Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 26, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Select Income REIT | |
Entity Central Index Key | 1,537,667 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 89,487,371 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Real estate properties: | ||
Land | $ 1,041,739 | $ 1,038,686 |
Buildings and improvements | 3,176,330 | 3,103,734 |
Real estate properties, gross | 4,218,069 | 4,142,420 |
Accumulated depreciation | (295,501) | (242,628) |
Real estate properties, net | 3,922,568 | 3,899,792 |
Properties held for sale | 5,829 | 0 |
Acquired real estate leases, net | 493,780 | 506,298 |
Cash and cash equivalents | 18,155 | 22,127 |
Restricted cash | 103 | 44 |
Rents receivable, including straight line rents of $117,403 and $117,008, respectively, net of allowance for doubtful accounts of $1,149 and $873, respectively | 122,292 | 124,089 |
Deferred leasing costs, net | 11,443 | 10,051 |
Other assets, net | 103,225 | 77,281 |
Total assets | 4,677,395 | 4,639,682 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Unsecured revolving credit facility | 102,000 | 327,000 |
Unsecured term loan, net | 348,746 | 348,373 |
Senior unsecured notes, net | 1,776,087 | 1,430,300 |
Mortgage notes payable, net | 227,772 | 245,643 |
Accounts payable and other liabilities | 92,783 | 101,605 |
Assumed real estate lease obligations, net | 70,989 | 77,622 |
Rents collected in advance | 20,127 | 18,815 |
Security deposits | 8,411 | 11,887 |
Due to related persons | 8,181 | 4,475 |
Total liabilities | 2,655,096 | 2,565,720 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,487,371 and 89,427,869 shares issued and outstanding, respectively | 895 | 894 |
Additional paid in capital | 2,180,845 | 2,179,669 |
Cumulative net income | 506,138 | 441,307 |
Cumulative other comprehensive income | 39,633 | 20,472 |
Cumulative common distributions | (705,212) | (568,380) |
Total shareholders' equity | 2,022,299 | 2,073,962 |
Total liabilities and shareholders' equity | $ 4,677,395 | $ 4,639,682 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Rents receivable, including straight line rents (in dollars) | $ 117,403 | $ 117,008 |
Rents receivable, allowance for doubtful accounts (in dollars) | $ 1,149 | $ 873 |
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 125,000,000 | 125,000,000 |
Common shares, shares issued (in shares) | 89,487,371 | 89,427,869 |
Common shares, shares outstanding (in shares) | 89,487,371 | 89,427,869 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
REVENUES: | ||||
Rental income | $ 98,635 | $ 96,037 | $ 293,020 | $ 290,512 |
Tenant reimbursements and other income | 19,379 | 18,999 | 57,158 | 56,660 |
Total revenues | 118,014 | 115,036 | 350,178 | 347,172 |
EXPENSES: | ||||
Real estate taxes | 11,489 | 10,755 | 33,168 | 31,565 |
Other operating expenses | 14,649 | 14,394 | 41,039 | 39,987 |
Depreciation and amortization | 34,713 | 33,366 | 102,770 | 100,240 |
Acquisition related costs | 0 | 13 | 0 | 71 |
General and administrative | 1,589 | 7,553 | 24,658 | 21,903 |
Write-off of straight line rents receivable, net | 0 | 0 | 12,517 | 0 |
Loss on asset impairment | 0 | 0 | 4,047 | 0 |
Loss on impairment of real estate assets | 0 | 0 | 229 | 0 |
Total expenses | 62,440 | 66,081 | 218,428 | 193,766 |
Operating income | 55,574 | 48,955 | 131,750 | 153,406 |
Dividend income | 397 | 397 | 1,190 | 872 |
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $1,716, $1,374, $4,688 and $4,124, respectively) | (24,383) | (20,690) | (68,278) | (61,883) |
Income before income tax expense and equity in earnings of an investee | 31,588 | 28,662 | 64,662 | 92,395 |
Income tax expense | (177) | (107) | (364) | (370) |
Equity in earnings of an investee | 31 | 13 | 533 | 107 |
Net income | 31,442 | 28,568 | 64,831 | 92,132 |
Net income allocated to noncontrolling interest | 0 | 0 | 0 | (33) |
Net income attributed to SIR | 31,442 | 28,568 | 64,831 | 92,099 |
Other comprehensive income (loss): | ||||
Unrealized gain on investment in available for sale securities | 4,284 | 11,061 | 18,804 | 37,339 |
Unrealized gain (loss) on interest rate swap | 27 | 312 | 61 | (898) |
Equity in unrealized gain of an investee | 116 | 80 | 296 | 175 |
Other comprehensive income (loss) | 4,427 | 11,453 | 19,161 | 36,616 |
Comprehensive income | 35,869 | 40,021 | 83,992 | 128,748 |
Comprehensive income allocated to noncontrolling interest | 0 | 0 | 0 | (33) |
Comprehensive income attributed to SIR | $ 35,869 | $ 40,021 | $ 83,992 | $ 128,715 |
Weighted average common shares outstanding - basic (in shares) | 89,355 | 89,308 | 89,341 | 89,295 |
Weighted average common shares outstanding - diluted (in shares) | 89,379 | 89,334 | 89,364 | 89,318 |
Net income attributed to SIR per common share - basic and diluted (in dollars per share) | $ 0.35 | $ 0.32 | $ 0.73 | $ 1.03 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net amortization of debt premiums and discounts and debt issuance costs | $ 1,716 | $ 1,374 | $ 4,688 | $ 4,124 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 64,831 | $ 92,132 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 59,994 | 58,482 |
Net amortization of debt issuance costs, premiums and discounts | 4,688 | 4,124 |
Amortization of acquired real estate leases and assumed real estate lease obligations | 40,308 | 39,582 |
Amortization of deferred leasing costs | 1,170 | 1,037 |
Write-off of straight line rents and provision for losses on rents receivable | 12,856 | 431 |
Straight line rental income | (16,361) | (19,054) |
Impairment losses | 4,276 | 0 |
Other non-cash expenses, net | (453) | (215) |
Equity in earnings of an investee | (533) | (107) |
Change in assets and liabilities: | ||
Restricted cash | 0 | (32) |
Rents receivable | 1,563 | 767 |
Deferred leasing costs | (2,591) | (3,794) |
Other assets | (7,355) | (4,627) |
Accounts payable and other liabilities | (4,910) | (11,137) |
Rents collected in advance | 1,312 | 2,662 |
Security deposits | 263 | (60) |
Due to related persons | 3,706 | 1,016 |
Net cash provided by operating activities | 162,764 | 161,207 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions and deposits | (117,458) | (10,200) |
Real estate improvements | (11,723) | (6,739) |
Cash placed in escrow for investing activities | (59) | 0 |
Net cash used in investing activities | (129,240) | (16,939) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of senior unsecured notes, after discounts | 345,394 | 0 |
Proceeds from borrowings | 220,000 | 135,000 |
Payments of borrowings | (462,552) | (141,207) |
Payment of debt issuance costs | (3,197) | 0 |
Distributions to common shareholders | (136,832) | (134,961) |
Repurchase of common shares | (309) | (305) |
Purchase of noncontrolling interest | 0 | (3,908) |
Distributions to noncontrolling interest | 0 | (66) |
Net cash used in financing activities | (37,496) | (145,447) |
Decrease in cash and cash equivalents | (3,972) | (1,179) |
Cash and cash equivalents at beginning of period | 22,127 | 17,876 |
Cash and cash equivalents at end of period | 18,155 | 16,697 |
SUPPLEMENTAL DISCLOSURES: | ||
Interest paid | 71,913 | 71,374 |
