Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 26, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Government Properties Income Trust | |
Entity Central Index Key | 1,456,772 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
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 | 71,138,808 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Real estate properties: | ||
Land | $ 257,746 | $ 253,058 |
Buildings and improvements | 1,518,845 | 1,443,074 |
Total real estate properties, gross | 1,776,591 | 1,696,132 |
Accumulated depreciation | (275,401) | (255,879) |
Total real estate properties, net | 1,501,190 | 1,440,253 |
Equity investment in Select Income REIT | 492,762 | 491,369 |
Assets of discontinued operations | 12,482 | 12,468 |
Assets of property held for sale | 3,095 | 3,098 |
Acquired real estate leases, net | 113,230 | 118,267 |
Cash and cash equivalents | 9,021 | 8,785 |
Restricted cash | 344 | 1,022 |
Rents receivable, net | 46,592 | 45,269 |
Deferred leasing costs, net | 20,214 | 14,299 |
Other assets, net | 52,280 | 33,680 |
Total assets | 2,251,210 | 2,168,510 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Unsecured revolving credit facility | 117,000 | |
Unsecured term loans, net | 546,830 | 546,490 |
Senior unsecured notes, net | 646,272 | 345,809 |
Mortgage notes payable, net | 28,655 | 136,299 |
Liabilities of discontinued operations | 83 | 54 |
Liabilities of property held for sale | 12 | 43 |
Accounts payable and other liabilities | 56,687 | 50,543 |
Due to related persons | 3,578 | 2,886 |
Assumed real estate lease obligations, net | 11,881 | 12,735 |
Total liabilities | 1,293,998 | 1,211,859 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common shares of beneficial interest, $.01 par value: 100,000,000 shares authorized, 71,138,808 and 71,126,308 shares issued and outstanding, respectively | 711 | 711 |
Additional paid in capital | 1,472,754 | 1,472,482 |
Cumulative net income | 72,686 | 38,486 |
Cumulative other comprehensive income (loss) | 12,391 | (14,867) |
Cumulative common distributions | (601,330) | (540,161) |
Total shareholders' equity | 957,212 | 956,651 |
Total liabilities and shareholders' equity | $ 2,251,210 | $ 2,168,510 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
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 | 71,138,808 | 71,126,308 |
Common shares of beneficial interest, shares outstanding | 71,138,808 | 71,126,308 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Rental income | $ 64,061 | $ 62,113 | $ 127,672 | $ 124,772 |
Expenses: | ||||
Real estate taxes | 7,566 | 7,674 | 15,219 | 15,084 |
Utility expenses | 3,673 | 4,001 | 7,847 | 8,572 |
Other operating expenses | 13,266 | 12,190 | 26,177 | 24,400 |
Depreciation and amortization | 17,985 | 17,299 | 36,309 | 34,514 |
Acquisition related costs | 64 | 183 | 216 | 189 |
General and administrative | 4,008 | 3,713 | 7,534 | 7,717 |
Total expenses | 46,562 | 45,060 | 93,302 | 90,476 |
Operating income | 17,499 | 17,053 | 34,370 | 34,296 |
Dividend income | 363 | 363 | ||
Interest income | 10 | 16 | 12 | |
Interest expense (including net amortization of debt premiums and discounts and debt issuance costs of $747, $328, $1,219 and $660, respectively) | (10,314) | (9,455) | (19,678) | (18,757) |
Gain on early extinguishment of debt | 104 | |||
Gain (loss) on issuance of shares by Select Income REIT | 16 | (1,353) | 16 | (42,124) |
Loss on impairment of Select Income REIT investment | (203,297) | (203,297) | ||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 7,574 | (197,052) | 15,191 | (229,870) |
Income tax expense | (35) | (32) | (50) | (62) |
Equity in earnings of investees | 9,400 | 6,094 | 19,334 | 5,778 |
Income (loss) from continuing operations | 16,939 | (190,990) | 34,475 | (224,154) |
Loss from discontinued operations | (126) | (173) | (275) | (379) |
Net income (loss) | 16,813 | (191,163) | 34,200 | (224,533) |
Other comprehensive income | ||||
Unrealized gain on investment in available for sale securities | 7,237 | 20,108 | ||
Equity in unrealized gain of investees | 2,606 | 131 | 7,150 | 189 |
Other comprehensive income | 9,843 | 131 | 27,258 | 189 |
Comprehensive income (loss) | $ 26,656 | $ (191,032) | $ 61,458 | $ (224,344) |
Weighted average common shares outstanding (basic) (in shares) | 71,038 | 70,485 | 71,034 | 70,377 |
Weighted average common shares outstanding (diluted) (in shares) | 71,061 | 70,485 | 71,046 | 70,377 |
Per common share amounts (basic and diluted): | ||||
Income (loss) from continuing operations (in dollars per share) | $ 0.24 | $ (2.71) | $ 0.49 | $ (3.19) |
Loss from discontinued operations | (0.01) | |||
Net income (loss) (in dollars per share) | $ 0.24 | $ (2.71) | $ 0.48 | $ (3.19) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net amortization of debt premiums and discounts and deferred financing fees | $ 747 | $ 328 | $ 1,219 | $ 660 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 34,200 | $ (224,533) |
Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||
Depreciation | 20,781 | 19,363 |
Net amortization of debt premiums and discounts and debt issuance costs | 1,219 | 660 |
Gain on early extinguishment of debt | (104) | |
Straight line rental income | (584) | (2,207) |
Amortization of acquired real estate leases | 14,842 | 14,617 |
Amortization of deferred leasing costs | 1,475 | 1,087 |
Other non-cash (income) expense, net | 302 | 1,057 |
Equity in earnings of investees | (19,334) | (5,778) |
(Gain) loss on issuance of shares by Select Income REIT | (16) | 42,124 |
Loss on impairment of Select Income REIT investment | 203,297 | |
Distributions of earnings from Select Income REIT | 17,760 | 10,425 |
Change in assets and liabilities: | ||
Restricted cash | 678 | (174) |
Deferred leasing costs | (3,409) | (2,123) |
Rents receivable | 1,428 | 539 |
Other assets | 1,120 | 2,027 |
Accounts payable and accrued expenses | 971 | 1,491 |
Due to related persons | 692 | 983 |
Net cash provided by operating activities | 72,021 | 62,855 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions and deposits | (79,285) | (1,400) |
Real estate improvements | (14,149) | (5,386) |
Investment in Select Income REIT | (95,821) | |
Investment in The RMR Group Inc. | (6,468) | |
Distributions in excess of earnings from Select Income REIT | 7,158 | 11,687 |
Proceeds from sale of properties, net | 30,520 | |
Net cash used in investing activities | (86,276) | (66,868) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of mortgage notes payable | (107,202) | (1,203) |
Proceeds from issuance of senior unsecured notes | 310,000 | |
Borrowings on unsecured revolving credit facility | 229,000 | 100,000 |
Repayments on unsecured revolving credit facility | (346,000) | (41,000) |
Payment of debt issuance costs | (10,138) | (16) |
Distributions to common shareholders | (61,169) | (60,508) |
Net cash provided by (used in) financing activities | 14,491 | (2,727) |
Increase (decrease) in cash and cash equivalents | 236 | (6,740) |
Cash and cash equivalents at beginning of period | 8,785 | 13,791 |
Cash and cash equivalents at end of period | 9,021 | 7,051 |
Supplemental cash flow information: | ||
Interest paid | 17,343 | 17,980 |
Income taxes paid | 76 | $ 78 |
Interest capitalized | $ 9 | |
Non-cash investing activities: | ||
Investment in The RMR Group Inc. paid in common shares | 13,836 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
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 GOV, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2015, or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year’s presentation. The preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include purchase price allocations, useful lives of fixed assets, impairment of real estate and equity method investments and the valuation of intangible assets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2016 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 2. Recent Accounting Pronouncements On January 1, 2016, we adopted the Financial Accounting Standards Board, or FASB, 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. The implementation of this update did not have an impact on our condensed consolidated financial statements. On January 1, 2016, we adopted FASB 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, and FASB 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. The implementation of these updates resulted in the reclassification of certain of our capitalized debt issuance costs as an offset to the associated debt liability in our condensed consolidated balance sheets. The classification of capitalized debt issuance costs related to our unsecured revolving credit facility remains unchanged in accordance with ASU No. 2015-15. As of December 31, 2015, debt issuance costs related to our unsecured term loans, senior unsecured notes and mortgage notes payable of $3,510 , $2,172 and $344 , respectively, were reclassified from assets to the associated debt liability in our condensed consolidated balance sheets. On January 1, 2016, we adopted FASB 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 they would have recorded in previous periods if the accounting had been completed at the acquisition date. The implementation of this update did not have an impact on our condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. Under this ASU, these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale equity investments we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have on our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU No. 2016-09 is effective for reporting periods beginning after December 15, 2016. We are currently assessing the potential impact that the adoption of ASU No. 2016-09 will have on our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will become effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact that adoption of ASU No. 2016-13 will have on our condensed consolidated financial statements. |
Weighted Average Common Shares
Weighted Average Common Shares | 6 Months Ended |
Jun. 30, 2016 | |
Weighted Average Common Shares | |
Weighted Average Common Shares | Note 3. Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): For the Three Months For the Six Months Ended June 30, Ended June 30, 2016 2015 2016 2015 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 | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate Properties | |
