Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 26, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Select Income REIT | |
Entity Central Index Key | 1,537,667 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 89,374,029 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Real estate properties: | ||
Land | $ 1,025,832 | $ 756,160 |
Buildings and improvements | 3,013,438 | 1,110,683 |
Real estate properties, gross | 4,039,270 | 1,866,843 |
Accumulated depreciation | (144,586) | (94,333) |
Real estate properties, net | 3,894,684 | 1,772,510 |
Properties held for sale | 67,250 | |
Acquired real estate leases, net | 558,027 | 120,700 |
Cash and cash equivalents | 25,247 | 13,504 |
Restricted cash | 1,163 | 42 |
Rents receivable, including straight line rents of $85,256 and $64,894, respectively, net of allowance for doubtful accounts of $1,391 and $1,664, respectively | 91,506 | 68,385 |
Deferred leasing costs, net | 7,216 | 6,196 |
Deferred financing costs, net | 17,282 | 3,416 |
Other assets | 99,272 | 8,478 |
Total assets | 4,761,647 | 1,993,231 |
LIABILITIES, NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | ||
Revolving credit facility | 305,000 | 77,000 |
Term loan | 350,000 | 350,000 |
Senior unsecured notes, net | 1,435,095 | |
Mortgage notes payable, net | 286,945 | 18,816 |
Accounts payable and other liabilities | 92,536 | 18,869 |
Liabilities related to properties held for sale | 1,614 | |
Assumed real estate lease obligations, net | 85,940 | 26,475 |
Rents collected in advance | 17,132 | 9,688 |
Security deposits | 11,719 | 10,348 |
Due to related persons | 2,862 | 1,588 |
Total liabilities | $ 2,588,843 | $ 512,784 |
Commitments and contingencies | ||
Noncontrolling interest | $ 3,270 | |
Shareholders' equity: | ||
Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,374,029 and 59,959,750 shares issued and outstanding, respectively | 894 | $ 600 |
Additional paid in capital | 2,179,139 | 1,441,036 |
Cumulative net income | 314,110 | 250,238 |
Cumulative other comprehensive loss | (295) | (23) |
Cumulative common distributions | (324,314) | (211,404) |
Total shareholders' equity | 2,169,534 | 1,480,447 |
Total liabilities, noncontrolling interest and shareholders' equity | $ 4,761,647 | $ 1,993,231 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Rents receivable, including straight line rents (in dollars) | $ 85,256 | $ 64,894 |
Rents receivable, allowance for doubtful accounts (in dollars) | $ 1,391 | $ 1,664 |
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized | 125,000,000 | 125,000,000 |
Common shares, shares issued | 89,374,029 | 59,959,750 |
Common shares, shares outstanding | 89,374,029 | 59,959,750 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Rental income | $ 94,745 | $ 48,523 | $ 267,389 | $ 142,051 |
Tenant reimbursements and other income | 17,197 | 8,177 | 46,182 | 24,234 |
Total revenues | 111,942 | 56,700 | 313,571 | 166,285 |
Expenses: | ||||
Real estate taxes | 9,871 | 5,645 | 27,247 | 16,580 |
Other operating expenses | 11,313 | 4,637 | 30,121 | 13,666 |
Depreciation and amortization | 33,070 | 10,653 | 90,179 | 30,442 |
Acquisition related costs | 402 | 5,365 | 21,720 | 5,739 |
General and administrative | 6,328 | 3,749 | 19,488 | 11,123 |
Total expenses | 60,984 | 30,049 | 188,755 | 77,550 |
Operating income | 50,958 | 26,651 | 124,816 | 88,735 |
Interest expense (including net amortization of debt premiums and discounts and deferred financing fees of $1,357 ,$378, $3,738 and $1,182 respectively) | (20,034) | (3,033) | (53,710) | (10,025) |
(Loss) gain on early extinguishment of debt | (6,845) | 243 | ||
Income before income tax expense and equity in earnings (loss) of an investee | 30,924 | 23,618 | 64,261 | 78,953 |
Income tax expense | (98) | (30) | (324) | (120) |
Equity in earnings (loss) of an investee | (25) | 38 | 70 | 59 |
Income before gain on sale of property | 30,801 | 23,626 | 64,007 | 78,892 |
Gain on sale of property | 116 | 116 | ||
Net income | 30,801 | 23,742 | 64,007 | 79,008 |
Net income allocated to noncontrolling interest | 46 | 135 | ||
Net income attributed to SIR | 30,755 | 23,742 | 63,872 | 79,008 |
Other comprehensive income: | ||||
Unrealized loss on interest rate swap | (831) | (181) | ||
Equity in unrealized gain (loss) of an investee | (72) | (33) | (91) | 8 |
Other comprehensive income (loss) | (903) | (33) | (272) | 8 |
Other comprehensive income (loss) | 29,898 | 23,709 | 63,735 | 79,016 |
Comprehensive income allocated to noncontrolling interest | (46) | (135) | ||
Comprehensive income attributed to SIR | $ 29,852 | $ 23,709 | $ 63,600 | $ 79,016 |
Weighted average common shares outstanding, basic (in shares) | 89,267 | 59,857 | 85,827 | 54,642 |
Weighted average common shares outstanding, diluted (in shares) | 89,274 | 59,910 | 85,837 | 54,688 |
Basic net income attributed to SIR per common share (in dollars per share) | $ 0.34 | $ 0.40 | $ 0.74 | $ 1.45 |
Diluted net income attributed to SIR per common share (in dollars per share) | $ 0.34 | $ 0.40 | $ 0.74 | $ 1.44 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Interest Expense, (including amortization of debt premiums and discounts and deferred financing fees) | $ 1,357 | $ 378 | $ 3,738 | $ 1,182 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 64,007 | $ 79,008 |
Adjustments to reconcile net income to cash provided by operating activities | ||
Depreciation | 53,090 | 20,020 |
Net amortization of debt premiums and discounts and deferred financing fees | 3,738 | 1,182 |
Amortization of acquired real estate leases and assumed real estate obligations | 33,098 | 9,625 |
Amortization of deferred leasing costs | 1,176 | 711 |
Provision for losses on rents receivable | (453) | 356 |
Straight line rental income | (20,395) | (12,757) |
Loss (gain) on early extinguishment of debt | 6,845 | (243) |
Gain on sale of property | (116) | |
Other non-cash expenses | 886 | 1,671 |
Equity in earnings of an investee | (70) | (59) |
Change in assets and liabilities: | ||
Restricted cash | 24 | |
Rents receivable | 2,048 | 2,620 |
Deferred leasing costs | (1,342) | (1,246) |
Other assets | (6,345) | (3,709) |
Accounts payable and other liabilities | 11,790 | 4,457 |
Rents collected in advance | (2,750) | 1,356 |
Security deposits | 310 | 1,977 |
Due to related persons | 1,357 | 175 |
Net cash provided by operating activities | 147,014 | 105,028 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions | (2,147,626) | (208,825) |
Real estate improvements | (2,657) | (859) |
Proceeds from sale of properties | 509,045 | 116 |
Investment in Affiliates Insurance Company | (825) | |
Investment in The RMR Group Inc. | (18,461) | |
Net cash used in investing activities | (1,659,699) | (210,393) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common shares, net | 277,329 | |
Proceeds from issuance of senior unsecured notes, net | 1,433,694 | |
Proceeds from borrowings | 1,774,000 | 256,000 |
Payments of borrowings | (1,546,182) | (357,671) |
Deferred financing fees | (23,761) | |
Distributions to common shareholders | (112,910) | (75,608) |
Repurchase of common shares | (130) | |
Distributions to noncontrolling interest | (283) | |
Net cash provided by financing activities | 1,524,428 | 100,050 |
Increase (decrease) in cash and cash equivalents | 11,743 | (5,315) |
Cash and cash equivalents at beginning of period | 13,504 | 20,025 |
Cash and cash equivalents at end of period | 25,247 | 14,710 |
SUPPLEMENTAL DISCLOSURE: | ||
Interest paid | 40,051 | 8,975 |
Income taxes paid | $ 294 | $ 93 |
Non-cash investing activities: | ||
Real estate and investment acquired by issuance of shares | (736,740) | |
Real estate acquired by assumption of mortgage notes payable | $ (297,698) | |
Real estate sold by assumption of mortgage notes payable | 29,955 | |
Working capital assumed | (20,720) | |
Non-cash financing activities: | ||
Assumption of mortgage notes payable | 297,698 | |
Issuance of SIR common shares | $ 736,740 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation | |
Basis of Presentation | Note 1. Basis of Presentation The accompanying condensed consolidated financial statements of Select Income REIT and its subsidiaries, or SIR, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, or our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessments of the carrying values and impairments of long lived assets. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 2. Recent Accounting Pronouncements On January 1, 2015, we adopted Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . This update amends the criteria for reporting discontinued operations to, among other things, raise the threshold for disposals to qualify as discontinued operations. This update reduce s the number of future property dispositions we are required to present as discontinued operations in our condensed consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, Consolidation . Among other things, this update changes how an entity determines the primary beneficiary of a variable interest entity. This update is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The implementation of this update is not expected to cause any significant changes to our condensed consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. In August 2015, the FASB clarified the previous ASU and issued ASU No. 2015-15 , Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting , which addresses the presentation of debt issuance costs related to line of credit arrangements. These updates are effective for interim and annual reporting periods beginning after December 15, 2015 and require retrospective application. The implementation of these updates is not expected to cause any material changes to our condensed consolidated financial statements other than the reclassification of debt issuance costs from assets to contra liabilities on our condensed consolidated balance sheets. Debt issuance costs related to line of credit arrangements will remain classified as assets in accordance with ASU No. 2015-15. When these updates are adopted, deferred financing costs of $12,384 and $1,689 as of September 30, 2015 and December 31, 2014 , respectively, will be reclassified from assets to the related debt obligations on our condensed consolidated balance sheets. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While this ASU specifically references contracts with customers, it also may apply to certain other transactions such as the sale of real estate or equipment. In July 2015, the FASB approved a one year deferral of the effective date for this ASU to interim and annual reporting periods beginning after December 15, 2017. We are continuing to evaluate this guidance; however, we do not expect its adoption to have a material impact on our condensed consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from this ASU. In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. This update is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The implementation of this update is not expected to have any material impact on our condensed consolidated financial statements. |