Income taxes paid | $ 373 | $ 409 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Select Income REIT and its subsidiaries, or SIR, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2016 , or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of 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 the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessments of the carrying values and impairments of long lived assets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2017, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-01, Clarifying the Definition of a Business . This update provides additional guidance on evaluating whether transactions should be accounted for as an acquisition (or disposal) of assets or of a business. This update defines three requirements for a set of assets and activities (collectively referred to as a “set”) to be considered a business: inputs, processes and outputs. As a result of the implementation of this update, certain property acquisitions which under previous guidance were accounted for as business combinations are now accounted for as acquisitions of assets. In an acquisition of assets, certain acquisition costs are capitalized as opposed to expensed under previous guidance. On January 1, 2017, we adopted FASB ASU No. 2016-09, Compensation - Stock Compensation , which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The adoption of ASU No. 2016-09 did not have a material impact in our condensed consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In August 2015, the FASB provided for a one-year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We are continuing to evaluate ASU No. 2014-09 (and related clarifying guidance issued by the FASB); however, we do not expect its adoption to have a significant impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. ASU No. 2016-01 states that these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale securities we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We do not expect this guidance to have a material impact in our condensed consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash , which clarifies how companies should present restricted cash and restricted cash equivalents. Companies will show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon the adoption of ASU No. 2016-18, we will reconcile both cash and cash equivalents and restricted cash and restricted cash equivalents, whereas under the current guidance we explain the changes during the period for cash and cash equivalents only. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting , which clarifies which changes to the terms or conditions of a share based payment award are subject to the guidance on modification accounting under FASB Accounting Standards Codification Topic 718. Entities would apply the modification accounting guidance unless the value, vesting requirements and classification of a share based payment award are the same immediately before and after a change to the terms or conditions of the award. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are continuing to evaluate ASU No. 2017-09; however, we do not expect its adoption to have a material impact in our condensed consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities , which amends the hedge accounting model and simplifies the application of hedge accounting by eliminating the requirement to separately measure and report hedge ineffectiveness. ASU No. 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2017-12 will have in our condensed consolidated financial statements. |
Real Estate Properties
Real Estate Properties | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate [Abstract] | |
Real Estate Properties | Real Estate Properties As of September 30, 2017 , we owned properties ( 366 buildings, leasable land parcels and easements) with approximately 45,496,000 rentable square feet, including 229 buildings, leasable land parcels and easements with approximately 17,778,000 rentable square feet in Hawaii. Acquisitions: On January 13, 2017, we acquired a land parcel adjacent to one of our properties located in McAlester, OK for $ 281 , including $ 55 of acquisition related costs. In September 2017, we substantially completed the development of a 35,000 square foot expansion for the tenant at our McAlester, OK property which is located on this adjacent parcel. During the nine months ended September 30, 2017 , we also acquired three properties ( four buildings) with a combined 648,017 rentable square feet for an aggregate purchase price of $ 117,177 , including acquisition related costs of $ 719 . These acquisitions were accounted for as acquisitions of assets. We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets as follows: Number of Rentable Acquired Properties/ Square Purchase Building and Real Estate Date Location Buildings Feet Price Land Improvements Leases April 2017 Norfolk, VA 1 / 1 288,662 $ 55,506 $ 4,497 $ 32,505 $ 18,504 May 2017 Houston, TX 1 / 1 84,150 20,459 887 12,594 6,978 July 2017 Indianapolis, IN 1 / 2 275,205 41,212 3,251 24,973 12,988 3 / 4 648,017 $ 117,177 $ 8,635 $ 70,072 $ 38,470 Dispositions: In June 2017, we began marketing for sale a land parcel in Kapolei, HI with 417,610 rentable square feet and a net book value of $ 5,829 . Also in June 2017, we entered into an agreement to sell one mainland office property (one building) located in Maynard, MA with 287,037 rentable square feet. We recorded a loss on impairment of real estate assets for the property in Maynard, MA of $ 229 in June 2017 to reduce its carrying value from $ 17,489 to its estimated fair value less costs to sell of $ 17,260 . As of June 30, 2017, both of these real estate properties were classified as held for sale in our condensed consolidated balance sheets and included in continuing operations in our condensed consolidated statements of comprehensive income. In July 2017, the prospective buyer of the property in Maynard, MA terminated that purchase agreement. As of September 30, 2017, we determined the property in Maynard, MA no longer met the criteria to be classified as held for sale and accordingly, we reclassified the carrying amount to held and used in operations. We continued to classify the land parcel in Kapolei, HI as held for sale as of September 30, 2017. |
Tenant Concentration and Segmen
Tenant Concentration and Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
Tenant Concentration and Segment Information | Tenant Concentration and Segment Information We operate in one business segment: ownership of properties that include buildings and leased industrial lands that are primarily net leased to single tenants. During the periods presented in this report, no single tenant accounted for more than 10% of our total revenues. A “net leased property” or a property being “net leased” means that the building or land lease requires the tenant to pay rent and pay, or reimburse us, for all, or substantially all, property level operating expenses and capital expenditures, such as real estate taxes, insurance, utilities, maintenance and repairs, other than, in certain circumstances, roof and structural element related expenditures; however, in some instances, tenants reimburse us for all expenses in excess of certain amounts included in the stated rent. Our buildings and lands are primarily leased to single tenants. We define a single tenant leased building or land parcel as a building or land parcel with at least 90% of its rentable area is leased to one tenant. We also own some multi-tenant buildings on the island of Oahu, HI, and one mainland multi-tenant office building. For the three months ended September 30, 2017 and 2016, approximately 19.9% and 19.7% , respectively, and for the nine months ended September 30, 2017 and 2016, approximately 20.1% and 19.7% , respectively, of our total revenues were from 229 buildings, leasable land parcels and easements with a combined approximately 17,778,000 rentable square feet that we own on Oahu, HI. |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities We are exposed to certain risks relating