gross (1) November 2018 (2) 1 Kapolei, HI 416,956 $ 7,100 April 2019 (3) 1 Buffalo, NY 121,711 17,350 Total 2 538,667 $ 24,450 (1) Gross sale price includes purchase price adjustments, if any, and excludes closing costs. (2) Comprises of a leasable land parcel acquired from SIR in the SIR Merger (each as defined below). We expect this sale to close in the second quarter of 2019. (3) During the three months ended March 31, 2019, we recorded a $2,757 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value less costs to sell. We expect this sale to close in the second quarter of 2019. |
Schedule of Pro Forma Information | The following table presents our pro forma results of operations for the three months ended March 31, 2018 as if the SIR Merger, the Secondary Sale and the ILPT Distribution had occurred on January 1, 2018. The SIR results of operations included in this pro forma financial information have been adjusted to remove ILPT's results of operations for the three months ended March 31, 2018. The effect of the adjustments to remove ILPT's results of operations was to decrease pro forma rental income $40,605 for the three months ended March 31, 2018 and to decrease net income $13,312 for the three months ended March 31, 2018 from the amounts that would have otherwise been included in the pro forma results. This unaudited pro forma financial information is not necessarily indicative of what our actual results of operations would have been for the period presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received pursuant to our existing leases or leases we may enter into, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this unaudited pro forma financial information and such differences could be significant. Three Months Ended March 31, 2018 Rental income $ 189,446 Net income $ 9,453 Net income per common share $ 0.20 |
Schedule of Joint Ventures | As of March 31, 2019 and December 31, 2018 , our investment in unconsolidated joint ventures consisted of the following: OPI Carrying Value of Investment at Joint Venture OPI Ownership March 31, 2019 December 31, 2018 Number of Office Buildings Location Square Feet Prosperity Metro Plaza 51% $ 23,498 $ 23,969 2 Fairfax, VA 328,456 1750 H Street, NW 50% 19,007 19,696 1 Washington, D.C. 115,411 Total $ 42,505 $ 43,665 3 443,867 The following table provides a summary of the mortgage debt of our unconsolidated joint ventures: Joint Venture Interest Rate (1) Maturity Date Principal Balance at March 31, 2018 (2) Prosperity Metro Plaza 4.09% 12/1/2029 $ 50,000 1750 H Street, NW 3.69% 8/1/2024 32,000 Weighted Average / Total 3.93% $ 82,000 (1) Includes the effect of mark to market purchase accounting. (2) Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint venture we do not own. None of the debt is recourse to us. |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 , 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 Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Recurring Fair Value Measurements Assets: Investment in RMR Inc. (1) $ 170,808 $ 170,808 $ — $ — Non-Recurring Fair Value Measurements Assets: Assets of properties held for sale (2) $ 16,848 $ — $ 16,848 $ — (1) Our 2,801,061 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 as defined in the fair value hierarchy under GAAP). Our historical cost basis for these shares is $111,117 as of March 31, 2019 . During the three months ended March 31, 2019 and 2018, we recorded an unrealized gain of $22,128 and $12,931 , respectively, to adjust our investment in RMR Inc. to its fair value. (2) We estimated the fair value of one building we have agreed to sell located in Buffalo, NY at March 31, 2019 based upon a negotiated sale agreement with a third party less estimated s ale costs (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 4 for further details. |