Real Estate Properties
Real Estate Properties | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate Properties | |
Real Estate Properties | Note 3. Real Estate Properties As of September 30 , 2015, we owned 118 properties ( 359 buildings, leasable land parcels and easements) with approximately 44,606,000 rentable square feet. On January 29, 2015, we completed our acquisition of Cole Corporate Income Trust, Inc., a Maryland corporation, or CCIT, pursuant to the Agreement and Plan of Merger, dated as of August 30, 2014, as amended, or the Merger Agreement, by and among us, SC Merger Sub LLC, a Maryland limited liability company and our wholly owned subsidiary, or SIR Merger Sub, and CCIT. At the effective time on January 29, 2015, CCIT merged with and into SIR Merger Sub, and the separate corporate existence of CCIT ceased, with SIR Merger Sub surviving as our wholly owned subsidiary, or the CCIT Merger. At the effective time of the CCIT Merger, we acquired CCIT’s full property portfolio which included 64 office and industrial net leased properties ( 73 buildings) , or the 64 CCIT Properties, as well as 23 healthcare properties which we sold concurrently to Senior Housing Properties Trust, or SNH. The total consideration for our acquisition of CCIT’s full portfolio was $2,997,601 , including the assumption of $297,698 of mortgage debt principal (of which $29,955 was assumed by SNH in our sale of the healthcare properties to SNH ) and excluding acquisition related costs. Pursuant to the terms of the Merger Agreement, we paid $1,245,321 in cash and issued 28,439,111 of our common shares at a value of $25.20 per share, or an aggregate of $716,666 , to former holders of CCIT common stock. Total consideration related to the 23 healthcare properties sold to SNH was $539,300 , including the assumption of $30,255 of mortgage debt principal and loan assumption costs. The following tables summarize the total consideration, the preliminary estimated fair values of the assets acquired and liabilities assumed in the CCIT Merger, based on our current best estimates, and the net purchase price after the completion of our sale of the 23 healthcare properties to SNH: Total Purchase Price (excluding acquisition costs): Aggregate share consideration $ Assumed working capital Assumed mortgage principal Noncash portion of purchase price Cash consideration paid to former holders of CCIT common stock CCIT shareholders distribution, debt and loan assumption costs paid at closing Cash portion of purchase price Gross purchase price $ Preliminary Purchase Price Allocation: Land $ Buildings and improvements Acquired real estate leases Cash Restricted cash Rents receivable Other assets Total assets Mortgage notes payable (1) Fair value of derivative instrument (2) Accounts payable and accrued expenses Assumed real estate lease obligations Rents collected in advance Security deposits Amount allocated to noncontrolling interest Net assets acquired Assumed working capital Assumed principal balance of debt Gross purchase price $ Reconciliation to Net Purchase Price (excluding acquisition costs): Gross purchase price $ Proceeds from properties sold to SNH Mortgage principal assumed by SNH, including loan assumption costs of $300 (3) Net purchase price $ (1) Includes the fair value adjustment totaling $2,012 on $297,698 of mortgage principal assumed in connection with the CCIT Merger. (2) Represents the fair value of an interest rate swap agreement relating to $41,000 of mortgage notes payable assumed in connection with the CCIT Merger. (3) Excludes the fair value adjustment totaling $1,073 . In accordance with GAAP, we accounted for the CCIT Merger as a business combination with SIR treated as the acquirer of CCIT for accounting purposes. Under business combination accounting rules, the assets acquired and liabilities assumed were recorded as of the acquisition date, at their respective estimated fair value, and added to those of SIR. We allocated the purchase price of this acquisition based on the estimated fair values of the acquired assets and liabilities assumed in a manner consistent with our purchase price allocation accounting policy described in our Annual Report. We engaged an independent real estate consulting firm to assist us with determining the purchase price allocations and to provide market information and evaluations which are relevant to purchase price allocations and determinations of useful lives. As of September 30 , 2015, the allocation of purchase price was based on preliminary estimates and may change upon the completion of (i) third party valuations and (ii) our analysis of acquired in place leases and land and building valuations. As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 10.2 years, 11.4 years and 12.3 years, respectively. During the nine months ended September 30 , 2015, we also acquired three propert ies ( five building s ) with 790,894 rentable square feet and an ancillary land parcel adjacent to one of our existing properties for an aggregate purchase price of $185,100 , excluding acquisition costs. We allocated the purchase price s of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities as follows: Assumed Acquired Real Estate Other Properties/ Square Purchase Building and Real Estate Lease Assumed Date Location Buildings Feet Price (1) Land Improvements Leases Obligations Liabilities April 2015 Phoenix, AZ (2) 1 / 1 $ $ $ $ $ $ April 2015 Birmingham, AL - - - - - - July 2015 Richmond, VA (2) 1 / 3 - - July 2015 Kansas City, MO (2) 1 / 1 - - 3 / 5 $ $ $ $ $ $ (1) Purchase price excludes acquisition related costs. (2) We accounted for these acquisitions as business combinations. The allocations of purchase price are based on preliminary estimates and may change upon the completion of (i) third party valuations and (ii) our analysis of acquired in place leases and land and building valuations. Certain of our real estate assets contain hazardous substances, including asbestos. We believe the asbestos at our properties is contained in accordance with current environmental regulations and we have no current plans to remove it. If these properties were demolished today, certain environmental regulations specify the manner in which the asbestos must be 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 land parcels or to undertake this environmental cleanup. In general, we do not have any insurance designated to limit any losses that we may incur as a result of known or unknown environmental conditions which are not caused by an insured event, such as, for example, fire or flood, although some of our tenants may maintain such insurance. However, as of September 30 , 2015 and December 31, 2014, accrued environmental remediation costs totaling $8,160 and $8,150 , respectively, were included in accounts payable and other liabilities in our condensed consolidated balance sheets. These accrued environmental remediation costs relate to maintenance of our properties for current uses and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. We do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us. However, no assurances can be given that such conditions 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 are included in other operating expenses in our condensed consolidated statements of comprehensive income. Pro Forma Information : The following table presents our pro forma results of operations for the nine months ended September 30 , 2015 and 2014 as if the CCIT Merger and the related financing activities described above and in Note 6, had occurred on January 1, 2014. This pro forma data also includes three additional properties ( five buildings) we acquired in 2015 for a n aggregate purchase price of $183,100 , excluding acquisition costs, three properties ( three buildings) we acquired during 2014 for an aggregate purchase price of $222,230 , excluding acquisition costs, and 10,000,000 of our common shares we sold during 2014 in a public offering at a price of $29.00 per share as if these transactions had occurred on January 1, 2014 . This pro forma data is not necessarily indicative of what our actual results of operations would have been for the periods presented, nor does it represent the results of operations for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, changes in interest rates, changes in our capital structure, changes in net property level operating expenses, changes in property level revenues, including rents expected to be received from our existing leases or leases we may enter into during and after 2015, and for other reasons. Nine Months Ended September 30, 2015 2014 Total revenues $ $ Net income attributed to SIR $ $ Net income attributed to SIR per share $ $ During the nine months ended September 30 , 2015, we recognized revenues of $154,684 and operating income of $127,218 , arising from our 2014 and 2015 acquisitions. In August 2015, we began marketing for sale 13 properties ( 13 buildings) with a combined 638,866 rentable square fee t . As of September 30, 2015, we have classified these properties as held for sale on our condensed consolidated balance sheet and included the results of operations of these properties in continuing operations in our condensed consolidated statements of comprehensive income. Summarized balance sheet information for these properties is as follows: As of September 30, 2015 Real estate properties $ Acquired real estate leases Rents receivable Properties held for sale $ Acquired real estate lease obligations $ Liabilities related to properties held for sale $ |