to our ongoing business operations, including the effect of changes in interest rates. We use derivative instruments to manage only a part of our interest rate risk. We have an interest rate swap agreement to manage our interest rate risk exposure on a $41,000 mortgage note due 2020, with interest payable at a rate equal to LIBOR plus a premium. We record all derivatives on our balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate swap agreement, which we designate as a cash flow hedge: Fair Value Notional of Liability Amount as of Interest Effective Maturity as of Balance Sheet Location September 30, 2017 Rate (1) Date Date September 30, 2017 Interest rate swap Accounts payable and other liabilities $ 41,000 4.16 % 1/29/2015 8/3/2020 $ 507 (1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. The table below presents the effects of our interest rate derivative on our condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) $ 2 $ 219 $ (85 ) $ (1,182 ) Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion) $ 25 $ 93 $ 146 $ 284 We may enter into additional interest rate swaps or hedge agreements to manage some of our interest rate risk associated with other floating rate borrowings. |
Indebtedness
Indebtedness | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Our principal debt obligations at September 30, 2017 were: (1) our $102,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) our $350,000 unsecured term loan; (3) an aggregate outstanding principal amount of $1,800,000 of public issuances of senior unsecured notes; and (4) an aggregate outstanding principal amount of $227,420 of mortgage notes. Our $750,000 revolving credit facility and our $350,000 term loan are governed by a credit agreement with a syndicate of institutional lenders. This credit agreement includes a feature under which the maximum aggregate borrowing availability under our revolving credit facility and term loan may be increased to up to $2,200,000 on a combined basis under certain circumstances. Our $750,000 revolving credit facility has a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 105 basis points and a facility fee of 20 basis points per annum, based on the total amount of lending commitments. Both the interest rate premium and the facility fee for our revolving credit facility are subject to adjustment based on changes to our credit ratings. Upon the payment of an extension fee and meeting other conditions, we have the option to extend the maturity date of our revolving credit facility to March 29, 2020. As of September 30, 2017 and December 31, 2016 , the interest rate payable on borrowings under our revolving credit facility was 2.24% and 1.76% , respectively. The weighted average interest rate for borrowings under our revolving credit facility was 2.25% and 1.49% for the three months ended September 30, 2017 and 2016 , respectively, and 1.95% and 1.46% for the nine months ended September 30, 2017 and 2016 , respectively. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of September 30, 2017 and October 26, 2017 , we had $102,000 and $82,000 , respectively, outstanding under our revolving credit facility, and $ 648,000 and $ 668,000 , respectively, available to borrow under our revolving credit facility. Our $350,000 term loan has a maturity date of March 31, 2020 and interest payable on the amount outstanding of LIBOR plus 115 basis points. The interest rate premium for our term loan is subject to adjustment based on changes to our credit ratings. As of September 30, 2017 and December 31, 2016 , the interest rate payable for the amount outstanding under our term loan was 2.39% and 1.77% , respectively. The weighted average interest rate for the amount outstanding under our term loan was 2.38% and 1.64% for the three months ended September 30, 2017 and 2016 , respectively, and 2.17% and 1.61% for the nine months ended September 30, 2017 and 2016 , respectively. On May 15, 2017, we issued $ 350,000 aggregate principal amount of 4.250% senior unsecured notes due 2024 in an underwritten public offering. Net proceeds from this offering were $ 342,197 after discounts and expenses. Our credit agreement and our senior unsecured 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 and property manager. Our senior unsecured notes indenture and its supplements and our credit agreement also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions under certain circumstances, and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the respective covenants under our senior unsecured notes indenture and its supplements and our credit agreement at September 30, 2017 . On July 3, 2017, we repaid at par a $ 17,361 5.95% mortgage note which was secured by two buildings located in Carlsbad, CA. This mortgage note was scheduled to mature on September 1, 2017. At September 30, 2017 , nine of our buildings with a net book value of $368,843 were encumbered by mortgages we assumed in connection with our acquisition of those buildings. The aggregate principal amount outstanding under these mortgage notes as of September 30, 2017 was $227,420 . These mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets and liabilities measured at fair value at September 30, 2017 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset and liability: Fair Value at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Total (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements: Assets: Investment in RMR Inc. (1) $ 81,484 $ 81,484 $ — $ — Liabilities: Interest rate swap (2) $ (507 ) $ — $ (507 ) $ — (1) Our 1,586,836 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 $42,686 . The unrealized gain of $38,798 for these shares as of September 30, 2017 is included in cumulative other comprehensive income in our condensed consolidated balance sheet. (2) As discussed in Note 5, we have an interest rate swap agreement in connection with a $41,000 mortgage note. This interest rate swap agreement is carried at fair value and is included in accounts payable and other liabilities in our condensed consolidated balance sheets and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount for which we could be liable upon extinguishment of the liability. In addition to the assets and liabilities described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, a term loan, senior unsecured notes, mortgage notes payable, accounts payable, rents collected in advance, security deposits and amounts due to related persons. At September 30, 2017 and December 31, 2016 , the fair value 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: At September 30, 2017 At December 31, 2016 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Senior unsecured notes, due 2018 at 2.85% $ 349,586 $ 350,847 $ 348,667 $ 352,074 Senior unsecured notes, due 2020 at 3.60% $ 396,895 $ 405,514 $ 395,955 $ 400,656 Senior unsecured notes, due 2022 at 4.15% $ 295,930 $ 307,068 $ 295,301 $ 297,186 Senior unsecured notes, due 2024 at 4.25% $ 342,554 $ 352,749 $ — $ — Senior unsecured notes, due 2025 at 4.50% $ 391,122 $ 405,618 $ 390,377 $ 387,030 Mortgage notes payable $ 227,772 $ 227,544 $ 245,643 $ 243,845 (1) Includes unamortized debt issuance costs, premiums and discounts. We estimate the fair value of our senior unsecured notes using an average of the bid and ask prices of the notes as of the measurement date (Level 2 inputs). We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date (Level 3 inputs). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Awards: On May 23, 2017, we granted 3,000 of our common shares, valued at $24.13 per share, the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day, to each of our five Trustees as part of their annual compensation. On September 14, 2017, we granted an aggregate of 57,850 of our common shares to our officers and certain other employees of RMR LLC valued at $ 23.11 per share, the closing price of our common shares on Nasdaq on that day. Share Purchases: On June 30, 2017, we purchased 222 of our common shares valued at $24.03 per share, the closing price of our common shares on Nasdaq on that day, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. On September 19, 2017, we purchased an aggregate of 13,126 of our common shares valued at $ 23.18 per common share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Distributions: On February 21, 2017, we paid a regular quarterly distribution of $0.51 per common share, or $45,608 , to shareholders of record on January 23, 2017. On May 18, 2017, we paid a regular quarterly distribution of $ 0.51 per common share, or $ 45,608 , to shareholders of record on April 21, 2017. On August 17, 2017, we paid a regular quarterly distribution of $ 0.51 per common share, or approximately $ 45,616 , to shareholders of record on July 24, 2017. On October 12, 2017, we declared a regular quarterly distribution of $0.51 per common share, or approximately $45,600 , to shareholders of record on October 23, 2017. We expect to pay this distribution on or about November 16, 2017. |
Cumulative Other Comprehensive
Cumulative Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Cumulative Other Comprehensive Income | Cumulative Other Comprehensive Income The following tables present changes in the amounts we recognized in cumulative other comprehensive income by component for the three and nine months ended September 30, 2017 : Three Months Ended September 30, 2017 Unrealized Gain Unrealized Equity in on Investment Gain Unrealized Gain in Available for on Derivative (Loss) of an Sale Securities Instruments (1) an Investee (2) Total Balance at June 30, 2017 $ 34,514 $ 403 $ 289 $ 35,206 Other comprehensive income before reclassifications 4,284 2 125 4,411 Amounts reclassified from cumulative other comprehensive income to net income — 25 (9 ) 16 Net current period other comprehensive income 4,284 27 116 4,427 Balance at September 30, 2017 $ 38,798 $ 430 $ 405 $ 39,633 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Nine Months Ended September 30, 2017 Unrealized Gain Unrealized Equity in on Investment Gain (Loss) Unrealized Gain in Available for on Derivative (Loss) of an Sale Securities Instruments (1) Investee (2) Total Balance at December 31, 2016 $ 19,994 $ 369 $ 109 $ 20,472 Other comprehensive income (loss) before reclassifications 18,804 (85 ) 322 19,041 Amounts reclassified from cumulative other comprehensive income to net income — 146 (26 ) 120 Net current period other comprehensive income 18,804 61 296 19,161 Balance at September 30, 2017 $ 38,798 $ 430 $ 405 $ 39,633 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. |
Weighted Average Common Shares
Weighted Average Common Shares | 9 Months Ended |
Sep. 30, 2017 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |
Weighted Average Common Shares | Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average common shares for basic earnings per share 89,355 89,308 89,341 89,295 Effect of dilutive securities: unvested share awards 24 26 23 23 Weighted average common shares for diluted earnings per share 89,379 89,334 89,364 89,318 |
Business and Property Managemen
Business and Property Management Agreements with RMR LLC | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Business and Property Management Agreements with RMR LLC | Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 61 and $ 5,739 for the three months ended September 30, 2017 and 2016 , respectively, and $ 19,944 and $ 16,187 for the nine months ended September 30, 2017 and 2016 , respectively. As of September 30, 2017 , we estimated annual incentive fees for 2017 to be $ 3,288 based on our common share total return, as defined. The business management fee expense for the three months ended September 30, 2017 includes a reduction of $5,478 to reverse the part of a prior 2017 period accrual for estimated incentive fees that exceeded the amount estimated as of September 30, 2017 . The actual amount of annual incentive fees payable to RMR LLC for 2017, if any, will be based on our common share total return, as defined, for the three year period ending December 31, 2017 , and will be payable in 2018. The net business management fees we recognized are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $ 3,340 and $ 3,224 for the three months ended September 30, 2017 and 2016 , respectively, and $ 9,766 and $ 9,522 for the nine months ended September 30, 2017 and 2016 , respectively. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses, including certain payroll and related costs incurred by RMR LLC, are generally incorporated into rents charged to our tenants. We reimbursed RMR LLC $ 2,162 and $ 2,177 for property management related expenses for the three months ended September 30, 2017 and 2016 , respectively, and $ 6,105 and $ 5,587 for the nine months ended September 30, 2017 and 2016 , respectively, which amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. In addition, we are responsible for our share of RMR LLC’s costs for providing our internal audit function. The amounts recognized as expense for internal audit costs were $ 67 and $ 34 for the three months ended September 30, 2017 and 2016 , respectively, and $ 201 and $ 168 for the nine months ended September 30, 2017 and 2016 , respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income for these periods. |
Related Person Transactions
Related Person Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., Government Properties Income Trust, or GOV, Affiliates Insurance Company, an Indiana insurance company, or AIC, and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also our Trustees or officers. Our Manager, RMR LLC. See Note 11 for further information regarding our management agreements with RMR LLC. We have historically granted share awards to certain RMR LLC employees under our equity compensation plans. In September 2017 and 2016, we granted annual share awards of 57,850 and 53,400 of our common shares, respectively, to our officers and to other employees of RMR LLC. In September 2017 and 2016, we purchased 13,126 and 11,017 of our common shares, respectively, at the closing price of our common shares on the Nasdaq on the date of purchase, from certain employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. We include amounts recognized as expense for share awards to RMR LLC employees in general and administrative expenses in our condensed consolidated statements of comprehensive income. RMR Inc. RMR LLC is a subsidiary of RMR Inc. and RMR Inc. is the managing member of RMR LLC. The controlling shareholder of RMR Inc., ABP Trust, is owned by our Managing Trustees. As of September 30, 2017 , we owned 1,586,836 shares of class A common stock of RMR Inc. See Note 7 for further information regarding our investment in RMR Inc. GOV. GOV is our largest shareholder. As of September 30, 2017 , GOV owned 24,918,421 , or approximately 27.8% , of our outstanding common shares. Our Managing Trustees are also managing trustees of GOV, our President and Chief Operating Officer also serves as the president and chief operating officer of GOV and one of our Independent Trustees serves as an independent trustee of GOV. RMR LLC provides management services to GOV and us. AIC. We, ABP Trust, GOV and four other companies to which RMR LLC provides management services currently own AIC in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $ 2,029 in connection with this insurance program for the policy year ending June 30, 2018, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. As of September 30, 2017 and December 31, 2016, our investment in AIC had a carrying value of $ 7,945 and $ 7,116 , respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income related to our investment in AIC, which amounts are presented as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Our other comprehensive income includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC. For further information about these and certain other related person relationships and transactions, please refer to our Annual Report. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies We believe some of our properties may contain asbestos. We believe any asbestos on our properties is contained in accordance with applicable laws and regulations and we have no current plans to remove it. If we removed the asbestos or demolished the affected properties, certain environmental regulations govern the manner in which the asbestos must be handled and removed, and we could incur substantial costs complying with such regulations. Due to the uncertainty of the timing and amount of costs we may incur, we cannot reasonably estimate the fair value and we have not recognized a liability in our financial statements for these costs. Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed; however, we do not have any present plans to change the use of those lands or to undertake this environmental cleanup. In general, we do not have any insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as, for example, fire or flood, although some of our tenants may maintain such insurance. However, as of both September 30, 2017 and December 31, 2016, accrued environmental remediation costs of $8,160 were included in accounts payable and other liabilities in our condensed consolidated balance sheets. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions or costs are not present in our properties or that other costs we incur to remediate contamination will not have a material adverse effect on our business or financial condition. Charges for environmental remediation costs, if any, are included in other operating expenses in our condensed consolidated statements of comprehensive income. In March 2017, one of our tenants filed for bankruptcy and rejected two leases with us: (i) a lease for a property located in Huntsville, AL with approximately 1,400,000 rentable square feet and an original lease term until August 2032 and (ii) a lease for a property in Hanover, PA with approximately 502,000 rentable square feet and an original lease term until September 2028. The Huntsville, AL property is occupied by a subtenant of our former tenant who is now contractually obligated to pay rent to us in an amount equal to the rent under the former tenant’s lease for a term that runs concurrently with our former tenant’s original lease term, but subject to certain tenant termination rights. We expect that the lost rents plus carrying costs, such as real estate taxes, insurance, security and other operating costs, from a fully vacant Hanover, PA property may total approximately $ 3,800 per year. The bankruptcy court overseeing this matter recently granted us permission to offset our damages with a $3,739 security deposit held from the bankrupt former tenant with respect to the Hanover, PA property. During the three months ended March 31, 2017, we recorded a non-cash charge of $ 12,517 to write off straight line rents receivable (net of the $ 3,739 security deposit) related to the rejected leases with the bankrupt former tenant at both properties plus an impairment charge of $ 4,047 related to the write-off of lease intangibles related to the property located in Hanover, PA. On June 29, 2016, we received an assessment from the State of Washington for real estate excise tax, interest and penalties of $2,837 on certain properties we acquired in connection with our acquisition of Cole Corporate Income Trust, Inc. in January 2015. We believe we are not liable for this tax and are disputing the assessment. As of September 30, 2017 , we have not recorded a loss reserve related to this matter. |
Real Estate Properties Real Est
Real Estate Properties Real Estate Properties (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate [Abstract] | |
Schedule of real estate properties | We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets as follows: Number of Rentable Acquired Properties/ Square Purchase Building and Real Estate Date Location Buildings Feet Price Land Improvements Leases April 2017 Norfolk, VA 1 / 1 288,662 $ 55,506 $ 4,497 $ 32,505 $ 18,504 May 2017 Houston, TX 1 / 1 84,150 20,459 887 12,594 6,978 July 2017 Indianapolis, IN 1 / 2 275,205 41,212 3,251 24,973 12,988 3 / 4 648,017 $ 117,177 $ 8,635 $ 70,072 $ 38,470 |
Derivatives and Hedging Activ21
Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of interest rate swap derivatives | We record all derivatives on our balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate swap agreement, which we designate as a cash flow hedge: Fair Value Notional of Liability Amount as of Interest Effective Maturity as of Balance Sheet Location September 30, 2017 Rate (1) Date Date September 30, 2017 Interest rate swap Accounts payable and other liabilities $ 41,000 4.16 % 1/29/2015 8/3/2020 $ 507 (1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. |
Schedule of effects on consolidated statements of income and comprehensive income | The table below presents the effects of our interest rate derivative on our condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) $ 2 $ 219 $ (85 ) $ (1,182 ) Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion) $ 25 $ 93 $ 146 $ 284 |
Fair Value of Assets and Liab22
Fair Value of Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements of assets and liabilities | The table below presents certain of our assets and liabilities measured at fair value at September 30, 2017 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset and liability: Fair Value at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Total (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements: Assets: Investment in RMR Inc. (1) $ 81,484 $ 81,484 $ — $ — Liabilities: Interest rate swap (2) $ (507 ) $ — $ (507 ) $ — (1) Our 1,586,836 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 $42,686 . The unrealized gain of $38,798 for these shares as of September 30, 2017 is included in cumulative other comprehensive income in our condensed consolidated balance sheet. (2) As discussed in Note 5, we have an interest rate swap agreement in connection with a $41,000 mortgage note. This interest rate swap agreement is carried at fair value and is included in accounts payable and other liabilities in our condensed consolidated balance sheets and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount for which we could be liable upon extinguishment of the liability. |
Schedule of carrying value and the estimated fair market value of mortgage notes payable | At September 30, 2017 and December 31, 2016 , the fair value 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: At September 30, 2017 At December 31, 2016 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Senior unsecured notes, due 2018 at 2.85% $ 349,586 $ 350,847 $ 348,667 $ 352,074 Senior unsecured notes, due 2020 at 3.60% $ 396,895 $ 405,514 $ 395,955 $ 400,656 Senior unsecured notes, due 2022 at 4.15% $ 295,930 $ 307,068 $ 295,301 $ 297,186 Senior unsecured notes, due 2024 at 4.25% $ 342,554 $ 352,749 $ — $ — Senior unsecured notes, due 2025 at 4.50% $ 391,122 $ 405,618 $ 390,377 $ 387,030 Mortgage notes payable $ 227,772 $ 227,544 $ 245,643 $ 243,845 (1) Includes unamortized debt issuance costs, premiums and discounts. |