Schedule of fair value and carrying value of financial instruments | At March 31, 2019 and December 31, 2018, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows: As of March 31, 2019 As of December 31, 2018 Financial Instrument Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ 349,524 $ 350,586 $ 349,239 $ 348,903 Senior unsecured notes, 3.60% interest rate, due in 2020 399,343 401,040 399,146 399,146 Senior unsecured notes, 4.00% interest rate, due in 2022 296,966 300,845 296,735 295,047 Senior unsecured notes, 4.15% interest rate, due in 2022 297,001 303,428 296,736 296,736 Senior unsecured notes, 4.25% interest rate, due in 2024 338,307 336,137 337,736 337,736 Senior unsecured notes, 4.50% interest rate, due in 2025 378,260 387,404 377,329 377,329 Senior unsecured notes, 5.875% interest rate, due in 2046 300,662 313,100 300,576 274,288 Mortgage notes payable 326,202 328,809 335,241 336,365 Total $ 2,686,265 $ 2,721,349 $ 2,692,738 $ 2,665,550 (1) Includes unamortized debt premiums, discounts and issuance costs. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of discontinued operations | The following presents a summarized income statement of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, 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. Three Months Ended March 31, 2018 Rental income $ 99,755 Tenant reimbursements and other income 20,874 Total revenues 120,629 Real estate taxes 11,788 Other operating expenses 15,282 Depreciation and amortization 34,946 General and administrative 13,941 Total expenses 75,957 Dividend income 397 Unrealized gain on equity securities 16,900 Interest income 510 Interest expense (23,492 ) Loss on early extinguishment of debt (1,192 ) Income before income tax expense and equity in earnings of an investee 37,795 Income tax expense (160 ) Equity in earnings of an investee 44 Net income 37,679 Net income allocated to noncontrolling interest (4,479 ) Net income attributed to SIR $ 33,200 Weighted average common shares outstanding (basic) 89,382 Weighted average common shares outstanding (diluted) 89,390 Net income attributed to SIR per common share (basic and diluted) $ 0.37 |
Recent Accounting Pronounceme_4
Recent Accounting Pronouncements - Additional Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Accounting Policies [Abstract] | |
Variable payments excluded from measurement of lease receivable | $ 23,394 |
2019 | 409,264 |
2020 | 504,511 |
2021 | 476,943 |
2022 | 435,405 |
2023 | 390,252 |
Thereafter | 1,286,197 |
Total | 3,502,572 |
ROU asset | 3,466 |
Operating lease liability | $ 3,466 |
Weighted Average Common Share_2
Weighted Average Common Shares - Weighted Average Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||
Weighted average common shares for basic earnings per share (in shares) | 48,031 | 24,760 |
Effect of dilutive securities: unvested share awards (in shares) | 15 | 0 |
Weighted average common shares for diluted earnings per share (in shares) | 48,046 | 24,760 |
Unvested common shares (in shares) | 2 |
Real Estate Properties - Additi
Real Estate Properties - Additional Information (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($)ft²leasebuildingjoint_venture | |
Real Estate Properties [Line Items] | |
Number of joint ventures | joint_venture | 2 |
Number of leases entered | lease | 32 |
Rentable square feet (in sqft) | ft² | 825,475 |
Weighted average lease term | 7 years 6 months |
Expenditures committed on leases | $ | $ 28,804 |
Committed but unspent tenant related obligations estimated | $ | $ 63,580 |
Continuing operations | |
Real Estate Properties [Line Items] | |
Number of buildings | building | 212 |
Rentable area of properties (in square feet) | ft² | 30,134,000 |
Carry value of properties | $ | $ 3,955,529 |
Unconsolidated Joint Ventures | |
Real Estate Properties [Line Items] | |
Number of buildings | building | 3 |
Rentable area of properties (in square feet) | ft² | 443,900 |
Number of buildings, noncontrolling interest | building | 3 |
Joint Venture 1 | |
Real Estate Properties [Line Items] | |
Equity Method Investment, Ownership Percentage | 50.00% |
Joint Venture 2 | |
Real Estate Properties [Line Items] | |
Equity Method Investment, Ownership Percentage | 51.00% |
Real Estate Properties - Dispos
Real Estate Properties - Disposition Activities (Details) $ in Thousands | Mar. 18, 2019USD ($)ft² | Feb. 08, 2019USD ($)ft²building | May 31, 2019USD ($)ft² | Apr. 30, 2019USD ($)ft² | Mar. 31, 2019USD ($)building | Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2019ft² | Mar. 31, 2019property | Dec. 31, 2018USD ($) |
Real Estate Properties [Line Items] | ||||||||||
