Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 27, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Government Properties Income Trust | |
Entity Central Index Key | 1,456,772 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 71,126,308 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Real estate properties: | ||
Land | $ 253,058 | $ 254,008 |
Buildings and improvements | 1,433,993 | 1,428,472 |
Total real estate properties, gross | 1,687,051 | 1,682,480 |
Accumulated depreciation | (246,191) | (219,791) |
Total real estate properties, net | 1,440,860 | 1,462,689 |
Equity investment in Select Income REIT | 511,872 | 680,137 |
Assets of discontinued operations | 12,463 | 13,165 |
Assets of property held for sale | 3,079 | 32,797 |
Acquired real estate leases, net | 125,898 | 150,080 |
Cash and cash equivalents | 11,306 | 13,791 |
Restricted cash | 1,330 | 2,280 |
Rents receivable, net | 40,923 | 36,239 |
Deferred leasing costs, net | 12,616 | 11,450 |
Deferred financing costs, net | 10,587 | 12,782 |
Other assets, net | 56,104 | 12,205 |
Total assets | 2,227,038 | 2,427,615 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Unsecured revolving credit facility | 114,000 | |
Unsecured term loans | 550,000 | 550,000 |
Senior unsecured notes, net of discount | 347,842 | 347,423 |
Mortgage notes payable, including premiums | 137,569 | 187,694 |
Liabilities of discontinued operations | 95 | 150 |
Liabilities of property held for sale | 35 | 343 |
Accounts payable and accrued expenses | 48,747 | 26,471 |
Due to related persons | 1,793 | 2,161 |
Assumed real estate lease obligations, net | 13,513 | 15,924 |
Total liabilities | $ 1,213,594 | $ 1,130,166 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized, 71,126,308 and 70,349,227 shares issued and outstanding, respectively | $ 711 | $ 703 |
Additional paid in capital | 1,472,480 | 1,457,631 |
Cumulative net income | 40,825 | 248,447 |
Cumulative other comprehensive income (loss) | (129) | 37 |
Cumulative common distributions | (500,443) | (409,369) |
Total shareholders' equity | 1,013,444 | 1,297,449 |
Total liabilities and shareholders' equity | $ 2,227,038 | $ 2,427,615 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares of beneficial interest, shares authorized | 100,000,000 | 100,000,000 |
Common shares of beneficial interest, shares issued | 71,126,308 | 70,349,227 |
Common shares of beneficial interest, shares outstanding | 71,126,308 | 70,349,227 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Rental income | $ 62,092 | $ 64,158 | $ 186,864 | $ 186,406 |
Expenses: | ||||
Real estate taxes | 7,735 | 7,027 | 22,819 | 21,005 |
Utility expenses | 5,194 | 5,327 | 13,788 | 15,072 |
Other operating expenses | 12,281 | 11,685 | 36,659 | 33,586 |
Depreciation and amortization | 17,161 | 17,636 | 51,675 | 49,254 |
Loss on impairment of real estate | 1,616 | 1,616 | ||
Acquisition related costs | 270 | 110 | 459 | 1,290 |
General and administrative | 3,714 | 4,329 | 11,431 | 11,537 |
Total expenses | 46,355 | 47,730 | 136,831 | 133,360 |
Operating income | 15,737 | 16,428 | 50,033 | 53,046 |
Interest and other income | 2 | 10 | 14 | 68 |
Interest expense (including net amortization of debt premiums and discounts and deferred financing fees of $360, $373, $1020 and $926, respectively | (9,137) | (8,845) | (27,894) | (18,530) |
Gain (Loss) on early extinguishment of Debt | 34 | (541) | 34 | (541) |
Loss on issuance of shares by Select Income REIT | (21) | (39) | (42,145) | (39) |
Loss on impairment of Select Income REIT investment | (203,297) | |||
Income (loss) from continuing operations before income taxes and equity in earnings of investees | 6,615 | 7,013 | (223,255) | 34,004 |
Income tax benefit (expense) | 13 | (7) | (49) | (130) |
Equity in earnings (losses) of investees | 10,294 | 4,910 | 16,072 | 4,931 |
Income (loss) from continuing operations | 16,922 | 11,916 | (207,232) | 38,805 |
Income (loss) from discontinued operations | (11) | 706 | (390) | 3,615 |
Net income (loss) | 16,911 | 12,622 | (207,622) | 42,420 |
Other comprehensive income (loss): | ||||
Equity in unrealized loss of investees | (355) | (45) | (166) | (3) |
Other comprehensive loss | (355) | (45) | (166) | (3) |
Comprehensive income (loss) | $ 16,556 | $ 12,577 | $ (207,788) | $ 42,417 |
Weighted average common shares outstanding (basic) (in shares) | 71,004 | 65,481 | 70,589 | 58,300 |
Weighted average common shares outstanding (diluted) (in shares) | 71,021 | 65,568 | 70,589 | 58,385 |
Per common share amounts (basic and diluted): | ||||
Income (loss) from continuing operations (basic) (in dollars per share) | $ 0.24 | $ 0.18 | $ (2.94) | $ 0.67 |
Income (loss) from continuing operations (diluted) (in dollars per share) | 0.24 | 0.18 | (2.94) | 0.66 |
Income (loss) from discontinued operations (basic and diluted) | 0.01 | (0.01) | 0.06 | |
Net income (loss) (basic and diluted) (in dollars per share) | $ 0.24 | $ 0.19 | $ (2.94) | $ 0.73 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net amortization of debt premiums and discounts and deferred financing fees | $ 360 | $ 373 | $ 1,020 | $ 926 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (207,622) | $ 42,420 |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Depreciation | 29,115 | 28,134 |
Net amortization of debt premiums and discount and deferred financing fees | 1,020 | 926 |
(Gain) loss on early extinguishment of debt | (34) | 541 |
Straight line rental income | (2,820) | (3,346) |
Amortization of acquired real estate leases | 21,771 | 20,294 |
Amortization of deferred leasing costs | 1,387 | 1,505 |
Other non-cash expenses | 1,288 | 1,719 |
Loss on impairment of real estate | 1,616 | |
Increase in carrying value of asset held for sale | (2,344) | |
Net gain on sale of properties | (774) | |
Equity in earnings of investees | (16,072) | (4,931) |
Loss on issuance of shares by Select Income REIT | 42,145 | 39 |
Loss on impairment of Select Income REIT investment | 203,297 | |
Distributions of earnings from Select Income REIT | 18,850 | 7,509 |
Change in assets and liabilities: | ||
Restricted cash | 950 | (612) |
Deferred leasing costs | (2,408) | (2,319) |
Rents receivable | 456 | (2,082) |
Other assets | (865) | (1,687) |
Accounts payable and accrued expenses | (1,037) | 6,044 |
Due to related persons | (368) | (611) |
Net cash provided by operating activities | 89,053 | 92,041 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions and deposits | (56,351) | |
Real estate improvements | (9,746) | (13,942) |
Investment in Select Income REIT | (95,821) | (689,969) |
Investment in The RMR Group Inc. | (6,467) | |
Investment in Affiliates Insurance Company | (825) | |
Distributions in excess of earnings from Select Income REIT | 15,721 | 2,811 |
Proceeds from sale of properties, net | 30,520 | 16,427 |
Net cash used in investing activities | (65,793) | (741,849) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of mortgage notes payable | (48,476) | (1,635) |
Proceeds from issuance of common shares, net | 349,789 | |
Proceeds from issuance of senior notes, net of discount | 347,217 | |
Proceeds from unsecured term loan | 500,000 | |
Repayment of unsecured term loan | (500,000) | |
Borrowings on unsecured revolving credit facility | 165,000 | 314,500 |
Repayments on unsecured revolving credit facility | (51,000) | (287,000) |
Financing fees | (21) | (5,189) |
Repurchase of common shares | (174) | |
Distributions to common shareholders | (91,074) | (70,609) |
Net cash (used in) provided by financing activities | (25,745) | 647,073 |
Decrease in cash and cash equivalents | (2,485) | (2,735) |
Cash and cash equivalents at beginning of period | 13,791 | 7,663 |
Cash and cash equivalents at end of period | 11,306 | 4,928 |
Supplemental cash flow information: | ||
Interest paid | 30,107 | 15,533 |
Income taxes paid | $ 143 | 126 |
Non-cash investing activities: | ||
Investment in The RMR Group Inc. paid in common shares | 13,545 | |
Real estate acquisition funded with the assumption of mortgage debt | (97,524) | |
Non-cash financing activities: | ||
Assumption of mortgage debt | $ 97,524 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation | |
Basis of Presentation | Note 1 . Basis of Presentat ion The accompanying condensed consolidated financial statements of Government Properties Income Trust and its subsidiaries, or the Company, 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 financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, impairment of real estate and equity method investments and the valuation of intangible assets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 2. Recent Accounting Pronouncements In February 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2015-02, Consolidation . Among other things, this update changes how an entity determines the primary beneficiary of a variable interest entity. This update is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The implementation of this update is not expected to have a material impact on our condensed consolidated financial statements. In April 2015, the FASB issued ASU, No. 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. In August 2015, the FASB clarified the previous ASU and issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting , which addresses the presentation of debt issuance costs related to line of credit arrangements. These updates are effective for interim and annual reporting periods beginning after December 15, 2015 and require retrospective application. The implementation of these updates is not expected to cause any material changes to our condensed consolidated financial statements other than the reclassification of certain debt issuance costs from assets to contra liabilities on our condensed consolidated balance sheets. Debt issuance costs related to line of credit arrangements will remain classified as assets in accordance with ASU No. 2015-15. When these updates are adopted, deferred financing costs of $10,587 and $12,782 as of September 30, 2015 and December 31, 2014, respectively, will be reclassified from assets to the related debt obligations on our condensed consolidated balance sheets. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While this ASU specifically references contracts with customers, it may also apply to certain other transactions such as the sale of real estate. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a material impact on our condensed consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from this ASU. In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. This update is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The implementation of this update is not expected to have a material impact on our condensed consolidated financial statements. |
Per Common Share Amounts
Per Common Share Amounts | 9 Months Ended |
Sep. 30, 2015 | |
Per Common Share Amounts | |
Per Common Share Amounts | Note 3. Per Common Share Amounts We calculate basic earnings per common share by dividing net income (loss) by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per common share by using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings, are considered when calculating diluted earnings per share. The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): For the Three Months For the Nine Months Ended September 30, Ended September 30, 2015 2014 2015 2014 Weighted average common shares for basic earnings per share Effect of dilutive securities: unvested share awards - Weighted average common shares for diluted earnings per share |
Real Estate Properties
Real Estate Properties | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate Properties | |