Cumulative Other Comprehensiv23
Cumulative Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Cumulative Other Comprehensive Income (Loss) | The following tables present changes in the amounts we recognized in cumulative other comprehensive income by component for the three and nine months ended September 30, 2017 : Three Months Ended September 30, 2017 Unrealized Gain Unrealized Equity in on Investment Gain Unrealized Gain in Available for on Derivative (Loss) of an Sale Securities Instruments (1) an Investee (2) Total Balance at June 30, 2017 $ 34,514 $ 403 $ 289 $ 35,206 Other comprehensive income before reclassifications 4,284 2 125 4,411 Amounts reclassified from cumulative other comprehensive income to net income — 25 (9 ) 16 Net current period other comprehensive income 4,284 27 116 4,427 Balance at September 30, 2017 $ 38,798 $ 430 $ 405 $ 39,633 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Nine Months Ended September 30, 2017 Unrealized Gain Unrealized Equity in on Investment Gain (Loss) Unrealized Gain in Available for on Derivative (Loss) of an Sale Securities Instruments (1) Investee (2) Total Balance at December 31, 2016 $ 19,994 $ 369 $ 109 $ 20,472 Other comprehensive income (loss) before reclassifications 18,804 (85 ) 322 19,041 Amounts reclassified from cumulative other comprehensive income to net income — 146 (26 ) 120 Net current period other comprehensive income 18,804 61 296 19,161 Balance at September 30, 2017 $ 38,798 $ 430 $ 405 $ 39,633 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. |
Weighted Average Common Shares
Weighted Average Common Shares (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |
Schedule of weighted average common shares, basic and diluted | 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): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Weighted average common shares for basic earnings per share 89,355 89,308 89,341 89,295 Effect of dilutive securities: unvested share awards 24 26 23 23 Weighted average common shares for diluted earnings per share 89,379 89,334 89,364 89,318 |
Real Estate Properties (Details
Real Estate Properties (Details) $ in Thousands | Jan. 13, 2017USD ($) | Jun. 30, 2017USD ($)ft² | Sep. 30, 2017USD ($)ft²Building | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)ft²BuildingProperty | Sep. 30, 2016USD ($) | May 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Real Estate Properties [Line Items] | ||||||||
Number of buildings, leasable land parcels easements | Building | 366 | 366 | ||||||
Net rentable area | ft² | 45,496,000 | 45,496,000 | ||||||
Properties held for sale | $ 5,829 | $ 5,829 | $ 0 | |||||
Loss on impairment of real estate assets | 0 | $ 0 | 229 | $ 0 | ||||
Real estate carrying value | $ 3,922,568 | $ 3,922,568 | $ 3,899,792 | |||||
Office and Industrial Properties | ||||||||
Real Estate Properties [Line Items] | ||||||||
Net rentable area | ft² | 648,017 | 648,017 | ||||||
Real estate aggregate purchase price, including acquisitions costs | $ 117,177 | $ 117,177 | ||||||
Real estate acquisition costs | $ 719 | |||||||
Number of properties acquired | Property | 3 | |||||||
Number of buildings acquired | Building | 4 | |||||||
HAWAII | ||||||||
Real Estate Properties [Line Items] | ||||||||
Number of buildings, leasable land parcels easements | Building | 229 | 229 | ||||||
Net rentable area | ft² | 17,778,000 | 17,778,000 | ||||||
McAlester, OK | ||||||||
Real Estate Properties [Line Items] | ||||||||
Real estate aggregate purchase price, including acquisitions costs | $ 281 | |||||||
Real estate acquisition costs | $ 55 | |||||||
Real estate property expansion, square feet | ft² | 35,000 | 35,000 | ||||||
Maynard, MA | ||||||||
Real Estate Properties [Line Items] | ||||||||
Net rentable area | ft² | 287,037 | |||||||
Loss on impairment of real estate assets | $ 229 | |||||||
Real estate carrying value | $ 17,260 | $ 17,489 | ||||||
Kapolei, HI | ||||||||
Real Estate Properties [Line Items] | ||||||||
Net rentable area | ft² | 417,610 | |||||||
Maynard, MA and Kapolei, HI | ||||||||
Real Estate Properties [Line Items] | ||||||||
Properties held for sale | $ 5,829 |
Real Estate Properties Purchase
Real Estate Properties Purchase Price Allocation of Real Estate Acquisitions (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | |||
Jul. 31, 2017USD ($)ft²BuildingProperty | May 31, 2017USD ($)ft²BuildingProperty | Apr. 30, 2017USD ($)ft²BuildingProperty | Sep. 30, 2017USD ($)ft²BuildingProperty | Dec. 31, 2016USD ($) | |
Real Estate [Line Items] | |||||
Net rentable area | ft² | 45,496,000 | ||||
Land | $ 1,041,739 | $ 1,038,686 | |||
Buildings and improvements | 3,176,330 | 3,103,734 | |||
Acquired real estate leases | $ 493,780 | $ 506,298 | |||
Office and Industrial Properties | |||||
Real Estate [Line Items] | |||||
Number of properties acquired | Property | 3 | ||||
Number of buildings acquired | Building | 4 | ||||
Net rentable area | ft² | 648,017 | ||||
Purchase Price | $ 117,177 | ||||
Land | 8,635 | ||||
Buildings and improvements | 70,072 | ||||
Office and Industrial Properties | Norfolk, VA | |||||
Real Estate [Line Items] | |||||
Number of properties acquired | Property | 1 | ||||
Number of buildings acquired | Building | 1 | ||||
Net rentable area | ft² | 288,662 | ||||
Purchase Price | $ 55,506 | ||||
Land | 4,497 | ||||
Buildings and improvements | 32,505 | ||||
Office and Industrial Properties | Houston, TX | |||||
Real Estate [Line Items] | |||||
Number of properties acquired | Property | 1 | ||||
Number of buildings acquired | Building | 1 | ||||
Net rentable area | ft² | 84,150 | ||||
Purchase Price | $ 20,459 | ||||
Land | 887 | ||||
Buildings and improvements | 12,594 | ||||
Office and Industrial Properties | Indianapolis, IN | |||||
Real Estate [Line Items] | |||||
Number of properties acquired | Property | 1 | ||||
Number of buildings acquired | Building | 2 | ||||
Net rentable area | ft² | 275,205 | ||||
Purchase Price | $ 41,212 | ||||
Land | 3,251 | ||||
Buildings and improvements | 24,973 | ||||
Acquired Real Estate Leases | Office and Industrial Properties | |||||
Real Estate [Line Items] | |||||
Acquired real estate leases | $ 38,470 | ||||
Acquired Real Estate Leases | Office and Industrial Properties | Norfolk, VA | |||||
Real Estate [Line Items] | |||||
Acquired real estate leases | $ 18,504 | ||||
Acquired Real Estate Leases | Office and Industrial Properties | Houston, TX | |||||
Real Estate [Line Items] | |||||
Acquired real estate leases | $ 6,978 | ||||
Acquired Real Estate Leases | Office and Industrial Properties | Indianapolis, IN | |||||
Real Estate [Line Items] | |||||
Acquired real estate leases | $ 12,988 |
Tenant Concentration and Segm27
Tenant Concentration and Segment Information (Details) ft² in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017ft²Building | Sep. 30, 2016ft²Building | Sep. 30, 2017ft²segmentBuildingtenant | Sep. 30, 2016ft²Building | |
Number of business segments | segment | 1 | |||
Minimum percentage of rentable square feet of a building or land leased as a building or land parcel to single tenant | 90.00% | |||
Number of tenants under single tenant leased buildings and lands | tenant | 1 | |||
Percentage of revenues | 19.90% | 19.70% | 20.10% | 19.70% |
Number of buildings, leasable land parcels easements | Building | 366 | 366 | ||
Net rentable area | ft² | 45,496 | 45,496 | ||
