Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
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 | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 89,489,754 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Real estate properties: | ||
Land | $ 1,041,767 | $ 1,041,767 |
Buildings and improvements | 3,180,492 | 3,178,098 |
Real estate properties, gross | 4,222,259 | 4,219,865 |
Accumulated depreciation | (334,159) | (314,249) |
Real estate properties, net | 3,888,100 | 3,905,616 |
Properties held for sale | 5,829 | 5,829 |
Acquired real estate leases, net | 461,577 | 477,577 |
Cash and cash equivalents | 30,884 | 658,719 |
Restricted cash | 1,612 | 178 |
Rents receivable, including straight line rents of $125,567 and $122,010, respectively, net of allowance for doubtful accounts of $1,797 and $1,396, respectively | 131,445 | 127,672 |
Deferred leasing costs, net | 14,459 | 14,295 |
Other assets, net | 135,103 | 113,144 |
Total assets | 4,669,009 | 5,303,030 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Unsecured revolving credit facility | 107,000 | 0 |
ILPT revolving credit facility | 302,000 | 750,000 |
Unsecured term loan, net | 0 | 348,870 |
Senior unsecured notes, net | 1,428,571 | 1,777,425 |
Mortgage notes payable, net | 210,749 | 210,785 |
Accounts payable and other liabilities | 86,092 | 101,352 |
Assumed real estate lease obligations, net | 66,577 | 68,783 |
Rents collected in advance | 21,099 | 15,644 |
Security deposits | 8,412 | 8,346 |
Due to related persons | 10,065 | 30,006 |
Total liabilities | 2,240,565 | 3,311,211 |
Commitments and contingencies | ||
Shareholders' equity attributable to SIR: | ||
Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,486,754 and 89,487,371 shares issued and outstanding, respectively | 895 | 895 |
Additional paid in capital | 2,311,923 | 2,180,896 |
Cumulative net income | 592,826 | 508,213 |
Cumulative other comprehensive income | 1,440 | 52,665 |
Cumulative common distributions | (796,489) | (750,850) |
Total shareholders' equity attributable to SIR | 2,110,595 | 1,991,819 |
Noncontrolling interest in consolidated subsidiary | 317,849 | 0 |
Total shareholders' equity | 2,428,444 | 1,991,819 |
Total liabilities and shareholders' equity | $ 4,669,009 | $ 5,303,030 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Rents receivable, including straight line rents | $ 125,567 | $ 122,010 |
Rents receivable, allowance for doubtful accounts | $ 1,797 | $ 1,396 |
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) | 89,486,754 | 89,487,371 |
Common shares, shares outstanding (in shares) | 89,486,754 | 89,487,371 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
REVENUES: | ||
Rental income | $ 99,755 | $ 97,344 |
Tenant reimbursements and other income | 20,874 | 18,950 |
Total revenues | 120,629 | 116,294 |
EXPENSES: | ||
Real estate taxes | 11,788 | 10,843 |
Other operating expenses | 15,282 | 12,867 |
Depreciation and amortization | 34,946 | 33,740 |
General and administrative | 13,941 | 14,901 |
Write-off of straight line rents receivable, net | 0 | 12,517 |
Loss on asset impairment | 0 | 4,047 |
Total expenses | 75,957 | 88,915 |
Operating income | 44,672 | 27,379 |
Dividend income | 397 | 397 |
Unrealized gain on equity securities | 16,900 | 0 |
Interest income | 510 | 13 |
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $1,764 and $1,404, respectively) | (23,492) | (21,087) |
Loss on early extinguishment of debt | (1,192) | 0 |
Income before income tax expense and equity in earnings of an investee | 37,795 | 6,702 |
Income tax expense | (160) | (102) |
Equity in earnings of an investee | 44 | 128 |
Net income | 37,679 | 6,728 |
Net income allocated to noncontrolling interest | (4,479) | 0 |
Net income attributed to SIR | 33,200 | 6,728 |
Net income | 37,679 | 6,728 |
Other comprehensive income: | ||
Unrealized gain on investment in available for sale securities | 0 | 15,868 |
Unrealized gain on interest rate swap | 281 | 131 |
Equity in unrealized (loss) gain of an investee | (93) | 122 |
Other comprehensive income | 188 | 16,121 |
Comprehensive income | 37,867 | 22,849 |
Comprehensive income allocated to noncontrolling interest | (4,479) | 0 |
Comprehensive income attributed to SIR | $ 33,388 | $ 22,849 |
Weighted average common shares outstanding - basic (in shares) | 89,382 | 89,331 |
Weighted average common shares outstanding - diluted (in shares) | 89,390 | 89,348 |
Net income attributed to SIR per common share - basic and diluted (in dollars per share) | $ 0.37 | $ 0.08 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net amortization of debt premiums and discounts and debt issuance costs | $ 1,764 | $ 1,404 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 37,679 | $ 6,728 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 20,256 | 19,862 |
Net amortization of debt issuance costs, premiums and discounts | 1,764 | 1,404 |
Amortization of acquired real estate leases and assumed real estate lease obligations | 13,794 | 13,109 |
Amortization of deferred leasing costs | 443 | 410 |
Write-off of straight line rents and provision for losses on rents receivable | 400 | 12,454 |
Straight line rental income | (3,556) | (5,391) |
Loss on asset impairment | 0 | 4,047 |
Loss on early extinguishment of debt | 1,192 | 0 |
Other non-cash expenses, net | (502) | (311) |
Unrealized gain on equity securities | (16,900) | 0 |
Equity in earnings of an investee | (44) | (128) |
Change in assets and liabilities: | ||
Rents receivable | (617) | 1,599 |
Deferred leasing costs | (448) | (1,346) |
Other assets | (1,642) | (5,510) |
Accounts payable and other liabilities | (15,833) | (17,519) |
Rents collected in advance | 5,455 | (137) |
Security deposits | 66 | 193 |
Due to related persons | (19,941) | 7,743 |
Net cash provided by operating activities | 21,566 | 37,207 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions and deposits | 0 | (5,977) |
Real estate improvements | (1,438) | (4,559) |
Net cash used in investing activities | (1,438) | (10,536) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common shares in subsidiary, net | 444,309 | 0 |
Repayments of mortgage notes payable | 0 | (89) |
Borrowings under revolving credit facilities | 134,000 | 80,000 |
Repayments of revolving credit facilities | (475,000) | (65,000) |
Payment of debt issuance costs | (4,183) | 0 |
Repayment of term loan | (350,000) | 0 |
Repayment of senior unsecured notes | (350,000) | 0 |
Distributions to common shareholders | (45,639) | (45,608) |
Repurchase of common shares | (16) | 0 |
Net cash used in financing activities | (646,529) | (30,697) |
Decrease in cash, cash equivalents and restricted cash | (626,401) | (4,026) |
Cash, cash equivalents and restricted cash at beginning of period | 658,897 | 22,171 |
Cash, cash equivalents and restricted cash at end of period | 32,496 | 18,145 |
SUPPLEMENTAL DISCLOSURES: | ||
Interest paid | 33,670 | 33,233 |
Income taxes paid | 0 | (30) |
Total cash and cash equivalents and restricted cash shown in the statement of cash flows | $ 658,897 | $ 22,171 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Select Income REIT and its subsidiaries, or the Company, 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, 2017 , or our Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years' condensed consolidated financial statements to conform to the current year's presentation. The preparation of 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. On January 17, 2018, Industrial Logistics Properties Trust, or ILPT, our then wholly owned subsidiary, completed an initial public offering and listing on The Nasdaq Stock Market LLC, or Nasdaq, of 20,000,000 of its common shares, or the ILPT IPO. ILPT intends to qualify for taxation as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2018 and to maintain such qualification thereafter. ILPT owns 266 of our consolidated buildings, leasable land parcels and easements with a combined 28,540,000 rentable square feet, consisting of 226 buildings, leasable land parcels and easements with approximately 16,834,000 rentable square feet located on the island of Oahu, HI, and 40 industrial buildings with approximately 11,706,000 rentable square feet located in 24 other states, or collectively, the ILPT Properties. Following the ILPT IPO, most of our 100% owned properties are office properties. Following the ILPT IPO, we continue to own 45,000,000 ILPT common shares, or approximately 69.2% of ILPT’s outstanding common shares as of March 31, 2018. We accounted for the sale of the ILPT common shares in accordance with Accounting Standards Codification 810 and concluded that we retained control under the voting interest model given our ownership percentage in ILPT, therefore ILPT remains one of our consolidated subsidiaries and the difference between net book value sold and share price paid is treated as a reduction to additional paid in capital. The 30.8% portion of ILPT that is not controlled by us, or the noncontrolling interest, is presented as a separate component of equity in our condensed consolidated balance sheets. In addition, net income attributable to the noncontrolling interest is calculated based on the 30.8% of ILPT shares not owned by us and is presented separately in our condensed consolidated statements of comprehensive income. See Note 13 for additional information regarding the ILPT IPO. References to and data for "the Company", "SIR", "we", "us" and "our" refer to and include data for Select Income REIT and its consolidated subsidiaries, including its consolidated subsidiary, ILPT, unless the context indicates otherwise. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), 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.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. On January 1, 2018, we adopted FASB 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. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $51,413 from cumulative other comprehensive income to cumulative net income. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash , which requires companies to show the changes in the total of cash and cash equivalents and restricted cash in the statements of cash flows. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash in our condensed consolidated balance sheets are presented with cash and cash equivalents in the condensed consolidated statements of cash flows. We have also included a reconciliation of the totals in the condensed consolidated statements of cash flows to the related captions in the condensed consolidated balance sheets. The adoption of this update did not change our balance sheet presentation. 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. We currently expect to adopt the standard using the modified retrospective approach. |
Real Estate Properties
Real Estate Properties | 3 Months Ended |
Mar. 31, 2018 | |
Real Estate [Abstract] | |
Real Estate Properties | Real Estate Properties As of March 31, 2018 , we owned 366 buildings, leasable land parcels and easements with approximately 45,496,000 rentable square feet. During the three months ended March 31, 2018, we committed $403 for expenditures related to tenant improvements and leasing costs for approximately 351,000 square feet of leases executed during the period. Committed but unspent tenant related obligations based on existing leases as of March 31, 2018, were $32,662 . |
Tenant Concentration
Tenant Concentration | 3 Months Ended |
Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Tenant Concentration | Tenant Concentration During the periods presented in these financial statements, 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 leased to one tenant. We also own some multi-tenant buildings on the island of Oahu, HI, and one mainland multi-tenant office building. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information In this Note 5, references to SIR refer to SIR and its consolidated subsidiaries, excluding ILPT. As of March 31, 2018 , we had two operating segments: properties 100% owned by SIR (primarily net leased office properties) and properties owned by ILPT (primarily industrial and logistics properties). We have restated the 2017 segment table below to present our segment information retrospectively. For the Three Months Ended March 31, 2018 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 64,946 $ 34,809 $ — $ 99,755 Tenant reimbursements and other income 15,078 5,796 — 20,874 Total revenues 80,024 40,605 — 120,629 EXPENSES: Real estate taxes 7,203 4,585 — 11,788 Other operating expenses 11,737 3,545 — 15,282 Depreciation and amortization 28,073 6,873 — 34,946 General and administrative — — 13,941 13,941 Total expenses 47,013 15,003 13,941 75,957 Operating income 33,011 25,602 (13,941 ) 44,672 Dividend income — — 397 397 Unrealized gain on equity securities — — 16,900 16,900 Interest income — — 510 510 Interest expense (1,447 ) (380 ) (21,665 ) (23,492 ) Loss on early extinguishment of debt — — (1,192 ) (1,192 ) Income before income tax expense and equity in earnings of an investee 31,564 25,222 (18,991 ) 37,795 Income tax expense — — (160 ) (160 ) Equity in earnings of an investee — — 44 44 Net income 31,564 25,222 (19,107 ) 37,679 Net income allocated to noncontrolling interest — — (4,479 ) (4,479 ) Net income attributed to SIR $ 31,564 $ 25,222 $ (23,586 ) $ 33,200 At March 31, 2018 SIR ILPT Corporate Consolidated Total assets $ 3,108,823 $ 1,403,704 $ 156,482 $ 4,669,009 For the Three Months Ended March 31, 2017 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 63,474 $ 33,870 $ — $ 97,344 Tenant reimbursements and other income 13,380 5,570 — 18,950 Total revenues 76,854 39,440 — 116,294 EXPENSES: Real estate taxes 6,504 4,339 — 10,843 Other operating expenses 10,135 2,732 — 12,867 Depreciation and amortization 26,929 6,811 — 33,740 General and administrative — — 14,901 14,901 Write-off of straight line rents receivable, net 12,517 — — 12,517 Loss on asset impairment 4,047 — — 4,047 Total expenses 60,132 13,882 14,901 88,915 Operating income 16,722 25,558 (14,901 ) 27,379 Dividend income — — 397 397 Interest income — — 13 13 Interest expense (1,657 ) (555 ) (18,875 ) (21,087 ) Income before income tax expense and equity in earnings of an investee 15,065 25,003 (33,366 ) 6,702 Income tax expense — — (102 ) (102 ) Equity in earnings of an investee — — 128 128 Net income 15,065 25,003 (33,340 ) 6,728 Net income allocated to noncontrolling interest — — — — Net income attributed to SIR $ 15,065 $ 25,003 $ (33,340 ) $ 6,728 At December 31, 2017 SIR ILPT Corporate Consolidated Total assets $ 3,128,182 $ 1,405,592 $ 769,256 $ 5,303,030 |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 3 Months Ended |
Mar. 31, 2018 | |
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 Asset Amount as of Interest Effective Maturity as of Balance Sheet Location March 31, 2018 Rate (1) Date Date March 31, 2018 Interest rate swap Other assets $ 41,000 4.16 % 1/29/2015 8/3/2020 $ 204 (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 months ended March 31, 2018 and 2017 : Three Months Ended March 31, 2018 2017 Amount of gain recognized in cumulative other comprehensive income (effective portion) $ 291 $ 61 Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion) $ (10 ) $ 70 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 | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Our principal debt obligations at March 31, 2018 were: (1) $107,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) $ 302,000 of outstanding borrowings under ILPT's $750,000 unsecured revolving credit facility; (3) an aggregate outstanding principal amount of $1,450,000 of public issuances of senior unsecured notes; and (4) an aggregate outstanding principal amount of $210,750 of mortgage notes. Our $750,000 revolving credit facility is 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 may be increased to up to $1,850,000 in certain circumstances. Our $750,000 revolving credit facility has a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 125 basis points and a facility fee of 25 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 March 31, 2018 and December 31, 2017 , the interest rate payable on borrowings under our revolving credit facility was 2.99% and 2.53% , respectively. The weighted average interest rate for borrowings under our revolving credit facility was 2.75% and 1.81% for the three months ended March 31, 2018 and 2017 , 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 March 31, 2018 and April 30, 2018 , we had $107,000 and $97,000 , respectively, outstanding under our revolving credit facility, and $ 643,000 and $ 653,000 , respectively, available to borrow under our revolving credit facility. On December 29, 2017, ILPT obtained a $750,000 secured revolving credit facility which initially had a maturity date of March 29, 2018. Upon the completion of the ILPT IPO, ILPT's secured revolving credit facility became a $750,000 unsecured revolving credit facility and the maturity date was extended to December 29, 2021. Following the ILPT IPO, borrowings under ILPT's revolving credit facility are available for ILPT's general business purposes, including acquisitions. Interest on borrowings under ILPT's revolving credit facility is calculated at floating rates based on LIBOR plus a premium that varies based on ILPT's leverage ratio. ILPT has the option to extend the maturity date of its revolving credit facility for two six month periods, subject to payment of extension fees and satisfaction of other conditions. If ILPT later achieves an investment grade credit rating, it will then be able to elect to continue to have the interest premium based on ILPT's leverage ratio or ILPT may instead elect to have the interest premium based on its credit rating, or a ratings election. ILPT is also required to pay a commitment fee on the unused portion of ILPT's revolving credit facility until and if such time as ILPT makes a ratings election, and thereafter ILPT will be required to pay a facility fee in lieu of such commitment fee based on the maximum amount of ILPT's revolving credit facility. ILPT may borrow, repay and reborrow funds under its revolving credit facility until maturity, and no principal repayment is due until maturity. The agreement governing ILPT's revolving credit facility, or ILPT's credit agreement, also includes a feature under which the maximum borrowing availability under ILPT's revolving credit facility may be increased to up to $1,500,000 in certain circumstances. In addition, during the first quarter of 2018, ILPT completed the syndication of its revolving credit facility with a group of institutional lenders. As of March 31, 2018 and December 31, 2017, the interest rate payable on borrowings under ILPT's revolving credit facility was 3.23% and 2.89% , respectively. The weighted average interest rate for borrowings under ILPT's revolving credit facility was 2.97% for the three months ended March 31, 2018. As of March 31, 2018 and April 30, 2018, ILPT had $302,000 and $292,000 , respectively, outstanding under its revolving credit facility, and $448,000 and $458,000 , respectively, available to borrow under its revolving credit facility. On January 2, 2018, we redeemed at par plus accrued interest all $350,000 of our 2.85% senior unsecured notes due 2018 and, on January 31, 2018, we repaid our $350,000 term loan in full without penalty. During the three months ended March 31, 2018 , we recognized a loss on early extinguishment of debt aggregating $1,192 from the write-off of unamortized debt issuance costs and discounts related to these repayments. Our credit agreement, ILPT's 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 and ILPT's credit agreement, a change of control of us or ILPT, respectively, which includes The RMR Group LLC, or RMR LLC, ceasing to act as business and property manager for us or ILPT, respectively. Our senior unsecured notes indenture and its supplements, our credit agreement and ILPT's credit agreement also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions in 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 and that ILPT was in compliance with the terms and conditions of the covenants under ILPT's credit agreement at March 31, 2018 . At March 31, 2018 , six of our buildings with a net book value of $339,636 were encumbered by mortgages we assumed in connection with our acquisition of those buildings. One of these buildings with a net book value of $66,166 is owned by ILPT. The aggregate principal amount outstanding under these mortgage notes as of March 31, 2018 was $210,750 , of which $48,750 was owed by ILPT. 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 | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets measured at fair value at March 31, 2018 , 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 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) $ 110,999 $ 110,999 $ — $ — Interest rate swap (2) 204 — 204 — $ 111,203 $ 110,999 $ 204 $ — (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 . During the three months ended March 31, 2018 , we recorded an unrealized gain of $16,900 to adjust our investment in RMR Inc. to its fair value. (2) As discussed in Note 6, 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 other assets in our condensed consolidated balance sheet as of March 31, 2018 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 we could receive upon extinguishment of the related liability. In addition to the assets described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, ILPT's revolving credit facility, a prior term loan, senior unsecured notes, mortgage notes payable, accounts payable, rents collected in advance, security deposits and amounts due to related persons. At March 31, 2018 and December 31, 2017 , 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 March 31, 2018 At December 31, 2017 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Senior unsecured notes, due 2018 at 2.85% (2) $ — $ — $ 349,896 $ 349,731 Senior unsecured notes, due 2020 at 3.60% $ 397,536 $ 399,140 $ 397,214 $ 404,050 Senior unsecured notes, due 2022 at 4.15% $ 296,361 $ 301,325 $ 296,143 $ 304,199 Senior unsecured notes, due 2024 at 4.25% $ 343,041 $ 342,710 $ 342,797 $ 347,877 Senior unsecured notes, due 2025 at 4.50% $ 391,633 $ 401,268 $ 391,375 $ 403,998 Mortgage notes payable $ 210,749 $ 207,205 $ 210,785 $ 209,200 (1) Includes unamortized debt issuance costs, premiums and discounts. (2) On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes. 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 | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity The following is a reconciliation of changes in our shareholders’ equity for the three months ended March 31, 2018 : Shareholders’ Equity Shareholders’ Attributable to Total Equity Noncontrolling Shareholders’ Attributable to SIR Interest Equity Balance at December 31, 2017 $ 1,991,819 $ — $ 1,991,819 Net income 33,200 4,479 37,679 Other comprehensive income 188 — 188 Issuance of shares of subsidiary, net 131,025 313,284 444,309 Distributions to common shareholders (45,639 ) — (45,639 ) Share grants 18 86 104 Share repurchases (16 ) — (16 ) Balance at March 31, 2018 $ 2,110,595 $ 317,849 $ 2,428,444 Share Awards: On March 27, 2018, in accordance with ILPT's trustee compensation arrangements, ILPT granted 1,000 of its common shares, valued at $20.87 per share, the closing price of its common shares on Nasdaq on that day, to each of its five trustees as part of their annual compensation. On April 2, 2018, in accordance with our Trustee compensation arrangements, we granted 3,000 of our common shares, valued at $ 19.15 per share, the closing price of our common shares on Nasdaq on that day, to our Managing Trustee who was elected as a Managing Trustee that day. Share Purchases: On January 1, 2018, we purchased 617 of our common shares valued at $ 25.13 per common share, the closing price of our common shares on Nasdaq on December 29, 2017, 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. Distributions: On February 22, 2018, we paid a regular quarterly distribution of $0.51 per common share, or $45,639 , to shareholders of record on January 29, 2018. On April 19, 2018, we declared a regular quarterly distribution of $0.51 per common share, or approximately $45,600 , to shareholders of record on April 30, 2018. We expect to pay this distribution on or about May 17, 2018. On April 19, 2018, ILPT declared a prorated distribution of $0.27 per ILPT common share, or approximately $17,600 , for the period from January 17, 2018 (the date ILPT completed the ILPT IPO) through March 31, 2018, to ILPT's shareholders of record on April 30, 2018. This prorated distribution is based upon a quarterly distribution by ILPT of $0.33 per ILPT common share ( $1.32 per ILPT common share per year). ILPT expects to pay this distribution on or about May 14, 2018. Accordingly, we expect to receive $12,150 from ILPT as a result of our ownership of 45,000,000 ILPT common shares. |
Cumulative Other Comprehensive