Real Estate Properties | Note 4. Real Estate Properties As of September 30, 2015 , we owned 71 properties ( 91 buildings), with an undepreciated carrying value of $1,690, 397 , excluding one property ( one building) classified as discontinued operations with an undepreciated carrying value of $12,260 . We generally lease space in our properties on a gross lease or modified gross lease basis pursuant to fixed term operating leases expiring between 2015 and 20 30 . Certain of our government tenants have the right to terminate their leases before the lease term expires. 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 September 30, 2015 , we entered into 1 8 leases for 207, 256 rentable square feet for a weighted (by rentable square feet) average lease term of 3. 3 years and we made commitments for approximately $1, 748 of leasing related costs. During the nine months ended September 30, 2015, we entered into 41 leases for 606, 357 rentable square feet for a weighted (by rentable square feet) average lease term of 7. 9 years and we made commitments for approximately $9, 230 of leasing related costs. We have estimated unspent leasing related obligations of $8, 629 as of September 30, 2015 . Acquisition Activities In August 2015, we terminated two previously disclosed agreements to acquire two office properties ( two buildings) for an aggregate purchase price of $25,950 . Disposition Activities – Continuing Operations In February 2015, one of our U.S. Government tenants exercised its option to acquire the office property ( one building) it leased from us located in Riverdale, MD with 337,500 rentable square feet. The sales price was $30,600 , excluding closing costs. We recognized no gain or loss on this sale. In May 2015, we began marketing for sale an office property ( one building) located in Savannah, GA with 35 ,228 rentable square feet and a net book value of $3,07 1 as of September 30, 2015. We can provide no assurance that the sale of this property will occur or what the terms for any such sale would be. We have classified this property as held for sale as of September 30, 2015. The results of operations for this property are included in continuing operations in our condensed consolidated financial statements. Summarized balance sheet information for the property is as follows: September 30, 2015 Real estate properties, net $ Rents receivable Other assets Assets of property held for sale $ Other liabilities $ Liabilities of property held for sale $ Disposition Activities – Discontinued Operations In July 2015, we entered into an agreement to sell an office property ( one building) located in Falls Church, VA with 164,746 rentable square feet and a net book value of $12, 282 at September 30, 2015, for a contract price of $16,500 , excluding c losing costs. In September 2015, this agreement was terminated. We continue to market this property for sale. We can provide no assurance that the sale of this property will occur or what the terms for any such sale would be. Results of operations for two properties ( two buildings) we sold in February 2014 and September 2014 and t he Falls Church, VA property ( one building ) disclosed above which was held for sale prior to our adoption of ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, are classified as discontinued operations in our condensed consolidated financial statements. Summarized balance sheet and income statement information for the properties classified as discontinued operations is as follows: Balance Sheets: September 30, December 31, 2015 2014 Real estate properties, net $ $ Rents receivable Other assets Assets of discontinued operations $ $ Other liabilities $ $ Liabilities of discontinued operations $ $ Statements of Operations Three Months ended September 30, Nine Months ended September 30, 2015 2014 2015 2014 Rental income $ $ $ $ Real estate taxes Utility expenses Other operating expenses General and administrative Increase in carrying value of asset held for sale — — — Net gain on sale of properties — — Income (loss) from discontinued operations $ $ $ $ |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2015 | |
Revenue Recognition | |
Revenue Recognition | Note 5. Revenue Recognition We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. Certain of our leases with government tenants provide the tenant the right to terminate before the lease expiration date if its respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations. We have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of early terminations to be remote contingencies based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis. We increased rental income to record revenue on a straight line basis by $61 3 and $1,1 35 for the three months ended September 30, 2015 and 2014, respectively, and $2,820 and $3, 378 for the nine months ended September 30, 2015 and 2014, respectively. Rents receivable include $17,837 and $15,017 of straight line rent receivables at September 30, 2015 and December 31, 2014, respectively. |
Concentration
Concentration | 9 Months Ended |
Sep. 30, 2015 | |
Concentration | |
Concentration | Note 6. Concentration Tenant and Credit Concentration We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. The U.S. Government, 12 state governments and the United Nations combined were responsible for approximately 92. 8 % and 93.2% of our annualized rental income, excluding properties classified as discontinued operations, as of September 30, 2015 and 2014, respectively. The U.S. Government is our largest tenant by annualized rental income and was responsible for approximately 67. 5 % and 69.6% of our annualized rental income, excluding properties classified as discontinued operations, as of September 30, 2015 and 2014, respectively. Geographic Concentration At September 30, 2015 , our 71 properties ( 91 buildings), excluding one property (one building) classified as discontinued operations, were located in 31 states and the District of Columbia. Properties located in California , Virginia , the District of Columbia , Georgia , New York , Maryland and Massachusetts were responsible for approximately 11.5 % , 10. 6 % , 10.3 % , 8. 7 % , 8. 7 % , 7. 4 % and 5.7 % of our annualized rental income as of September 30, 2015 , respectively. |
Indebtedness
Indebtedness | 9 Months Ended |
Sep. 30, 2015 | |
Indebtedness | |
Indebtedness | Note 7. Indebtedness At September 30, 2015 and December 31, 2014, our outstanding indebtedness consisted of the following: September 30, December 31, 2015 2014 Unsecured revolving credit facility, due in 2019 $ $ — Unsecured term loan, due in 2020 Unsecured term loan, due in 2022 Senior unsecured notes, 3.75% interest rate, including unamortized discounts of $2,158 and $2,577 , respectively, due in 2019 Mortgage note payable, 5.55% interest rate, including unamortized premiums of $878 and $2,167 , respectively, due in 2016 (1) Mortgage note payable, 6.21% interest rate, due in 2016 (1) Mortgage note payable, 5.88% interest rate, due in 2021 (1) Mortgage note payable, 7.00% interest rate, including unamortized premiums of $504 and $605 , respectively, due in 2019 (1) Mortgage note payable, 8.15% interest rate, including unamortized premiums of $317 and $398 , respectively, due in 2021 (1) Mortgage note payable, 5.73% interest rate, including unamortized premiums of $0 and $177 , respectively, due in 2015 (1)(2) — $ $ (1) We assumed these mortgages in connection with our acquisitions of certain properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. (2) This mortgage was repaid, at par, in July 2015. Our $750,000 unsecured revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is January 31, 2019 and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. Borrowings under our revolving credit facility bear interest at a rate of LIBOR plus a premium, which was 125 basis points at September 30, 2015 . 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 September 30, 2015 . Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of September 30, 2015 , the annual interest rate payable on borrowings under our revolving credit facility was 1.4% and the weighted average annual interest rate for borrowings under our revolving credit facility was 1.4% and 1.5% , respectively, for the three and nine months ended September 30, 2015 and 1.7% for both the three and nine months ended September 30, 2014 . As of September 30, 2015 and October 27, 2015 , we had $ 114,000 and $107,000 outstanding under our revolving credit facility, respectively. Our $300,000 unsecured term loan, which matures on March 31, 2020, is prepayable without penalty at any time. The amount outstanding under our $300,000 term loan bears interest at LIBOR plus a premium, which was 140 basis points at September 30, 2015 . The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of September 30, 2015 , the annual interest rate for the amount outstanding under our $300,000 term loan was 1.6% . The weighted average annual interest rate under our $300,000 term loan was 1.6% for both the three and nine months ended September 30, 2015 . Our $250,000 unsecured term loan, which matures on March 31, 2022, is prepayable at any time. If our $250,000 term loan is repaid prior to November 22, 2015, a prepayment premium of 2.0% of the amount repaid will be payable. If our $250,000 term loan is repaid during the period from November 22, 2015 to November 21, 2016, a prepayment premium of 1.0% of the amount repaid will be payable. Subsequent to November 21, 2016, no prepayment premium will be payable. The amount outstanding under our $250,000 term loan bears interest at LIBOR plus a premium, which was 180 basis points at September 30, 2015 . The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of September 30, 2015 , the annual interest rate for the amount outstanding under our $250,000 term loan was 2.0 % . The weighted average annual interest rate under our $250,000 term loan was 2.0% for both the three and nine months ended September 30, 2015 . Our $750,000 revolving credit facility, our $300,000 term loan and our $250,000 term loan are governed by a credit agreement with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. This credit agreement also includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2,500,000 on a combined basis in certain circumstances. Our $350,000 of 3.75% senior unsecured notes due in 2019 are governed by an indenture and a supplement to the indenture, and require semi-annual payments of interest only through maturity. The outstanding amount of these notes may be prepaid at par (plus accrued and unpaid interest) on or after July 15, 2019 or before that date together with a make whole premium. Our credit agreement and senior notes indenture and its supplement 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 (formerly known as Reit Management & Research LLC), or RMR LLC, ceasing to act as our business manager and property manager. Our senior notes indenture and its supplement and our credit agreement also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions under certain circumstances and require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the respective covenants under our senior unsecured notes indenture and its supplement and our credit agreement at September 30, 2015 . In July 2015, we repaid, at par, a $47,083 mortgage note bearing interest at 5.73% which was secured by a property ( two buildings) located in Indianapolis, IN. This mortgage was scheduled to mature in October 2015. As a result of this repayment, we recorded a gain on extinguishment of debt of $34 in the three months ended September 30, 2015, which represented the unamortized debt premium and deferred finance fees related to this note. At September 30, 2015 , five of our properties ( six buildings) with an aggregate net book value of $200, 435 secured five mortgage notes that we assumed in connection with the acquisition of such properties. 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 | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value of Assets and Liabilities | |
Fair Value of Assets and Liabilities | Note 8. Fair Value of Assets and Liabilities Our financial instruments include cash and cash equivalents, restricted cash, rents receivable, mortgage notes payable, accounts payable, senior unsecured notes, an unsecured revolving credit facility, unsecured term loans, amounts due to related persons, other accrued expenses and security deposits. At September 30, 2015 and December 31, 2014, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows: As of September 30, 2015 As of December 31, 2014 Carrying Amount Fair Value Carrying Amount Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ $ $ $ Mortgage note payable, 5.55% interest rate, due in 2016 (1) Mortgage note payable, 6.21% interest rate, due in 2016 (1) Mortgage note payable, 5.88% interest rate, due in 2021 (1) Mortgage note payable, 7.00% interest rate, due in 2019 (1) Mortgage note payable, 8.15% interest rate, due in 2021 (1) Mortgage note payable, 5.73% interest rate, due in 2015 (1)(2) — — $ $ $ $ (1) We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. (2) This mortgage was repaid, at par, in July 2015. We estimate the fair value of our senior unsecured notes 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 estimate the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Shareholders' Equity | |