Real Estate Properties | Note 4. Real Estate Properties As of June 30, 2016 , we owned 72 properties ( 92 buildings), with an undepreciated carrying value of $1,779,937 , excluding one property ( one building) classified as discontinued operations with an undepreciated carrying value of $12,260 . We generally lease space at our properties on a gross lease or modified gross lease basis pursuant to fixed term operating leases expiring between 2016 and 20 32 . Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the three months ended June 30, 201 6, we entered into 15 leases for 566,640 rentable square feet, for a weighted (by rentable square feet) average lease term of 10. 1 years and we made commitments for approximately $11,136 of leasing related costs. During the six months ended June 30, 2016, we entered into 35 leases for 1,089,602 rentable square feet, including a 25,579 square foot expansion to be constructed at an existing property, for a weighted (by rentable square feet) average lease term of 10. 8 years and we made commitments for approximately $31,605 of leasing related costs. As of June 30, 2016, we have estimated unspent leasing related obligations of $23,89 1 and have committed to redevelop and expand an existing property at an estimated cost of approximately $12,800 . Acquisition Activities During the six months ended June 30, 2016, we acquired one office property (one building ) located in Sacramento, CA with 337,811 rentable square feet. This property was 86% leased, of which 71% was leased to the State of California and occupied by three separate agencies, on the date of acquisition. The purchase price was $79,2 35 , excluding acquisition costs. Our allocation of the purchase price of this acquisition based on the estimated fair values of the acquired assets and assumed liabilities is presented in the table below . The allocation of purchase price is based on preliminary estimates and may change upon the completion of (i) third party valuations and (ii) our analysis of acquired in place leases and land and building valuations. Number of Buildings Other Acquired Acquisition Properties/ Square Purchase and Assumed Acquired Lease Date Location Type Buildings Feet Price Land Improvements Assets Leases Obligations January 2016 Sacramento, CA Office 1 / 1 $ $ $ $ $ $ On July 6, 2016, we acquired certain land we leased from a third party at one of our properties in Atlanta, GA for $1,623 , excluding acquisition costs. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives. Disposition Activities – Continuing Operations On July 22, 2016, we sold an office property ( one building ) in Savannah, GA with 35,228 rentable square feet and a net book value of $3,071 at June 30, 2016 for $4,000 , excluding closing costs. In connection with this sale, we provided $3,600 of mortgage financing to the buyer. The mortgage note requires interest to be paid at an annual rate of LIBOR plus 4.0%, subject to a minimum annual interest rate of 5.0%, and requires monthly payments of interest only until maturity on June 30, 2021. We have classified this property as held for sale as of June 30, 2016. 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: June 30, December 31, 2016 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 March 2016, we entered into an agreeme nt to sell an office property ( one building) in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,282 at June 30, 2016. The contract sales price, as amended in June 2016, is $13,000 , excluding closing costs. This sale is subject to conditions, including the purchaser obtaining certain zoning entitlements, and is currently expected to occur in the first quarter of 2017. We can provide no assurance that the sale of this property will occur, that the sale will not be delayed or that its terms will not change. We have classified this property, which was held for sale prior to our adoption of FASB ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, as a discontinued operation in our condensed consolidated financial statements. Summarized balance sheet and income statement information for the property is as follows: Balance Sheets June 30, December 31, 2016 2015 Real estate properties, net $ $ Other assets Assets of discontinued operations $ $ Other liabilities $ $ Liabilities of discontinued operations $ $ Statements of Operations Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Rental income $ $ $ $ Real estate taxes Utility expenses Other operating expenses General and administrative Loss from discontinued operations $ $ $ $ |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2016 | |
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 the legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of early terminations to be remote contingencies based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis. We increased rental income to record revenue on a straight line basis by $435 and $ 1,544 for the three months ended June 30, 201 6 and 2015, respectively, and $584 and $2,207 for the six months ended June 30, 201 6 and 2015, respectively. Rents receivable include $19,579 and $18,995 of straight line rent receivables at June 30, 2016 and December 31, 2015, respectively. |
Concentration
Concentration | 6 Months Ended |
Jun. 30, 2016 | |
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 three other government tenants combined were responsible for approximately 92. 7 % and 92.8% of our annualized rental income, excluding one property ( one building) classified as discontinued operations, as of June 30, 201 6 and 2015, respectively. The U.S. Government is our largest tenant by annualized rental income and was responsible for approximately 64. 1 % and 67.7% of our annualized rental income, excluding one property classified as discontinued operations, as of June 30, 2016 and 2015, respectively. Geographic Concentration At June 30, 201 6 , our 72 properties ( 92 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 14. 7 % , 10. 0 % , 9. 9 % , 9. 2 % , 8. 1 % , 7. 6 % and 5. 3 % of our annualized rental income as of June 30, 201 6 , respectively. |
Indebtedness
Indebtedness | 6 Months Ended |
Jun. 30, 2016 | |
Indebtedness | |
Indebtedness | Note 7. Indebtedness Our principal debt obligations at June 30, 2016 were: (1) $550,000 aggregate outstanding principal amount of term loans; (2) an aggregate outstanding principal amount of $660,000 of public issuances of senior unsecured notes; and (3) $28,238 aggregate principal amount of mortgage notes. 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 other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity. We are required to pay interest at a rate of LIBOR plus a premium, which was 125 basis points per annum at June 30, 2016, on borrowings under our revolving credit facility. We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2016. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of June 30, 201 6 , the annual interest rate payable on borrowings under our revolving credit facility was 1.7% and the weighted average annual interest rate for borrowings under our revolving credit facility was 1.7% for both the three and six months ended June 30, 201 6 and 1.4% and 1.6% , respectively, for the three and six months ended June 30, 2015 . As of both June 30, 201 6 and July 26 , 2016, we had no amounts outstanding under our revolving credit facility. Our $300,000 unsecured term loan, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at June 30, 2016, on the amount outstanding under our $300,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 201 6 , the annual interest rate for the amount outstanding under our $300,000 term loan was 1.9% . The weighted average annual interest rate under our $300,000 term loan was 1.8% and 1.6% , respectively, for the three and six months ended June 30, 201 6 and 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 on or prior 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. We are required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum as of June 30, 2016, on the amount outstanding under our $250,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of June 30, 201 6 , the annual interest rate for the amount outstanding under our $250,000 term loan was 2.3 % . The weighted average annual interest rate under our $250,000 term loan was 2.2% and 2.0% , respectively, for the three and six months ended June 30, 201 6 and 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. In May 2016, we issued $300,000 of 5.875% senior unsecured notes due 2046 in an underwritten public offering. In June 2016, the underwriters exercised an option to purchase an additional $10,000 of these notes. The net proceeds from this offering of $299,892 , after offering expenses, were used to repay all amounts then outstanding under our revolving credit facility and for general business purposes. These notes require quarterly payments of interest only through maturity and may be repaid at par (plus accrued and unpaid interest) on or after May 26, 2021. Our $350,000 of 3.75% senior unsecured notes due 2019 require semi-annual payments of interest only through maturity and may be repaid at par (plus accured and unpaid interest) on or after July 15, 2019 or before that date together with a make whole premium. Both issuances of our senior notes are governed by an indenture and its supplements. Our credit agreement and senior notes indenture and its supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC, or RMR LLC, ceasing to act as our business manager and property manager. Our credit agreement and our senior notes indenture and its supplement s also contain a number of covenants, including covenants that restrict our ability to incur debts, require us to maintain certain financial ratios and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior notes indenture and its supplements at June 30, 2016 . In February 2016, we repaid, at par, a $23,473 mortgage note requiring annual interest of 6.21% which was secured by one office property ( one building) located in Landover, MD. This mortgage note was scheduled to mature in August 2016. We recorded a loss on extinguishment of debt of $21 in the six months ended June 30, 2016, which represented unamortized debt issuance costs related to this note. In March 2016, we repaid, at par, an $83,000 mortgage note requiring annual interest of 5.55% which was secured by one office property ( two buildings) located in Reston, VA. This mortgage note was scheduled to mature in April 2016. We recorded a gain on extinguishment of debt of $125 in the six months ended June 30, 2016, which represented the net unamortized debt premium and debt issuance costs related to this note. At June 30, 201 6 , t hree of our properties ( three buildings) with an aggregate net book value of $53,927 secured three mortgage notes with an aggregate principal amount of $28,238 . 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 | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value of Assets and Liabilities | |