Net book value | $ 3,533,689 | $ 3,569,489 | ||||||||
Loss on impairment of real estate | $ 3,204 | $ 6,116 | ||||||||
Gain (loss) on sale of real estate | $ 22,092 | $ 0 | ||||||||
Assets of properties held for sale | 23,999 | $ 253,501 | ||||||||
Held-for-sale | ||||||||||
Real Estate Properties [Line Items] | ||||||||||
Number of properties | 2 | 2 | ||||||||
Rentable area of properties (in square feet) | ft² | 538,667 | |||||||||
Aggregate sale price of properties sold, excluding closing costs | $ 24,450 | |||||||||
Assets of properties held for sale | $ 35,152 | |||||||||
Office Building | Disposal Group, Disposed of by Sale | Northern Virginia and Maryland | ||||||||||
Real Estate Properties [Line Items] | ||||||||||
Number of buildings | building | 34 | |||||||||
Rentable area of properties (in square feet) | ft² | 1,635,868 | |||||||||
Aggregate sale price of properties sold, excluding closing costs | $ 198,500 | |||||||||
Loss on impairment of real estate | $ 447 | |||||||||
Office Building | Disposal Group, Disposed of by Sale | District of Columbia | ||||||||||
Real Estate Properties [Line Items] | ||||||||||
Rentable area of properties (in square feet) | ft² | 129,035 | |||||||||
Aggregate sale price of properties sold, excluding closing costs | $ 70,000 | |||||||||
Gain (loss) on sale of real estate | $ 22,092 | |||||||||
Buildings and Properties Acquired in SIR Merger | Disposal Group, Disposed of by Sale | ||||||||||
Real Estate Properties [Line Items] | ||||||||||
Number of buildings | building | 30 | |||||||||
Rentable area of properties (in square feet) | ft² | 4,400,000 | |||||||||
Subsequent Event | Office Building | Disposal Group, Disposed of by Sale | Hanover, PA | ||||||||||
Real Estate Properties [Line Items] | ||||||||||
Rentable area of properties (in square feet) | ft² | 502,300 | |||||||||
Aggregate sale price of properties sold, excluding closing costs | $ 6,000 | |||||||||
Forecast | Office Building | Disposal Group, Disposed of by Sale | Maynard, MA | ||||||||||
Real Estate Properties [Line Items] | ||||||||||
Rentable area of properties (in square feet) | ft² | 287,037 | |||||||||
Aggregate sale price of properties sold, excluding closing costs | $ 5,000 |
Real Estate Properties - Assets
Real Estate Properties - Assets Held-for-Sale (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019USD ($)building | Mar. 31, 2018USD ($) | Mar. 31, 2019ft² | Mar. 31, 2019property | |
Real Estate Properties [Line Items] | ||||
Loss on impairment of real estate | $ 3,204 | $ 6,116 | ||
Held-for-sale | ||||
Real Estate Properties [Line Items] | ||||
Number of Office Buildings | 2 | 2 | ||
Square Footage (in square feet) | ft² | 538,667 | |||
Gross Sale Price | $ 24,450 | |||
Held-for-sale | Kapolei, HI | ||||
Real Estate Properties [Line Items] | ||||
Number of Office Buildings | building | 1 | |||
Square Footage (in square feet) | ft² | 416,956 | |||
Gross Sale Price | $ 7,100 | |||
Held-for-sale | Buffalo, NY | ||||
Real Estate Properties [Line Items] | ||||
Number of Office Buildings | building | 1 | |||
Square Footage (in square feet) | ft² | 121,711 | |||
Gross Sale Price | $ 17,350 | |||
Loss on impairment of real estate | $ 2,757 |
Real Estate Properties - Merger
Real Estate Properties - Merger With Select Income REIT (Details) $ / shares in Units, $ in Thousands, ft² in Millions | Dec. 31, 2018USD ($)ft²property | Dec. 27, 2018shares | Oct. 09, 2018USD ($)$ / sharesshares |
SIR | |||
Business Acquisition [Line Items] | |||
Number of properties acquired | property | 99 | ||
Rentable area of properties (in square feet) | ft² | 16.5 | ||
Consideration transferred | $ 2,415,053 | ||
Closing costs | 27,497 | ||
Payments for closing costs | 14,508 | ||
Debt assumed | 1,719,772 | ||
SIR | SIR | |||
Business Acquisition [Line Items] | |||
Payments for closing costs | $ 12,989 | ||
Underwritten public offering | Common shares | |||
Business Acquisition [Line Items] | |||
Shares sold (in shares) | shares | 24,918,421 | ||
Price per share (in dollars per share) | $ / shares | $ 18.25 | ||
Proceeds from sale of shares | $ 435,125 | ||
ILPT | SIR | |||
Business Acquisition [Line Items] | |||
Shares holding (in shares) | shares | 45,000,000 |