Shareholders' Equity | Note 9. Shareholders’ Equity Distributions On February 26, 2015, we paid a distribution to common shareholders of $0.43 per share, or $30,252 . On May 26, 2015 , we paid a distribution to common shareholders of $0.43 per share, or $30,256 . On August 24, 2015, we paid a distribution to common shareholders of $0.43 per share, or $30,566 . On October 12, 2015, we declared a distribution payable to common shareholders of record on October 23, 2015 of $0.43 per share, or $30,584 . We expect to pay this distribution on or about November 23, 2015 using cash on hand and borrowings under our revolving credit facility. Share Issuances and Repurchases During the three and nine months ended September 30, 2015 , we issued zero and 23,222, respectively, of our common shares to RMR LLC, as part of the business management fee payable by us under our business management agreement with RMR LLC. See Note 10 for further information regarding this agreement. On May 12, 2015, we granted 2,500 of our common shares, valued at $19.75 per share, the closing price of our common shares on the New York Stock Exchange, or NYSE, on that day, to each of our five Trustees as part of their annual compensation. On June 5, 2015, we issued 700,000 of our common shares in connection with our acquisition of an interest in The RMR Group Inc. (formerly known as Reit Management & Research Inc.), or RMR Inc., as further described in Note 10. RMR Inc. is the parent company of RMR LLC, our manager. On September 2, 2015, pursuant to our 2009 Incentive Share Award Plan, we granted an aggregate of 53,100 of our common shares to our officers and certain other employees of our manager, RMR LLC, valued at $15.84 per share, the closing price of our common shares on the NYSE on that day. On September 24, 2015, we purchased an aggregate of 10,721 of our common shares for $16.12 per share, the closing price of our common shares on the NYSE on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of restricted common shares. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions | |
Related Party Transactions | Note 10. Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also trustees, directors or officers of us, RMR Inc. or RMR LLC. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report and our Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC, on June 8, 2015. Acquisition of Interest in our Manager: On June 5, 2015, we and three other real estate investment trusts, or REITs, to which RMR LLC provides management services – Hospitality Properties Trust, or HPT, Select Income REIT, or SIR, and Senior Housing Properties Trust, or SNH, and collectively with HPT and SIR, the Other REITs – participated in a transaction, or the Up-C Transaction, by which we and the Other REITs each acquired an ownership interest in RMR Inc. The Up-C Transaction was completed pursuant to a transaction agreement by and among us, our manager, RMR LLC, its then sole member, Reit Management & Research Trust, or RMR Trust, and RMR Inc. and similar transaction agreements that each Other REIT entered into with RMR LLC, RMR Trust and RMR Inc. RMR Trust is owned by our Managing Trustees, Barry and Adam Portnoy. Pursuant to these transaction agreements: we contributed to RMR Inc. 700,000 of our common shares and $3,91 7 in cash ; HPT contributed to RMR Inc. 1,490,000 of its common shares and $12,62 2 in cash; SIR contributed to RMR Inc. 880,000 of its common shares and $15,8 80 in cash; SNH contributed to RMR Inc. 2,345,000 of its common s hares and $13,96 7 in cash ; RMR Trust contributed to RMR Inc. $11,5 2 0 in cash , which RMR Inc. contributed to RMR LLC; RMR LLC issued 1,000,000 of its class B membership units to RMR Inc.; RMR Inc. issued 1,541,201 shares of its c lass A common stock to us, 5,019,121 shares of its c lass A common stock to HPT, 3,166,891 shares of its c lass A common stock to SIR , 5,272,787 shares of its c lass A common stock to SNH and 1,000,000 shares of its c lass B-1 common stock and 15,000,000 shares of its c lass B-2 common stock to RMR Trust; RMR Trust delivered 15,000,000 of the 30,000,000 class A membership units of RMR LLC which RMR Trust then owned to RMR Inc.; and RMR Inc. delivered to RMR Trust our common shares , the common shares of the Other REITs and the cash which had been contributed by us and the Other REIT s to RMR Inc. The c lass A common stock and c lass B-1 common stock of RMR Inc. share ratably as a single class in dividends and other distributions of RMR Inc. when and if declared by the board of directors of RMR Inc. and have the same rights in a liquidation of RMR Inc. The c lass B-1 common stock of RMR Inc. is convertible into c lass A common stock of RMR Inc. on a 1 :1 basis. The c lass A common stock of RMR Inc. ha s one vote per share. The c lass B-1 common stock of RMR Inc. ha s 10 votes per share. The c lass B-2 common stock of RMR Inc. ha s no economic interest in RMR Inc., but ha s 10 votes per share and is paired with the c lass A membership units of RMR LLC owned by RMR Trust. The c lass A membership units of RMR LLC owned by RMR Trust are required to be redeemed by RMR LLC upon request by RMR Trust for c lass A common stock of RMR Inc. on a 1 :1 basis, or if RMR Inc. elect s, cash. Under the governing documents of RMR Inc., upon the redemption of a c lass A membership unit of RMR LLC, the c lass B-2 common stock of RMR Inc. “paired” with an equal number of class A membership unit s are cancelled for no additional consideration. As part of the Up-C Transaction and concurrently with entering the transaction agreements, on June 5, 2015: · We entered into an amended and restated business management agreement, or the amended business management agreement, with RMR LLC and an amended and restated property management agreement, or the amended property management agreement, with RMR LLC. The amendments made by these agreements are described below in this Note under “Amendment and Restatement of Management Agreements with RMR LLC.” Each Other REIT also entered amended and restated business and property management agreements with RMR LLC which made similar amendments to their management agreements with RMR LLC. · We entered into a registration rights agreement with RMR Inc. covering the class A common stock of RMR Inc. that we received in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations. Each Other REIT entered into a similar registration rights agreement with RMR Inc. We entered into a lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy pursuant to which RMR Trust and Barry and Adam Portnoy agreed not to transfer the 700,000 of our common shares RMR Trust received in the Up-C Transaction for a period of 10 years and we granted them certain registration rights, subject to certain limited exceptions. Each Other REIT also entered into a similar lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy. As a result of the Up-C Transaction: RMR LLC became a subsidiary of RMR Inc.; RMR Inc. became the managing member of RMR LLC; through our ownership of c lass A common stock of RMR Inc., we currently have an indirect 5 .0% economic interest in RMR LLC; through their ownership of cl ass A common stock of RMR Inc., HPT , SIR and SNH currently have an indirect 16.2% , 10.2% and 17 .0% economic interest in RMR LLC, respectively; and RMR Trust through its ownership of c lass B-1 common stock of RMR Inc., c lass B-2 common stock of RMR Inc. and c lass A membership units of RMR LLC currently directly and indirectly has a 51.6% economic interest in RMR LLC and controls 91.4% of the voting power of outstanding capital stock of RMR Inc. Pursuant to the transaction agreements, we and each Other REIT agreed to distribute approximately half of the shares of class A common stock of RMR Inc. received in the Up-C Transaction to our respective shareholders as a special distribution, and RMR Inc. agreed to facilitate this distribution by filing a registration statement with the SEC to register the shares of class A common stock of RMR Inc. to be distributed and by seeking a listing of those shares on a national stock exchange upon the registration statement being declared effective by the SEC. The distribution of class A common stock of RMR Inc. that we and the Other REITs have agreed to make to our and the Other REITs’ shareholders will be made only after a registration statement, including a prospectus, is declared effective by the SEC. Amendment and Restatement of Management Agreements with RMR LLC : As part of the Up-C Transaction, on June 5, 2015, we and RMR LLC entered into the amended business management agreement, which amended and restated our previous business management agreement with RMR LLC, and the amended property management agreement, which amended and restated our previous property management agreement with RMR LLC. Our amended business management agreement and amended property management agreement are referred to together in this Note as our amended management agreements. Our amended management agreements were effective as of June 5, 2015. Our amended management agreements have terms that end on December 31, 2035, and automatically extend on December 31st of each year for an additional year, so that the terms of the agreements thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate each amended management agreement: (i) at any time on 60 days’ written notice for convenience, (ii) immediately upon written notice for cause, as defined therein, (iii) on 60 days’ written notice given within 60 days after the end of any calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the amended management agreements for good reason, as defined therein. If we terminate one or both of our amended management agreements for convenience, or if RMR LLC terminates one or both of our amended management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated amended management agreement(s) for the remaining term. If we terminate one or both of our amended management agreements for a performance reason, as defined therein, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years. We are not required to pay any termination fee if we terminate our amended management agreements for cause or as a result of a change of control of RMR LLC. Accounting for Investment in RMR Inc.: On June 5, 2015, we acquired 1,541,201 shares of class A common stock of RMR Inc. for $17,462 , ex cluding transaction costs . We have concluded, for accounting purposes, that the consideration paid for this investment in RMR Inc.’s shares of class A common stock represented a discount to the fair value of these shares. We account for this investment under the cost method of accounting and have recorded this investment at its estimated fair value of $39,833 as of June 5, 2015 using Level 3 inputs as defined in the fair value hierarchy under GAAP. As a result, we recorded a liability for the amount by which the estimated fair value exceeded the price we paid for these shares and which amount we are amortizing as described below. As of September 30, 2015, the unamortized balance of this liability was $22,025 and it is included in accounts payable and other liabilities in our condensed consolidated balance sheet. Our investment is included in other assets in our condensed consolidated balance sheet and the carrying value of our investment was $42,384 , including transaction costs, as of September 30, 2015. We believe the carrying value of our investment in RMR Inc. as of September 30, 2015 approximates its estimated fair value for accounting purposes. The liability related to the acquisition of these shares is being amortized on a straight line basis over the 20 year life of the business and property management agreements with RMR LLC as a reduction to business management fees and property management fees, which are included in general and administrative and other operating expenses, respectively, in our condensed consolidated statements of comprehensive income. Amortization of the liability, included in general and administrative expense and other operating expenses for the three