Cumulative Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Cumulative Other Comprehensive Income | Cumulative Other Comprehensive Income The following table presents changes in the amounts we recognized in cumulative other comprehensive income by component for the three months ended March 31, 2018 : 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 December 31, 2017 $ 51,413 $ 682 $ 570 $ 52,665 Amounts reclassified from cumulative other comprehensive income to cumulative net income (51,413 ) — — (51,413 ) Subtotal — 682 570 1,252 Other comprehensive income before reclassifications — 291 (81 ) 210 Amounts reclassified from cumulative other comprehensive income to net income — (10 ) (12 ) (22 ) Net current period other comprehensive income (loss) — 281 (93 ) 188 Balance at March 31, 2018 $ — $ 963 $ 477 $ 1,440 (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 | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 2017 Weighted average common shares for basic earnings per share 89,382 89,331 Effect of dilutive securities: unvested share awards 8 17 Weighted average common shares for diluted earnings per share 89,390 89,348 |
Business and Property Managemen
Business and Property Management Agreements with RMR LLC | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Business and Property Management Agreements with RMR LLC | Business and Property Management Agreements with RMR LLC Neither we nor ILPT have any employees. The personnel and various services we and ILPT require to operate our respective businesses 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. ILPT also has similar agreements with RMR LLC under which RMR LLC provides management services to ILPT and its subsidiaries comparable to those provided to us. On January 17, 2018, simultaneously with ILPT entering into its agreements with RMR LLC in connection with the ILPT IPO, our agreements with RMR LLC were amended to avoid any payments by us for services rendered by RMR LLC to ILPT; ILPT pays for those services directly. Pursuant to our business management agreement with RMR LLC and ILPT's business management agreement with RMR LLC, we recognized net business management fees of $ 11,155 and $ 13,387 for the three months ended March 31, 2018 and 2017, respectively, which amount for the three months ended March 31, 2018 includes $ 1,482 of business management fees incurred by ILPT for the period beginning on January 17, 2018, the date on which ILPT entered into its business management agreement with RMR LLC, through March 31, 2018. The net business management fees payable to RMR LLC for the three months ended March 31, 2018 include estimated 2018 incentive fees of $ 5,358 payable by us based on our common share total return, as defined, as of March 31, 2018 and do not include any estimated incentive fees that may be payable by ILPT under its business management agreement with RMR LLC because, as of March 31, 2018, ILPT estimated no incentive fees payable by it for 2018. Although we recognized estimated incentive fees in accordance with GAAP, the actual amount of incentive fees payable by us to RMR LLC for 2018, if any, will be based on our common share total return, as defined, for the three year period ending December 31, 2018, and will be payable in 2019. Similarly, the actual amount of incentive fees payable by ILPT to RMR LLC for 2018, if any, will be based on ILPT’s common share total return, as defined, for the period beginning on January 12, 2018, the first day ILPT’s common shares began trading on Nasdaq, and ending on December 31, 2018, and will be payable in 2019. The net business management fees we recognized for the three months ended March 31, 2017 included $ 7,846 of the then estimated 2017 incentive fees; in January 2018, we paid RMR LLC an incentive fee of $ 25,569 for 2017. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. Pursuant to our property management agreement with RMR LLC and ILPT's property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $ 3,319 and $ 3,158 for the three months ended March 31, 2018 and 2017, respectively, which amount for the three months ended March 31, 2018 includes $ 967 of property management fees incurred by ILPT for the period beginning on January 17, 2018, the date on which ILPT entered into its property management agreement with RMR LLC, through March 31, 2018. 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 $ 2,177 and $ 1,982 for property management related expenses, including with respect to properties owned by ILPT, for the three months ended March 31, 2018 and 2017, respectively, which amount for the three months ended March 31, 2018 includes $ 542 of expenses incurred and paid by ILPT for the period beginning on January 17, 2018 through March 31, 2018. These amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. In addition, we and ILPT are each responsible for our respective share of RMR LLC’s costs for providing our respective internal audit functions. The amounts we recognized as expense for internal audit costs, including amounts allocated to ILPT, were $ 121 and $ 67 for the three months ended March 31, 2018 and 2017, respectively, which amount for the three months ended March 31, 2018 includes $ 52 recognized by ILPT for the period beginning on January 17, 2018 through March 31, 2018. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. |
Related Person Transactions
Related Person Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., ILPT, Government Properties Income Trust, or GOV, Affiliates Insurance Company, or AIC, and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and which have trustees, directors and officers who are also our Trustees or officers. Our Manager, RMR LLC . We and ILPT each have two agreements with RMR LLC to provide management services to us. See Note 12 for further information regarding our and ILPT's management agreements with RMR LLC. RMR Inc. RMR LLC is a majority owned subsidiary of RMR Inc. and RMR Inc. is the managing member of RMR LLC. Adam D. Portnoy, one of our Managing Trustees, is the sole trustee of ABP Trust, the controlling shareholder of RMR Inc. and is a managing director, president and chief executive officer of RMR Inc., an officer of ABP Trust and RMR LLC and a managing trustee or managing director of all of the public companies to which RMR LLC or its subsidiaries provide management services. David M. Blackman, our other Managing Trustee and our President and Chief Operating Officer, also serves as an executive officer of RMR LLC. As of March 31, 2018, we owned 1,586,836 shares of class A common stock of RMR Inc. See Note 8 for further information regarding our investment in RMR Inc. ILPT . We are ILPT’s largest shareholder. As of March 31, 2018, we owned 45,000,000 ILPT common shares, or approximately 69.2% of ILPT’s outstanding common shares. ILPT was our wholly owned subsidiary until it completed the ILPT IPO on January 17, 2018. Adam D. Portnoy, one of our Managing Trustees, is also a managing trustee of ILPT. Our Chief Financial Officer and Treasurer also serves as the other managing trustee and the president and chief operating officer of ILPT. RMR LLC provides management services to ILPT and us. In connection with the ILPT IPO, ILPT reimbursed us for approximately $7,271 of the costs that we incurred in connection with ILPT’s formation and preparation for the ILPT IPO. Also, in connection with the ILPT IPO, we entered a transaction agreement with ILPT that governs ILPT’s separation from and relationship with us. The transaction agreement provides that, among other things, (1) the current assets and current liabilities of ILPT, as of the time of closing of the ILPT IPO, were settled so that we retain all pre-closing current assets and pre-closing current liabilities and ILPT assumes all post-closing current assets and post-closing current liabilities, (2) ILPT will indemnify us with respect to any of ILPT’s liabilities, and we will indemnify ILPT with respect to any of our liabilities, after giving effect to the settlement between us and ILPT of ILPT’s current assets and current liabilities, and (3) we and ILPT will cooperate to enforce the ownership limitations in our and ILPT’s respective declaration of trust as may be appropriate to qualify for and maintain qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, and otherwise to ensure each receives the economics of its assets and liabilities and to file future tax returns, including appropriate allocations of taxable income, expenses and other tax attributes. See Notes 1 and 12 for further information regarding ILPT and the ILPT IPO. GOV. GOV is our largest shareholder. As of March 31, 2018, GOV owned 24,918,421 of our common shares, or approximately 27.8% of our outstanding common shares. Adam D. Portnoy, one of our Managing Trustees, is also a managing trustee of GOV, and David M. Blackman, our other Managing Trustee and President and Chief Operating Officer, also serves as the president and chief operating officer 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. ILPT’s properties are included in this program and ILPT reimburses us for the part of the premium we paid that is allocated to ILPT’s properties. As of March 31, 2018 and December 31, 2017, our investment in AIC had a carrying value of $ 8,136 and $ 8,185 , respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income related to our investment in AIC, which is 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 and losses on securities which are owned by AIC related to our investment in AIC. For further information about these and other such relationships and certain other related person transactions, refer to our Annual Report. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
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 to limit losses that we may incur as a result of known or unknown environmental conditions, although some of our tenants may maintain such insurance. As of both March 31, 2018 and December 31, 2017 , we had accrued environmental remediation costs of $8,112 , which were included in accounts payable and other liabilities in our condensed consolidated balance sheets, including $7,002 related to the ILPT Properties. 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. 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 March 31, 2018 , we have not recorded a loss reserve related to this matter. |
Recent Accounting Pronounceme21
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), 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.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. On January 1, 2018, we adopted FASB 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. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $51,413 from cumulative other comprehensive income to cumulative net income. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash , which requires companies to show the changes in the total of cash and cash equivalents and restricted cash in the statements of cash flows. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash in our condensed consolidated balance sheets are presented with cash and cash equivalents in the condensed consolidated statements of cash flows. We have also included a reconciliation of the totals in the condensed consolidated statements of cash flows to the related captions in the condensed consolidated balance sheets. The adoption of this update did not change our balance sheet presentation. 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. We currently expect to adopt the standard using the modified retrospective approach. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment information | We have restated the 2017 segment table below to present our segment information retrospectively. For the Three Months Ended March 31, 2018 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 64,946 $ 34,809 $ — $ 99,755 Tenant reimbursements and other income 15,078 5,796 — 20,874 Total revenues 80,024 40,605 — 120,629 EXPENSES: Real estate taxes 7,203 4,585 — 11,788 Other operating expenses 11,737 3,545 — 15,282 Depreciation and amortization 28,073 6,873 — 34,946 General and administrative — — 13,941 13,941 Total expenses 47,013 15,003 13,941 75,957 Operating income 33,011 25,602 (13,941 ) 44,672 Dividend income — — 397 397 Unrealized gain on equity securities — — 16,900 16,900 Interest income — — 510 510 Interest expense (1,447 ) (380 ) (21,665 ) (23,492 ) Loss on early extinguishment of debt — — (1,192 ) (1,192 ) Income before income tax expense and equity in earnings of an investee 31,564 25,222 (18,991 ) 37,795 Income tax expense — — (160 ) (160 ) Equity in earnings of an investee — — 44 44 Net income 31,564 25,222 (19,107 ) 37,679 Net income allocated to noncontrolling interest — — (4,479 ) (4,479 ) Net income attributed to SIR $ 31,564 $ 25,222 $ (23,586 ) $ 33,200 At March 31, 2018 SIR ILPT Corporate Consolidated Total assets $ 3,108,823 $ 1,403,704 $ 156,482 $ 4,669,009 For the Three Months Ended March 31, 2017 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 63,474 $ 33,870 $ — $ 97,344 Tenant reimbursements and other income 13,380 5,570 — 18,950 Total revenues 76,854 39,440 — 116,294 EXPENSES: Real estate taxes 6,504 4,339 — 10,843 Other operating expenses 10,135 2,732 — 12,867 Depreciation and amortization 26,929 6,811 — 33,740 General and administrative — — 14,901 14,901 Write-off of straight line rents receivable, net 12,517 — — 12,517 Loss on asset impairment 4,047 — — 4,047 Total expenses 60,132 13,882 14,901 88,915 Operating income 16,722 25,558 (14,901 ) 27,379 Dividend income — — 397 397 Interest income — — 13 13 Interest expense (1,657 ) (555 ) (18,875 ) (21,087 ) Income before income tax expense and equity in earnings of an investee 15,065 25,003 (33,366 ) 6,702 Income tax expense — — (102 ) (102 ) Equity in earnings of an investee — — 128 128 Net income 15,065 25,003 (33,340 ) 6,728 Net income allocated to noncontrolling interest — — — — Net income attributed to SIR $ 15,065 $ 25,003 $ (33,340 ) $ 6,728 At December 31, 2017 SIR ILPT Corporate Consolidated Total assets $ 3,128,182 $ 1,405,592 $ 769,256 $ 5,303,030 |
Derivatives and Hedging Activ23
Derivatives and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 Asset Amount as of Interest Effective Maturity as of Balance Sheet Location March 31, 2018 Rate (1) Date Date March 31, 2018 Interest rate swap Other assets $ 41,000 4.16 % 1/29/2015 8/3/2020 $ 204 (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 months ended March 31, 2018 and 2017 : Three Months Ended March 31, 2018 2017 Amount of gain recognized in cumulative other comprehensive income (effective portion) $ 291 $ 61 Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion) $ (10 ) $ 70 |
Fair Value of Assets and Liab24
Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements of assets and liabilities | The table below presents certain of our assets measured at fair value at March 31, 2018 , 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 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) $ 110,999 $ 110,999 $ — $ — Interest rate swap (2) 204 — 204 — $ 111,203 $ 110,999 $ 204 $ — (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 . During the three months ended March 31, 2018 , we recorded an unrealized gain of $16,900 to adjust our investment in RMR Inc. to its fair value. (2) As discussed in Note 6, 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 other assets in our condensed consolidated balance sheet as of March 31, 2018 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 we could receive upon extinguishment of the related liability. |
Schedule of carrying value and the estimated fair market value of mortgage notes payable | At March 31, 2018 and December 31, 2017 , 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 March 31, 2018 At December 31, 2017 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Senior unsecured notes, due 2018 at 2.85% (2) $ — $ — $ 349,896 $ 349,731 Senior unsecured notes, due 2020 at 3.60% $ 397,536 $ 399,140 $ 397,214 $ 404,050 Senior unsecured notes, due 2022 at 4.15% $ 296,361 $ 301,325 $ 296,143 $ 304,199 Senior unsecured notes, due 2024 at 4.25% $ 343,041 $ 342,710 $ 342,797 $ 347,877 Senior unsecured notes, due 2025 at 4.50% $ 391,633 $ 401,268 $ 391,375 $ 403,998 Mortgage notes payable $ 210,749 $ 207,205 $ 210,785 $ 209,200 (1) Includes unamortized debt issuance costs, premiums and discounts. (2) On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of reconciliation of changes in shareholders' equity | The following is a reconciliation of changes in our shareholders’ equity for the three months ended March 31, 2018 : Shareholders’ Equity Shareholders’ Attributable to Total Equity Noncontrolling Shareholders’ Attributable to SIR Interest Equity Balance at December 31, 2017 $ 1,991,819 $ — $ 1,991,819 Net income 33,200 4,479 37,679 Other comprehensive income 188 — 188 Issuance of shares of subsidiary, net 131,025 313,284 444,309 Distributions to common shareholders (45,639 ) — (45,639 ) Share grants 18 86 104 Share repurchases (16 ) — (16 ) Balance at March 31, 2018 $ 2,110,595 $ 317,849 $ 2,428,444 |