Oahu, HI | ||||
Number of buildings, leasable land parcels easements | Building | 229 | 229 | 229 | 229 |
Net rentable area | ft² | 17,778 | 17,778 | 17,778 | 17,778 |
Derivatives and Hedging Activ28
Derivatives and Hedging Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Designated Cash Flow Hedge RollForward | ||||
Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) | $ 2 | $ 219 | $ (85) | $ (1,182) |
Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion) | 25 | $ 93 | 146 | $ 284 |
Cole Corporate Income Trust, Inc. (CCIT) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Mortgage notes payable with related interest rate swap | 41,000 | |||
Interest Rate Swap | Cash Flow Hedging | Designated as Hedging Instrument | Cole Corporate Income Trust, Inc. (CCIT) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative, amount of hedged item | $ 41,000 | $ 41,000 | ||
Hedge rate (as a percent) | 4.16% | 4.16% | ||
Derivative, effective date | Jan. 29, 2015 | |||
Derivative, maturity date | Aug. 3, 2020 | |||
Cash flow hedge derivative instrument liabilities at fair value | $ 507 | $ 507 |
Indebtedness (Details)
Indebtedness (Details) $ in Thousands | Jul. 03, 2017USD ($)Property | May 15, 2017USD ($) | Sep. 30, 2017USD ($)Property | Sep. 30, 2016 | Sep. 30, 2017USD ($)Property | Sep. 30, 2016 | Oct. 26, 2017USD ($) | Dec. 31, 2016USD ($) |
Indebtedness | ||||||||
Unsecured revolving credit facility | $ 102,000 | $ 102,000 | $ 327,000 | |||||
Maximum borrowing capacity of revolving credit facility and term loan | $ 2,200,000 | $ 2,200,000 | ||||||
Number of buildings collateralized | Property | 9 | 9 | ||||||
Aggregate net book value of secured properties | $ 368,843 | $ 368,843 | ||||||
Unsecured revolving credit facility | ||||||||
Indebtedness | ||||||||
Maximum borrowing capacity of revolving credit facility and term loan | 750,000 | 750,000 | ||||||
Term loan, due in 2020 | LIBOR | ||||||||
Indebtedness | ||||||||
Aggregate principal amount | $ 350,000 | $ 350,000 | ||||||
Interest rate payable on borrowings (as a percent) | 1.15% | |||||||
Interest rate at the end of the period (as a percent) | 2.39% | 2.39% | 1.77% | |||||
Weighted average annual interest rate (as a percent) | 2.38% | 1.64% | 2.17% | 1.61% | ||||
Senior unsecured notes | ||||||||
Indebtedness | ||||||||
Aggregate principal amount | $ 1,800,000 | $ 1,800,000 | ||||||
Mortgage note payable | ||||||||
Indebtedness | ||||||||
Assumed mortgage principal | 227,420 | 227,420 | ||||||
Revolving credit facility, due in 2019 | LIBOR | ||||||||
Indebtedness | ||||||||
Unsecured revolving credit facility | $ 102,000 | $ 102,000 | ||||||
Interest rate payable on borrowings (as a percent) | 1.05% | |||||||
Facility fee per annum (as a percent) | 0.20% | |||||||
Interest rate at the end of the period (as a percent) | 2.24% | 2.24% | 1.76% | |||||
Weighted average annual interest rate (as a percent) | 2.25% | 1.49% | 1.95% | 1.46% | ||||
Principal repayment due until maturity | $ 0 | |||||||
Remaining borrowing capacity | $ 648,000 | $ 648,000 | ||||||
Subsequent Event | Revolving credit facility, due in 2019 | LIBOR | ||||||||
Indebtedness | ||||||||
Unsecured revolving credit facility | $ 82,000 | |||||||
Remaining borrowing capacity | $ 668,000 | |||||||
4.25% Senior Notes due 2024 | Senior unsecured notes | ||||||||
Indebtedness | ||||||||
Aggregate principal amount | $ 350,000 | |||||||
Stated interest rate | 4.25% | |||||||
Proceeds from issuance of senior notes | $ 342,197 | |||||||
5.95% Mortgage Note | ||||||||
Indebtedness | ||||||||
Stated interest rate | 5.95% | |||||||
Number of buildings collateralized | Property | 2 | |||||||
Repayment of mortgage note | $ 17,361 |
Fair Value of Assets and Liab30
Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Unrealized gain (loss) on investment in available for sale securities | $ 4,284 | $ 11,061 | $ 18,804 | $ 37,339 | |
Senior unsecured notes, net | 1,776,087 | 1,776,087 | $ 1,430,300 | ||
Mortgage notes payable, net | $ 227,772 | $ 227,772 | 245,643 | ||
Class A common shares | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Shares holding (in shares) | 1,586,836 | 1,586,836 | |||
Historical cost | $ 42,686 | ||||
Unrealized gain (loss) on investment in available for sale securities | 38,798 | ||||
Carrying Amount | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Mortgage notes payable, net | $ 227,772 | 227,772 | 245,643 | ||
Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Mortgage notes payable, net | $ 227,544 | 227,544 | 243,845 | ||
Cole Corporate Income Trust, Inc. (CCIT) | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Mortgage notes payable with related interest rate swap | 41,000 | ||||
Cole Corporate Income Trust, Inc. (CCIT) | Fair Value, Inputs, Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Mortgage notes payable with related interest rate swap | $ 41,000 | ||||
Senior unsecured notes, due 2018 at 2.85% | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Stated interest rate | 2.85% | 2.85% | |||
Senior unsecured notes, due 2018 at 2.85% | Carrying Amount | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 349,586 | $ 349,586 | 348,667 | ||
Senior unsecured notes, due 2018 at 2.85% | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 350,847 | $ 350,847 | 352,074 | ||
Senior unsecured notes, due 2020 at 3.60% | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Stated interest rate | 3.60% | 3.60% | |||
Senior unsecured notes, due 2020 at 3.60% | Carrying Amount | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 396,895 | $ 396,895 | 395,955 | ||
Senior unsecured notes, due 2020 at 3.60% | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 405,514 | $ 405,514 | 400,656 | ||
Senior unsecured notes, due 2022 at 4.15% | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Stated interest rate | 4.15% | 4.15% | |||
Senior unsecured notes, due 2022 at 4.15% | Carrying Amount | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 295,930 | $ 295,930 | 295,301 | ||
Senior unsecured notes, due 2022 at 4.15% | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 307,068 | $ 307,068 | 297,186 | ||
Senior unsecured notes, due 2024 at 4.25% | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Stated interest rate | 4.25% | 4.25% | |||
Senior unsecured notes, due 2024 at 4.25% | Carrying Amount | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 342,554 | $ 342,554 | 0 | ||
Senior unsecured notes, due 2024 at 4.25% | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 352,749 | $ 352,749 | 0 | ||
Senior unsecured notes, due 2025 at 4.50% | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Stated interest rate | 4.50% | 4.50% | |||
Senior unsecured notes, due 2025 at 4.50% | Carrying Amount | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | $ 391,122 | $ 391,122 | 390,377 | ||
Senior unsecured notes, due 2025 at 4.50% | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Senior unsecured notes, net | 405,618 | 405,618 | $ 387,030 | ||
Fair Value, Measurements, Recurring | Interest Rate Swap | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Interest rate swap | (507) | (507) | |||
Fair Value, Measurements, Recurring | Interest Rate Swap | Fair Value, Inputs, Level 1 | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Interest rate swap | 0 | 0 | |||
Fair Value, Measurements, Recurring | Interest Rate Swap | Fair Value, Inputs, Level 2 | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Interest rate swap | (507) | (507) | |||
Fair Value, Measurements, Recurring | Interest Rate Swap | Fair Value, Inputs, Level 3 | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Interest rate swap | 0 | 0 | |||