and nine months ended September 30, 2015, totaled $281 and $346 , respectively. RMR LLC Management Fees and Reimbursements : We recognized business management fees of $2,438 and $2,643 for the three months ended September 30, 2015 and 2014, respectively, and $7,482 and $7,578 for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015 and 2014, no incentive fees were estimated to be payable to RMR LLC for 2015 and 2014, respectively. The business management fees we recognized for the 2015 and 2014 periods are included in general and administrative expenses in our condensed consolidated financial statements. In accordance with the terms of our previous business management agreement, we issued 19,339 and 27,103 of our common shares to RMR LLC for the nine months ended September 30, 2015 and 2014, respectively, as payment for portions of the base business management fees we recognized for those periods. Our amended business management agreement requires that 100% of the management fee due to RMR LLC be paid by us in cash. Pursuant to our property management agreement with RMR LLC, the property management fees, including construction supervision fees, we recognized were $ 1,930 and $ 2,095 for the three months ended September 30, 2015 and 2014, respectively, and $ 5,861 and $ 6 , 034 for the nine months ended September 30, 2015 and 2014, respectively. These amounts are included in operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. Pursuant to our previous and amended management agreements with RMR LLC, we are responsible for paying all of the property level operating costs which costs are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. The total of those property management related reimbursements paid to RMR LLC for the three months ended September 30, 2015 and 2014 were $3,011 and $2,312 respectively, and $8,478 and $6,332 for the nine months ended September 30, 2015 and 2014, respectively, and these amounts are included in property operating expenses in our condensed consolidated financial statements for these periods. In addition, we have historically awarded share grants to certain RMR LLC employees under our equity compensation plan and we accrue estimated amounts for such share grants based upon historical practices throughout the year. In September 2015 and 2014, we made annual share grants to RMR LLC employees of 53,100 and 51,150 of our common shares, respectively. In September 2015, we purchased 10,721 of our common shares, at the closing price for our common shares on the NYSE on the date of purchase, from certain of our officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of restricted common shares. In addition, under our business management agreement we reimburse RMR LLC for our allocable costs for internal audit services. The amounts accrued for share grants to RMR LLC employees and internal audit costs were $292 and $508 for the three months ended September 30, 2015 and 2014, respectively, and $725 and $973 for the nine months ended September 30, 2015 and 2014, respectively, and these amounts are included in our general and administrative expenses for these periods. Leases with RMR LLC : We lease office space to RMR LLC in certain of our properties for its property management offices. Pursuant to our lease agreements with RMR LLC, we recognized rental income from RMR LLC for leased office space of approximately $1 11 and $14 for the three months ended September 30, 2015 and 2014, respectively, and approximately $ 278 and $4 7 for the nine months ended September 30, 2015 and 2014, respectively. SIR: On February 28, 2015, we entered into a share purchase agreement, or the GOV Purchase Agreement, with Lakewood Capital Partners, LP, or Lakewood, the other persons who are members of a group with Lakewood, or, together with Lakewood, the Lakewood Parties, and, for the purpose of specified sections, SIR, pursuant to which, on March 4, 2015, we acquired 3,418,421 common shares of SIR from Lakewood for a cash purchase price equal to approximately $95,203 . On February 28, 2015, the SIR common shares that we acquired pursuant to the GOV Purchase Agreement represented approximately 3.9% of SIR’s outstanding common shares. We funded our acquisition of these SIR common shares with cash on hand and borrowings under our revolving credit facility. As of September 30, 2015, we owned 24,918,421 SIR common shares, or approximately 27.9% of SIR’s total outstanding common shares. The GOV Purchase Agreement contains (i) standstill provisions, pursuant to which the Lakewood Parties agreed not to take certain actions with respect to our securities, or those of SIR, for a 50 -year period and (ii) voting provisions, pursuant to which the Lakewood Parties agreed to cause our securities, or those of SIR, that they or any of their affiliates own as of a record date for a meeting of our or SIR’s shareholders to be present and voted at such meeting in favor of all actions recommended by the board of trustees of such company. On February 28, 2015, our Managing Trustees, Messrs. Barry and Adam Portnoy, entered into separate share purchase agreements with the Lakewood Parties, with provisions similar to the GOV Purchase Agreement, including the per share purchase price, pursuant to which, on March 4, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 107,606 and 87,606 SIR common shares, respectively, from Lakewood and, on March 5, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 2,429 and 2,429 SIR common shares, respectively, from Mr. William H. Lenehan, one of the Lakewood Parties. Concurrently with entering into the agreements among us, Messrs. Barry Portnoy and Adam Portnoy and the Lakewood Parties, Lakewood withdrew its nomination of Mr. Lenehan for election to SIR’s board of trustees at SIR’s 2015 annual meeting of shareholders. See Note 11 for further information regarding our investment in SIR. AIC: As of September 30, 2015, our investment in Affiliates Insurance Company, or AIC, an Indiana insurance company, had a carrying value of $6,926 , which amount is included in other assets on our condensed consolidated balance sheet. We recognized income (loss) of ($24) and $38 related to our investment in AIC for the three months ended September 30, 2015 and 2014, respectively, and $70 and $59 for the nine months ended September 30, 2015 and 2014, respectively. Our other comprehensive income (loss) includes unrealized gains (losses) on securities held for sale which are owned by AIC of ($72) and ($33) for the three months ended September 30, 2015 and 2014, respectively, and ($91) and $8 for the nine months ended September 30, 2015 and 2014, respectively. In June 2015, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC. In connection with that renewal, we purchased a three year combined property insurance policy providing $500,000 of coverage annually with the premium to be paid annually and a one year combined policy providing terrorism coverage of $200,000 for our properties which policies were arranged by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $1,277 in connection with these policies for the policy year ending June 30, 2016, and this amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. Directors’ and Officers’ Liability Insurance : In August 2015, we extended through September 2017 our combined directors' and officers' insurance policy with RMR LLC and five other companies managed by RMR LLC that provides $10,000 in aggregate primary coverage. At that time, we also extended through September 2016 our separate additional directors' and officers' liability insurance policies that provide $20,000 of aggregate excess coverage plus $5,000 of excess non-indemnifiable coverage. The total premium payable by us for these extensions was approximately $338 . |
Equity Investment in Select Inc
Equity Investment in Select Income REIT | 9 Months Ended |
Sep. 30, 2015 | |
Equity Investment in Select Income REIT. | |
Equity Investment in Select Income REIT | Note 11. Equity Investment in Select Income REIT As described in Note 10, as of September 30, 2015, we owned 24,918,421 , or approximately 27. 9 % , of the then outstanding SIR common shares. SIR is a REIT that is primarily focused on owning and investing in net leased, single tenant properties. We account for our investment in SIR under the equity method. Under the equity method, we record our proportionate share of SIR’s net income as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. For the three and nine months ended September 30, 2015 , we recorded $ 8, 425 and $18, 850 of equity in the earnings of SIR, respectively. During the three and nine months ended September 30, 2015, SIR issued 45,389 and 29,414,279 common shares, respectively. We recognized a loss on issuance of shares by SIR of $ 21 and $42, 145 , respectively, during the three and nine months ended September 30, 2015 as a result of the per share issuance price of these SIR common shares being below the then average per share carrying value of our SIR common shares. We periodically evaluate our equity investment in SIR for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of SIR, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value. In performing our periodic evaluation of other than temporary impairment of our investment in SIR during the second quarter of 2015, we determined, based on the length of time and the extent to which the market value of our SIR investment was below our carrying value, that the decline in fair value was other than temporary. Accordingly, we recorded a $203,297 loss on impairment to reduce the carrying value of our SIR investment to its estimated fair value during the second quarter of 2015. We estimated fair value using the closing price of SIR common shares on the NYSE as of June 30, 2015. The cost of our investments in SIR exceeded our proportionate share of SIR’s total shareholders’ equity book value on their dates of acquisition by an aggregate of $166,272 . As required under GAAP, we were amortizing this difference to equity in earnings of investees over the average remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR as of the respective dates of our acquisition. This amortization decreased our equity in the earnings of SIR by zero and $4,742 for the three and nine months ended September 30, 2015, respectively, and $2,637 for both the three and nine months ended September 30, 2014. Recording the loss on impairment noted above resulted in the carrying value of our SIR investment to be less than our proportionate share of SIR’s total shareholders’ book equity as of June 30, 2015. As a result, the previous basis difference was eliminated and we are currently amortizing a basis difference of ($95,035) to earnings over the estimated remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR as of June 30, 2015. This amortization increased our equity in the earnings of SIR by $1,893 for both the three and nine months ended September 30, 2015. During the three and nine months ended September 30, 2015 , we received cash distributions from SIR totaling $12, 459 and $34, 571 , respectively, and $10,320 for both the three and nine months ended September 30, 2014. The following summarized financial data of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2015 , or the SIR Quarterly Report, includes the results of operations for periods prior to July 9, 2014 (the date on which we acquired our initial interest in SIR). References in our 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 financial statements. Condensed Consolidated Balance Sheets: September 30, December 31, 2015 2014 Real estate properties, net $ $ Properties held for sale - Acquired real estate leases, net Cash and cash equivalents Rents receivable, net Other assets, net Total assets $ $ Revolving credit facility $ $ Term loan Senior notes - Mortgage notes payable Assumed real estate lease obligations, net Other liabilities Noncontrolling interest - Shareholders' equity Total liabilities and shareholders' equity $ $ Condensed Consolidated Statements of Income: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Rental income $ $ $ $ Tenant reimbursements and other income Total revenues Operating expenses Depreciation and amortization Acquisition related costs General and administrative Total expenses Operating income Interest expense Gain (loss) on early extinguishment of debt — — Income before income tax expense and equity in earnings (losses) of an investee Income tax expense Equity in earnings (losses) of an investee Gain on sale of property - - Net income Net income allocated to noncontrolling interest - - Net income attributed to SIR $ $ $ $ Weighted average common shares outstanding (basic) Weighted average common shares outstanding (diluted) Basic net income attributed to SIR per common share $ $ $ $ Diluted net income attributed to SIR per common share $ $ $ $ |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information | |