Real Estate Properties - Pro Fo
Real Estate Properties - Pro Forma (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / shares | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Rental income | $ 189,446 |
Net income | $ 9,453 |
Net income per common share (in dollars per share) | $ / shares | $ 0.20 |
Acquisition-related costs | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Decrease in revenues | $ 40,605 |
Decrease in net income | $ 13,312 |
Real Estate Properties - Schedu
Real Estate Properties - Schedule of Joint Ventures (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)ft²buildingjoint_venture | Dec. 31, 2018USD ($) | |
Real Estate [Line Items] | ||
Number of joint ventures | joint_venture | 2 | |
Unconsolidated Joint Ventures | ||
Real Estate [Line Items] | ||
Investment at carrying value | $ 42,505 | $ 43,665 |
Number of buildings | building | 3 | |
Square Feet (in square feet) | ft² | 443,900 | |
Interest rate (as a percent) | 3.93% | |
Principal Balance | $ 82,000 | |
Unamortized basis difference | $ 8,320 | |
Unconsolidated Joint Ventures | Prosperity Metro Plaza | ||
Real Estate [Line Items] | ||
GOV Ownership | 51.00% | |
Investment at carrying value | $ 23,498 | 23,969 |
Number of buildings | building | 2 | |
Square Feet (in square feet) | ft² | 328,456 | |
Interest rate (as a percent) | 4.09% | |
Principal Balance | $ 50,000 | |
Unconsolidated Joint Ventures | 1750 H Street, NW | ||
Real Estate [Line Items] | ||
GOV Ownership | 50.00% | |
Investment at carrying value | $ 19,007 | $ 19,696 |
Number of buildings | building | 1 | |
Square Feet (in square feet) | ft² | 115,411 | |
Interest rate (as a percent) | 3.69% | |
Principal Balance | $ 32,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Revenue Recognition [Abstract] | |||
Increase in rental income to record revenue on straight line basis | $ 6,794 | $ 3,091 | |
Straight line rent receivables | $ 40,640 | $ 34,006 |
Concentration (Details)
Concentration (Details) | 3 Months Ended | |
Mar. 31, 2019governmentbuildinggovernment_tenantstate_governmentstate | Mar. 31, 2018government_tenantstate_government | |
Concentration | ||
Number of US government | government | 1 | |
Number of state governments | state_government | 13 | 13 |
Number of other governments | government_tenant | 3 | 4 |
Annualized rental income, excluding properties classified as discontinued operations | Virginia | ||
Concentration | ||
Annualized Rental income percent | 15.10% | |
Annualized rental income, excluding properties classified as discontinued operations | California | ||
Concentration | ||
Annualized Rental income percent | 11.80% | |
Annualized rental income, excluding properties classified as discontinued operations | Texas | ||
Concentration | ||
Annualized Rental income percent | 11.60% | |
Annualized rental income, excluding properties classified as discontinued operations | District of Columbia | ||
Concentration | ||
Concentration risk percentage | 23.50% | |
Annualized Rental income percent | 9.40% | |
Annualized rental income, excluding properties classified as discontinued operations | Maryland | ||
Concentration | ||
Annualized Rental income percent | 7.10% | |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government, state governments and Other Four Government | ||
Concentration | ||
Concentration risk percentage | 35.90% | 63.20% |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government | ||
Concentration | ||
Concentration risk percentage | 25.80% | 44.00% |
Continuing operations | ||
Concentration | ||
Number of buildings | building | 212 | |
Number of states in which acquired properties located | state | 38 |
Indebtedness - Debt Obligations
Indebtedness - Debt Obligations (Details) $ in Thousands | Mar. 19, 2019USD ($) | Mar. 01, 2019USD ($) | Feb. 11, 2019 | Mar. 31, 2019USD ($)extension_option | Mar. 31, 2018USD ($) | Apr. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | |||||||
Borrowings outstanding | $ 80,000 | $ 175,000 | |||||
Maximum borrowing capacity on revolving credit facility | 2,185,000 | ||||||
Aggregate principal amount on secured properties | 329,309 | ||||||
Loss on early extinguishment of debt | 414 | $ 0 | |||||