Segment Information and Tenant
Segment Information and Tenant Concentration | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information and Tenant Concentration | |
Segment Information and Tenant Concentration | Note 4. Segment Information and Tenant Concentration We operate in one business segment: ownership of properties that include buildings and leased commercial and industrial lands that are primarily net leased to single tenants, with no one tenant accounting 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; in some instances, tenants instead reimburse us for all expenses in excess of certain amounts included in the stated rent. We define a single tenant leased building or leased land as a building or land parcel with at least 90% of its rentable square footage leased to one tenant. Our buildings and lands are primarily leased to single tenants; however, we also own some multi - tenant buildings on the island of Oahu, HI , and one mainland multi-tena nt office building. For the three months ended September 30 , 2015 and 2014, approximately 19.8% and 37.7% , respectively, and for the nine months ended September 30 , 2015 and 2014, approximately 21.4% and 38.8% , respectively, of total revenues were from 11 properties ( 229 buildings, leasable land parcels and easements) with a combined approximately 17,778,000 re ntable square feet that we own o n Oahu, HI. |
Derivatives Instruments and Hed
Derivatives Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2015 | |
Derivatives Instruments and Hedging Activities | |
Derivatives Instruments and Hedging Activities | Note 5. Derivatives and Hedging Activities Risk Management Objective of Using Derivatives : We are exposed to certain risks relating to our ongoing business operations, including the effect of changes in interest rates. A part of our interest rate risk is t he only risk currently managed by us using derivative instruments. We have an interest rate swap agreement to manage our interest rate risk exposure on $41,000 of mortgage notes payable due 2020, with interest payable at a rate equal to a spread over LIBOR. We assumed this mortgage note and related interest rate swap agreement in connection with the CCIT Merger. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings. We do not anticipate that any of the counterparties will fail to meet their obligations. Cash Flow Hedges of Interest Rate Risk : W e record all derivatives on the balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate swap agreement , which we designate as a cash flow hedge: Fair Value Notional of Liability as of Interest Effective Maturity as of Balance Sheet Location September 30, 2015 Rate (1) Date Date September 30, 2015 Interest Rate Swap Accounts Payable and Other Liabilities $ 1/29/2015 8/3/2020 $ (1) The interest rate consists of the underlying index swapped to a fixed rate and the applicable interest rate spread . The interest rate swap agreement manages our interest rate risk exposure on $41,000 of mortgage debt due in 2020, which requires interest at LIBOR plus 200 basis points . The interest rate swap agreement qualifies as a cash flow hedge and effectively modifies our exposure to interest rate risk by converting our floating interest rate debt to a fixed interest rate basis for this loan through August 3, 2020, thus reducing the impact of interest rate changes on future interest expense. This agreement involves the receipt of floating interest rate amounts in exchange for fixed rate interest payments over the life of the agreement without an exchange of th e underlying principal amount. The fair value of our derivative instrument liability changed by $ 181 from the closing of the CCIT Merger to September 30 , 2015, based primarily on changes in market interest rates. We may enter into additional interest rate swaps or hedge agreements to manage some of our additional interest rate risk associated with our o ther floating rate borrowings. The table below presents the effects of our interest rate derivative on our condensed consolidated statements of comprehensive income for the three and nine months ended September 30 , 2015: Three Months Nine Months Ended Ended September 30, 2015 September 30, 2015 Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) $ $ Amount of gain (loss) reclassified from cumulative other comprehensive income into interest expense (effective portion) $ $ The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in cumulative other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portions of the change in fair value of the interest rate swap agreement were considered immaterial for the three and nine months ended September 30 , 2015. Additional disclosures related to the fair value of this derivative instrument are included in Note 7. The notional amount under the interest rate swap agreement is an indication of the extent of our involvement in the instrument, but does not represent exposure to credit, interest rate or market risks. During the twelve months ending September 30, 2016 , we currently estimate that an additional $430 may be reclassified from other comprehensive income as an increase to interest expense. Credit- R isk- R elated Contingent Features : Under an agreement with our derivative counterparty, if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligation. As of September 30 , 2015, the fair value of our interest rate swap was a liability of $1,814 , including accrued interest. As of September 30 , 2015, we had not posted any collateral related to this agreement and we were not in breach of any agreement provisions. If we had breached any of the provisions, we could have been required to settle our obligation under the agreement at the termination value. |
Indebtedness
Indebtedness | 9 Months Ended |
Sep. 30, 2015 | |
Indebtedness | |
Indebtedness | Note 6. Indebtedness At September 30 , 2015 and December 31, 2014, our outstanding indebtedness consisted of the following: September 30, December 31, 2015 2014 Revolving credit facility, due in 2019 $ $ Term loan, due in 2020 Senior unsecured notes, 2.85% , due in 2018 - Senior unsecured notes, 3.60% , due in 2020 - Senior unsecured notes, 4.15% , due in 2022 - Senior unsecured notes, 4.50% , due in 2025 - Mortgage note payable, LIBOR plus 160 bps, due in 2016 (1) - Mortgage note payable, 5.950% , due in 2017 (1) Mortgage note payable, 4.50% , due in 2019 (1) (2) - Mortgage note payable, 4.50% , due in 2019 (1) (2) - Mortgage note payable, 3.87% , due in 2020 (1) (2) - Mortgage note payable, 4.16% , due in 2020 (1) (3) - Mortgage note payable, 3.99% , due in 2020 (1) (2) - Mortgage note payable, 3.55% , due in 2023 (1) (2) - Mortgage note payable, 3.70% , due in 2023 (1) (2) - Plus: net premiums and (discounts) $ $ (1) We assumed all of our mortgage notes in connection with our acquisition of certain properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the date of acquisition and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the date of acquisition. (2) In connection with the CCIT Merger, we assumed fixed rate mortgage notes with an aggregate principal balance of $186,510 . We recorded these mortgage notes at their estimated fair value aggregating $187,449 on the date of acquisition. (3) This mortgage note was assumed in connection with the CCIT Merger. Interest on this mortgage note is payable at a rate equal to a premium over LIBOR but has been fixed by a cash flow hedge which sets the rate at approximately 4.16% until August 3, 2020, which is the maturity date of the mortgage note. On January 9, 2015, we replaced our then existing $750,000 unsecured revolving credit facility and $350,000 unsecured term loan with a new credit agreement providing $1,100,000 in aggregate borrowing availability, or the credit agreement. The credit agreement replaced our prior revolving credit facility maturing on March 11, 2016 with a new $750,000 unsecured revolving credit facility that has a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 105 basis points and a facility fee of 20 basis points per annum, based on the total amount of lending commitments. Both the interest rate premium and the facility fee for the new revolving credit facility are subject to adjustment based on changes to our credit ratings. Upon the payment of an extension fee and meeting certain other conditions, we have an option to extend the maturity date of the new revolving credit facility to March 29, 2020. As of September 30 , 2015, the interest rate payable on borrowings under our new revolving credit facility was 1.22% . The weighted average annual interest rate for borrowings under our new and prior revolving credit facility was 1.26% for both the three and nine months ended September 30 , 2015 and 1.45% for both the three and nine months ended September 30 , 2014. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of September 30 , 2015 and October 26 , 2015, we had $305,000 and $273,000 , respectively , outstanding under our revolving credit facility. The credit agreement also replaced our prior term loan maturing on July 11, 2017 with a new $350,000 unsecured term loan that has a maturity date of March 31, 2020 and interest payable on the amount outstanding of LIBOR plus 115 basis points. The interest rate premium for the new term loan is subject to adjustment based on changes to our credit ratings. As of September 30 , 2015, the interest rate payable for the amount outstanding under our new term loan was 1.35% . The weighted average annual interest rate for the amount outstanding under our new and prior term loan was 1.34% for both the three and nine months ended September 30 , 2015 and 1.69% for both the three and nine months ended September 30 , 2014. In addition, the credit agreement governing our revolving credit facility and term loan includes a feature under which the maximum aggregate borrowing availability under the new revolving credit facility and the new term loan may be increased to up to $2,200,000 on a combined basis under certain circumstances. The credit agreement and our senior notes indenture and its supplement provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as , in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC (formerly known as Reit Management & Research LLC), or RMR LLC , ceasing to act as our business manager and property manager. Our senior notes indenture and its supplement and our credit agreement also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions under certain circumstances and 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 supplement and our credit agreement at September 30 , 2015. In connection with the closing of the CCIT Merger, we entered into a bridge loan agreement with a group of institutional lenders pursuant to which we obtained a 364 -day $1,000,000 senior unsecured bridge loan, which had a maturity date of January 28, 2016, bore interest at LIBOR plus 140 basis points (subject to adjustment based on changes to our credit ratings), and was prepayable in whole or in part at any time. On February 3, 2015, we repaid in full the $1,000,000 senior unsecured bridge loan and reduced amounts then outstanding on our revolving credit facility with net proceeds from an underwritten public offering of $1,450,000 aggregate principal amount of senior unsecured notes, which included: $350,000 aggregate principal amount of 2.85% senior unsecured notes due 2018; $400,000 aggregate principal amount of 3.60% senior unsecured notes due 2020; $300,000 aggregate principal amount of 4.15% senior unsecured notes due 2022; and $400,000 aggregate principal amount of 4.50% senior unsecured notes due 2025. We also assumed eight mortgage notes associated with properties that we acquired in the CCIT Merger with an aggregate principal amount of $267,743 , net of mortgage notes related to properties sold to SNH. During the nine months ended September 30 , 2015, we recognized a loss on early extinguishment of debt aggregating $6,845 from the write off of unamortized deferred financing fees related to the repayment and termination of the bridge loan that was entered in connection with the CCIT Merger, our prior revolving credit facility and our prior term loan. At September 30 , 2015, nine of our properties ( 12 buildings) with an aggregate net book value of $465,289 secured mortgage notes we assumed in connection with our acquisition of those properties. The aggregate principal amount outstanding under these mortgage notes as of September 30 , 2015, was $285,561 . These mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 7. Fair Value of Financial Instruments The table below presents a liability measured at fair value during 2015, categorized by the level of inputs used in the valuation of the liability: Fair Value at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Total (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements: Interest rate swap (1) $ $ - $ $ - (1) As discussed in Note 5, we assumed an interest rate swap agreement on a $41,000 mortgage note assumed in connection with the CCIT Merger. This interest rate swap agreement is carried at fair value and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount for which we could be liable upon extinguishment of the liability. In addition to the liability described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, a revolving credit facility, a term loan, senior unsecured notes, mortgage notes payable, accounts payable, rents collected in advance, security deposits and amounts due to related persons. At September 30 , 2015 and December 31, 2014, the fair value of our financial instruments approximated their carrying values in our condensed consolidated financial statements, except as follows: At September 30, 2015 At December 31, 2014 Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Senior unsecured notes $ $ $ - $ - Mortgage notes payable $ $ $ $ We estimate the fair values of our senior unsecured notes using quoted prices of the not es as of the measurement date (L evel 1 inputs as defined in the fair value hierarchy under GAAP). We estimate the fair values of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date ( L evel 3 inputs as defined in the fair value hierarchy under GAAP). Because L evel 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. |
Noncontrolling Interest
Noncontrolling Interest | 9 Months Ended |
Sep. 30, 2015 | |
Noncontrolling Interest. | |
Noncontrolling Interest | Note 8. Noncontrolling Interest One of the properties acquired in connection with the CCIT Merger is owned pursuant to a joint venture arrangement. The joint venture was formed by CCIT on December 19, 2013 to own and manage an office building with approximately 344,000 square feet in Duluth, GA. Pursuant to the joint venture agreement, the joint venture partner has the right to exercise an option after two years whereby we will be required to purchase the remaining 11.0% ownership interest of the joint venture partner at a fair market value. Upon the closing of the CCIT Merger, we determined that we have a controlling interest in this joint venture and therefore meet the GAAP requirements for consolidation under the voting model. We recorded the noncontrolling interest in this joint venture at its acquisition date fair value of $3,422 and have classified it as temporary equity due to the redemption option existing outside of our control. The portion of the joint venture’s net income and comprehensive income not allocated to us, or $46 and $135 for the three and nine months ended September 30 , 2015, respectively, is reported as noncontrolling interest in our condensed consolidated statements of comprehensive income. As of September 30 , 2015, this joint venture held real estate assets with an aggregate net book value of $57,846 and encumbered by variable rate mortgage debt of $40,233 . We expect to continually evaluate the need to consolidate this joint venture arrangement based on standards set forth under GAAP. In determining whether we have a controlling interest in this joint venture arrangement and the requirement to consolidate the accounts of that entity, we consider factors such as percentage ownership interest, power to make decisions and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity for which we may be the primary beneficiary. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Shareholders' Equity | |
Shareholders' Equity | Note 9. Shareholders’ Equity Share Issuances: In connection with the CCIT Merger in January 2015 , we issued 28,439,111 of our common shares to former holders of CCIT common stock. During the nine months ended September 30 , 2015, we issued 37,689 of our common shares to RMR LLC as part of the business management fees payable by us under our business management agreement. See Note 11 for further information regarding t his agreement and recent amendments to this agreement . On May 13, 2015, we granted 2,500 of our common shares, valued at $22.97 per share, the closing price of our common shares on the New York Stock Exchange , or NYSE, on that day, to each of our five Trustees as part of their annual compensation. On June 5, 2015, w e issued 880,000 of our common shares in connection with our acquisition of an interest in The RMR Group Inc. (formerly known as Reit Management & Research Inc.), or RMR Inc. , as further described in Note 11. RMR Inc. is the parent company of RMR LLC, our manager. On September 2 , 2015, pursuant to our 2012 Equity Compensation Plan, we granted an aggregate of 52,600 of our common shares to our officers and certain other employees of our manager, RMR LLC , valued at $18.50 per share, the closing price of our common shares on the NYSE on that day. On September 24, 2015, we purchased an aggregate of 6,851 of our common shares valued at $19.04 per common share, the closing price of our common shares on the NYSE on that day, from certain of our officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of restricted common shares. Distributions: On February 24, 2015, we paid a distribution of $0.48 per common share, or $28,782 , to shareholders of record on January 23, 2015. On February 27, 2015, we paid a prorated distribution of $0.1493 per common share, or $8,953 , to shareholders of record on January 28, 2015, the last business day immediately prior to the effective date of the CCIT Merger. This prorated distribution was calculated based upon our historical quarterly dividend rate ($0.48 per share per quarter) for the period from January 1, 2015 to January 28, 2015, its payment was conditioned upon the closing of the CCIT Merger and it was intended to permit us to align the two companies’ distributions for the first quarter of 2015. On May 21, 2015, we paid a prorated distribution of $0.3444 per common share, or $30,452 , for the period from and including January 29, 2015 (the effective date of the CCIT Merger) through March 31, 2015, to shareholders of record on April 24, 2015. This prorated distribution is based on a quarterly distribution rate of $0.50 per share. On August 20, 2015, we paid a distribution of $0.50 per common share, or $44,664 , to shareholders of record on July 24, 2015. On October 12, 2015, we declared a quarterly distribution of $0.50 per common share, or approximately $44,700 , to shareholders of record on October 23, 2015. We expect to pay this distribution on or about November 19, 2015 using existing cash balances and borrowings under our revolving credit facility. |