Fair Value of Assets and Liabilities | Note 8. Fair Value of Assets and Liabilities The table below presents certain of our assets measured at fair value at June 30, 2016, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Fair Value at Reporting Date Using Quoted Prices in Significant Estimated Active Markets for Significant Other Unobservable Fair Identical Assets Observable Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements Assets: Investment in RMR Inc. (1) $ $ 37,605 $ — $ — Non-Recurring Fair Value Measurements Assets: Property held for sale and classified as discontinued operations (2) $ $ — $ — $ (1) Our 1,214,225 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $26,888 as of June 30, 2016. The net unrealized gain of $10,717 for these shares as of June 30, 2016 is included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. (2) We estimated the fair value of this property at June 30 , 2016 based upon broker estimates of value less estimated sale costs (Level 3 inputs as defined in the fair value hierarchy under GAAP). In addition to the assets described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, accounts payable, a revolving credit facility, term loans, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At June 30, 201 6 and December 31, 2015, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows: As of June 30, 2016 As of December 31, 2015 Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ $ $ $ Senior unsecured notes, 5.875% interest rate, due in 2046 — — Mortgage note payable, 6.21% interest rate, due in 2016 (2) (3) — — Mortgage note payable, 5.55% interest rate, due in 2016 (2) (4) — — Mortgage note payable, 5.88% interest rate, due in 2021 (2) Mortgage note payable, 7.00% interest rate, due in 2019 (2) Mortgage note payable, 8.15% interest rate, due in 2021 (2) $ $ $ $ (1) Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts. (2) We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. (3) This mortgage note was repaid, at par, in February 2016. (4) This mortgage note was repaid, at par, in March 2016. 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 | 6 Months Ended |
Jun. 30, 2016 | |
Shareholders' Equity | |
Shareholders' Equity | Note 9. Shareholders’ Equity Distributions On February 25, 2016, we paid a regular quarterly distribution to common shareholders of record on January 22, 2016 of $0.43 per share, or $30 , 584 . On May 23, 2016, we paid a regular quarterly distribution to common shareholders of record on April 25, 2016 of $0.43 per share, or $30,585 . On July 12, 2016, we declared a regular quarterly distribution payable to common shareholders of record on July 22, 2016 of $0.43 per share, or $30,590 . We expect to pay this amount on or about August 22, 2016 using cash on hand and borrowings under our revolving credit facility. Share Issuance On May 17, 2016, we granted 2,500 of our common shares, valued at $19.52 per share, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on that day, to each of our five Trustees as part of their annual compensation. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss) represents the unrealized gain on the RMR Inc. shares we own and our share of the comprehensive income (loss) of Select Income REIT, or SIR, and Affiliates Insurance Company, or AIC . The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the three and six months ended June 30, 2016: Three Months Ended June 30, 2016 Unrealized Gain Equity in (Loss) on Investment Unrealized Gain in Available for (Loss) of Sale Securities Investees Total Balance at March 31, 2016 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from cumulative other comprehensive income (loss) to net income (1) - Net current period other comprehensive income Balance at June 30, 2016 $ $ $ Six Months Ended June 30, 2016 Unrealized Gain Equity in (Loss) on Investment Unrealized Gain in Available for (Loss) of Sale Securities Investees Total Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from cumulative other comprehensive income (loss) to net income (1) - Net current period other comprehensive income Balance at June 30, 2016 $ $ $ (1) Amounts reclassified from cumulative other comprehensive income (loss) are included in equity in earnings (losses) of investees in our condensed consolidated statements of comprehensive income (loss). |
Related Person Transactions
Related Person Transactions | 6 Months Ended |
Jun. 30, 2016 | |
Related Person Transactions | |
Related Person Transactions | Note 10. Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, SIR and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also our Trustees or officers. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report. RMR LLC : Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $2,534 and $2,512 for the three months ended June 30, 2016 and 2015, respectively and $5,042 and $5,073 for the six months ended June 30, 2016 and 2015, respectively. No incentive fees were estimated to be payable to RMR LLC for the three or six months ended June 30, 2016 and 2015, respectively. The net business management fees we recognized for the 2016 and 2015 periods are included in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss). In accordance with the terms of our business management agreement, we issued 23,222 of our common shares to RMR LLC for the period from January 1, 2015 through May 31, 2015 as payment for a part of the business management fee we recognized for that period. Beginning June 1, 2015, all management fees under our business management agreement are paid in cash. Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $2,277 and $1,887 for the three months ended June 30, 2016 and 2015, respectively, and $4,386 and $3,902 for the six months ended June 30, 2016 and 2015, respectively. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $2,966 and $2,128 for property management related expenses for the three months ended June 30, 2016 and 2015 , respectively ; and $5,910 and $5,233 for the six months ended June 30, 2016 and 2015 , respectively. These amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income (loss). We have historically awarded share grants to certain RMR LLC employees under our equity compensation plan. In addition, under our business management agreement we reimburse RMR LLC for our allocable costs for internal audit services. The amounts recognized as expense for share grants to RMR LLC employees and internal audit costs were $ 501 and $119 for the three months ended June 30, 2016 and 2015, respectively, and $735 and $433 for the six months ended June 30, 2016 and 2015, respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income (loss). 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 $92 and $153 for the three months ended June 30, 2016 and 2015, respectively, and $183 and $167 for the six months ended June 30, 2016 and 2015, respectively. RMR Inc. : In connection with our June 2015 acquisition of shares of class A common stock of RMR Inc., we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our condensed consolidated balance sheets. A part of this liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $272 and $543 of this liability for the three and six months ended June 30, 2016, respectively, and $65 of this liability for both the three and six months ended June 30, 2015. These amounts are included in the net business management and property management fee amounts for such periods. As of June 30, 2016, the remaining unamortized amount of this liability was $21, 210 . As of June 30, 2016, we owned 1,214,225 shares of class A common stock of RMR Inc. We receive dividends on our RMR Inc. class A common shares as declared and paid by RMR Inc. to all holders of its class A common shares. We received a dividend of $363 on our RMR Inc. class A common shares during the three months ended June 30, 2016, which was for the period from December 14, 2015 through March 31, 2016. Since then, we have not yet received any other dividends on our RMR Inc. class A common shares. On July 12, 2016, RMR Inc. declared a regular quarterly dividend of $0.25 per class A common share payable to shareholders of record on July 22 , 2016. RMR Inc. has stated that it expects to pay this dividend on or about August 18 , 2016. Our investment in RMR Inc. class A common shares, which is included in other assets in our condensed consolidated balance sheets is recorded at fair value with the related unrealized gain (loss) included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. We recognize the increase or decrease in the fair value of our RMR Inc. class A common shares each reporting period as unrealized gain or loss on investment in available for sale securities which is a component of other comprehensive income in our condensed consolidated statements of comprehensive income (loss). For further information, see Notes 8 and 9. SIR : As of June 30, 2016, we owned 24,918,421 common shares of SIR. We receive distributions on our SIR common shares as declared and paid by SIR to all holders of its common shares. We received distributions of $12,459 and $8,582 on our SIR common shares during the three months ended June 30, 2016 and 2015, respectively, and $24,918 and $22,112 during the six months ended June 30, 2016 and 2015, respectively. On July 12, 2016, SIR declared a quarterly distribution of $0.51 per common share payable to shareholders of record on July 22, 2016. SIR has stated that it expects to pay this distribution on or about August 18, 2016. We account for our investment in SIR common shares on the equity method. For additional information about our ownership of SIR common shares and how we account for this investment, see Note 11 below. AIC : We and six other companies to which RMR LLC provides management services each own AIC in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We currently expect to pay aggregate annual premiums, including taxes and fees, of approximately $1,032 in connection with this insurance program for the policy year ending June 30, 2017, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. As of June 30, 2016 and December 31, 2015, our investment in AIC had a carrying value of $7,135 and $6,946 , respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income of $17 and $22 related to our investment in AIC for the three months ended June 30, 2016 and 2015, respectively, and $94 and $95 for the six months ended June 30, 2016 and 2015, respectively. Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which are owned by AIC of $43 and ($64) for the three months ended June 30, 2016 and 2015, respectively, and $95 and ($19) for the six months ended June 30, 2016 and 2015, respectively. |