Cumulative Other Comprehensiv26
Cumulative Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Cumulative other comprehensive income (loss) | The following table presents changes in the amounts we recognized in cumulative other comprehensive income by component for the three months ended March 31, 2018 : 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 December 31, 2017 $ 51,413 $ 682 $ 570 $ 52,665 Amounts reclassified from cumulative other comprehensive income to cumulative net income (51,413 ) — — (51,413 ) Subtotal — 682 570 1,252 Other comprehensive income before reclassifications — 291 (81 ) 210 Amounts reclassified from cumulative other comprehensive income to net income — (10 ) (12 ) (22 ) Net current period other comprehensive income (loss) — 281 (93 ) 188 Balance at March 31, 2018 $ — $ 963 $ 477 $ 1,440 (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) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 2017 Weighted average common shares for basic earnings per share 89,382 89,331 Effect of dilutive securities: unvested share awards 8 17 Weighted average common shares for diluted earnings per share 89,390 89,348 |
Basis of Presentation (Details)
Basis of Presentation (Details) ft² in Thousands | Jan. 17, 2018buildingshares | Mar. 31, 2018ft²building | Jan. 18, 2018shares | Jan. 17, 2018ft² | Jan. 17, 2018property | Jan. 17, 2018state |
Subsidiary, Sale of Stock [Line Items] | ||||||
Net rentable area | 45,496 | |||||
Number of buildings, leasable land parcels easements | building | 366 | |||||
ILPT | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of properties owned | 40 | 266 | ||||
Net rentable area | 28,540 | |||||
ILPT | IPO | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Common shares issued (in shares) | shares | 20,000,000 | |||||
ILPT | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Shares owned by parent (in shares) | shares | 45,000,000 | |||||
Ownership percentage by parent | 69.20% | |||||
Ownership percentage by noncontrolling interest | 30.80% | |||||
Hawaii | ILPT | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Net rentable area | 16,834 | |||||
Number of buildings, leasable land parcels easements | building | 226 | |||||
Other States | ILPT | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Net rentable area | 11,706 | |||||
Number of states where real estate is located | state | 24 |
Recent Accounting Pronounceme29
Recent Accounting Pronouncements (Details) - Accounting Standards Update 2016-01 $ in Thousands | Dec. 31, 2017USD ($) |
AOCI Including Portion Attributable to Noncontrolling Interest | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of new accounting principle | $ (51,413) |
Retained Earnings | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Cumulative effect of new accounting principle | $ 51,413 |
Real Estate Properties (Details
Real Estate Properties (Details) ft² in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)ft²building | |
Real Estate [Abstract] | |
Number of buildings, leasable land parcels easements | building | 366 |
Net rentable area | ft² | 45,496 |
Commitments related to tenant improvements and leasing costs | $ | $ 403 |
Square feet committed expenditures related to tenant improvements and leasing costs | ft² | 351 |
Committed bus unspent tenant related obligations | $ | $ 32,662 |
Tenant Concentration and Segmen
Tenant Concentration and Segment Information (Details) | 3 Months Ended |
Mar. 31, 2018tenant | |
Risks and Uncertainties [Abstract] | |
Minimum percentage of rentable square feet of a building or land leased as a building or land parcel to single tenant (at least) | 90.00% |
Number of tenants under single tenant leased buildings and lands | 1 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting [Abstract] | |||
Number of operating segments | segment | 2 | ||
REVENUES: | |||
Rental income | $ 99,755 | $ 97,344 | |
Tenant reimbursements and other income | 20,874 | 18,950 | |
Total revenues | 120,629 | 116,294 | |
EXPENSES: | |||
Real estate taxes | 11,788 | 10,843 | |
Other operating expenses | 15,282 | 12,867 | |
Depreciation and amortization | 34,946 | 33,740 | |
General and administrative | 13,941 | 14,901 | |
Write-off of straight line rents receivable, net | 0 | 12,517 | |
Loss on asset impairment | 0 | 4,047 | |
Total expenses | 75,957 | 88,915 | |
Operating income | 44,672 | 27,379 | |
Dividend income | 397 | 397 | |
Unrealized gain on equity securities | 16,900 | 0 | |
Interest income | 510 | 13 | |
Interest expense | (23,492) | (21,087) | |
Loss on early extinguishment of debt | (1,192) | 0 | |
Income before income tax expense and equity in earnings of an investee | 37,795 | 6,702 | |
Income tax expense | (160) | (102) | |
Equity in earnings of an investee | 44 | 128 | |
Net income | 37,679 | 6,728 | |
Net income allocated to noncontrolling interest | (4,479) | 0 | |
Net income attributed to SIR | 33,200 | 6,728 | |
Total assets | 4,669,009 | $ 5,303,030 | |
Operating Segments | SIR | |||
REVENUES: | |||
Rental income | 64,946 | 63,474 | |
Tenant reimbursements and other income | 15,078 | 13,380 | |
Total revenues | 80,024 | 76,854 | |
EXPENSES: | |||
Real estate taxes | 7,203 | 6,504 | |
Other operating expenses | 11,737 | 10,135 | |
Depreciation and amortization | 28,073 | 26,929 | |
General and administrative | 0 | 0 | |
Write-off of straight line rents receivable, net | 12,517 | ||
Loss on asset impairment | 4,047 | ||
Total expenses | 47,013 | 60,132 | |
Operating income | 33,011 | 16,722 | |
Dividend income | 0 | 0 | |
Unrealized gain on equity securities | 0 | ||
Interest income | 0 | 0 | |
Interest expense | (1,447) | (1,657) | |
Loss on early extinguishment of debt | 0 | ||
Income before income tax expense and equity in earnings of an investee | 31,564 | 15,065 | |
Income tax expense | 0 | 0 | |
Equity in earnings of an investee | 0 | 0 | |
Net income | 31,564 | 15,065 | |
Net income allocated to noncontrolling interest | 0 | 0 | |
Net income attributed to SIR | 31,564 | 15,065 | |
Total assets | 3,108,823 | 3,128,182 | |
Operating Segments | ILPT | |||
REVENUES: | |||
Rental income | 34,809 | 33,870 | |
Tenant reimbursements and other income | 5,796 | 5,570 | |
Total revenues | 40,605 | 39,440 | |
EXPENSES: | |||
Real estate taxes | 4,585 | 4,339 | |
Other operating expenses | 3,545 | 2,732 | |
Depreciation and amortization | 6,873 | 6,811 | |
General and administrative | 0 | 0 | |
Write-off of straight line rents receivable, net | 0 | ||
Loss on asset impairment | 0 | ||
Total expenses | 15,003 | 13,882 | |
Operating income | 25,602 | 25,558 | |
Dividend income | 0 | 0 | |
Unrealized gain on equity securities | 0 | ||
Interest income | 0 | 0 | |
Interest expense | (380) | (555) | |
Loss on early extinguishment of debt | 0 | ||
Income before income tax expense and equity in earnings of an investee | 25,222 | 25,003 | |
Income tax expense | 0 | 0 | |
Equity in earnings of an investee | 0 | 0 | |
Net income | 25,222 | 25,003 | |
Net income allocated to noncontrolling interest | 0 | 0 | |
Net income attributed to SIR | 25,222 | 25,003 | |
Total assets | 1,403,704 | 1,405,592 | |
Corporate | |||
REVENUES: | |||
Rental income | 0 | 0 | |
Tenant reimbursements and other income | 0 | 0 | |
Total revenues | 0 | 0 | |
EXPENSES: | |||
Real estate taxes | 0 | 0 | |
Other operating expenses | 0 | 0 | |
Depreciation and amortization | 0 | 0 | |
General and administrative | 13,941 | 14,901 | |
Write-off of straight line rents receivable, net | 0 | ||
Loss on asset impairment | 0 | ||
Total expenses | 13,941 | 14,901 | |
Operating income | (13,941) | (14,901) | |
Dividend income | 397 | 397 | |
Unrealized gain on equity securities | 16,900 | ||
Interest income | 510 | 13 | |
Interest expense | (21,665) | (18,875) | |
Loss on early extinguishment of debt | (1,192) | ||
Income before income tax expense and equity in earnings of an investee | (18,991) | (33,366) | |
Income tax expense | (160) | (102) | |
Equity in earnings of an investee | 44 | 128 | |
Net income | (19,107) | (33,340) | |
Net income allocated to noncontrolling interest | (4,479) | 0 | |