Unsecured term loan, due in 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Remaining borrowing capacity | $ 235,000 | ||||||
Maximum borrowing capacity on revolving credit facility | $ 300,000 | ||||||
Interest rate (as a percent) | 3.8955% | 3.90% | |||||
The weighted average annual interest rate (as a percent) | 3.90% | 3.00% | |||||
Amount of debt repaid | $ 65,000 | ||||||
Unsecured revolving credit facility | |||||||
Debt Instrument [Line Items] | |||||||
Borrowings outstanding | $ 80,000 | ||||||
Remaining borrowing capacity | 670,000 | ||||||
Maximum borrowing capacity on revolving credit facility | $ 750,000 | ||||||
Number of extension options | extension_option | 2 | ||||||
Extension option duration | 6 months | ||||||
Facility fee (as a percent) | 0.25% | ||||||
Interest rate (as a percent) | 3.50763% | 3.60% | |||||
The weighted average annual interest rate (as a percent) | 3.50% | 2.80% | |||||
Unsecured revolving credit facility | Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Borrowings outstanding | $ 65,000 | ||||||
Remaining borrowing capacity | $ 685,000 | ||||||
Term loans | |||||||
Debt Instrument [Line Items] | |||||||
Borrowings outstanding | $ 235,000 | ||||||
Loss on early extinguishment of debt | 414 | ||||||
Senior unsecured notes | |||||||
Debt Instrument [Line Items] | |||||||
Borrowings outstanding | $ 2,410,000 | ||||||
LIBOR | Unsecured term loan, due in 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate premium (as a percent) | 1.40% | ||||||
LIBOR | Unsecured revolving credit facility | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate premium (as a percent) | 1.10% | ||||||
Mortgages | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal amount | $ 329,309 | ||||||
Amount of debt repaid | $ 7,890 | ||||||
Unsecured debt | Term loan due in 2022 | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity on revolving credit facility | $ 250,000 | ||||||
The weighted average annual interest rate (as a percent) | 4.30% | 3.40% | |||||
Long term debt | $ 88,000 |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Details) $ in Thousands | Mar. 31, 2019USD ($)building |
Debt Disclosure [Abstract] | |
Number of buildings secured by mortgage notes | building | 11 |
Aggregate net book value of secured properties | $ 609,048 |
Aggregate principal amount on secured properties | $ 329,309 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Recurring and Nonrecurring Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Fair Value of Assets and Liabilities | ||
Common shares owned in RMR Inc. (in shares) | 2,801,061 | |
Historical cost | $ 111,117 | |
Unrealized gain on equity securities | 22,128 | $ 12,931 |
Recurring | ||
Fair Value of Assets and Liabilities | ||
Investment in RMR Inc. | 170,808 | |
Recurring | Level 1 inputs | ||
Fair Value of Assets and Liabilities | ||
Investment in RMR Inc. | 170,808 | |
Recurring | Level 2 inputs | ||
Fair Value of Assets and Liabilities | ||
Investment in RMR Inc. | 0 | |
Recurring | Level 3 inputs | ||
Fair Value of Assets and Liabilities | ||
Investment in RMR Inc. | 0 | |
Held-for-sale | Nonrecurring | ||
Fair Value of Assets and Liabilities | ||
Assets of properties held for sale | 16,848 | |
Held-for-sale | Nonrecurring | Level 1 inputs | ||
Fair Value of Assets and Liabilities | ||
Assets of properties held for sale | 0 | |
Held-for-sale | Nonrecurring | Level 2 inputs | ||
Fair Value of Assets and Liabilities | ||
Assets of properties held for sale | 16,848 | |
Held-for-sale | Nonrecurring | Level 3 inputs | ||
Fair Value of Assets and Liabilities | ||
Assets of properties held for sale | $ 0 |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value of Financial Instruments | ||
Senior notes | $ 2,360,063 | $ 2,357,497 |
Mortgage notes payable, net | $ 326,202 | 335,241 |
Senior unsecured notes, 3.75% interest rate, due in 2019 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 3.75% | |
Senior unsecured notes, 3.60% interest rate, due in 2020 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 3.60% | |
Senior unsecured notes, 4.00% interest rate, due in 2022 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 4.00% | |