Segment Information | Note 12. Segment Information We operate in two separate reportable business segments: ownership of properties that are primarily leased to government tenants and our equity method investment in SIR. Three months ended September 30, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Acquisition related costs — — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Gain on early extinguishment of debt — — Loss on issuance of shares by SIR — — Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees Income tax benefit — — Equity in earnings (losses) of investees — Income (loss) from continuing operations Loss from discontinued operations — — Net income (loss) $ $ $ $ Nine months ended September 30, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Acquisition related costs — — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Gain on early extinguishment of debt — — Loss on issuance of shares by SIR — — Loss on impairment of SIR investment — — Income (loss) from continuing operations before income taxes and equity in earnings of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Loss from discontinued operations — — Net income (loss) $ $ $ $ As of September 30, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ Three months ended September 30, 2014 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Loss on impairment of real estate — — Acquisition related costs — — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Loss on early extinguishment of debt — — Loss on issuance of shares by SIR — — Income (loss) from continuing operations before income taxes and equity in earnings of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Income from discontinued operations — — Net income (loss) $ $ $ $ Nine months ended September 30, 2014 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Loss on impairment of real estate — — Acquisition related costs — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Loss on early extinguishment of debt — — Loss on issuance of shares by SIR — — Income (loss) from continuing operations before income taxes and equity in earnings of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Income from discontinued operations — — Net income (loss) $ $ $ As of December 31, 2014 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ |
Per Common Share Amounts (Table
Per Common Share Amounts (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Per Common Share Amounts | |
Per Common Share Amounts | The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): For the Three Months For the Nine Months Ended September 30, Ended September 30, 2015 2014 2015 2014 Weighted average common shares for basic earnings per share Effect of dilutive securities: unvested share awards - Weighted average common shares for diluted earnings per share |
Real Estate Properties (Tables)
Real Estate Properties (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate Properties | |
Summarized balance sheet information for properties classified as held for sale | September 30, 2015 Real estate properties, net $ Rents receivable Other assets Assets of property held for sale $ Other liabilities $ Liabilities of property held for sale $ |
Summarized balance sheet and income statement information for properties classified as discontinued operations | Balance Sheets: September 30, December 31, 2015 2014 Real estate properties, net $ $ Rents receivable Other assets Assets of discontinued operations $ $ Other liabilities $ $ Liabilities of discontinued operations $ $ Statements of Operations Three Months ended September 30, Nine Months ended September 30, 2015 2014 2015 2014 Rental income $ $ $ $ Real estate taxes Utility expenses Other operating expenses General and administrative Increase in carrying value of asset held for sale — — — Net gain on sale of properties — — Income (loss) from discontinued operations $ $ $ $ |
Indebtedness (Tables)
Indebtedness (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Indebtedness | |
Composition of outstanding indebtedness | September 30, December 31, 2015 2014 Unsecured revolving credit facility, due in 2019 $ $ — Unsecured term loan, due in 2020 Unsecured term loan, due in 2022 Senior unsecured notes, 3.75% interest rate, including unamortized discounts of $2,158 and $2,577 , respectively, due in 2019 Mortgage note payable, 5.55% interest rate, including unamortized premiums of $878 and $2,167 , respectively, due in 2016 (1) Mortgage note payable, 6.21% interest rate, due in 2016 (1) Mortgage note payable, 5.88% interest rate, due in 2021 (1) Mortgage note payable, 7.00% interest rate, including unamortized premiums of $504 and $605 , respectively, due in 2019 (1) Mortgage note payable, 8.15% interest rate, including unamortized premiums of $317 and $398 , respectively, due in 2021 (1) Mortgage note payable, 5.73% interest rate, including unamortized premiums of $0 and $177 , respectively, due in 2015 (1)(2) — $ $ (1) We assumed these mortgages in connection with our acquisitions of certain properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. (2) This mortgage was repaid, at par, in July 2015. |
Fair Value of Assets and Liab22
Fair Value of Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value of Assets and Liabilities | |
Schedule of fair value and carrying value of financial instruments | As of September 30, 2015 As of December 31, 2014 Carrying Amount Fair Value Carrying Amount Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ $ $ $ Mortgage note payable, 5.55% interest rate, due in 2016 (1) Mortgage note payable, 6.21% interest rate, due in 2016 (1) Mortgage note payable, 5.88% interest rate, due in 2021 (1) Mortgage note payable, 7.00% interest rate, due in 2019 (1) Mortgage note payable, 8.15% interest rate, due in 2021 (1) Mortgage note payable, 5.73% interest rate, due in 2015 (1)(2) — — $ $ $ $ (1) We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. (2) This mortgage was repaid, at par, in July 2015. |
Equity Investment in Select I23
Equity Investment in Select Income REIT (Tables) - SIR | 9 Months Ended |
Sep. 30, 2015 | |
Schedule Of Summarized Balance Sheet Information Of Equity Method Investee Table Text Block | September 30, December 31, 2015 2014 Real estate properties, net $ $ Properties held for sale - Acquired real estate leases, net Cash and cash equivalents Rents receivable, net Other assets, net Total assets $ $ Revolving credit facility $ $ Term loan Senior notes - Mortgage notes payable Assumed real estate lease obligations, net Other liabilities Noncontrolling interest - Shareholders' equity Total liabilities and shareholders' equity $ $ |
Schedule Of Summarized Income Statement Information Of Equity Method Investee Table Text Block | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Rental income $ $ $ $ Tenant reimbursements and other income Total revenues Operating expenses Depreciation and amortization Acquisition related costs General and administrative Total expenses Operating income Interest expense Gain (loss) on early extinguishment of debt — — Income before income tax expense and equity in earnings (losses) of an investee Income tax expense Equity in earnings (losses) of an investee Gain on sale of property - - Net income Net income allocated to noncontrolling interest - - Net income attributed to SIR $ $ $ $ Weighted average common shares outstanding (basic) Weighted average common shares outstanding (diluted) Basic net income attributed to SIR per common share $ $ $ $ Diluted net income attributed to SIR per common share $ $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information | |
Schedule of ownership of properties that are primarily leased to government tenants and our equity method investment in SIR | Three months ended September 30, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Acquisition related costs — — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Gain on early extinguishment of debt — — Loss on issuance of shares by SIR — — Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees Income tax benefit — — Equity in earnings (losses) of investees — Income (loss) from continuing operations Loss from discontinued operations — — Net income (loss) $ $ $ $ Nine months ended September 30, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Acquisition related costs — — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Gain on early extinguishment of debt — — Loss on issuance of shares by SIR — — Loss on impairment of SIR investment — — Income (loss) from continuing operations before income taxes and equity in earnings of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Loss from discontinued operations — — Net income (loss) $ $ $ $ As of September 30, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ Three months ended September 30, 2014 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Loss on impairment of real estate — — Acquisition related costs — — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Loss on early extinguishment of debt — — Loss on issuance of shares by SIR — — Income (loss) from continuing operations before income taxes and equity in earnings of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Income from discontinued operations — — Net income (loss) $ $ $ $ Nine months ended September 30, 2014 Investment Investment in Real Estate in SIR Corporate Consolidated Rental income $ $ — $ — $ Expenses: Real estate taxes — — Utility expenses — — Other operating expenses — — Depreciation and amortization — — Loss on impairment of real estate — — Acquisition related costs — General and administrative — — Total expenses — Operating income (loss) — Interest and other income — — Interest expense — Loss on early extinguishment of debt — — Loss on issuance of shares by SIR — — Income (loss) from continuing operations before income taxes and equity in earnings of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Income from discontinued operations — — Net income (loss) $ $ $ As of December 31, 2014 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ |
Recent Accounting Pronounceme25
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Accounting Standards Update 2015-03 | ||
New Accounting Pronouncements or Change in Accounting Principle | ||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 10,587 | $ 12,782 |
Per Common Share Amounts (Detai
Per Common Share Amounts (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Per Common Share Amounts | ||||
Weighted average common shares outstanding (basic) (in shares) | 71,004 | 65,481 | 70,589 | 58,300 |
Effect of dilutive securities: unvested share awards | 17 | 87 | 85 | |
Weighted average common shares outstanding (diluted) (in shares) | 71,021 | 65,568 | 70,589 | 58,385 |
Real Estate Properties (Details
Real Estate Properties (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Aug. 31, 2015USD ($)propertybuildingagreement | Feb. 28, 2015USD ($)ft²item | Sep. 30, 2015USD ($)ft²propertyitem | Sep. 30, 2015USD ($)ft²propertyitem | Sep. 30, 2014USD ($) | Jul. 31, 2015USD ($) | May. 31, 2015ft²building | Dec. 31, 2014USD ($) | Apr. 30, 2014ft²item | |
Real estate properties | |||||||||
Number of properties owned | property | 71 | 71 | |||||||
Number of buildings | item | 91 | 91 | |||||||
Total real estate properties, gross | $ 1,687,051 | $ 1,687,051 | $ 1,682,480 | ||||||
Number of leases entered | property | 18 | 41 | |||||||
Weighted average lease term | 3 years 3 months 18 days | 7 years 10 months 24 days | |||||||
Expenditures committed on leases | $ 1,748 | $ 9,230 | |||||||
Committed but unspent tenant related obligations estimated | $ 8,629 | $ 8,629 | |||||||
Square Feet | ft² | 207,256 | 606,357 | |||||||
Net book value | $ 1,440,860 | $ 1,440,860 | 1,462,689 | ||||||
Increase in carrying value of assets held for sale | $ 2,344 | ||||||||