Equity Investment in Select Inc
Equity Investment in Select Income REIT | 6 Months Ended |
Jun. 30, 2016 | |
Equity Investment in Select Income REIT | |
Equity Investment in Select Income REIT | Note 11. Equity Investment in Select Income REIT As of June 30, 2016, we owned 24,918,421 , or approximately 27. 9 % , of the then outstanding SIR common shares. SIR is a real estate investment trust 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 (loss). We recorded $ 8,643 and $ 8,249 of equity in the earnings of SIR for the three months ended June 30, 2016 and 2015, respectively, and $17,760 and $10,425 for the six months ended June 30, 2016 and 2015 , respectively. Our other comprehensive income (loss) includes our proportionate share of SIR’s unrealized gains (losses) of $2,563 and ($195) for the three months ended June 30, 2016 and 2015, respectively, and $7,055 and ($207) for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, our investment in SIR had a carrying value of $492,762 and a market value, based on the closing price of SIR common shares on the NYSE on June 30, 2016, of $647,630 . We periodically evaluate our equity investment in SIR for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time the market value of our investment is below our cost basis, the financial condition of SIR, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we may record an impairment charge to adjust the basis of the investment to its fair value. During the three and six months ended June 30, 2016, SIR issued 12,500 common shares. During the three and six months ended June 30, 2015, SIR issued 915,853 and 29,368,890 common shares, respectively. We recognized a gain (loss) on issuance of shares by SIR of $16 and ($1,353) during the three months ended June 30, 2016 and 2015, respectively, and a gain (loss) of $16 and ($42,124) during the six months ended June 30, 2016 and 2015, respectively, as a result of the per share issuance price of these SIR common shares being above or (below) the then average per share carrying value of our SIR common shares. 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 acquisitions. This amortization decreased our equity in the earnings of SIR by $2,177 and $4,742 for the three and six months ended June 30, 2015, respectively. We recorded a loss on impairment of our SIR investment during the three months ended June 30, 2015 resulting 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 ( $95,089 ) 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 $ 740 and $1,480 for the three and six months ended June 30, 2016, respectively. We received cash distributions from SIR totaling $12, 459 and $ 8,582 during the three months ended June 30, 2016 and 2015, respectively, and $24,918 and $22,112 during the six months ended June 30, 2016 and 2015, respectively. The following are summarized financial data of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the quarter ended June 30, 201 6, or the SIR Quarterly Report. 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 June 30, December 31, 2016 2015 Real estate properties, net $ $ Acquired real estate leases, net Cash and cash equivalents Rents receivable, net Other assets, net Total assets $ $ Unsecured revolving credit facility $ $ Unsecured term loan, net Senior unsecured notes, net Mortgage notes payable, net Assumed real estate lease obligations, net Other liabilities Shareholders' equity Total liabilities and shareholders' equity $ $ Condensed Consolidated Statements of Income Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Rental income $ $ $ $ Tenant reimbursements and other income Total revenues Real estate taxes Other operating expenses Depreciation and amortization Acquisition related costs — General and administrative Total expenses Operating income Dividend income — — Interest expense Loss on early extinguishment of debt — — — Income before income tax expense and equity in earnings of an investee Income tax expense Equity in earnings of an investee 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) Net income attributed to SIR per common share (basic and diluted) $ $ $ $ |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 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) — Dividend income — — Interest income — — Interest expense — Gain on issuance of shares by Select Income REIT — — 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) $ $ $ $ Six Months Ended June 30, 2016 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) — Dividend income — — Interest income — — Interest expense — Gain on early extinguishment of debt — — Gain on issuance of shares by Select Income REIT — — Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Loss from discontinued operations — — Net income (loss) $ $ $ $ As of June 30, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ Three Months Ended June 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 expense — Loss on issuance of shares by Select Income REIT — — Loss on impairment of Select Income REIT 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) $ $ $ $ Six Months Ended June 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 income — — Interest expense — Loss on issuance of shares by Select Income REIT — — Loss on impairment of Select Income REIT 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 December 31, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2016, we adopted the Financial Accounting Standards Board, or FASB, 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. The implementation of this update did not have an impact on our condensed consolidated financial statements. On January 1, 2016, we adopted FASB 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, and FASB 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. The implementation of these updates resulted in the reclassification of certain of our capitalized debt issuance costs as an offset to the associated debt liability in our condensed consolidated balance sheets. The classification of capitalized debt issuance costs related to our unsecured revolving credit facility remains unchanged in accordance with ASU No. 2015-15. As of December 31, 2015, debt issuance costs related to our unsecured term loans, senior unsecured notes and mortgage notes payable of $3,510 , $2,172 and $344 , respectively, were reclassified from assets to the associated debt liability in our condensed consolidated balance sheets. On January 1, 2016, we adopted FASB 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 they would have recorded in previous periods if the accounting had been completed at the acquisition date. The implementation of this update did not have an impact on our condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. Under this ASU, these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale equity investments we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have on our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU No. 2016-09 is effective for reporting periods beginning after December 15, 2016. We are currently assessing the potential impact that the adoption of ASU No. 2016-09 will have on our condensed consolidated financial statements. |
Weighted Average Common Shares
Weighted Average Common Shares (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Weighted Average Common Shares | |
Weighted Average Common Share Amounts | For the Three Months For the Six Months Ended June 30, Ended June 30, 2016 2015 2016 2015 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) | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate Properties | |
Schedule of purchase prices of acquisitions allocated based on the estimated fair values of the acquired assets and assumed liabilities | . The allocation of purchase price is based on preliminary estimates and may change upon the completion of (i) third party valuations and (ii) our analysis of acquired in place leases and land and building valuations. Number of Buildings Other Acquired Acquisition Properties/ Square Purchase and Assumed Acquired Lease Date Location Type Buildings Feet Price Land Improvements Assets Leases Obligations January 2016 Sacramento, CA Office 1 / 1 $ $ $ $ $ $ |
Summarized balance sheet information for properties classified as held for sale | June 30, December 31, 2016 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 June 30, December 31, 2016 2015 Real estate properties, net $ $ Other assets Assets of discontinued operations $ $ Other liabilities $ $ Liabilities of discontinued operations $ $ Statements of Operations Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Rental income $ $ $ $ Real estate taxes Utility expenses Other operating expenses General and administrative Loss from discontinued operations $ $ $ $ |
Fair Value of Assets and Liab22
Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value of Assets and Liabilities | |