Senior unsecured notes, 4.15% interest rate, due in 2022 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 4.15% | |
Senior unsecured notes, 4.25% interest rate, due in 2024 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 4.25% | |
Senior unsecured notes, 4.50% interest rate, due in 2025 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 4.50% | |
Senior unsecured notes, 5.875% interest rate, due in 2046 | ||
Fair Value of Financial Instruments | ||
Interest rate (as a percent) | 5.875% | |
Carrying Amount | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | $ 326,202 | 335,241 |
Fair value of financial instruments | 2,686,265 | 2,692,738 |
Carrying Amount | Senior unsecured notes, 3.75% interest rate, due in 2019 | ||
Fair Value of Financial Instruments | ||
Senior notes | 349,524 | 349,239 |
Carrying Amount | Senior unsecured notes, 3.60% interest rate, due in 2020 | ||
Fair Value of Financial Instruments | ||
Senior notes | 399,343 | 399,146 |
Carrying Amount | Senior unsecured notes, 4.00% interest rate, due in 2022 | ||
Fair Value of Financial Instruments | ||
Senior notes | 296,966 | 296,735 |
Carrying Amount | Senior unsecured notes, 4.15% interest rate, due in 2022 | ||
Fair Value of Financial Instruments | ||
Senior notes | 297,001 | 296,736 |
Carrying Amount | Senior unsecured notes, 4.25% interest rate, due in 2024 | ||
Fair Value of Financial Instruments | ||
Senior notes | 338,307 | 337,736 |
Carrying Amount | Senior unsecured notes, 4.50% interest rate, due in 2025 | ||
Fair Value of Financial Instruments | ||
Senior notes | 378,260 | 377,329 |
Carrying Amount | Senior unsecured notes, 5.875% interest rate, due in 2046 | ||
Fair Value of Financial Instruments | ||
Senior notes | 300,662 | 300,576 |
Fair Value | ||
Fair Value of Financial Instruments | ||
Mortgage notes payable, net | 328,809 | 336,365 |
Fair value of financial instruments | 2,721,349 | 2,665,550 |
Fair Value | Senior unsecured notes, 3.75% interest rate, due in 2019 | ||
Fair Value of Financial Instruments | ||
Senior notes | 350,586 | 348,903 |
Fair Value | Senior unsecured notes, 3.60% interest rate, due in 2020 | ||
Fair Value of Financial Instruments | ||
Senior notes | 401,040 | 399,146 |
Fair Value | Senior unsecured notes, 4.00% interest rate, due in 2022 | ||
Fair Value of Financial Instruments | ||
Senior notes | 300,845 | 295,047 |
Fair Value | Senior unsecured notes, 4.15% interest rate, due in 2022 | ||
Fair Value of Financial Instruments | ||
Senior notes | 303,428 | 296,736 |
Fair Value | Senior unsecured notes, 4.25% interest rate, due in 2024 | ||
Fair Value of Financial Instruments | ||
Senior notes | 336,137 | 337,736 |
Fair Value | Senior unsecured notes, 4.50% interest rate, due in 2025 | ||
Fair Value of Financial Instruments | ||
Senior notes | 387,404 | 377,329 |
Fair Value | Senior unsecured notes, 5.875% interest rate, due in 2046 | ||
Fair Value of Financial Instruments | ||
Senior notes | $ 313,100 | $ 274,288 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands | Apr. 18, 2019USD ($)$ / shares | Apr. 05, 2019$ / sharesshares | Feb. 27, 2019trustee$ / sharesshares | Feb. 21, 2019USD ($)$ / shares | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) |
Share Awards | ||||||
Cash distribution to common shareholders (in dollars per share) | $ 0.55 | |||||
Distributions to common shareholders | $ | $ 26,455 | $ 26,445 | $ 42,632 | |||
Subsequent Event | ||||||
Share Awards | ||||||
Dividends declared (in dollars per share) | $ 0.55 | |||||
Dividends declared | $ | $ 26,450 | |||||
Common shares | Trustees | ||||||
Share Awards | ||||||
Shares granted (in shares) | shares | 3,000 | |||||
Shares granted (in dollars per share) | $ 29.95 | |||||
Number of trustees | trustee | 3 | |||||
Former Employee of RMR LLC | Subsequent Event | ||||||
Share Awards | ||||||
Shares paid for tax withholding (in shares) | shares | 1,795 | |||||
Shares paid for tax withholding (in dollars per share) | $ 28.96 |
Business and Property Managem_2
Business and Property Management Agreements with RMR LLC (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2019USD ($) | Mar. 31, 2019USD ($)employeeagreement | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Number of employees | employee | 0 | |||