Gain (loss) on sale of properties | $ 774 | ||||||||
Balance Sheet: | |||||||||
Real estate properties, net | 3,071 | 3,071 | |||||||
Rents receivable | 1 | 1 | |||||||
Other assets | 7 | 7 | |||||||
Assets of property held for sale | 3,079 | 3,079 | 32,797 | ||||||
Other liabilities | 35 | 35 | |||||||
Liabilities of property held for sale | 35 | 35 | 343 | ||||||
Continuing operations | |||||||||
Real estate properties | |||||||||
Total real estate properties, gross | $ 1,690,397 | $ 1,690,397 | |||||||
Discontinued operations | |||||||||
Real estate properties | |||||||||
Number of properties owned | property | 1 | 1 | |||||||
Number of buildings | item | 1 | 1 | |||||||
Total real estate properties, gross | $ 12,260 | $ 12,260 | |||||||
Acquisition | Office | |||||||||
Real estate properties | |||||||||
Number of properties owned | property | 2 | ||||||||
Number of buildings | building | 2 | ||||||||
Number of agreements terminated | agreement | 2 | ||||||||
Purchase Price | $ 25,950 | ||||||||
Disposal Group, By Sale, Not Discontinued Operations | Riverdale, MD | Office | U.S. Government | One building | |||||||||
Real estate properties | |||||||||
Number of buildings | item | 1 | ||||||||
Rentable square feet of properties | ft² | 337,500 | ||||||||
Option purchase price | $ 30,600 | ||||||||
Gain (loss) on sale of properties | $ 0 | ||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | Savannah, GA | Office | |||||||||
Real estate properties | |||||||||
Number of buildings | building | 1 | ||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | Savannah, GA | One building | Office | |||||||||
Real estate properties | |||||||||
Rentable square feet of properties | ft² | 35,228 | ||||||||
Net book value | 3,071 | 3,071 | |||||||
Discontinued Operations, Held-for-sale | |||||||||
Balance Sheet: | |||||||||
Real estate properties, net | 12,260 | 12,260 | 12,260 | ||||||
Rents receivable | 3 | 3 | 782 | ||||||
Other assets | 200 | 200 | 123 | ||||||
Other liabilities | 95 | 95 | $ 150 | ||||||
Discontinued Operations, Held-for-sale | Falls Church, VA | Office | One building | |||||||||
Real estate properties | |||||||||
Number of buildings | item | 1 | ||||||||
Rentable square feet of properties | ft² | 164,746 | ||||||||
Net book value | $ 12,282 | $ 12,282 | |||||||
Real Estate Aggregate Sales Price | $ 16,500 |
Real Estate Properties (Detai28
Real Estate Properties (Details 2) $ in Thousands | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($)item | Sep. 30, 2014propertyitem | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($)item | Dec. 31, 2014USD ($) | |
Real estate properties | ||||||
Number of Buildings | item | 91 | 91 | ||||
Net book value | $ 1,440,860 | $ 1,440,860 | $ 1,462,689 | |||
Balance Sheets: | ||||||
Real estate properties | 3,071 | 3,071 | ||||
Rents receivable | 1 | 1 | ||||
Other assets | 7 | 7 | ||||
Assets of Disposal Group, Including Discontinued Operation, Total | 12,463 | 12,463 | 13,165 | |||
Other liabilities | 35 | 35 | ||||
Liabilities of Disposal Group, Including Discontinued Operation, Total | 95 | 95 | 150 | |||
Statement of Operations: | ||||||
Income (loss) from discontinued operations | (11) | $ 706 | (390) | $ 3,615 | ||
Discontinued Operations, Held-for-sale | ||||||
Balance Sheets: | ||||||
Real estate properties | 12,260 | 12,260 | 12,260 | |||
Rents receivable | 3 | 3 | 782 | |||
Other assets | 200 | 200 | 123 | |||
Assets of Disposal Group, Including Discontinued Operation, Total | 12,463 | 12,463 | 13,165 | |||
Other liabilities | 95 | 95 | 150 | |||
Liabilities of Disposal Group, Including Discontinued Operation, Total | 95 | 95 | $ 150 | |||
Statement of Operations: | ||||||
Rental income | 28 | 166 | 86 | 1,652 | ||
Real estate taxes | 71 | (100) | (69) | (373) | ||
Utility expenses | (46) | (50) | (124) | (204) | ||
Other operating expenses | (35) | (41) | (197) | (426) | ||
General and administrative | (29) | (43) | (86) | (152) | ||
Increase in carrying value of asset held for sale | 2,344 | |||||
Gain on sale of property | 774 | 774 | ||||
Income (loss) from discontinued operations | $ (11) | $ 706 | $ (390) | $ 3,615 | ||
Two buildings | Discontinued operations | ||||||
Real estate properties | ||||||
Number of properties sold | property | 2 | |||||
Number of Buildings | item | 2 | 2 | 2 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Revenue Recognition | |||||
Increase in rental income to record revenue on straight line basis | $ 613 | $ 1,135 | $ 2,820 | $ 3,378 | |
Straight line rent receivables (liabilities) | $ 17,837 | $ 17,837 | $ 15,017 |
Concentration (Details)
Concentration (Details) | 9 Months Ended | |
Sep. 30, 2015statepropertyitem | Sep. 30, 2014 | |
Concentration | ||
Number of properties owned | property | 71 | |
Number of buildings | 91 | |
Number of states in which acquired properties located | state | 31 | |
Number of state governments | 12 | |
Annualized rental income, excluding properties classified as discontinued operations | California | ||
Concentration | ||
Annualized Rental income percent | 0.115 | |
Annualized rental income, excluding properties classified as discontinued operations | Virginia | ||
Concentration | ||
Annualized Rental income percent | 0.106 | |
Annualized rental income, excluding properties classified as discontinued operations | District of Columbia | ||
Concentration | ||
Annualized Rental income percent | 0.103 | |
Annualized rental income, excluding properties classified as discontinued operations | Georgia | ||
Concentration | ||
Annualized Rental income percent | 0.087 | |
Annualized rental income, excluding properties classified as discontinued operations | New York | ||
Concentration | ||
Annualized Rental income percent | 0.087 | |
Annualized rental income, excluding properties classified as discontinued operations | Maryland | ||
Concentration | ||
Annualized Rental income percent | 0.074 | |
Annualized rental income, excluding properties classified as discontinued operations | Massachusetts | ||
Concentration | ||
Annualized Rental income percent | 0.057 | |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government, state governments and the United Nations | ||
Concentration | ||
Concentration risk, percentage | 92.80% | 93.20% |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government | ||
Concentration | ||
Concentration risk, percentage | 67.50% | 69.60% |
Discontinued operations | ||
Concentration | ||
Number of properties owned | property | 1 | |
Number of buildings | 1 |
Indebtedness (Details)
Indebtedness (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2015USD ($)building | Sep. 30, 2015USD ($)propertyitem$ / shares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)propertyitemloan$ / shares | Sep. 30, 2014USD ($) | Oct. 27, 2015USD ($) | Dec. 31, 2014USD ($)$ / shares | |
Indebtedness | |||||||
Unsecured revolving credit facility | $ 114,000 | $ 114,000 | |||||
Unsecured term loans | 550,000 | 550,000 | $ 550,000 | ||||
Senior Notes | 347,842 | 347,842 | 347,423 | ||||
Mortgage notes payable, including premiums | 137,569 | 137,569 | 187,694 | ||||
Total | 1,149,411 | 1,149,411 | $ 1,085,117 | ||||
Interest rate (as a percent) | 5.73% | ||||||
Maximum borrowing capacity on debt instruments may be increased under certain conditions | $ 2,500,000 | $ 2,500,000 | |||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
(Gain) loss on early extinguishment of debt | $ (34) | $ 541 | $ (34) | $ 541 | |||
Number of assumed secured mortgage loans | loan | 5 | ||||||
Aggregate net book value of secured properties | $ 200,435 | $ 200,435 | |||||
Number of properties secured by mortgage notes | property | 5 | 5 | |||||
Number of buildings secured by mortgage notes | 2 | 6 | 6 | ||||
Mortgage note repaid | $ 47,083 | ||||||
Unsecured revolving credit facility | |||||||
Indebtedness | |||||||
Unsecured revolving credit facility | $ 114,000 | $ 114,000 | $ 107,000 | ||||
Interest rate (as a percent) | 1.40% | 1.40% | |||||
Maximum borrowing capacity on revolving credit facility | $ 750,000 | $ 750,000 | |||||
Revolving credit facility, interest rate basis | LIBOR | ||||||
Option to extend the maturity date subject to certain conditions and the payment of a fee | 1 year | ||||||
Interest rate premium (as a percent) | 1.25% | ||||||
Facility fee (as a percent) | 0.25% | ||||||
The weighted average annual interest rate (as a percent) | 1.40% | 1.70% | 1.50% | 1.70% | |||
Unsecured term loan, due in 2020 | |||||||
Indebtedness | |||||||
Face amount | $ 300,000 | $ 300,000 | |||||
Unsecured term loans | $ 300,000 | $ 300,000 | $ 300,000 | ||||
Interest rate (as a percent) | 1.60% | 1.60% | |||||
Term loan, interest rate basis | LIBOR | ||||||
Interest rate premium (as a percent) | 1.40% | ||||||
The weighted average annual interest rate (as a percent) | 1.60% | 1.60% | |||||
Unsecured term loan, due in 2022 | |||||||
Indebtedness | |||||||
Face amount | $ 250,000 | $ 250,000 | |||||
Unsecured term loans | $ 250,000 | $ 250,000 | 250,000 | ||||
Interest rate (as a percent) | 2.00% | 2.00% | |||||
Term loan, interest rate basis | LIBOR | ||||||
Interest rate premium (as a percent) | 1.80% | ||||||
The weighted average annual interest rate (as a percent) | 2.00% | ||||||
Loan prepayment premium prior to November 22, 2015 (as a percent) | 2.00% | ||||||
Loan prepayment premium prior to November 21, 2016 (as a percent) | 1.00% | ||||||
Senior Unsecured Note 3.75 Percent Due In 2019 | |||||||
Indebtedness | |||||||
Face amount | $ 350 | $ 350 | |||||
Senior Notes | $ 347,842 | $ 347,842 | $ 347,423 | ||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | ||||
Unamortized fair value discount included in mortgage notes | $ 2,158 | $ 2,158 | $ 2,577 | ||||
Mortgage note payable, 5.55% interest rate, due in 2016 | |||||||
Indebtedness | |||||||
Mortgage notes payable, including premiums | $ 83,878 | $ 83,878 | $ 85,167 | ||||
Interest rate (as a percent) | 5.55% | 5.55% | 5.55% | ||||
Unamortized fair value premium included in mortgage notes | $ 878 | $ 878 | $ 2,167 | ||||
6.21% Mortgage notes due in 2016 | |||||||
Indebtedness | |||||||
Mortgage notes payable, including premiums | $ 23,586 | $ 23,586 | $ 23,833 | ||||
Interest rate (as a percent) | 6.21% | 6.21% | 6.21% | ||||
Mortgage note payable, 5.88% interest rate, due in 2021 | |||||||
Indebtedness | |||||||
Mortgage notes payable, including premiums | $ 14,215 | $ 14,215 | $ 14,374 | ||||
Interest rate (as a percent) | 5.88% | 5.88% | 5.88% | ||||
7% Mortgage notes due in 2019 | |||||||
Indebtedness | |||||||
Mortgage notes payable, including premiums | $ 9,291 | $ 9,291 | $ 9,563 | ||||
Interest rate (as a percent) | 7.00% | 7.00% | 7.00% | ||||
Unamortized fair value premium included in mortgage notes | $ 504 | $ 504 | $ 605 | ||||
8.15% Mortgage notes due in 2021 | |||||||
Indebtedness | |||||||
Mortgage notes payable, including premiums | $ 6,599 | $ 6,599 | $ 7,339 | ||||
Interest rate (as a percent) | 8.15% | 8.15% | 8.15% | ||||
Unamortized fair value premium included in mortgage notes | $ 317 | $ 317 | $ 398 | ||||
5.73% Mortgage notes due in 2015 | |||||||
Indebtedness | |||||||
Mortgage notes payable, including premiums | $ 47,418 | ||||||
Interest rate (as a percent) | 5.73% | 5.73% | 5.73% | ||||
Unamortized fair value premium included in mortgage notes | $ 0 | $ 0 | $ 177 |
Fair Value of Assets and Liab32
Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Jul. 31, 2015 | Dec. 31, 2014 |
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 137,569 | $ 187,694 | |
Senior Notes | 347,842 | 347,423 | |
Interest rate (as a percent) | 5.73% | ||
Senior Unsecured Note 3.75 Percent Due In 2019 | |||
Fair Value of Financial Instruments | |||
Senior Notes | $ 347,842 | $ 347,423 | |
Interest rate (as a percent) | 3.75% | 3.75% | |
Mortgage note payable, 5.55% interest rate, due in 2016 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 83,878 | $ 85,167 | |
Interest rate (as a percent) | 5.55% | 5.55% | |
5.73% Mortgage notes due in 2015 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 47,418 | ||
Interest rate (as a percent) | 5.73% | 5.73% | |
6.21% Mortgage notes due in 2016 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 23,586 | $ 23,833 | |
Interest rate (as a percent) | 6.21% | 6.21% | |
Mortgage note payable, 5.88% interest rate, due in 2021 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 14,215 | $ 14,374 | |