Per Common Share Amounts
Per Common Share Amounts | 9 Months Ended |
Sep. 30, 2015 | |
Per Common Share Amounts | |
Per Common Share Amounts | Note 10. Per Common Share Amounts We calculate basic earnings per common share by dividing net income by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per common share by using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares , and the related impact on earnings, are considered when calculating diluted earnings per share. The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Weighted average common shares for basic earnings per share Effect of dilutive securities: unvested share awards Weighted average common shares for diluted earnings per share |
Related Person Transactions
Related Person Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Person Transactions | |
Related Person Transactions | Note 11. Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also trustees, directors or officers of us, RMR Inc. or RMR LLC. For further information about these and other such relationships and certain other related person transactions, please refer to our Annual Report and our Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC , on June 8, 2015 . Acquisition of Interest in o ur Manage r : On June 5, 2015, we and three other real estate investment trusts, or REITs , to which RMR L LC provides management services – Government Properties Income Trust, or GOV , Hospitality Properties Trust, or HPT, and SNH , and collectively with GOV and HPT, the Other REITs – participated in a transaction, or the Up-C Transaction, by which we and the Other REITs each acquired an ownership interest in RMR Inc. The Up-C Transaction was completed pursuant to a transaction agreement by and among us, our manager, RMR LLC, its then sole member, Reit Management & Research Trust, or RMR Trust, and RMR Inc. and similar transaction agreements that each Other REIT entered into with RMR LLC, RMR Trust and RMR Inc. RMR Trust is owned by our Managing Trustees, Barry and Adam Portnoy. Pursuant to these transaction agreements: we contributed to RMR Inc. 880,000 of our common shares and $15,8 80 in cash; GOV contributed to RMR Inc. 700,000 of its common shares and $3,91 7 in cash ; HPT contributed to RMR Inc. 1,490,000 of its common shares and $12,622 in cash; SNH contributed to RMR Inc. 2,345,000 of its common shares and $13,96 7 in cash ; RMR Trust contributed to RMR Inc. $11,5 2 0 in cash , which RMR Inc. contributed to RMR LLC ; RMR LLC issued 1,000,000 of its class B membership units to RMR Inc.; RMR Inc. issued 3,166,891 shares of its c lass A common stock to us, 1,541,201 shares of its c lass A common stock to GOV, 5,019,121 shares of its c lass A common stock to HPT , 5,272,787 shares of its c lass A common stock to SNH , and 1,000,000 shares of its c lass B-1 common stock and 15,000,000 shares of its c lass B-2 common stock to RMR Trust; RMR Trust delivered 15,000,000 of the 30,000,000 class A membership units of RMR LLC which RMR Trust then owned to RMR Inc.; and RMR Inc. delivered to RMR Trust our common shares , the common shares of the Other REITs and the cash which had been contributed by us and the Other REIT s to RMR Inc. The c lass A common stock and c lass B-1 common stock of RMR Inc. share ratably as a single class in dividends and other distributions of RMR Inc. when and if declared by the board of directors of RMR Inc. and have the same rights i n a liquidation of RMR Inc. The c lass B-1 common stock of RMR Inc. is convertible into c lass A common stock of RMR Inc. on a 1 :1 basis. The c lass A common stock of RMR Inc. has one vote per share. The c lass B-1 common stock of RMR Inc. ha s 10 votes per share. The c lass B-2 common stock of RMR Inc. ha s no economic interest in RMR Inc., but ha s 10 votes per share and is paired with the c lass A membership units of RMR LLC owned by RMR Trust. The c lass A membership units of RMR LLC owned by RMR Trust are required to be redeemed by RMR LLC upon request by RMR Trust for c lass A common stock of RMR Inc. on a 1 :1 basis, or if RMR Inc. elects, cash. Under the governing documents of RMR Inc., upon the redemption of a c lass A membership unit of RMR LLC, the c lass B-2 common stock of RMR Inc. “paired” with an equal number of class A membership unit s are cancelled for no additional consideration. As part of the Up-C Transaction and concurrently with entering the transaction agreements, on June 5, 2015: · We entered into an amended and restated business management agreement with RMR LLC and an amended and restated property management agreement with RMR LLC. The amendments made by these agreements are described below in this N ote under “Amendment and Restatement of Management Agreements with RMR LLC.” Each Other REIT also entered amended and restated business and property management agreements with RMR LLC which made similar amendments to their management agreements with RMR LLC. · We entered into a registration rights agreement with RMR Inc. covering the c lass A common stock of RMR Inc. that we received in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations. Each Other REIT entered into a similar registration rights agreement with RMR Inc. · We entered into a lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy pursuant to which RMR Trust and Barry and Adam Portnoy agreed not to transfer the 880 ,000 of our common shares RMR Trust received in the Up-C Transaction for a period of 10 years and we granted them certain registration rights, subject to certain limited exceptions. Each Other REIT also entered into a similar lock up and registration rights agreement with RMR Trust and Barry and Adam Portnoy . As a result of the Up-C Transaction: RMR LLC became a subsidiary of RMR Inc.; RMR Inc. became the managing member of RMR LLC; through our ownership of c lass A common stock of RMR Inc., we currently have an indirect 10.2 % economic interest in RMR LLC; through their ownership of c lass A common stock of RMR Inc., GOV , HPT and SNH currently have an indirect 5.0% , 16.2% and 17 .0% economic interest in RMR LLC, respectively; and RMR Trust through its ownership of c lass B-1 common stock of RMR Inc., c lass B-2 common stock of RMR Inc. and c lass A membership units of RMR LLC currently directly and indirectly has a 51.6% economic interest in RMR LLC and controls 91.4% of the voting power of outstanding capital stock of RMR Inc. Pursuant to the transaction agreements, we and each Other REIT agreed to distribute approximately half of the shares of c lass A common stock of RMR Inc. received in the Up-C Transaction to our respective shareholders as a special distribution, and RMR Inc. agreed to facilitate this distribution by filing a registration statement with the SEC to register the shares of c lass A common stock of RMR Inc. to be distributed and by seeking a listing of those shares on a national stock exchange upon the registration statement being declared effective by the SEC . The distribution of class A common stock of RMR Inc. that we and the Other REITs have agreed to make to our and the Other REITs’ shareholders will be made only after a registration statement, including a prospectus, is declared effective by the SEC. Amendment and Restatement of Management Agreements with RMR LLC : As part of the Up-C Transaction, on June 5, 2015, we and RMR LLC entered into an amended and restated business management agreement, or the amended business management agreement, which amended and restated our previous business management agreement with RMR LLC, and an amended and restated property management agreement, or the amended property management agreement, which amended and restated our previous property management agreement with RMR LLC. Our amended business management agreement and amended property management agreement are referred to together in this N ote as our amended management agreements. Our amended management agreements were effective as of June 5, 2015. Our amended management agreements have terms that end on December 31, 2035, and automatically extend on December 31st of each year for an additional year, so that the terms of the agreements thereafter end on the 20th anniversary of the date of the extension. We have the right to terminate each amended management agreement: (i) at any time on 60 days’ written notice for convenience, (ii) immediately upon written notice for cause, as defined therein, (iii) on 60 days’ written notice given within 60 days after the end of any calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the amended management agreements for good reason, as defined therein. If we terminate one or both of our amended management agreements for convenience, or if RMR LLC terminates one or both of our amended management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated amended management agreement(s) for