Number of agreements | agreement | 2 | |||
Related party expense | $ 5,722 | $ 7,309 | ||
Incentive fee | 2,887 | |||
Reimbursement expense | 6,553 | 4,969 | ||
Net Property Management and Construction Supervision Fees | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Related party transaction amount | $ 5,449 | $ 3,349 | ||
RMR LLC | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Period of common share total return, incentive fees payable | 3 years | |||
SIR | Net Property Management and Construction Supervision Fees | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Payment for incentive fees | $ 2,185 | $ 25,817 |
Related Person Transactions (De
Related Person Transactions (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)agreementcompanyshares | Mar. 31, 2018USD ($) | |
Related Party Transaction [Line Items] | ||
Equity in net losses of investees | $ (235) | $ (577) |
Class A common shares | ||
Related Party Transaction [Line Items] | ||
Shares holding (in shares) | shares | 2,801,061 | |
RMR LLC | ||
Related Party Transaction [Line Items] | ||
Number of agreements | agreement | 2 | |
Revenue from related party | $ 279 | 218 |
AIC | ||
Related Party Transaction [Line Items] | ||
Number of entities to whom services are provided | company | 5 | |
Carrying value of equity method investments | $ 9,221 | 8,751 |
Equity in net losses of investees | $ 404 | $ 44 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Equity in earnings of an investee | $ (235) | $ (577) |
SIR | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Equity in earnings of an investee | $ 10,289 |
Discontinued Operations - Summa
Discontinued Operations - Summarized Income (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Rental income | $ 174,777 | $ 108,717 |
Real estate taxes | 18,392 | 12,964 |
Other operating expenses | 30,136 | 22,837 |
Depreciation and amortization | 77,521 | 44,204 |
General and administrative | 8,723 | 9,606 |
Total expenses | 147,941 | 102,417 |
Dividend income | 980 | 304 |
Unrealized gain on equity securities | 22,128 | 12,931 |
Interest income | 248 | 116 |
Interest expense | (37,133) | (22,766) |
Loss on early extinguishment of debt | (414) | 0 |
Income before income tax expense and equity in earnings of an investee | 34,737 | (3,115) |
Income tax expense | (483) | (32) |
Equity in earnings of an investee | (235) | (577) |
Net income attributed to SIR | $ 34,019 | $ 6,565 |
Weighted average common shares outstanding (basic) (in shares) | 48,031 | 24,760 |
Weighted average common shares outstanding (diluted) (in shares) | 48,046 | 24,760 |
Net income attributed to SIR per common share (basic and diluted) (in dollars per share) | $ 0.71 | $ 0.25 |
SIR | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Equity in earnings of an investee | $ 10,289 | |
SIR | SIR | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Rental income | 99,755 | |
Tenant reimbursements and other income | 20,874 | |
Total revenues | 120,629 | |
Real estate taxes | 11,788 | |
Other operating expenses | 15,282 | |
Depreciation and amortization | 34,946 | |
General and administrative | 13,941 | |
Total expenses | 75,957 | |
Dividend income | 397 | |
Unrealized gain on equity securities | 16,900 | |
Interest income | 510 | |
Interest expense | (23,492) | |
Loss on early extinguishment of debt | (1,192) | |
Income before income tax expense and equity in earnings of an investee | 37,795 | |
Income tax expense | (160) | |
Equity in earnings of an investee | 44 | |
Net income | 37,679 | |
Net income allocated to noncontrolling interest | (4,479) | |
Net income attributed to SIR | $ 33,200 | |
Weighted average common shares outstanding (basic) (in shares) | 89,382 | |
Weighted average common shares outstanding (diluted) (in shares) | 89,390 | |
Net income attributed to SIR per common share (basic and diluted) (in dollars per share) | $ 0.37 |
Uncategorized Items - opi-20190
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 712,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 712,000 |
Accounting Standards Update 2016-01 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 60,281,000 |
Accounting Standards Update 2016-01 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (60,281,000) |