Interest rate (as a percent) | 5.88% | 5.88% | |
7% Mortgage notes due in 2019 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 9,291 | $ 9,563 | |
Interest rate (as a percent) | 7.00% | 7.00% | |
8.15% Mortgage notes due in 2021 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 6,599 | $ 7,339 | |
Interest rate (as a percent) | 8.15% | 8.15% | |
Carrying Amount | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 485,411 | $ 535,117 | |
Carrying Amount | Senior Unsecured Note 3.75 Percent Due In 2019 | |||
Fair Value of Financial Instruments | |||
Senior Notes | 347,842 | 347,423 | |
Carrying Amount | Mortgage note payable, 5.55% interest rate, due in 2016 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 83,878 | 85,167 | |
Carrying Amount | 5.73% Mortgage notes due in 2015 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 47,418 | ||
Carrying Amount | 6.21% Mortgage notes due in 2016 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 23,586 | 23,833 | |
Carrying Amount | Mortgage note payable, 5.88% interest rate, due in 2021 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 14,215 | 14,374 | |
Carrying Amount | 7% Mortgage notes due in 2019 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 9,291 | 9,563 | |
Carrying Amount | 8.15% Mortgage notes due in 2021 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 6,599 | 7,339 | |
Fair Value | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 498,388 | 548,407 | |
Fair Value | Senior Unsecured Note 3.75 Percent Due In 2019 | |||
Fair Value of Financial Instruments | |||
Senior Notes | 358,206 | 356,129 | |
Fair Value | Mortgage note payable, 5.55% interest rate, due in 2016 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 83,866 | 85,171 | |
Fair Value | 5.73% Mortgage notes due in 2015 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 48,233 | ||
Fair Value | 6.21% Mortgage notes due in 2016 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 24,400 | 25,394 | |
Fair Value | Mortgage note payable, 5.88% interest rate, due in 2021 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 14,965 | 15,249 | |
Fair Value | 7% Mortgage notes due in 2019 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | 9,885 | 10,275 | |
Fair Value | 8.15% Mortgage notes due in 2021 | |||
Fair Value of Financial Instruments | |||
Mortgage notes payable, including premiums | $ 7,066 | $ 7,956 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, $ in Thousands | Oct. 23, 2015USD ($)$ / shares | Sep. 24, 2015$ / sharesshares | Sep. 02, 2015$ / sharesshares | Aug. 24, 2015USD ($)$ / shares | May. 26, 2015USD ($)$ / shares | May. 12, 2015trustee$ / sharesshares | Feb. 26, 2015USD ($)$ / shares | Jun. 30, 2015shares | Sep. 30, 2015shares | Sep. 30, 2015shares |
Distributions | ||||||||||
Cash distribution to common shareholders (in dollars per share) | $ / shares | $ 0.43 | $ 0.43 | $ 0.43 | |||||||
Distribution paid to common shareholders | $ | $ 30,584 | $ 30,566 | $ 30,256 | $ 30,252 | ||||||
Distribution payable to common shareholders (in dollars per share) | $ / shares | $ 0.43 | |||||||||
Number of shares issued | 0 | 23,222 | ||||||||
Share Issuances | ||||||||||
Shares granted for equity compensation plan | 53,100 | 2,500 | ||||||||
Closing share price of the entity's common shares (in dollars per share) | $ / shares | $ 16.12 | $ 15.84 | $ 19.75 | |||||||
Number of trustees | trustee | 5 | |||||||||
Number of shares issued as partial payment to acquire Class A common stock of RMR Inc | 700,000 | |||||||||
Shares purchased from certain of our officers and other employees of RMR LLC | 10,721 |
Related Party Transactions - Up
Related Party Transactions - Up-C Transaction (Details) - Up C Transaction $ in Thousands | Jun. 05, 2015USD ($)trustshares | Jun. 04, 2015shares | Sep. 30, 2015shares | Sep. 30, 2015USD ($)Vote |
Related Party Transaction | ||||
Indirect economic interest in RMR LLC as a percent | 5.00% | |||
RMR LLC | ||||
Related Party Transaction | ||||
Additional consideration needed to cancel RMR Inc B-2 common stock | $ | $ 0 | |||
RMR Trust | ||||
Related Party Transaction | ||||
Direct and indirect economic interest in RMR LLC as a percent | 51.60% | |||
Voting power of outstanding capital stock of RMR Inc | 91.40% | |||
RMR Inc | Class A common shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 1,541,201 | |||
HPT | ||||
Related Party Transaction | ||||
Indirect economic interest in RMR LLC as a percent | 16.20% | |||
SIR | ||||
Related Party Transaction | ||||
Indirect economic interest in RMR LLC as a percent | 10.20% | |||
SNH | ||||
Related Party Transaction | ||||
Indirect economic interest in RMR LLC as a percent | 17.00% | |||
RMR Inc | ||||
Related Party Transaction | ||||
Aggregate consideration paid | $ | $ 3,917 | |||
Equity conversion ratio of RMR Inc class B-1 common stock | 1 | |||
Equity conversion ratio of RMR LLC class A membership units | 1 | |||
Number of other companies to whom management services were provided by related party | trust | 3 | |||
RMR Inc | Common Shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 700,000 | |||
RMR Inc | Class A common shares | ||||
Related Party Transaction | ||||
Number of votes per equity interest | Vote | 1 | |||
RMR Inc | Class B1 common shares | ||||
Related Party Transaction | ||||
Number of votes per equity interest | Vote | 10 | |||
RMR Inc | Class B2 common shares | ||||
Related Party Transaction | ||||
Number of votes per equity interest | Vote | 10 | |||
Economic interest in RMR Inc as a percent | 0.00% | |||
RMR Inc | RMR LLC | ||||
Related Party Transaction | ||||
Aggregate consideration paid | $ | $ 11,520 | |||
RMR Inc | RMR LLC | Class B member units | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 1,000,000 | |||
RMR Inc | RMR Trust | ||||
Related Party Transaction | ||||
Aggregate consideration paid | $ | $ 11,520 | |||
RMR Inc | HPT | ||||
Related Party Transaction | ||||
Aggregate consideration paid | $ | $ 12,622 | |||
RMR Inc | HPT | Common Shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 1,490,000 | |||
RMR Inc | SIR | ||||
Related Party Transaction | ||||
Aggregate consideration paid | $ | $ 15,880 | |||
RMR Inc | SIR | Common Shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 880,000 | |||
RMR Inc | SNH | ||||
Related Party Transaction | ||||
Aggregate consideration paid | $ | $ 13,967 | |||
RMR Inc | SNH | Common Shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 2,345,000 | |||
RMR LLC | RMR Trust | Class A member units | ||||
Related Party Transaction | ||||
Business acquisition related pary equity interests delivered | 15,000,000 | 30,000,000 | ||
RMR Trust | RMR Inc | Class B1 common shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 1,000,000 | |||
RMR Trust | RMR Inc | Class B2 common shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 15,000,000 | |||
HPT | RMR Inc | Class A common shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 5,019,121 | |||
SIR | RMR Inc | Class A common shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 3,166,891 | |||
SNH | RMR Inc | Class A common shares | ||||
Related Party Transaction | ||||
Shares issued in connection with acquisition | 5,272,787 | |||
Managing Trustees Barry And Adam Portnoy Member | RMR Trust | ||||
Related Party Transaction | ||||
Number of shares under lock up and registration agreement | 700,000 | |||
Period over which shares remain under lock up and registration agreement | 10 years |
Related Party Transactions - Am
Related Party Transactions - Amendment and Restatement of Management Agreements with RMR LLC (Details) - RMR LLC - Up C Transaction | 3 Months Ended |
Sep. 30, 2015 | |
Related Party Transaction | |
Number of business days notice for termination of property management agreement for convenience by the related party | 60 days |
Number of business days notice for termination of property management agreement for performance by the related party | 60 days |
Window for providing notice of termination of property management agreement for performance by the related party | 60 days |
Window for providing notice of termination of property management agreement for change of control by the related party | 12 months |
Termination fee remaining term assumption | 10 years |
Related Party Transactions - Ac
Related Party Transactions - Accounting for Investment in RMR Inc (Details) - RMR Inc - Up C Transaction - USD ($) $ in Thousands | Jun. 05, 2015 | Sep. 30, 2015 | Sep. 30, 2015 |
Related Party Transaction | |||
Amount of investment acquired | $ 17,462 | ||
Fair value of investment | $ 39,833 | ||
Initial other liabilities | $ 22,025 | $ 22,025 | |
Investment at carrying value, including transaction costs | 42,384 | $ 42,384 | |
Straight line discount amortization period | 20 years | ||
General and Administrative Expense | |||
Related Party Transaction | |||
Amortization of other liabilities to reduce business and property management fees | $ 281 | ||
Operating Expense | |||
Related Party Transaction | |||
Amortization of other liabilities to reduce business and property management fees | $ 346 | ||
Class A common shares | |||
Related Party Transaction | |||
Number of shares aquired | 1,541,201 |
Related Party Transactions - RM
Related Party Transactions - RMR LLC Management Fees and Reimbursements (Details) - USD ($) $ in Thousands | Sep. 24, 2015 | Sep. 02, 2015 | May. 12, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Related Party Transaction | |||||||
Number of shares issued | 0 | 23,222 | |||||
Number of shares granted to each trustee under the award plan | 53,100 | 2,500 | |||||
Shares purchased from certain of our officers and other employees of RMR LLC | 10,721 | ||||||
RMR LLC | |||||||
Related Party Transaction | |||||||
Business management fees | $ 2,438 | $ 2,643 | $ 7,482 | $ 7,578 | |||
Incentive fees payable | $ 0 | 0 | $ 0 | $ 0 | |||
Number of shares issued | 19,339 | 27,103 | |||||
Base business management fee payable in cash (as a percent) | 100.00% | 100.00% | |||||
Property management and construction supervision fees | $ 1,930 | 2,095 | $ 5,861 | $ 6,034 | |||
Related party reimbursement expenses | 3,011 | 2,312 | $ 8,478 | $ 6,332 | |||
Number of shares granted to each trustee under the award plan | 53,100 | 51,150 | |||||
Accrual for RMR LLC employee share grants | $ 292 | $ 508 | $ 725 | $ 973 | |||
Certain Our Officers And Employees Of RMR LLC | |||||||
Related Party Transaction | |||||||
Shares purchased from certain of our officers and other employees of RMR LLC | 10,721 |
Related Party Transactions - RE
Related Party Transactions - REITs, for which RMR LLC provides Management Services (Details) $ in Thousands | Mar. 05, 2015shares | Mar. 04, 2015USD ($)shares | Aug. 31, 2015USD ($)company | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)shares | Sep. 30, 2014USD ($) | Feb. 28, 2015 | Dec. 31, 2014USD ($) |
Related Party Transaction | ||||||||||
Investment at carrying value | $ 511,872 | $ 511,872 | $ 680,137 | |||||||
Recognized income (loss) related to investment | 10,294 | $ 4,910 | 16,072 | $ 4,931 | ||||||
Equity in unrealized loss of investees | (355) | (45) | (166) | (3) | ||||||
RMR LLC | ||||||||||
Related Party Transaction | ||||||||||
Rental income earned | $ 111 | 14 | $ 278 | 47 | ||||||
Number of entities to whom RMR provides management services | company | 5 | |||||||||
Aggregate coverage of combined directors' and officers' liability insurance policy purchased by the related party | $ 10,000 | |||||||||
Aggregate additional coverage of combined directors' and officers' liability insurance policy purchased by the related party | 20,000 | |||||||||
Non-indemnifiable coverage of combined directors' and officers' liability insurance policy purchased by the related party | 5,000 | |||||||||
Premium paid for combined directors' and officers' liability insurance policy | $ 338 | |||||||||
SIR | ||||||||||
Related Party Transaction | ||||||||||
Percentage of interest | 27.90% | 27.90% | 3.90% | |||||||
SIR Common shares of beneficial interest acquired pursuant to stock purchase agreement | shares | 24,918,421 | |||||||||
Period of standstill provision pursuant to which the counterparty agreed not to make unsolicited proposals to acquire entities as specified | 50 years | |||||||||
SIR | Lakewood Capital Partners LP | ||||||||||
Related Party Transaction | ||||||||||