the remaining term. If we terminate one or both of our amended management agreements for a performance reason, as defined therein, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a remaining term of 10 years. We are not required to pay any termination fee if we terminate our amended management agreements for cause or as a result of a change of control of RMR LLC. Accounting for Investment in RMR Inc. : On June, 5, 2015, we acquired 3,166,891 shares of class A common stock of RMR Inc. for $35,954 , excluding transaction costs. We have concluded, for accounting purposes, that the consideration paid for this investment in RMR Inc.’s shares of class A common stock represented a discount to the fair value of these shares. We account for this investment under the cost method of accounting and have recorded this investment at its estimated fair value of $81,850 as of June 5, 2015 , using Level 3 inputs as defined in the fa ir value hierarchy under GAAP. As a result, we recorded a liability for the amount by which the estimated fair value exceeded the price we paid for these shares and which amount we are amortizing as described below. As of September 30, 2015, the unamortized balance of this liability was $45,187 and it is included in accounts payable and other liabilities in our condensed consolidated balance sheet . Our investment is included in other assets in our condensed consolidated balance sheet and the carrying value of our investment was $84,431 , including transaction costs , as of September 30 , 2015. We believe the carrying value of our investment in RMR Inc. as of September 30, 2015 approxima tes its estimated fair value for accounting purposes. The liabilit y related to the acquisition of these shares is being amortized on a straight line basis over the 20 year life of the business and property management agreements with RMR LLC as a reduction to business management fees and property management fees, which are included in general and administrative and other operating expenses, respectively, in our condensed consolidated statements of comprehensive income. Amortization of the liabilit y, included in general and administrative expense and other operating expenses for the three and nine months ended September 30 , 2015, totaled $567 and $709 , respectively. RMR LLC Management Fees and Reimbursements : We recognized business management fees of $4,943 and $2,275 for the three months ended September 30 , 2015 and 2014, respectively, and $14,958 and $7,608 for the nine months ended September 30 , 2015 and 2014, respectively. As of September 30 , 2015 and 2014, no incentive fees were estimated to be payable to RMR LLC for 2015 and 2014 , respectively . The business management fee expense for the three months ended September 30, 2014 was reduced by $347 to reverse a prior period accrual for estimated incentive fees. The business management fees we recognized for the 2015 and 2014 periods are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. In accordance with the terms of our previous business management agreement, we issued 34,206 and 26,477 of our common shares to RMR LLC for the nine months ended September 30 , 2015 and 2014, respectively, as payment for portions of the base business management fees we recognized for those periods. Our amended business management agreement require s that 100% of the management fee due to RMR LLC be paid by us in cash . Pursuant to our property management agreement with RMR LLC, the property management fees, including construction supervision fees, we recognized were $2,887 and $1,561 for the three months ended September 30 , 2015 and 2014, respectively , and $8,467 and $4,628 for the nine months ended September 30 , 2015 and 2014, respectively. These amounts are included in operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. Pursuant to our previous and amended management agreements with RMR LLC, we are responsible for paying all of the property level operating costs which costs are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. The total of those property management related reimbursements paid to RMR LLC for the three months ended September 30 , 2015 and 2014 were $1,371 and $588 , respectively, and $3,155 and $1,697 for the nine months ended September 30 , 2015 and 2014, respectively, and these amounts are included in property operating expenses in our condensed consolidated financial statements for these periods. In addition, we have historically awarded share grants to certain RMR LLC employees under our equity compensation plan and we accrue estimated amounts for such share grants based upon historical practices throughout the year. In September 2015 and 2014, we made annual share grants to RMR LLC employees of 52,600 and 51,500 of our common shares , respectively. In September 2015, we purchased 6,851 of our common shares, at the closing price for our common shares on the NYSE on the date of purchase, from certain of our officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of restricted common shares. In addition, under our business management agreement we reimburse RMR LLC for our allocable costs for internal audit services. The amounts accrued for share grants to RMR LLC employees and internal audit costs were $315 and $411 for the three months ended September 30 , 2015 and 2014, respectively, and $676 and $712 for the nine months ended September 30 , 2015 and 2014, respectively, and these amounts are included in our general and administrative expenses for these periods. GOV : On February 28, 2015, GOV entered into a share purchase agreement, or the GOV Purchase Agreement, with Lakewood Capital Partners, LP, or Lakewood, the other persons who are members of a group with Lakewood, or, together with Lakewood, the Lakewood Parties, and, for the purpose of specified sections, us, pursuant to which, on March 4, 2015, GOV acquired from Lakewood 3,418,421 of our common shares, representing approximately 3.9% of our then outstanding common shares, for an aggregate cash purchase price of approximately $95,203 . As of September 30, 2015, GOV owned 24,918,421 of our common shares, or approximately 27.9% of our total outstanding shares. The GOV Purchase Agreement contains (i) standstill provisions, pursuant to which the Lakewood Parties agreed not to take certain actions with respect to our securities, or those of GOV, for a 50 -year period and (ii) voting provisions, pursuant to which the Lakewood Parties agreed to cause our securities, or those of GOV, that they or any of their affiliates own as of a record date for a meeting of our or GOV’s shareholders to be present and voted at such meeting in favor of all actions recommended by the board of trustees of such company. On February 28, 2015, our Managing Trustees, Messrs. Barry Portnoy and Adam Portnoy, entered into separate share purchase agreements with the Lakewood Parties, with provisions similar to the GOV Purchase Agreement, pursuant to which, on March 4, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 107,606 and 87,606 of our common shares, respectively, from Lakewood and, on March 5, 2015, Messrs. Barry Portnoy and Adam Portnoy acquired 2,429 and 2,429 of our common shares, respectively, from Mr. William H. Lenehan, one of the Lakewood Parties. Concurrently with entering into the agreements among GOV, Messrs. Barry Portnoy and Adam Portnoy and the Lakewood Parties, Lakewood withdrew its nomination of Mr. Lenehan for election to our Board of Trustees at our 2015 Annual Meeting of Shareholders. SNH : Pursuant to a purchase and sale agreement and joint escrow instructions previously entered into between SNH and a subsidiary of ours, on January 29, 2015, we sold to SNH concurrently with the closing of the CCIT Merger, the subsidiaries of CCIT owning 23 healthcare properties for approximately $539,000 , including the assumption of approximately $30,000 of mortgage debt and excluding working capital. In April 2015, we paid to SNH $8,993 to settle certain working capital activity for the 23 healthcare properties as of the sale date. AIC : As of September 30 , 2015, our investment in Affiliates Insurance Company, or AIC, an Indiana insurance company, had a carrying value of $6,807 , which amount is included in other assets on our condensed consolidated balance sheet. We recognized income (loss) of ($25) and $38 for the three months ended September 30 , 2015 and 2014, respectively, and $70 and $59 for the nine months ended September 30 , 2015 and 2014, respectively. Our other comprehensive income includes unrealized gains (losses) on securities held for sale which are owned by AIC of ($72) and ($33) for the three months ended September 30 , 2015 and 2014, respectively, and ($91) and $8 for the nine months ended September 30 , 2015 and 2014, respectively. In June 2015, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC. In connection with that renewal, we purchased a three year property insurance policy providing $500,000 of coverage annually with the premium to be paid annually and a one year standalone policy providing terrorism coverage of $200,000 for our properties, which policies were arranged by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $2,325 in connection with these policies for the policy year ending June 30, 2016, and this amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. Directors’ and Officers’ Liability Insurance: In August 2015, we extended through September 2017 our combined directors ’ and officers ’ insurance policy with RMR LLC and five other companies managed by RMR LLC that provides $10,000 in aggregate primary coverage. At that time, we also extended through September 2016 our separate additional directors' and officers' liability insurance policies that provide $20,000 of aggregate excess coverage plus $5,000 of excess non-indemnifiable coverage. The total premium payable by us for these extensions was approximatel y $355 . |