Net income attributed to SIR | (23,586) | $ (33,340) | |
Total assets | $ 156,482 | $ 769,256 |
Derivatives and Hedging Activ33
Derivatives and Hedging Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Designated Cash Flow Hedge | ||
Amount of gain recognized in cumulative other comprehensive income (effective portion) | $ 291 | $ 61 |
Amount of gain reclassified from cumulative other comprehensive income into interest expense (effective portion) | (10) | $ 70 |
Cole Corporate Income Trust, Inc. (CCIT) | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Mortgage notes payable with related interest rate swap | 41,000 | |
Other assets | Interest Rate Swap | Cash Flow Hedging | Designated as Hedging Instrument | Cole Corporate Income Trust, Inc. (CCIT) | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
National Amount | $ 41,000 | |
Interest Rate | 4.16% | |
Effective Date | Jan. 29, 2015 | |
Maturity Date | Aug. 3, 2020 | |
Fair Value of Assets | $ 204 |
Indebtedness (Details)
Indebtedness (Details) $ in Thousands | Jan. 31, 2018USD ($) | Mar. 31, 2018USD ($)optionbuilding | Mar. 31, 2017USD ($) | Apr. 30, 2018USD ($) | Jan. 17, 2018USD ($) | Jan. 02, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 29, 2017USD ($) |
Indebtedness | ||||||||
Unsecured revolving credit facility | $ 107,000 | $ 0 | ||||||
Maximum borrowing capacity of revolving credit facility and term loan | 1,850,000 | |||||||
Repayment of term loan | 350,000 | $ 0 | ||||||
Loss on early extinguishment of debt | $ 1,192 | $ 0 | ||||||
Number of buildings collateralized | building | 6 | |||||||
Aggregate net book value of secured properties | $ 339,636 | |||||||
Revolving credit facility, due in 2018 | ||||||||
Indebtedness | ||||||||
Maximum borrowing capacity of revolving credit facility and term loan | 750,000 | |||||||
Revolving credit facility, due in 2018 | LIBOR | ||||||||
Indebtedness | ||||||||
Unsecured revolving credit facility | $ 107,000 | |||||||
Interest rate payable on borrowings (as a percent) | 1.25% | |||||||
Facility fee per annum (as a percent) | 0.25% | |||||||
Interest rate at period end | 2.99% | 2.53% | ||||||
Weighted average annual interest rate (as a percent) | 2.75% | 1.81% | ||||||
Principal repayment due until maturity | $ 0 | |||||||
Remaining borrowing capacity | 643,000 | |||||||
Senior unsecured notes | ||||||||
Indebtedness | ||||||||
Aggregate principal amount | 1,450,000 | |||||||
Mortgage note payable | ||||||||
Indebtedness | ||||||||
Assumed mortgage principal | 210,750 | |||||||
Subsequent Event | Revolving credit facility, due in 2018 | LIBOR | ||||||||
Indebtedness | ||||||||
Unsecured revolving credit facility | $ 97,000 | |||||||
Remaining borrowing capacity | 653,000 | |||||||
ILPT Revolving Credit Facility Due in 2018 | Revolving credit facility, due in 2018 | ||||||||
Indebtedness | ||||||||
Unsecured revolving credit facility | 302,000 | |||||||
Maximum borrowing capacity of revolving credit facility and term loan | 750,000 | $ 750,000 | ||||||
Remaining borrowing capacity | $ 448,000 | |||||||
ILPT Revolving Credit Facility Due in 2018 | Subsequent Event | Revolving credit facility, due in 2018 | ||||||||
Indebtedness | ||||||||
Unsecured revolving credit facility | 292,000 | |||||||
Remaining borrowing capacity | $ 458,000 | |||||||
ILPT Revolving Credit Facility Due in 2019 | Revolving credit facility, due in 2018 | ||||||||
Indebtedness | ||||||||
Maximum borrowing capacity of revolving credit facility and term loan | $ 750,000 | |||||||
Interest rate at period end | 3.23% | 2.89% | ||||||
Number of options to extend maturity date | option | 2 | |||||||
Period of extension of maturity date | 6 months | |||||||
Option to increase maximum borrowing capacity | $ 1,500,000 | |||||||
Weighted average interest rate | 2.97% | |||||||
Term Loan Due in 2020 | Unsecured debt | ||||||||
Indebtedness | ||||||||
Repayment of term loan | $ 350,000 | |||||||
Senior unsecured notes, due 2018 at 2.85% | ||||||||
Indebtedness | ||||||||
Stated interest rate | 2.85% | |||||||
Senior unsecured notes, due 2018 at 2.85% | Senior unsecured notes | ||||||||
Indebtedness | ||||||||
Redemption of debt | $ 350,000 | |||||||
Stated interest rate | 2.85% | |||||||
Loss on early extinguishment of debt | $ 1,192 | |||||||
ILPT | ||||||||
Indebtedness | ||||||||
Number of buildings collateralized | building | 1 | |||||||
Aggregate net book value of secured properties | $ 66,166 | |||||||
ILPT | Mortgage note payable | ||||||||
Indebtedness | ||||||||
Assumed mortgage principal | $ 48,750 |
Fair Value of Assets and Liab35
Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Unrealized gain (loss) on investment in available for sale securities | $ 0 | $ 15,868 | |
Senior unsecured notes | 1,428,571 | $ 1,777,425 | |
Mortgage notes payable | 210,749 | 210,785 | |
Carrying Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Mortgage notes payable | 210,749 | 210,785 | |
Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Mortgage notes payable | $ 207,205 | 209,200 | |
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% | ||
Senior unsecured notes, due 2018 at 2.85% | Carrying Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes | $ 0 | 349,896 | |
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 | $ 0 | 349,731 | |
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% | ||
Senior unsecured notes, due 2020 at 3.60% | Carrying Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes | $ 397,536 | 397,214 | |
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 | $ 399,140 | 404,050 | |
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% | ||
Senior unsecured notes, due 2022 at 4.15% | Carrying Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes | $ 296,361 | 296,143 | |
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 | $ 301,325 | 304,199 | |
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% | ||
Senior unsecured notes, due 2024 at 4.25% | Carrying Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes | $ 343,041 | 342,797 | |
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 | $ 342,710 | 347,877 | |
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% | ||
Senior unsecured notes, due 2025 at 4.50% | Carrying Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes | $ 391,633 | 391,375 | |
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 | 401,268 | $ 403,998 | |
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 | ||
Class A common shares | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Shares holding (in shares) | 1,586,836 | ||
Historical cost | $ 42,686 | ||
Unrealized gain (loss) on investment in available for sale securities | 16,900 | ||
Level 2 | 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 | ||
Fair Value, Measurements, Recurring | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Assets: | 111,203 | ||
Fair Value, Measurements, Recurring | Level 1 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Assets: | 110,999 | ||
Fair Value, Measurements, Recurring | Level 2 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Assets: | 204 | ||
Fair Value, Measurements, Recurring | Level 3 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Assets: | 0 | ||
Interest Rate Swap | Fair Value, Measurements, Recurring | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Interest rate swap | 204 | ||
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 1 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Interest rate swap | 0 | ||
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 2 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Interest rate swap | 204 | ||
Interest Rate Swap | Fair Value, Measurements, Recurring | Level 3 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Interest rate swap | 0 | ||
Reit Management And Research Inc | Fair Value, Measurements, Recurring | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Investment in RMR Inc. | 110,999 | ||
Reit Management And Research Inc | Fair Value, Measurements, Recurring | Level 1 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Investment in RMR Inc. | 110,999 | ||
Reit Management And Research Inc | Fair Value, Measurements, Recurring | Level 2 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Investment in RMR Inc. | 0 | ||