Schedule of assets measured on a recurring and non-recurring basis at fair value, categorized by the level of inputs used in the valuation assets | The table below presents certain of our assets measured at fair value at June 30, 2016, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Fair Value at Reporting Date Using Quoted Prices in Significant Estimated Active Markets for Significant Other Unobservable Fair Identical Assets Observable Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements Assets: Investment in RMR Inc. (1) $ $ 37,605 $ — $ — Non-Recurring Fair Value Measurements Assets: Property held for sale and classified as discontinued operations (2) $ $ — $ — $ (1) Our 1,214,225 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $26,888 as of June 30, 2016. The net unrealized gain of $10,717 for these shares as of June 30, 2016 is included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. (2) We estimated the fair value of this property at June 30 , 2016 based upon broker estimates of value less estimated sale costs (Level 3 inputs as defined in the fair value hierarchy under GAAP). |
Schedule of fair value and carrying value of financial instruments | As of June 30, 2016 As of December 31, 2015 Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Senior unsecured notes, 3.75% interest rate, due in 2019 $ $ $ $ Senior unsecured notes, 5.875% interest rate, due in 2046 — — Mortgage note payable, 6.21% interest rate, due in 2016 (2) (3) — — Mortgage note payable, 5.55% interest rate, due in 2016 (2) (4) — — Mortgage note payable, 5.88% interest rate, due in 2021 (2) Mortgage note payable, 7.00% interest rate, due in 2019 (2) Mortgage note payable, 8.15% interest rate, due in 2021 (2) $ $ $ $ (1) Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts. (2) We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. (3) This mortgage note was repaid, at par, in February 2016. (4) This mortgage note was repaid, at par, in March 2016. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Shareholders' Equity | |
Schedule of changes in each component of cumulative other comprehensive income (loss) | Three Months Ended June 30, 2016 Unrealized Gain Equity in (Loss) on Investment Unrealized Gain in Available for (Loss) of Sale Securities Investees Total Balance at March 31, 2016 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from cumulative other comprehensive income (loss) to net income (1) - Net current period other comprehensive income Balance at June 30, 2016 $ $ $ Six Months Ended June 30, 2016 Unrealized Gain Equity in (Loss) on Investment Unrealized Gain in Available for (Loss) of Sale Securities Investees Total Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from cumulative other comprehensive income (loss) to net income (1) - Net current period other comprehensive income Balance at June 30, 2016 $ $ $ Amounts reclassified from cumulative other comprehensive income (loss) are included in equity in earnings (losses) of investees in our condensed consolidated statements of comprehensive income (loss). |
Equity Investment in Select I24
Equity Investment in Select Income REIT (Tables) - SIR | 6 Months Ended |
Jun. 30, 2016 | |
Schedule Of Summarized Balance Sheet Information Of Equity Method Investee | June 30, December 31, 2016 2015 Real estate properties, net $ $ Acquired real estate leases, net Cash and cash equivalents Rents receivable, net Other assets, net Total assets $ $ Unsecured revolving credit facility $ $ Unsecured term loan, net Senior unsecured notes, net Mortgage notes payable, net Assumed real estate lease obligations, net Other liabilities Shareholders' equity Total liabilities and shareholders' equity $ $ |
Schedule Of Summarized Income Statement Information Of Equity Method Investee | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Rental income $ $ $ $ Tenant reimbursements and other income Total revenues Real estate taxes Other operating expenses Depreciation and amortization Acquisition related costs — General and administrative Total expenses Operating income Dividend income — — Interest expense Loss on early extinguishment of debt — — — Income before income tax expense and equity in earnings of an investee Income tax expense Equity in earnings of an investee 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) Net income attributed to SIR per common share (basic and diluted) $ $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information | |
Schedule of ownership of properties that are primarily leased to government tenants and our equity method investment in SIR | Three Months Ended June 30, 2016 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) — Dividend income — — Interest income — — Interest expense — Gain on issuance of shares by Select Income REIT — — 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) $ $ $ $ Six Months Ended June 30, 2016 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) — Dividend income — — Interest income — — Interest expense — Gain on early extinguishment of debt — — Gain on issuance of shares by Select Income REIT — — Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees Income tax expense — — Equity in earnings of investees — Income (loss) from continuing operations Loss from discontinued operations — — Net income (loss) $ $ $ $ As of June 30, 2016 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ Three Months Ended June 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 expense — Loss on issuance of shares by Select Income REIT — — Loss on impairment of Select Income REIT 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) $ $ $ $ Six Months Ended June 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 income — — Interest expense — Loss on issuance of shares by Select Income REIT — — Loss on impairment of Select Income REIT 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 December 31, 2015 Investment Investment in Real Estate in SIR Corporate Consolidated Total Assets $ $ $ $ |
Recent Accounting Pronounceme26
Recent Accounting Pronouncements (Details) - Accounting Standards Update 2015-03 $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Unsecured term loan | |
New Accounting Pronouncements or Change in Accounting Principle | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 3,510 |
Senior unsecured notes | |
New Accounting Pronouncements or Change in Accounting Principle | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | 2,172 |
Mortgage notes | |
New Accounting Pronouncements or Change in Accounting Principle | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 344 |
Weighted Average Common Share27
Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Weighted Average Common Shares | ||||
Weighted average common shares outstanding (basic) (in shares) | 71,038 | 70,485 | 71,034 | 70,377 |
Effect of dilutive securities: unvested share awards | 23 | 12 | ||
Weighted average common shares outstanding (diluted) (in shares) | 71,061 | 70,485 | 71,046 | 70,377 |
Real Estate Properties (Details
Real Estate Properties (Details) $ in Thousands | Jul. 06, 2016USD ($)property | Jun. 30, 2016USD ($)ft²propertybuildingitem$ / shares | Jun. 30, 2016USD ($)ft²propertybuildingitem$ / shares | Apr. 28, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2015propertybuilding |
Real estate properties | ||||||
Number of properties | property | 72 | 72 | ||||
Number of buildings | building | 92 | 92 | ||||
Total real estate properties, gross | $ 1,776,591 | $ 1,776,591 | $ 1,696,132 | |||
Number of leases entered | property | 15 | 35 | ||||
Square Feet | ft² | 566,640 | 1,089,602 | ||||
Square feet expansion | ft² | 25,579 | |||||
Weighted average lease term | 10 years 1 month 6 days | 10 years 9 months 18 days | ||||
Expenditures committed on leases | $ 11,136 | $ 31,605 | ||||
Committed but unspent tenant related obligations estimated | $ 23,891 | $ 23,891 | ||||
Purchase Price | $ 1,623 | |||||
Continuing operations | ||||||
Real estate properties | ||||||
Number of properties | property | 72 | 72 | ||||
Number of buildings | building | 92 | 92 | ||||
Total real estate properties, gross | $ 1,779,937 | $ 1,779,937 | ||||
Discontinued operations | ||||||
Real estate properties | ||||||
Number of properties | property | 1 | 1 | 1 | |||
Number of buildings | building | 1 | 1 | 1 | |||
Real estate properties, net | $ 12,260 | $ 12,260 | ||||
Square foot expansion cost | $ 12,800 | |||||
Sacramento, CA | ||||||
Real estate properties | ||||||
Number of properties | $ / shares | 1 | 1 | ||||
Number of buildings | $ / shares | 1 | 1 | ||||
Square Feet | ft² | 337,811 | |||||
Property leased | 86.00% | |||||
Purchase Price | $ 79,235 | |||||
Land | $ 4,688 | 4,688 | ||||
Buildings and Improvement | 61,722 | 61,722 | ||||
Other assumed assets | 2,167 | 2,167 | ||||
Acquired leases | 11,245 | 11,245 | ||||
Acquired Lease obligation | $ (587) | $ (587) | ||||
Sacramento, CA | State of California | ||||||
Real estate properties | ||||||
Property leased | 71.00% | |||||
Number of agencies | item | 3 | 3 | ||||
Atlanta, GA | ||||||
Real estate properties | ||||||
Number of properties | property | 1 | |||||
Land | $ 1,623 |
Real Estate Properties Disposit
Real Estate Properties Disposition Acitivities (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016USD ($)ft²building$ / shares | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)ft²building$ / shares | Jun. 30, 2015USD ($) | Jul. 22, 2016building | Dec. 31, 2015USD ($) | |
Real estate properties | ||||||
Number of Buildings | building | 92 | 92 | ||||
Net book value | $ 1,501,190 | $ 1,501,190 | $ 1,440,253 | |||
Balance Sheets: | ||||||
Assets of property held for sale | 3,095 | 3,095 | 3,098 | |||
Assets of discontinued operations | 12,482 | 12,482 | 12,468 | |||
Liabilities of property held for sale | 12 | 12 | 43 | |||
Liabilities of discontinued operations | 83 | 83 | 54 | |||
Statement of Operations: | ||||||
Rental income | 56 | $ 58 | ||||
Real estate taxes | (46) | (140) | ||||
Utility expenses | (79) | (78) | ||||
Other operating expenses | (149) | (162) | ||||
General and administrative | (57) | (57) | ||||
Income (loss) from discontinued operations | $ (126) | $ (173) | $ (275) | $ (379) | ||
Sacramento, CA | ||||||
Real estate properties | ||||||
Number of Buildings | $ / shares | 1 | 1 | ||||
