Office Properties Income Trust (OPI) 10-Q 28 Jul 16 2016 Q2 Quarterly report Financial data

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