Reit Management And Research Inc | Fair Value, Measurements, Recurring | Level 3 | Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Investment in RMR Inc. | $ 0 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Reconciliation of Changes in Shareholders Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance at December 31, 2017 | $ 1,991,819 | |
Net income | 37,679 | $ 6,728 |
Other comprehensive income | 188 | |
Issuance of shares of subsidiary, net | 444,309 | |
Distributions to common shareholders | (45,639) | |
Share grants | 104 | |
Share repurchases | (16) | |
Balance at March 31, 2018 | 2,428,444 | |
Shareholders' Equity Attributable to SIR | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance at December 31, 2017 | 1,991,819 | |
Net income | 33,200 | |
Other comprehensive income | 188 | |
Issuance of shares of subsidiary, net | 131,025 | |
Distributions to common shareholders | (45,639) | |
Share grants | 18 | |
Share repurchases | (16) | |
Balance at March 31, 2018 | 2,110,595 | |
Shareholders' Equity Attributable to Noncontrolling Interest | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Balance at December 31, 2017 | 0 | |
Net income | 4,479 | |
Other comprehensive income | 0 | |
Issuance of shares of subsidiary, net | 313,284 | |
Distributions to common shareholders | 0 | |
Share grants | 86 | |
Share repurchases | 0 | |
Balance at March 31, 2018 | $ 317,849 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, $ in Thousands | Apr. 19, 2018USD ($)$ / sharesshares | Apr. 02, 2018$ / sharesshares | Mar. 27, 2018trustee$ / sharesshares | Feb. 22, 2018USD ($)$ / shares | Jan. 01, 2018$ / sharesshares | Mar. 31, 2018USD ($) |
Shareholders' Equity | ||||||
Stock repurchased during period (in shares) | shares | 617 | |||||
Share price of repurchased shares (in dollars per share) | $ 25.13 | |||||
Distributions | ||||||
Distribution to common shareholders | $ | $ 45,639 | |||||
Dividend paid | ||||||
Distributions | ||||||
Distribution paid on common shares (in dollars per share) | $ 0.51 | |||||
Distribution to common shareholders | $ | $ 45,639 | |||||
Subsequent Event | Dividend declared | ||||||
Distributions | ||||||
Distribution to common shareholders | $ | $ 45,600 | |||||
Dividends declared (in dollars per share) | $ 0.51 | |||||
Common Stock | Trustees | ||||||
Shareholders' Equity | ||||||
Shares granted (in shares) | shares | 1,000 | |||||
Shares granted (in dollars per share) | $ 20.87 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number Of Receivers Of Award | trustee | 5 | |||||
Common Stock | Trustees | Subsequent Event | ||||||
Shareholders' Equity | ||||||
Shares granted (in shares) | shares | 3,000 | |||||
Shares granted (in dollars per share) | $ 19.15 | |||||
ILPT | Subsequent Event | ||||||
Distributions | ||||||
Distribution to common shareholders | $ | $ 17,600 | |||||
Dividends declared (in dollars per share) | $ 0.27 | |||||
Quarterly dividend distributions (in dollars per share) | 0.33 | |||||
Annual dividend distribution (in dollars per share) | $ 1.32 | |||||
Affiliated Entity | ILPT | Subsequent Event | ||||||
Distributions | ||||||
Shares holding (in shares) | shares | 45,000,000 | |||||
Affiliated Entity | ILPT | Subsequent Event | Dividend paid | ||||||
Distributions | ||||||
Distribution to common shareholders | $ | $ 12,150 |
Cumulative Other Comprehensiv38
Cumulative Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | $ 1,991,819 | |
Other comprehensive income before reclassifications | 210 | |
Amounts reclassified from cumulative other comprehensive income to net income | (22) | |
Net current period other comprehensive income (loss) | 188 | |
Balance at the end of the period | 2,110,595 | |
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 | 51,413 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | $ (51,413) | |
Subtotal | 0 | |
Other comprehensive income before reclassifications | 0 | |
Amounts reclassified from cumulative other comprehensive income to net income | 0 | |
Net current period other comprehensive income (loss) | 0 | |
Balance at the end of the period | 0 | |
Unrealized Gain on Derivative Instruments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 682 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | 0 | |
Subtotal | 682 | |
Other comprehensive income before reclassifications | 291 | |
Amounts reclassified from cumulative other comprehensive income to net income | (10) | |
Net current period other comprehensive income (loss) | 281 | |
Balance at the end of the period | 963 | |
Equity in Unrealized Gain (Loss) of an Investee | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 570 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | 0 | |
Subtotal | 570 | |
Other comprehensive income before reclassifications | (81) | |
Amounts reclassified from cumulative other comprehensive income to net income | (12) | |
Net current period other comprehensive income (loss) | (93) | |
Balance at the end of the period | 477 | |
AOCI Attributable to Parent | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance at the beginning of the period | 52,665 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | (51,413) | |
Subtotal | $ 1,252 | |
Balance at the end of the period | $ 1,440 |
Weighted Average Common Share39
Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | ||
Weighted average common shares for basic earnings per share (in shares) | 89,382 | 89,331 |
Effect of dilutive securities: unvested share awards (in shares) | 8 | 17 |
Weighted average common shares for diluted earnings per share (in shares) | 89,390 | 89,348 |
Business and Property Managem40
Business and Property Management Agreements with RMR LLC (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2018USD ($) | Mar. 31, 2018USD ($)agreement | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Related Party Transaction [Line Items] | ||||
Incentive fees payable | $ 10,065 | $ 30,006 | ||
Management fee, measurement period | 3 years | |||
RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Number of management service agreements | agreement | 2 | |||
Business management fees | $ 11,155 | $ 13,387 | ||
Business management fees, prior period estimate | 7,846 | |||
Incentive fee expense | $ 25,569 | |||
Construction supervision fees | 3,319 | 3,158 | ||
Related party reimbursement expenses | 2,177 | 1,982 | ||
Internal audit expense | 121 | $ 67 | ||
Accrual reversal | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Business management fees | 5,358 | |||
ILPT | RMR LLC | ||||
Related Party Transaction [Line Items] | ||||
Business management fees | 1,482 | |||
Incentive fees payable | 0 | |||
Construction supervision fees | 967 | |||
Related party reimbursement expenses | 542 | |||
Internal audit expense | $ 52 |
Related Person Transactions - N
Related Person Transactions - Narrative (Details) $ in Thousands | Mar. 31, 2018USD ($)agreementshares | Mar. 31, 2018USD ($)agreementshares | Dec. 31, 2017USD ($) |
Reit Management And Research Inc | Common Class A | |||
Related Party Transaction [Line Items] | |||
Cumulative number of shares issued for all transactions (in shares) | 1,586,836 | ||
RMR LLC | |||
Related Party Transaction [Line Items] | |||
Number of management service agreements | agreement | 2 | 2 | |
ILPT | |||
Related Party Transaction [Line Items] | |||
Shares holding (in shares) | 45,000,000 | 45,000,000 | |
Ownership percentage, equity method | 69.20% | 69.20% | |
Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Equity method investments | $ | $ 8,136 | $ 8,136 | $ 8,185 |
Government Properties Income Trust | |||
Related Party Transaction [Line Items] | |||
Ownership percentage, equity method | 27.80% | 27.80% | |
Government Properties Income Trust | Shareholder | |||
Related Party Transaction [Line Items] | |||
Shares holding (in shares) | 24,918,421 | 24,918,421 | |
IPO | ILPT | |||
Related Party Transaction [Line Items] | |||
Reimbursement for share issuance costs | $ | $ 7,271 |
Contingencies (Details)
Contingencies (Details) - USD ($) $ in Thousands | Jun. 29, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Loss Contingencies [Line Items] | ||||
Accrued environmental remediation costs | $ 8,112 | $ 8,112 | ||
Real estate taxes | 11,788 | $ 10,843 | ||
Cole Corporate Income Trust, Inc. (CCIT) | ||||
Loss Contingencies [Line Items] | ||||
Real estate taxes | $ 2,837 | |||
ILPT | ||||
Loss Contingencies [Line Items] | ||||
Accrued environmental remediation costs | $ 7,002 | $ 7,002 |