Real Estate Properties (Tables)
Real Estate Properties (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Schedule of purchase prices of acquisitions allocated based on the estimated fair values of the acquired assets and assumed liabilities | Assumed Acquired Real Estate Other Properties/ Square Purchase Building and Real Estate Lease Assumed Date Location Buildings Feet Price (1) Land Improvements Leases Obligations Liabilities April 2015 Phoenix, AZ (2) 1 / 1 $ $ $ $ $ $ April 2015 Birmingham, AL - - - - - - July 2015 Richmond, VA (2) 1 / 3 - - July 2015 Kansas City, MO (2) 1 / 1 - - 3 / 5 $ $ $ $ $ $ (1) Purchase price excludes acquisition related costs. (2) We accounted for these acquisitions as business combinations. The allocations of purchase price are based on preliminary estimates and may change upon the completion of (i) third party valuations and (ii) our analysis of acquired in place leases and land and building valuations. |
Schedule of pro forma results of operations | Nine Months Ended September 30, 2015 2014 Total revenues $ $ Net income attributed to SIR $ $ Net income attributed to SIR per share $ $ |
Cole Corporate Income Trust, Inc. (CCIT) | |
Schedule of purchase prices of acquisitions allocated based on the estimated fair values of the acquired assets and assumed liabilities | Total Purchase Price (excluding acquisition costs): Aggregate share consideration $ Assumed working capital Assumed mortgage principal Noncash portion of purchase price Cash consideration paid to former holders of CCIT common stock CCIT shareholders distribution, debt and loan assumption costs paid at closing Cash portion of purchase price Gross purchase price $ Preliminary Purchase Price Allocation: Land $ Buildings and improvements Acquired real estate leases Cash Restricted cash Rents receivable Other assets Total assets Mortgage notes payable (1) Fair value of derivative instrument (2) Accounts payable and accrued expenses Assumed real estate lease obligations Rents collected in advance Security deposits Amount allocated to noncontrolling interest Net assets acquired Assumed working capital Assumed principal balance of debt Gross purchase price $ Reconciliation to Net Purchase Price (excluding acquisition costs): Gross purchase price $ Proceeds from properties sold to SNH Mortgage principal assumed by SNH, including loan assumption costs of $300 (3) Net purchase price $ (1) Includes the fair value adjustment totaling $2,012 on $297,698 of mortgage principal assumed in connection with the CCIT Merger. (2) Represents the fair value of an interest rate swap agreement relating to $41,000 of mortgage notes payable assumed in connection with the CCIT Merger. (3) Excludes the fair value adjustment totaling $1,073 . |
Disposal Group, Held-for-sale, Not Discontinued Operations | |
Summarized balance sheet information of properties classified as held for sale | As of September 30, 2015 Real estate properties $ Acquired real estate leases Rents receivable Properties held for sale $ Acquired real estate lease obligations $ Liabilities related to properties held for sale $ |
Derivatives Instruments and H19
Derivatives Instruments and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivatives Instruments and Hedging Activities | |
Summary of interest rate swap derivatives | Fair Value Notional of Liability as of Interest Effective Maturity as of Balance Sheet Location September 30, 2015 Rate (1) Date Date September 30, 2015 Interest Rate Swap Accounts Payable and Other Liabilities $ 1/29/2015 8/3/2020 $ The interest rate consists of the underlying index swapped to a fixed rate and the applicable interest rate spread |
Schedule of effects on consolidated statements of income and comprehensive income | Three Months Nine Months Ended Ended September 30, 2015 September 30, 2015 Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) $ $ Amount of gain (loss) reclassified from cumulative other comprehensive income into interest expense (effective portion) $ $ |
Indebtedness (Tables)
Indebtedness (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Indebtedness | |
Schedule of outstanding indebtedness | September 30, December 31, 2015 2014 Revolving credit facility, due in 2019 $ $ Term loan, due in 2020 Senior unsecured notes, 2.85% , due in 2018 - Senior unsecured notes, 3.60% , due in 2020 - Senior unsecured notes, 4.15% , due in 2022 - Senior unsecured notes, 4.50% , due in 2025 - Mortgage note payable, LIBOR plus 160 bps, due in 2016 (1) - Mortgage note payable, 5.950% , due in 2017 (1) Mortgage note payable, 4.50% , due in 2019 (1) (2) - Mortgage note payable, 4.50% , due in 2019 (1) (2) - Mortgage note payable, 3.87% , due in 2020 (1) (2) - Mortgage note payable, 4.16% , due in 2020 (1) (3) - Mortgage note payable, 3.99% , due in 2020 (1) (2) - Mortgage note payable, 3.55% , due in 2023 (1) (2) - Mortgage note payable, 3.70% , due in 2023 (1) (2) - Plus: net premiums and (discounts) $ $ (1) We assumed all of our mortgage notes in connection with our acquisition of certain properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the date of acquisition and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the date of acquisition. (2) In connection with the CCIT Merger, we assumed fixed rate mortgage notes with an aggregate principal balance of $186,510 . We recorded these mortgage notes at their estimated fair value aggregating $187,449 on the date of acquisition. (3) This mortgage note was assumed in connection with the CCIT Merger. Interest on this mortgage note is payable at a rate equal to a premium over LIBOR but has been fixed by a cash flow hedge which sets the rate at approximately 4.16% until August 3, 2020, which is the maturity date of the mortgage note. |
Fair Value of Financial Instr21
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value of Financial Instruments | |
Schedule fair value of assets and liabilities measurement on recurring basis | 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: Interest rate swap (1) $ $ - $ $ - (1) As discussed in Note 5, we assumed an interest rate swap agreement on a $41,000 mortgage note assumed in connection with the CCIT Merger. This interest rate swap agreement is carried at fair value and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount for which we could be liable upon extinguishment of the liability. |
Schedule of carrying value and the estimated fair market value of mortgage notes payable | At September 30, 2015 At December 31, 2014 Carrying Estimated Carrying Estimated Amount Fair Value Amount Fair Value Senior unsecured notes $ $ $ - $ - Mortgage notes payable $ $ $ $ |
Per Common Share Amounts (Table
Per Common Share Amounts (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Per Common Share Amounts | |
Schedule of weighted average common shares, basic and diluted | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Weighted average common shares for basic earnings per share Effect of dilutive securities: unvested share awards Weighted average common shares for diluted earnings per share |
Recent Accounting Pronounceme23
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Accounting Standards Update 2015-03 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 12,384 | $ 1,689 |
Real Estate Properties (Details
Real Estate Properties (Details) $ / shares in Units, $ in Thousands | Jan. 29, 2015USD ($)propertybuilding$ / sharesshares | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($)ft²propertybuilding$ / sharesshares | Sep. 30, 2014USD ($)$ / shares | Dec. 31, 2014USD ($)propertybuilding$ / sharesshares | Aug. 31, 2015ft²propertybuilding | Apr. 30, 2015USD ($) |
Real Estate Properties | |||||||
Number of properties owned | property | 118 | ||||||
Number of buildings, leasable land parcels easements contributed to the reporting entity | building | 359 | ||||||
Net rentable area | ft² | 44,606,000 | ||||||
Accrued environmental remediation costs | $ 8,160 | $ 8,150 | |||||
Square Feet | ft² | 790,894 | ||||||
Purchase price | $ 185,100 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 3 | ||||||
Land | $ 11,154 | ||||||
Buildings and Improvements | 91,979 | ||||||
Acquired real estate leases | 82,055 | ||||||
Assumed real estate lease obligations | (78) | ||||||
Other Assumed Liabilities | $ (10) | ||||||
Business Acquisition, Pro Forma Information | |||||||
Number of buildings acquired | building | 5 | ||||||
Total revenues | $ 339,618 | $ 333,459 | |||||
Net income | $ 86,543 | $ 86,503 | |||||
Net income per share (in dollars per share) | $ / shares | $ 0.97 | $ 0.97 | |||||
Revenue | $ 154,684 | ||||||
Operating income | $ 127,218 | ||||||
Summarized Balance Sheet Information Of Properties [Abstract] | |||||||
Real estate properties | 3,894,684 | 1,772,510 | |||||
Acquired real estate leases, net | 558,027 | 120,700 | |||||
Rents receivable | 91,506 | 68,385 | |||||
Properties held for sale | 67,250 | ||||||
Acquired real estate lease obligations | 85,940 | $ 26,475 | |||||
Liabilities related to properties held for sale | 1,614 | ||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | |||||||
Real Estate Properties | |||||||
Number of properties owned | property | 13 | ||||||
Number of buildings, leasable land parcels easements contributed to the reporting entity | building | 13 | ||||||
Net rentable area | ft² | 638,866 | ||||||
Summarized Balance Sheet Information Of Properties [Abstract] | |||||||
Real estate properties | 58,419 | ||||||
Acquired real estate leases, net | 8,798 | ||||||
Rents receivable | 33 | ||||||
Properties held for sale | 67,250 | ||||||
Acquired real estate lease obligations | 1,614 | ||||||