Disposal Group, By Sale, Not Discontinued Operations | Savannah GA | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Real estate properties | ||||||
Interest rate premium (as a percent) | 4.00% | |||||
Disposal Group, By Sale, Not Discontinued Operations | Savannah GA | Minimum | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Real estate properties | ||||||
Interest rate premium (as a percent) | 5.00% | |||||
Continuing operations. | ||||||
Balance Sheets: | ||||||
Real estate properties, net | $ 3,071 | $ 3,071 | 3,071 | |||
Rents receivable | 1 | |||||
Other assets | 24 | 24 | 26 | |||
Assets of property held for sale | 3,095 | 3,095 | 3,098 | |||
Other liabilities | 12 | 12 | 43 | |||
Liabilities of property held for sale | 12 | 12 | 43 | |||
Discontinued operations | ||||||
Balance Sheets: | ||||||
Real estate properties, net | 12,260 | 12,260 | ||||
Other assets | 222 | 222 | ||||
Assets of discontinued operations | 12,482 | 12,482 | ||||
Other liabilities | 83 | 83 | ||||
Liabilities of discontinued operations | 83 | $ 83 | ||||
Statement of Operations: | ||||||
Rental income | 28 | 27 | ||||
Real estate taxes | (23) | (70) | ||||
Utility expenses | (29) | (11) | ||||
Other operating expenses | (73) | (91) | ||||
General and administrative | (29) | (28) | ||||
Income (loss) from discontinued operations | $ (126) | $ (173) | ||||
Discontinued operations | Discontinued Operations, Held-for-sale | ||||||
Balance Sheets: | ||||||
Real estate properties, net | 12,260 | |||||
Other assets | 208 | |||||
Assets of discontinued operations | 12,468 | |||||
Other liabilities | 54 | |||||
Liabilities of discontinued operations | $ 54 | |||||
One building | Continuing operations. | Office | Savannah GA | ||||||
Real estate properties | ||||||
Number of Buildings | building | 1 | |||||
Rentable square feet of properties | ft² | 35,228 | 35,228 | ||||
Net book value | $ 3,071 | $ 3,071 | ||||
Aggregate sale price of properties sold, excluding closing costs | $ 4,000 | 4,000 | ||||
Mortgage financing to the buyer | $ 3,600 | |||||
One building | Discontinued Operations, Held-for-sale | Office | Falls Church, VA | ||||||
Real estate properties | ||||||
Number of Buildings | building | 1 | 1 | ||||
Rentable square feet of properties | ft² | 164,746 | 164,746 | ||||
Net book value | $ 12,282 | $ 12,282 | ||||
Aggregate sale price of properties sold, excluding closing costs | $ 13,000 | $ 13,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Revenue Recognition | |||||
Increase in rental income to record revenue on straight line basis | $ 435 | $ 1,544 | $ 584 | $ 2,207 | |
Straight line rent receivables (liabilities) | $ 19,579 | $ 19,579 | $ 18,995 |
Concentration (Details)
Concentration (Details) | 6 Months Ended | |
Jun. 30, 2016statepropertybuildingitem | Jun. 30, 2015propertybuilding | |
Concentration | ||
Number of properties | property | 72 | |
Number of buildings | building | 92 | |
Number of states in which acquired properties located | state | 31 | |
Number of state governments | state | 12 | |
Number of other governments | item | 3 | |
Annualized rental income, excluding properties classified as discontinued operations | California | ||
Concentration | ||
Annualized Rental income percent | 14.7 | |
Annualized rental income, excluding properties classified as discontinued operations | Virginia | ||
Concentration | ||
Annualized Rental income percent | 10 | |
Annualized rental income, excluding properties classified as discontinued operations | District of Columbia | ||
Concentration | ||
Annualized Rental income percent | 9.9 | |
Annualized rental income, excluding properties classified as discontinued operations | Georgia | ||
Concentration | ||
Annualized Rental income percent | 9.2 | |
Annualized rental income, excluding properties classified as discontinued operations | New York | ||
Concentration | ||
Annualized Rental income percent | 8.1 | |
Annualized rental income, excluding properties classified as discontinued operations | Maryland | ||
Concentration | ||
Annualized Rental income percent | 7.6 | |
Annualized rental income, excluding properties classified as discontinued operations | Massachusetts | ||
Concentration | ||
Annualized Rental income percent | 5.3 | |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government, state governments and Other Three Government | ||
Concentration | ||
Concentration risk, percentage | 92.70% | 92.80% |
Annualized rental income, excluding properties classified as discontinued operations | Tenant concentration | U.S. Government | ||
Concentration | ||
Concentration risk, percentage | 64.10% | 67.70% |
Discontinued operations | ||
Concentration | ||
Number of properties | property | 1 | 1 |
Number of buildings | building | 1 | 1 |
Indebtedness (Details)
Indebtedness (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 18 Months Ended | |||||||
Jun. 30, 2016USD ($)propertyitem | Mar. 31, 2016USD ($)propertybuilding | Feb. 29, 2016USD ($)propertybuilding | Jun. 30, 2016USD ($)propertyitem | Jun. 30, 2015 | Jun. 30, 2016USD ($)propertyitemloan | Jun. 30, 2015 | Jun. 30, 2016USD ($)propertyitem | Jul. 26, 2016USD ($) | May 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Indebtedness | |||||||||||
Unsecured revolving credit facility | $ 117,000 | ||||||||||
Unsecured term loans, net | $ 546,830 | $ 546,830 | $ 546,830 | $ 546,830 | 546,490 | ||||||
Senior Notes | 646,272 | 646,272 | 646,272 | 646,272 | 345,809 | ||||||
Mortgage notes payable, net | 28,655 | 28,655 | 28,655 | 28,655 | $ 136,299 | ||||||
Maximum borrowing capacity on debt instruments may be increased under certain conditions | $ 2,500,000 | $ 2,500,000 | 2,500,000 | $ 2,500,000 | |||||||
Gain (Loss) on early extinguishment of debt | $ 104 | ||||||||||
Number of properties secured by mortgage notes | property | 3 | 3 | 3 | 3 | |||||||
Number of buildings secured by mortgage notes | item | 3 | 3 | 3 | 3 | |||||||
Aggregate net book value of secured properties | $ 53,927 | $ 53,927 | $ 53,927 | $ 53,927 | |||||||
Number of assumed secured mortgage loans | loan | 3 | ||||||||||
Aggregate principal amount on secured properties | 28,238 | 28,238 | $ 28,238 | 28,238 | |||||||
Unsecured revolving credit facility | |||||||||||
Indebtedness | |||||||||||
Unsecured term loans, net | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||||
Interest rate (as a percent) | 1.70% | 1.70% | 1.70% | 1.70% | |||||||
Maximum borrowing capacity on revolving credit facility | $ 750,000 | $ 750,000 | $ 750,000 | $ 750,000 | |||||||
Option to extend the maturity date subject to certain conditions and the payment of a fee | 1 year | ||||||||||
The weighted average annual interest rate (as a percent) | 1.70% | 1.40% | 1.70% | 1.60% | |||||||
Term loan, interest rate basis | LIBOR | ||||||||||
Interest rate premium (as a percent) | 1.25% | ||||||||||
Facility fee (as a percent) | 0.25% | ||||||||||
Term loans | |||||||||||
Indebtedness | |||||||||||
Face amount | 550,000 | $ 550,000 | $ 550,000 | 550,000 | |||||||
Senior unsecured notes | |||||||||||
Indebtedness | |||||||||||
Face amount | 660,000 | 660,000 | 660,000 | 660,000 | |||||||
Mortgage notes | |||||||||||
Indebtedness | |||||||||||
Face amount | 28,238 | 28,238 | 28,238 | 28,238 | |||||||
Unsecured term loan, due in 2020 | |||||||||||
Indebtedness | |||||||||||
Face amount | $ 300,000 | $ 300,000 | $ 300,000 | $ 300,000 | |||||||
Interest rate (as a percent) | 1.90% | 1.90% | 1.90% | 1.90% | |||||||
The weighted average annual interest rate (as a percent) | 1.80% | 1.60% | 1.80% | 1.60% | |||||||
Term loan, interest rate basis | LIBOR | ||||||||||
Interest rate premium (as a percent) | 1.40% | ||||||||||
Unsecured term loan, due in 2022 | |||||||||||
Indebtedness | |||||||||||
Face amount | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | |||||||
Interest rate (as a percent) | 2.30% | 2.30% | 2.30% | 2.30% | |||||||
The weighted average annual interest rate (as a percent) | 2.20% | 2.20% | 2.00% | ||||||||
Term loan, interest rate basis | LIBOR | ||||||||||
Interest rate premium (as a percent) | 1.80% | ||||||||||
Loan prepayment premium prior to November 21, 2016 (as a percent) | 1.00% | ||||||||||
Loan prepayment premium subsequent to November 21, 2016 (as a percent) | 0.00% | ||||||||||
3.75% Senior unsecured note due In 2019 | |||||||||||
Indebtedness | |||||||||||
Face amount | $ 350,000 | $ 350,000 | $ 350,000 | $ 350,000 | |||||||
Interest rate (as a percent) | 3.75% | 3.75% | 3.75% | 3.75% | 3.75% | ||||||
5.875% Senior unsecured note due in 2046 | |||||||||||
Indebtedness | |||||||||||
Face amount | $ 300,000 | ||||||||||
Interest rate (as a percent) | 5.875% | ||||||||||
Underwriters purchase option amount | $ 10,000 | ||||||||||
Net amount of senious unsecured notes issued | $ 299,892 | ||||||||||
5.55% Mortgage notes due in 2016 | |||||||||||
Indebtedness | |||||||||||
Interest rate (as a percent) | 5.55% | 5.55% | |||||||||
Mortgage note repaid | $ 83,000 | ||||||||||
Gain (Loss) on early extinguishment of debt | $ 125 | ||||||||||
Number of properties secured by mortgage notes | property | 1 | ||||||||||
Number of buildings secured by mortgage notes | building | 2 | ||||||||||
6.21% Mortgage notes due in 2016 | |||||||||||
Indebtedness | |||||||||||
Interest rate (as a percent) | 6.21% | 6.21% | |||||||||
Mortgage note repaid | $ 23,473 | ||||||||||
Gain (Loss) on early extinguishment of debt | $ 21 | ||||||||||
Number of properties secured by mortgage notes | property | 1 | ||||||||||
Number of buildings secured by mortgage notes | building | 1 | ||||||||||
5.88% Mortgage notes due in 2021 | |||||||||||
Indebtedness | |||||||||||
Interest rate (as a percent) | 5.88% | 5.88% | 5.88% | 5.88% | 5.88% | ||||||
7% Mortgage notes due in 2019 | |||||||||||
Indebtedness | |||||||||||
Interest rate (as a percent) | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | ||||||
8.15% Mortgage notes due in 2021 | |||||||||||
Indebtedness | |||||||||||
Interest rate (as a percent) | 8.15% | 8.15% | 8.15% | 8.15% | 8.15% |
Fair Value of Assets and Liab33
Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 | Feb. 29, 2016 | Dec. 31, 2015 |
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | $ 28,655 | $ 136,299 | ||
Senior Notes | $ 646,272 | $ 345,809 | ||