Number shares purchased under shareholder agreement | shares | 3,418,421 | |||||||||
Cash purchase price | $ 95,203 | |||||||||
SIR | Barry Portnoy | Lakewood Capital Partners LP | ||||||||||
Related Party Transaction | ||||||||||
Number shares purchased under shareholder agreement | shares | 2,429 | 107,606 | ||||||||
SIR | Adam Portnoy | Lakewood Capital Partners LP | ||||||||||
Related Party Transaction | ||||||||||
Number shares purchased under shareholder agreement | shares | 2,429 | 87,606 | ||||||||
AIC | ||||||||||
Related Party Transaction | ||||||||||
Investment at carrying value | $ 6,926 | $ 6,926 | ||||||||
Recognized income (loss) related to investment | (24) | 38 | 70 | 59 | ||||||
Equity in unrealized loss of investees | $ (72) | $ (33) | $ (91) | $ 8 | ||||||
Combined property insurance policy | 3 years | |||||||||
Coverage of purchased property insurance | $ 500,000 | |||||||||
Combined property terror insurance policy | 1 year | |||||||||
Coverage of purchased property terror insurance | $ 200,000 | |||||||||
Premium for property insurance | $ 1,277 |
Equity Investment in Select I39
Equity Investment in Select Income REIT (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Equity Investment in Select Income REIT | |||||||
Investment at carrying value | $ 511,872 | $ 511,872 | $ 680,137 | ||||
Costs related to acquisition | 270 | $ 110 | 459 | $ 1,290 | |||
Income (Loss) from Equity Method Investments | 10,294 | 4,910 | 16,072 | 4,931 | |||
Loss on issuance of shares by SIR | (21) | (39) | (42,145) | (39) | |||
Loss on impairment of SIR investment | (203,297) | ||||||
Gain (Loss) on Disposition of Stock in Subsidiary or Equity Method Investee | (21) | (39) | (42,145) | (39) | |||
Proceeds from Equity Method Investment, Dividends or Distributions | 18,850 | 7,509 | |||||
Equity Method Investment Summarized Balance Sheet Information Abstract | |||||||
Real estate properties, net | 1,440,860 | 1,440,860 | 1,462,689 | ||||
Properties held for sale | 3,079 | 3,079 | 32,797 | ||||
Acquired real estate leases, net | 125,898 | 125,898 | 150,080 | ||||
Cash and cash equivalents | 11,306 | 4,928 | 11,306 | 4,928 | 13,791 | $ 7,663 | |
Rents receivable, net | 40,923 | 40,923 | 36,239 | ||||
Other assets, net | 56,104 | 56,104 | 12,205 | ||||
Total assets | 2,227,038 | 2,227,038 | 2,427,615 | ||||
Revolving credit facility | 114,000 | 114,000 | |||||
Term loan | 550,000 | 550,000 | 550,000 | ||||
Senior notes | 347,842 | 347,842 | 347,423 | ||||
Mortgage notes payable, including premiums | 137,569 | 137,569 | 187,694 | ||||
Assumed real estate lease obligations, net | 13,513 | 13,513 | 15,924 | ||||
Other Liabilities | 48,747 | 48,747 | 26,471 | ||||
Shareholders' equity | 1,013,444 | 1,013,444 | 1,297,449 | ||||
Total liabilities and shareholders' equity | 2,227,038 | 2,227,038 | 2,427,615 | ||||
Income Statements: | |||||||
Total revenues | 62,092 | 64,158 | 186,864 | 186,406 | |||
Depreciation and amortization | 17,161 | 17,636 | 51,675 | 49,254 | |||
Acquisition related costs | 270 | 110 | 459 | 1,290 | |||
General and administrative | 3,714 | 4,329 | 11,431 | 11,537 | |||
Total expenses | 46,355 | 47,730 | 136,831 | 133,360 | |||
Operating income | 15,737 | 16,428 | 50,033 | 53,046 | |||
Interest expense | (9,137) | (8,845) | (27,894) | (18,530) | |||
Gain (Loss) on early extinguishment of Debt | 34 | (541) | 34 | (541) | |||
(Loss) income from continuing operations before income tax expense and equity in earnings of investees | 6,615 | 7,013 | (223,255) | 34,004 | |||
Income tax expense | (13) | 7 | 49 | 130 | |||
Equity in earnings (losses) of investees | $ 10,294 | $ 4,910 | $ 16,072 | $ 4,931 | |||
Weighted average common shares outstanding (basic) (in shares) | 71,004,000 | 65,481,000 | 70,589,000 | 58,300,000 | |||
Weighted average common shares outstanding (diluted) (in shares) | 71,021,000 | 65,568,000 | 70,589,000 | 58,385,000 | |||
SIR | |||||||
Equity Investment in Select Income REIT | |||||||
Equity investments, common shares owned | 24,918,421 | 24,918,421 | |||||
Equity Method Investment, Ownership Percentage | 27.90% | 27.90% | |||||
Amortization of the difference between carrying value and share of underlying equity | $ 0 | $ 2,637 | $ 4,742 | $ 2,637 | |||
Income (Loss) from Equity Method Investments | 8,425 | 18,850 | |||||
The amount of investment in exceed the underlying equity of the investee | 166,272 | 166,272 | |||||
Difference in basis to be amortized over remaining period | (95,035) | (95,035) | |||||
Amortization of the difference between carrying value and share of underlying equity upon recording loss on impairment | 1,893 | 1,893 | |||||
Proceeds from Equity Method Investment, Dividends or Distributions | 12,459 | 10,320 | 34,571 | 10,320 | |||
Income Statements: | |||||||
Equity in earnings (losses) of investees | $ 8,425 | $ 18,850 | |||||
Gain on sale of property | $ 116 | $ 116 | |||||
Basic net income attributable to SIR per common share (in dollars per share) | $ 0.34 | $ 0.40 | $ 0.74 | $ 1.45 | |||
SIR | SIR | |||||||
Equity Investment in Select Income REIT | |||||||
Costs related to acquisition | $ 402 | $ 5,365 | $ 21,720 | $ 5,739 | |||
Income (Loss) from Equity Method Investments | $ (25) | 38 | $ 70 | 59 | |||
Number of common shares issued during period | 45,389 | 29,414,279 | |||||
Loss on issuance of shares by SIR | $ 21 | $ 42,145 | |||||
Loss on impairment of SIR investment | $ 203,297 | ||||||
Gain (Loss) on Disposition of Stock in Subsidiary or Equity Method Investee | 21 | 42,145 | |||||
Equity Method Investment Summarized Balance Sheet Information Abstract | |||||||
Real estate properties, net | 3,894,684 | 3,894,684 | 1,772,510 | ||||
Properties held for sale | 67,250 | 67,250 | |||||
Acquired real estate leases, net | 558,027 | 558,027 | 120,700 | ||||
Cash and cash equivalents | 25,247 | 25,247 | 13,504 | ||||
Rents receivable, net | 91,506 | 91,506 | 68,385 | ||||
Other assets, net | 124,933 | 124,933 | 18,132 | ||||
Total assets | 4,761,647 | 4,761,647 | 1,993,231 | ||||
Revolving credit facility | 305,000 | 305,000 | 77,000 | ||||
Term loan | 350,000 | 350,000 | 350,000 | ||||
Senior notes | 1,435,095 | 1,435,095 | |||||
Mortgage notes payable, including premiums | 286,945 | 286,945 | 18,816 | ||||
Assumed real estate lease obligations, net | 92,536 | 92,536 | 26,475 | ||||
Other Liabilities | 119,267 | 119,267 | 40,493 | ||||
Noncontrolling interest | 3,270 | 3,270 | |||||
Shareholders' equity | 2,169,534 | 2,169,534 | 1,480,447 | ||||
Total liabilities and shareholders' equity | 4,761,647 | 4,761,647 | $ 1,993,231 | ||||
Income Statements: | |||||||
Rental income | 94,745 | 48,523 | 267,389 | 142,051 | |||
Tenant Reimbursements And Other Real Estate Revenue | 17,197 | 8,177 | 46,182 | 24,234 | |||
Total revenues | 111,942 | 56,700 | 313,571 | 166,285 | |||
Operating expenses | 21,184 | 10,282 | 57,368 | 30,246 | |||
Depreciation and amortization | 33,070 | 10,653 | 90,179 | 30,442 | |||
Acquisition related costs | 402 | 5,365 | 21,720 | 5,739 | |||
General and administrative | 6,328 | 3,749 | 19,488 | 11,123 | |||
Total expenses | 60,984 | 30,049 | 188,755 | 77,550 | |||
Operating income | 50,958 | 26,651 | 124,816 | 88,735 | |||
Interest expense | (20,034) | (3,033) | (53,710) | (10,025) | |||
Gain (Loss) on early extinguishment of Debt | (6,845) | 243 | |||||
(Loss) income from continuing operations before income tax expense and equity in earnings of investees | 30,924 | 23,618 | 64,261 | 78,953 | |||
Income tax expense | (98) | (30) | (324) | (120) | |||
Equity in earnings (losses) of investees | (25) | 38 | 70 | 59 | |||
Net income | 30,801 | 23,742 | 64,007 | 79,008 | |||
Net loss allocated to noncontrolling interest | (46) | (135) | |||||
Net Income (Loss) Attributable to Parent | $ 30,755 | $ 23,742 | $ 63,872 | $ 79,008 | |||
Weighted average common shares outstanding (basic) (in shares) | 89,267,000 | 59,857,000 | 85,827,000 | 54,642,000 | |||
Weighted average common shares outstanding (diluted) (in shares) | 89,274,000 | 59,910,000 | 85,837,000 | 54,688,000 | |||
Diluted net income attributable to SIR per common share (in dollars per share) | $ 0.34 | $ 0.40 | $ 0.74 | $ 1.44 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Segment Information. | |||||
Rental income | $ 62,092 | $ 64,158 | $ 186,864 | $ 186,406 | |
Number of segments | item | 2 | ||||
Expenses: | |||||
Real Estate Tax Expense | 7,735 | 7,027 | $ 22,819 | 21,005 | |
Utility expenses | 5,194 | 5,327 | 13,788 | 15,072 | |
Other operating expenses | 12,281 | 11,685 | 36,659 | 33,586 | |
Depreciation and amortization | 17,161 | 17,636 | 51,675 | 49,254 | |
Loss on impairment of real estate | 1,616 | 1,616 | |||
Acquisition related costs | 270 | 110 | 459 | 1,290 | |
General and administrative | 3,714 | 4,329 | 11,431 | 11,537 | |
Total expenses | 46,355 | 47,730 | 136,831 | 133,360 | |
Operating income | 15,737 | 16,428 | 50,033 | 53,046 | |
Interest and other income | 2 | 10 | 14 | 68 | |
Interest expense | (9,137) | (8,845) | (27,894) | (18,530) | |
Gain (Loss) on early extinguishment of Debt | 34 | (541) | 34 | (541) | |
Loss on issuance of shares by SIR | (21) | (39) | (42,145) | (39) | |
Loss on impairment of SIR investment | (203,297) | ||||
Income (loss) from continuing operations before income taxes and equity in earnings of investees | 6,615 | 7,013 | (223,255) | 34,004 | |
Income tax benefit (expense) | 13 | (7) | (49) | (130) | |
Equity in earnings (losses) of investees | 10,294 | 4,910 | 16,072 | 4,931 | |
Income (loss) from continuing operations | 16,922 | 11,916 | (207,232) | 38,805 | |
Income (loss) from discontinued operations | (11) | 706 | (390) | 3,615 | |
Net income (loss) | 16,911 | 12,622 | (207,622) | 42,420 | |
Total assets | 2,227,038 | 2,227,038 | $ 2,427,615 | ||
Operating Segments | Investment in Real Estate | |||||
Segment Information. | |||||
Rental income | 62,092 | 64,158 | 186,864 | 186,406 | |
Expenses: | |||||
Real Estate Tax Expense | 7,735 | 7,027 | 22,819 | 21,005 | |
Utility expenses | 5,194 | 5,327 | 13,788 | 15,072 | |
Other operating expenses | 12,281 | 11,685 | 36,659 | 33,586 | |
Depreciation and amortization | 17,161 | 17,636 | 51,675 | 49,254 | |
Loss on impairment of real estate | 1,616 | 1,616 | |||
Acquisition related costs | 270 | 110 | 459 | 1,070 | |
Total expenses | 42,641 | 43,401 | 125,400 | 121,603 | |
Operating income | 19,451 | 20,757 | 61,464 | 64,803 | |
Interest expense | (1,727) | (2,326) | (21,618) | (13,029) | |
Gain (Loss) on early extinguishment of Debt | 34 | 34 | |||
Income (loss) from continuing operations before income taxes and equity in earnings of investees | 17,758 | 18,431 | 39,880 | 51,774 | |
Income (loss) from continuing operations | 17,758 | 18,431 | 39,880 | 51,774 | |
Income (loss) from discontinued operations | (11) | 706 | (390) | 3,615 | |
Net income (loss) | 17,747 | 19,137 | 39,490 | 55,389 | |
Total assets | 1,643,834 | 1,643,834 | 1,714,130 | ||
Operating Segments | Investment in SIR | |||||
Expenses: | |||||
Loss on issuance of shares by SIR | (21) | (39) | (42,145) | (39) | |
Loss on impairment of SIR investment | (203,297) | ||||
Income (loss) from continuing operations before income taxes and equity in earnings of investees | (21) | (39) | (245,442) | (39) | |
Equity in earnings (losses) of investees | 10,318 | 4,872 | 16,002 | 4,872 | |
Income (loss) from continuing operations | 10,297 | 4,833 | (229,440) | 4,833 | |
Net income (loss) | 10,297 | 4,833 | (229,440) | 4,833 | |
Total assets | 511,872 | 511,872 | 680,137 | ||
Corporate, Non-Segment | |||||
Expenses: | |||||
Acquisition related costs | 220 | ||||
General and administrative | 3,714 | 4,329 | 11,431 | 11,537 | |
Total expenses | 3,714 | 4,329 | 11,431 | 11,757 | |
Operating income | (3,714) | (4,329) | (11,431) | (11,757) | |
Interest and other income | 2 | 10 | 14 | 68 | |
Interest expense | (7,410) | (6,519) | (6,276) | (5,501) | |
Gain (Loss) on early extinguishment of Debt | (541) | (541) | |||
Income (loss) from continuing operations before income taxes and equity in earnings of investees | (11,122) | (11,379) | (17,693) | (17,731) | |
Income tax benefit (expense) | 13 | (7) | (49) | (130) | |
Equity in earnings (losses) of investees | (24) | 38 | 70 | 59 | |
Income (loss) from continuing operations | (11,133) | (11,348) | (17,672) | (17,802) | |
Net income (loss) | (11,133) | $ (11,348) | (17,672) | $ (17,802) | |
Total assets | $ 71,332 | $ 71,332 | $ 33,348 |