RMR Group Inc. | Fair Value, Measurements, Recurring | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Investment in RMR Inc. | 81,484 | 81,484 | |||
RMR Group Inc. | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Investment in RMR Inc. | 81,484 | 81,484 | |||
RMR Group Inc. | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Investment in RMR Inc. | 0 | 0 | |||
RMR Group Inc. | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Estimated Fair Value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||||
Investment in RMR Inc. | $ 0 | $ 0 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, $ in Thousands | Oct. 12, 2017USD ($)$ / shares | Sep. 19, 2017$ / sharesshares | Sep. 14, 2017$ / sharesshares | Aug. 17, 2017USD ($)$ / shares | Jun. 30, 2017$ / sharesshares | May 23, 2017Trustee$ / sharesshares | May 18, 2017USD ($)$ / shares | Feb. 21, 2017USD ($)$ / shares |
Shareholders' Equity | ||||||||
Number of trustees | Trustee | 5 | |||||||
Stock repurchased during period (in shares) | shares | 13,126 | 222 | ||||||
Share price of repurchased shares (in dollars per share) | $ 23.18 | $ 24.03 | ||||||
Dividend paid | ||||||||
Distributions | ||||||||
Distribution paid on common shares (in dollars per share) | $ 0.51 | $ 0.51 | $ 0.51 | |||||
Distribution to common shareholders | $ | $ 45,616 | $ 45,608 | $ 45,608 | |||||
Subsequent Event | Dividend declared | ||||||||
Distributions | ||||||||
Dividends declared (in dollars per share) | $ 0.51 | |||||||
Dividends payable | $ | $ 45,600 | |||||||
Trustees | Common shares | ||||||||
Shareholders' Equity | ||||||||
Common shares granted (in shares) | shares | 3,000 | |||||||
Grant date fair value of shares granted (in dollars per share) | $ 24.13 | |||||||
Officers and certain employees | Common shares | ||||||||
Shareholders' Equity | ||||||||
Common shares granted (in shares) | shares | 57,850 | |||||||
Grant date fair value of shares granted (in dollars per share) | $ 23.11 |
Cumulative Other Comprehensiv32
Cumulative Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | $ 2,073,962 | |
Other comprehensive income before reclassifications | $ 4,411 | 19,041 |
Amounts reclassified from cumulative other comprehensive income to net income | 16 | 120 |
Net current period other comprehensive income | 4,427 | 19,161 |
Balance at the end of the period | 2,022,299 | 2,022,299 |
Unrealized Gain on Investment in Available for Sale Securities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 34,514 | 19,994 |
Other comprehensive income before reclassifications | 4,284 | 18,804 |
Amounts reclassified from cumulative other comprehensive income to net income | 0 | 0 |
Net current period other comprehensive income | 4,284 | 18,804 |
Balance at the end of the period | 38,798 | 38,798 |
Unrealized Gain on Derivative Instruments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 403 | 369 |
Other comprehensive income before reclassifications | 2 | (85) |
Amounts reclassified from cumulative other comprehensive income to net income | 25 | 146 |
Net current period other comprehensive income | 27 | 61 |
Balance at the end of the period | 430 | 430 |
Equity in Unrealized Gain (Loss) of an Investee | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 289 | 109 |
Other comprehensive income before reclassifications | 125 | 322 |
Amounts reclassified from cumulative other comprehensive income to net income | (9) | (26) |
Net current period other comprehensive income | 116 | 296 |
Balance at the end of the period | 405 | 405 |
AOCI Attributable to Parent | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 35,206 | 20,472 |
Balance at the end of the period | $ 39,633 | $ 39,633 |
Weighted Average Common Share33
Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | ||||
Weighted average common shares for basic earnings per share (in shares) | 89,355 | 89,308 | 89,341 | 89,295 |
Effect of dilutive securities: unvested share awards (in shares) | 24 | 26 | 23 | 23 |
Weighted average common shares for diluted earnings per share (in shares) | 89,379 | 89,334 | 89,364 | 89,318 |
Business and Property Managem34
Business and Property Management Agreements with RMR LLC (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)employeeAgreement | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)employeeAgreement | Sep. 30, 2016USD ($) | |
Related Party Transaction [Line Items] | ||||
Number of employees | employee | 0 | 0 | ||
RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Number of management service agreements | Agreement | 2 | 2 | ||
Business management fees | $ 61 | $ 5,739 | $ 19,944 | $ 16,187 |
Incentive fee expense | 3,288 | |||
Construction supervision fees | 3,340 | 3,224 | 9,766 | 9,522 |
Related party reimbursement expenses | 2,162 | 2,177 | 6,105 | 5,587 |
Internal audit expense | 67 | $ 34 | $ 201 | $ 168 |
Accrual reversal | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Business management fees | $ (5,478) |
Related Person Transactions - N
Related Person Transactions - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Reit Management And Research Inc | Common Class A | |||
Related Party Transaction [Line Items] | |||
Shares holding (in shares) | 1,586,836 | ||
RMR LLC | |||
Related Party Transaction [Line Items] | |||
Share awards granted (in shares) | 57,850 | 53,400 | |
Shares purchased from employees (in shares) | 13,126 | 11,017 | |
Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Equity method investments | $ 7,945 | $ 7,116 | |
Government Properties Income Trust | Shareholder | |||
Related Party Transaction [Line Items] | |||
Shares holding (in shares) | 24,918,421 | ||
Ownership percentage, equity method | 27.80% | ||
Property Insurance Premium Expense | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Property insurance premiums paid | $ 2,029 |
Contingencies (Details)
Contingencies (Details) $ in Thousands | Jun. 29, 2016USD ($) | Mar. 31, 2017ft²Leasetenant | Sep. 30, 2017USD ($)ft² | Mar. 31, 2017USD ($)ft²Lease | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)ft² | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | ||||||||
Accrued environmental remediation costs | $ 8,160 | $ 8,160 | $ 8,160 | |||||
Loss Contingencies [Line Items] | ||||||||
Number of tenants that filed for bankruptcy | tenant | 1 | |||||||
Number of leases with bankruptcy tenants | Lease | 2 | 2 | ||||||
Net rentable area | ft² | 45,496,000 | 45,496,000 | ||||||
Security deposit from bankrupt tenant | $ 8,411 | $ 8,411 | $ 11,887 | |||||
Write-off of straight line rents receivable, net | 0 | $ 0 | 12,517 | $ 0 | ||||
Impairment of leasehold | 0 | 0 | 4,047 | 0 | ||||
Real estate taxes | $ 11,489 | $ 10,755 | $ 33,168 | $ 31,565 | ||||
Office and Industrial Properties | ||||||||
Loss Contingencies [Line Items] | ||||||||
Net rentable area | ft² | 648,017 | 648,017 | ||||||
Huntsville, AL | Office and Industrial Properties | ||||||||
Loss Contingencies [Line Items] | ||||||||
Net rentable area | ft² | 1,400,000 | 1,400,000 | ||||||
Hanover, PA | Office and Industrial Properties | ||||||||
Loss Contingencies [Line Items] | ||||||||
Net rentable area | ft² | 502,000 | 502,000 | ||||||
Huntsville, AL & Hanover, PA | ||||||||
Loss Contingencies [Line Items] | ||||||||
Estimate of loss due to tenant bankruptcy | $ 3,800 | $ 3,800 | ||||||
Security deposit from bankrupt tenant | $ 3,739 | $ 3,739 | ||||||
Write-off of straight line rents receivable, net | $ 12,517 | |||||||
Impairment of leasehold | $ 4,047 | |||||||
Cole Corporate Income Trust, Inc. (CCIT) | ||||||||
Loss Contingencies [Line Items] | ||||||||
Real estate taxes | $ 2,837 |