3.75% Senior unsecured note due In 2019 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 3.75% | 3.75% | ||
5.875% Senior unsecured notes due In 2046 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 5.875% | |||
6.21% Mortgage notes due in 2016 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 6.21% | 6.21% | ||
5.55% Mortgage notes due in 2016 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 5.55% | 5.55% | ||
5.88% Mortgage notes due in 2021 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 5.88% | 5.88% | ||
7% Mortgage notes due in 2019 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 7.00% | 7.00% | ||
8.15% Mortgage notes due in 2021 | ||||
Fair Value of Financial Instruments | ||||
Interest rate (as a percent) | 8.15% | 8.15% | ||
Carrying Amount | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | $ 674,927 | $ 482,108 | ||
Carrying Amount | 3.75% Senior unsecured note due In 2019 | ||||
Fair Value of Financial Instruments | ||||
Senior Notes | 346,381 | 345,809 | ||
Carrying Amount | 5.875% Senior unsecured notes due In 2046 | ||||
Fair Value of Financial Instruments | ||||
Senior Notes | 299,891 | |||
Carrying Amount | 6.21% Mortgage notes due in 2016 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 23,476 | |||
Carrying Amount | 5.55% Mortgage notes due in 2016 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 83,375 | |||
Carrying Amount | 5.88% Mortgage notes due in 2021 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 13,944 | 14,045 | ||
Carrying Amount | 7% Mortgage notes due in 2019 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 8,964 | 9,145 | ||
Carrying Amount | 8.15% Mortgage notes due in 2021 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 5,747 | 6,258 | ||
Fair Value | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 705,444 | 490,221 | ||
Fair Value | 3.75% Senior unsecured note due In 2019 | ||||
Fair Value of Financial Instruments | ||||
Senior Notes | 358,351 | 351,692 | ||
Fair Value | 5.875% Senior unsecured notes due In 2046 | ||||
Fair Value of Financial Instruments | ||||
Senior Notes | 316,200 | |||
Fair Value | 6.21% Mortgage notes due in 2016 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 24,038 | |||
Fair Value | 5.55% Mortgage notes due in 2016 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 83,457 | |||
Fair Value | 5.88% Mortgage notes due in 2021 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 15,100 | 14,678 | ||
Fair Value | 7% Mortgage notes due in 2019 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | 9,551 | 9,645 | ||
Fair Value | 8.15% Mortgage notes due in 2021 | ||||
Fair Value of Financial Instruments | ||||
Mortgage notes payable, net | $ 6,242 | $ 6,711 |
Fair Value of Assets and Liab34
Fair Value of Assets and Liabilities Financial Instruments (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Fair Value of Assets and Liabilities | ||
Property held for sale | $ 1,501,190 | $ 1,440,253 |
Common shares owned in RMR Inc. | 1,214,225 | |
Historical cost | $ 26,888 | |
Unrealized gain on investment in available for sale securities | 10,717 | |
Recurring | ||
Fair Value of Assets and Liabilities | ||
Investment in RMR Inc. | 37,605 | |
Recurring | Level 1 inputs | ||
Fair Value of Assets and Liabilities | ||
Investment in RMR Inc. | 37,605 | |
Discontinued Operations, Held-for-sale | Nonrecurring | ||
Fair Value of Assets and Liabilities | ||
Property held for sale and classified as discontinued operations (2) | 12,260 | |
Discontinued Operations, Held-for-sale | Nonrecurring | Level 3 inputs | ||
Fair Value of Assets and Liabilities | ||
Property held for sale and classified as discontinued operations (2) | 12,260 | |
Discontinued operations | ||
Fair Value of Assets and Liabilities | ||
Property held for sale and classified as discontinued operations (2) | $ 12,260 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | Jul. 22, 2016USD ($)$ / shares | May 23, 2016USD ($)$ / shares | May 17, 2016USD ($)trusteeshares | Feb. 25, 2016USD ($)$ / shares | Jun. 30, 2016USD ($) | Jun. 30, 2016USD ($) |
Distributions | ||||||
Cash distribution to common shareholders (in dollars per share) | $ / shares | $ 0.43 | $ 0.43 | ||||
Distribution payable to common shareholders (in dollars per share) | $ / shares | $ 0.43 | |||||
Distribution paid to common shareholders | $ 30,590,000 | $ 30,585,000 | $ 30,584,000 | |||
Cumulative Other Comprehensive Income (Loss) | ||||||
Balance at the beginning of the period | $ 2,548,000 | $ (14,867,000) | ||||
Other comprehensive loss before reclassifications | 9,839,000 | 27,255,000 | ||||
Amounts reclassified from cumulative other comprehensive loss to net income | 4,000 | 3,000 | ||||
Net current period other comprehensive loss | 9,843,000 | 27,258,000 | ||||
Balance at the end of the period | 12,391,000 | 12,391,000 | ||||
Unrealized Loss on Investment in Available for Sale Securities | ||||||
Cumulative Other Comprehensive Income (Loss) | ||||||
Balance at the beginning of the period | 3,480,000 | (9,391,000) | ||||
Other comprehensive loss before reclassifications | 7,237,000 | 20,108,000 | ||||
Net current period other comprehensive loss | 7,237,000 | 20,108,000 | ||||
Balance at the end of the period | 10,717,000 | 10,717,000 | ||||
Equity in Unrealized Gain (Loss) of an Investee | ||||||
Cumulative Other Comprehensive Income (Loss) | ||||||
Balance at the beginning of the period | (932,000) | (5,476,000) | ||||
Other comprehensive loss before reclassifications | 2,602,000 | 7,147,000 | ||||
Amounts reclassified from cumulative other comprehensive loss to net income | 4,000 | 3,000 | ||||
Net current period other comprehensive loss | 2,606,000 | 7,150,000 | ||||
Balance at the end of the period | $ 1,674,000 | $ 1,674,000 | ||||
Share Award Plan | Trustees | ||||||
Share Awards | ||||||
Number of Trustees | trustee | 5 | |||||
Number of shares granted to each trustee under the award plan | shares | 2,500 | |||||
Aggregate market value of shares granted under the Award Plan | $ 19.52 | |||||
Number of Shares | ||||||
Shares granted (in shares) | shares | 2,500 |
Related Person Transactions - R
Related Person Transactions - RMR LLC Management Fees and Reimbursements (Details) - RMR LLC - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | May 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Related Person Transaction | |||||
Business management fees | $ 2,534 | $ 2,512 | $ 5,042 | $ 5,073 | |
Number of shares issued | 23,222 | ||||
Incentive fees payable | 0 | 0 | 0 | 0 | |
Property management and construction supervision fees | 2,277 | 1,887 | 4,386 | 3,902 | |
Related party reimbursement expenses | 2,966 | 2,128 | 5,910 | 5,233 | |
Accrual for RMR LLC employee share grants and internal audit services | 501 | 119 | 735 | 433 | |
Rental income earned | $ 92 | $ 153 | $ 183 | $ 167 |
Related Person Transactions -37
Related Person Transactions - REITs, for which RMR LLC provides Management Services (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016USD ($)company | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)companyshares | Jun. 30, 2015USD ($) | Jul. 12, 2016$ / shares | Dec. 31, 2015USD ($) | |
Related Person Transaction | ||||||
Dividend received | $ 363 | $ 363 | ||||
Proceeds from Equity Method Investment, Dividends or Distributions | 17,760 | $ 10,425 | ||||
Investment at carrying value | 492,762 | 492,762 | $ 491,369 | |||
Recognized income (loss) related to investment | 9,400 | $ 6,094 | $ 19,334 | 5,778 | ||
SIR | ||||||
Related Person Transaction | ||||||
Shares holding | shares | 24,918,421 | |||||
Quarterly dividend payable on common stock (in dollars per share) | $ / shares | $ 0.51 | |||||
Proceeds from Equity Method Investment, Dividends or Distributions | 12,459 | 8,582 | $ 24,918 | 22,112 | ||
Investment at carrying value | 492,762 | 492,762 | ||||
Recognized income (loss) related to investment | 8,643 | 8,249 | 17,760 | 10,425 | ||
SIR | SIR | ||||||
Related Person Transaction | ||||||
Dividend received | 475 | 475 | ||||
Recognized income (loss) related to investment | $ 17 | 23 | $ 94 | 95 | ||
AIC | ||||||
Related Person Transaction | ||||||
Number of other companies owning outstanding shares | company | 6 | 6 | ||||
Amount invested in equity investee | $ 7,135 | $ 7,135 | $ 6,946 | |||
Coverage of purchased property insurance | 1,032 | |||||
Recognized income (loss) related to investment | 17 | 22 | 94 | 95 | ||
Other Comprehensive Income, Other, Net of Tax | 43 | (64) | 95 | (19) | ||
RMR Inc | ||||||
Related Person Transaction | ||||||
Recognized amortization of the liability | 272 | $ 65 | 543 | $ 65 | ||
RMR Inc | ||||||
Related Person Transaction | ||||||
Initial Other Liabilities | 21,210 | $ 21,210 | ||||
RMR Inc | Class A common shares | ||||||
Related Person Transaction | ||||||
Dividend received | $ 363 | |||||
Shares holding | shares | 1,214,225 | |||||
Quarterly dividend payable on common stock (in dollars per share) | $ / shares | $ 0.25 |
Equity Investment in Select I38
Equity Investment in Select Income REIT (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Equity Investment in Select Income REIT | ||||||
Income (Loss) from Equity Method Investments | $ 9,400 | $ 6,094 | $ 19,334 | $ 5,778 | ||
Equity in unrealized gain of investees | 2,606 | 131 | 7,150 | 189 | ||
Investment at carrying value | 492,762 | 492,762 | $ 491,369 | |||
Gain (Loss) on issuance of shares by Select Income REIT | 16 | (1,353) | 16 | (42,124) | ||
Loss on impairment of Select Income REIT investment | (203,297) | (203,297) | ||||
Proceeds from Equity Method Investment, Dividends or Distributions | 17,760 | 10,425 | ||||
Equity Method Investment Summarized Balance Sheet Information Abstract | ||||||
Real estate properties, net | 1,501,190 | 1,501,190 | 1,440,253 | |||
Acquired real estate leases, net | 113,230 | 113,230 | 118,267 | |||
Cash and cash equivalents | 9,021 | 7,051 | 9,021 | 7,051 | 8,785 | $ 13,791 |
Rents receivable, net | 46,592 | 46,592 | 45,269 | |||
Other assets, net | 52,280 | 52,280 | 33,680 | |||
Total assets | 2,251,210 | 2,251,210 | 2,168,510 | |||
Unsecured revolving credit facility | 117,000 | |||||
Unsecured term loan, net | 546,830 | 546,830 | 546,490 | |||
Senior unsecured notes, net | 646,272 | 646,272 | 345,809 | |||
Mortgage notes payable, net | 28,655 | 28,655 | 136,299 | |||
Assumed real estate lease obligations, net | 11,881 | 11,881 | 12,735 | |||
Other Liabilities | 56,687 | 56,687 | 50,543 | |||
Shareholders' equity | 957,212 | 957,212 | 956,651 | |||
Total liabilities and shareholders' equity | 2,251,210 | 2,251,210 | 2,168,510 | |||
Income Statements: | ||||||
Total revenues | 64,061 | 62,113 | 127,672 | 124,772 | ||
Real estate taxes | 7,566 | 7,674 | 15,219 | 15,084 | ||
Other operating expenses | 13,266 | 12,190 | 26,177 | 24,400 | ||
Depreciation and amortization | 17,985 | 17,299 | 36,309 | 34,514 | ||
Acquisition related costs | 64 | 183 | 216 | 189 | ||
General and administrative | 4,008 | 3,713 | 7,534 | 7,717 | ||
Total expenses | 46,562 | 45,060 | 93,302 | 90,476 | ||
Operating income | 17,499 | 17,053 | 34,370 | 34,296 | ||
Dividend income | 363 | 363 | ||||
Interest expense | (10,314) | (9,455) | (19,678) | (18,757) | ||
Gain (Loss) on early extinguishment of debt | 104 | |||||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 7,574 | (197,052) | 15,191 | (229,870) | ||
Income tax expense | (35) | (32) | (50) | (62) | ||
Equity in earnings of investees | $ 9,400 | $ 6,094 | $ 19,334 | $ 5,778 | ||
Weighted average common shares outstanding (basic) (in shares) | 71,038,000 | 70,485,000 | 71,034,000 | 70,377,000 | ||
Weighted average common shares outstanding (diluted) (in shares) | 71,061,000 | 70,485,000 | 71,046,000 | 70,377,000 | ||
Basic and diluted net income attributed to SIR per common share | $ 0.24 | $ (2.71) | $ 0.48 | $ (3.19) | ||
SIR | ||||||
Equity Investment in Select Income REIT | ||||||
Equity investments, common shares owned | 24,918,421 | 24,918,421 | ||||
Percentage of outstanding shares owned | 27.90% | 27.90% | ||||
Income (Loss) from Equity Method Investments | $ 8,643 | $ 8,249 | $ 17,760 | $ 10,425 | ||
Equity in unrealized gain of investees | 2,563 | (195) | 7,055 | (207) | ||
Investment at carrying value | 492,762 | 492,762 | ||||
Equity Investments, market value | 647,630 | 647,630 | ||||
The amount of investment in exceed the underlying equity of the investee | 166,272 | 166,272 | ||||
Amortization of the difference between carrying value and share of underlying equity | 2,177 | 4,742 | ||||
Difference in basis to be amortized over remaining period | 95,089 | 95,089 | ||||
Amortization of the difference between carrying value and share of underlying equity upon recording loss on impairment | 740 | 1,480 | ||||
Proceeds from Equity Method Investment, Dividends or Distributions | 12,459 | 8,582 | 24,918 | 22,112 | ||
Income Statements: | ||||||
Equity in earnings of investees | 8,643 | 8,249 | 17,760 | 10,425 | ||
SIR | SIR | ||||||
Equity Investment in Select Income REIT | ||||||
Income (Loss) from Equity Method Investments | $ 17 | $ 23 | $ 94 | $ 95 | ||
Number of common shares issued during period | 12,500 | 915,853 | 12,500 | 29,368,890 | ||
Gain (Loss) on issuance of shares by Select Income REIT | $ 16 | $ (1,353) | $ 16 | $ (42,124) | ||
Equity Method Investment Summarized Balance Sheet Information Abstract | ||||||
Real estate properties, net | 3,920,333 | 3,920,333 | 3,954,889 | |||
Acquired real estate leases, net | 535,235 | 535,235 | 566,195 | |||
Cash and cash equivalents | 10,815 | 10,815 | 17,876 | |||
Rents receivable, net | 110,285 | 110,285 | 99,307 | |||
Other assets, net | 73,125 | 73,125 | 46,078 | |||
Total assets | 4,649,793 | 4,649,793 | 4,684,345 | |||
Unsecured revolving credit facility | 280,000 | 280,000 | 303,000 | |||
Unsecured term loan, net | 348,124 | 348,124 | 347,876 | |||
Senior unsecured notes, net | 1,428,201 | 1,428,201 | 1,426,025 | |||
Mortgage notes payable, net | 286,326 | 286,326 | 286,706 | |||
Assumed real estate lease obligations, net | 82,044 | 82,044 | 86,495 | |||
Other Liabilities | 128,462 | 128,462 | 137,283 | |||
Shareholders' equity | 2,096,636 | 2,096,636 | 2,096,960 | |||
Total liabilities and shareholders' equity | 4,649,793 | 4,649,793 | $ 4,684,345 | |||
Income Statements: | ||||||
Rental income | 96,615 | 92,166 | 194,475 | 172,644 | ||
Tenant Reimbursements And Other income | 18,289 | 15,048 | 37,661 | 28,985 | ||
Total revenues | 114,904 | 107,214 | 232,136 | 201,629 | ||
Real estate taxes | 10,522 | 9,019 | 20,810 | 17,376 | ||
Other operating expenses | 12,635 | 9,801 | 25,593 | 18,808 | ||
Depreciation and amortization | 33,405 | 32,390 | 66,874 | 57,109 | ||
Acquisition related costs | 779 | 58 | 21,318 | |||
General and administrative | 7,374 | 6,368 | 14,350 | 13,160 | ||
Total expenses | 63,936 | 58,357 | 127,685 | 127,771 | ||
Operating income | 50,968 | 48,857 | 104,451 | 73,858 | ||
Dividend income | 475 | 475 | ||||
Interest expense | (20,584) | (19,497) | (41,193) | (33,676) | ||
Gain (Loss) on early extinguishment of debt | (6,845) | |||||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 30,859 | 29,360 | 63,733 | 33,337 | ||
Income tax expense | (124) | (195) | (263) | (226) | ||
Equity in earnings of investees | 17 | 23 | 94 | 95 | ||
Net income | 30,752 | 29,188 | 63,564 | 33,206 | ||
Net income allocated to noncontrolling interest | 48 | 33 | 89 | |||
Net income attributed to SIR | $ 30,752 | $ 29,140 | $ 63,531 | $ 33,117 | ||
Weighted average common shares outstanding (basic) (in shares) | 89,292,000 | 88,617,000 | 89,289,000 | 84,078,000 | ||
Weighted average common shares outstanding (diluted) (in shares) | 89,315,000 | 88,631,000 | 89,306,000 | 84,090,000 | ||
Basic and diluted net income attributed to SIR per common share | $ 0.34 | $ 0.33 | $ 0.71 | $ 0.39 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Information. | |||||
Number of segments | item | 2 | ||||
Rental income | $ 64,061 | $ 62,113 | $ 127,672 | $ 124,772 | |
Expenses: | |||||
Real estate taxes | 7,566 | 7,674 | 15,219 | 15,084 | |
Utility expenses | 3,673 | 4,001 | 7,847 | 8,572 | |
Other operating expenses | 13,266 | 12,190 | 26,177 | 24,400 | |
Depreciation and amortization | 17,985 | 17,299 | 36,309 | 34,514 | |
Acquisition related costs | 64 | 183 | 216 | 189 | |
General and administrative | 4,008 | 3,713 | 7,534 | 7,717 | |
Total expenses | 46,562 | 45,060 | 93,302 | 90,476 | |
Operating income (loss) | 17,499 | 17,053 | 34,370 | 34,296 | |
Dividend income | 363 | 363 | |||
Interest income | 10 | 16 | 12 | ||
Interest expense | (10,314) | (9,455) | (19,678) | (18,757) | |
Gain on early extinguishment of debt | 104 | ||||
Gain (Loss) on issuance of shares by Select Income REIT | 16 | (1,353) | 16 | (42,124) | |
Loss on impairment of Select Income REIT investment | (203,297) | (203,297) | |||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 7,574 | (197,052) | 15,191 | (229,870) | |
Income tax expense | (35) | (32) | (50) | (62) | |
Equity in earnings of investees | 9,400 | 6,094 | 19,334 | 5,778 | |
Income (loss) from continuing operations | 16,939 | (190,990) | 34,475 | (224,154) | |
Loss from discontinued operations | (126) | (173) | (275) | (379) | |
Net income (loss) | 16,813 | (191,163) | 34,200 | (224,533) | |
Total assets | 2,251,210 | 2,251,210 | $ 2,168,510 | ||
Investment in Real Estate | |||||
Segment Information. | |||||
Rental income | 62,113 | 124,772 | |||
Expenses: | |||||
Real estate taxes | 7,674 | 15,084 | |||
Utility expenses | 4,001 | 8,572 | |||
Other operating expenses | 12,190 | 24,400 | |||
Depreciation and amortization | 17,299 | 34,514 | |||
Acquisition related costs | 183 | 189 | |||
Total expenses | 41,347 | 82,759 | |||
Operating income (loss) | 20,766 | 42,013 | |||
Interest expense | (2,282) | (14,208) | |||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 18,484 | 27,805 | |||
Income (loss) from continuing operations | 18,484 | 27,805 | |||
Loss from discontinued operations | (173) | (379) | |||
Net income (loss) | 18,311 | 27,426 | |||
Total assets | 1,639,462 | ||||
Investment in SIR | |||||
Expenses: | |||||
Gain (Loss) on issuance of shares by Select Income REIT | (1,353) | (42,124) | |||
Loss on impairment of Select Income REIT investment | (203,297) | (203,297) | |||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | (204,650) | (245,421) | |||
Equity in earnings of investees | 6,072 | 5,683 | |||
Income (loss) from continuing operations | (198,578) | (239,738) | |||
Net income (loss) | (198,578) | (239,738) | |||
Total assets | 491,369 | ||||
Operating Segments | Investment in Real Estate | |||||
Segment Information. | |||||
Rental income | 64,061 | 127,672 | |||
Expenses: | |||||
Real estate taxes | 7,566 | 15,219 | |||
Utility expenses | 3,673 | 7,847 | |||
Other operating expenses | 13,266 | 26,177 | |||
Depreciation and amortization | 17,985 | 36,309 | |||
Acquisition related costs | 64 | 216 | |||
Total expenses | 42,554 | 85,768 | |||
Operating income (loss) | 21,507 | 41,904 | |||
Interest expense | (429) | (1,524) | |||
Gain on early extinguishment of debt | 104 | ||||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 21,078 | 40,484 | |||
Income (loss) from continuing operations | 21,078 | 40,484 | |||
Loss from discontinued operations | (126) | (275) | |||
Net income (loss) | 20,952 | 40,209 | |||
Total assets | 1,700,724 | 1,700,724 | |||
Operating Segments | Investment in SIR | |||||
Expenses: | |||||
Gain (Loss) on issuance of shares by Select Income REIT | 16 | 16 | |||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | 16 | 16 | |||
Equity in earnings of investees | 9,383 | 19,240 | |||
Income (loss) from continuing operations | 9,399 | 19,256 | |||
Net income (loss) | 9,399 | 19,256 | |||
Total assets | 492,762 | 492,762 | |||
Corporate, Non-Segment | |||||
Expenses: | |||||
General and administrative | 4,008 | 3,713 | 7,534 | 7,717 | |
Total expenses | 4,008 | 3,713 | 7,534 | 7,717 | |
Operating income (loss) | (4,008) | (3,713) | (7,534) | (7,717) | |
Dividend income | 363 | 363 | |||
Interest income | 10 | 16 | 12 | ||
Interest expense | (9,885) | (7,173) | (18,154) | (4,549) | |
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of investees | (13,520) | (10,886) | (25,309) | (12,254) | |
Income tax expense | (35) | (32) | (50) | (62) | |
Equity in earnings of investees | 17 | 22 | 94 | 95 | |
Income (loss) from continuing operations | (13,538) | (10,896) | (25,265) | (12,221) | |
Net income (loss) | (13,538) | $ (10,896) | (25,265) | $ (12,221) | |
Total assets | $ 57,724 | $ 57,724 | $ 37,679 |