Liabilities related to properties held for sale | $ 1,614 | ||||||
Pro Forma | |||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 3 | 3 | |||||
Gross purchase price | $ 183,100 | $ 222,230 | |||||
Business Acquisition, Pro Forma Information | |||||||
Number of common shares sold in public offering | shares | 10,000,000 | ||||||
Price per share (in dollars per share) | $ / shares | $ 29 | ||||||
Number of buildings acquired | building | 5 | 3 | |||||
Phoenix, AZ | |||||||
Real Estate Properties | |||||||
Net rentable area | ft² | 790,894 | ||||||
Square Feet | ft² | 106,397 | ||||||
Purchase price | $ 16,850 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 1 | ||||||
Land | $ 2,490 | ||||||
Buildings and Improvements | 10,799 | ||||||
Acquired real estate leases | 3,649 | ||||||
Assumed real estate lease obligations | (78) | ||||||
Other Assumed Liabilities | $ (10) | ||||||
Business Acquisition, Pro Forma Information | |||||||
Number of buildings acquired | building | 1 | ||||||
Birmingham | |||||||
Real Estate Properties | |||||||
Purchase price | $ 2,000 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Land | $ 2,000 | ||||||
Richmond, VA | |||||||
Real Estate Properties | |||||||
Square Feet | ft² | 88,890 | ||||||
Purchase price | $ 12,750 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 1 | ||||||
Land | $ 2,401 | ||||||
Buildings and Improvements | 7,289 | ||||||
Acquired real estate leases | $ 3,060 | ||||||
Business Acquisition, Pro Forma Information | |||||||
Number of buildings acquired | building | 3 | ||||||
Kansas City | |||||||
Real Estate Properties | |||||||
Square Feet | ft² | 595,607 | ||||||
Purchase price | $ 153,500 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 1 | ||||||
Land | $ 4,263 | ||||||
Buildings and Improvements | 73,891 | ||||||
Acquired real estate leases | $ 75,346 | ||||||
Business Acquisition, Pro Forma Information | |||||||
Number of buildings acquired | building | 1 | ||||||
Oahu, HI | |||||||
Real Estate Properties | |||||||
Net rentable area | ft² | 17,778,000 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 11 | ||||||
Business Acquisition, Pro Forma Information | |||||||
Number of buildings acquired | building | 229 | ||||||
Cole Corporate Income Trust, Inc. (CCIT) | |||||||
Real Estate Properties | |||||||
Weighted average amortization period for capitalized above market lease values | 10 years 2 months 12 days | ||||||
Weighted average amortization period lease origination value | 11 years 4 months 24 days | ||||||
Weighted average amortization period for capitalized below market lease values | 12 years 3 months 18 days | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Share consideration, issued or issuable for each CCIT common share (in shares) | shares | 28,439,111 | 28,439,111 | |||||
Share consideration, per share value of equity interests issued or issuable for each CCIT common share (in dollars per share) | $ / shares | $ 25.20 | ||||||
Aggregate share consideration | $ 716,666 | ||||||
Assumed working capital | 3,597 | ||||||
Assumed mortgage principal | (297,698) | ||||||
Noncash portion of purchase price | 1,017,961 | ||||||
Aggregate consideration paid | 1,245,321 | ||||||
CCIT debt repaid and shareholder distribution at closing | 734,319 | ||||||
Cash portion of purchase price | 1,979,640 | ||||||
Gross purchase price | 2,997,601 | ||||||
Land | 324,329 | ||||||
Buildings and Improvements | 2,261,704 | ||||||
Acquired real estate leases | 489,463 | ||||||
Cash | 17,127 | ||||||
Restricted cash | 1,145 | ||||||
Rent receivable | 4,354 | ||||||
Other assets | 565 | ||||||
Total assets | 3,098,687 | ||||||
Mortgage notes payable | 299,710 | ||||||
Fair value of derivative instrument | 1,779 | ||||||
Accounts payable and accrued expenses | 15,533 | ||||||
Assumed real estate lease obligations | (70,682) | ||||||
Rents collected in advance | 10,194 | ||||||
Security deposits | 1,061 | ||||||
Amount allocated to noncontrolling interest | 3,422 | ||||||
Net assets acquired | 2,696,306 | ||||||
Assumed principal balance of debt | 297,698 | ||||||
Net purchase price | 2,458,301 | ||||||
Mortgage notes payable with related interest rate swap | 41,000 | ||||||
Fair value adjustment, liabilities | 2,012 | ||||||
Cole Corporate Income Trust, Inc. (CCIT) | SNH | |||||||
Purchase price allocation of real estate properties acquired | |||||||
Assumed mortgage principal | (30,255) | ||||||
SNH | Healthcare properties | Cole Corporate Income Trust, Inc. (CCIT) | |||||||
Purchase price allocation of real estate properties acquired | |||||||
Aggregate purchase price | 539,300 | ||||||
SNH | Cole Corporate Income Trust, Inc. (CCIT) | |||||||
Purchase price allocation of real estate properties acquired | |||||||
Cash proceeds from properties sold | (509,045) | ||||||
Fair value adjustment, liabilities | $ 1,073 | ||||||
SNH | Cole Corporate Income Trust, Inc. (CCIT) | Office and industrial net leased properties | |||||||
Real Estate Properties | |||||||
Number of buildings, leasable land parcels easements contributed to the reporting entity | building | 73 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties acquired | property | 64 | ||||||
SNH | Cole Corporate Income Trust, Inc. (CCIT) | Healthcare properties | |||||||
Real Estate Properties | |||||||
Number of properties owned | property | 23 | ||||||
Purchase price allocation of real estate properties acquired | |||||||
Number of properties sold | property | 23 | ||||||
Assumed working capital | $ 8,993 | ||||||
Assumed mortgage principal | $ (30,000) | ||||||
Gross purchase price | $ 539,000 | ||||||
Senior unsecured bridge loan facility member | Cole Corporate Income Trust, Inc. (CCIT) | |||||||
Summarized Balance Sheet Information Of Properties [Abstract] | |||||||
Term of loan | 364 days |
Segment Information and Tenan25
Segment Information and Tenant Concentration (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015ft²propertybuilding | Sep. 30, 2014 | Sep. 30, 2015ft²propertybuildingitem | Sep. 30, 2014 | |
Number of business segments | item | 1 | |||
Minimum percentage of rentable square footage of a building or land leased as a building or land parcel to single tenant | 90.00% | |||
Number of tenants under single tenant leased buildings and lands | item | 1 | |||
Number of properties acquired | 3 | 3 | ||
Number of buildings acquired | building | 5 | 5 | ||
Net rentable area | ft² | 44,606,000 | 44,606,000 | ||
Oahu, HI | ||||
Percentage of revenues | 19.80% | 37.70% | 21.40% | 38.80% |
Number of properties acquired | 11 | 11 | ||
Number of buildings acquired | building | 229 | 229 | ||
Net rentable area | ft² | 17,778,000 | 17,778,000 |
Derivatives Instruments and H26
Derivatives Instruments and Hedging Activities (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Additonal amount reclassified from other comprehensive income into interest expense | $ 430 | $ 430 |
Cash flow hedge derivative instrument liabilities at fair value, interest rate swap and accrued interest | 1,814 | 1,814 |
Designated Cash Flow Hedge RollForward | ||
Amount of income recognized in cumulative other comprehensive income (effective portion) | (953) | (273) |
Amount of income reclassified from cumulative other comprehensive income into interest expense (effective portion) | 122 | 92 |
Unrealized loss on derivative instrument | $ (831) | $ (181) |
Interest Rate Swap | Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Mortgage debt due interest rate | 200.00% | 200.00% |
Interest Rate Swap | Cash Flow Hedging | Designated as Hedging Instrument | Cole Corporate Income Trust, Inc. (CCIT) | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative, outstanding notional amount | $ 41,000 | $ 41,000 |
Hedge rate (as a percent) | 4.16% | |
Derivative, effective date | Jan. 29, 2015 | |
Derivative, maturity date | Aug. 3, 2020 | |
Cash flow hedge derivative instrument liabilities at fair value | $ 1,814 | $ 1,814 |
Indebtedness (Details)
Indebtedness (Details) $ in Thousands | Feb. 03, 2015USD ($)item | Jan. 09, 2015USD ($) | Sep. 30, 2015USD ($)propertybuilding | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015USD ($)propertybuilding | Sep. 30, 2014USD ($) | Oct. 26, 2015USD ($) | Jan. 08, 2015USD ($) | Dec. 31, 2014USD ($) |
Indebtedness | ||||||||||
Unsecured revolving credit facility | $ 305,000 | $ 305,000 | $ 77,000 | |||||||
Term loan | 350,000 | 350,000 | 350,000 | |||||||
Senior unsecured notes, net | 1,435,095 | 1,435,095 | ||||||||
Mortgage note payable | 286,945 | 286,945 | 18,816 | |||||||
Total debt, gross | 2,390,561 | 2,390,561 | 444,999 | |||||||
Plus: net premiums and (discounts) | 13,521 | 13,521 | (817) | |||||||
Total debt, net | 2,377,040 | 2,377,040 | 445,816 | |||||||
Aggregate borrowing availability of revolving credit facility and term loan | $ 1,100,000 | |||||||||
Maximum borrowing capacity of revolving credit facility | 2,200,000 | 2,200,000 | ||||||||
Fair value of mortgages assumed | $ 285,561 | $ 285,561 | ||||||||
Number of real estate properties collateralized | property | 9 | 9 | ||||||||
Number of buildings collateralized | building | 12 | 12 | ||||||||
Loss (gain) on early extinguishment of debt | $ 6,845 | $ (243) | ||||||||
Aggregate net book value of secured properties | $ 465,289 | 465,289 | ||||||||
Cole Corporate Income Trust, Inc. (CCIT) | ||||||||||
Indebtedness | ||||||||||
Aggregate principal amount | $ 267,743 | 186,510 | 186,510 | |||||||
Fair value of mortgages assumed | 187,449 | $ 187,449 | ||||||||
Number of assumed secured mortgage loans | item | 8 | |||||||||
Cole Corporate Income Trust, Inc. (CCIT) | LIBOR | ||||||||||
Indebtedness | ||||||||||
Hedge rate (as a percent) | 4.16% | |||||||||
Revolving credit facility, due in 2016 | ||||||||||
Indebtedness | ||||||||||
Unsecured revolving credit facility | $ 750,000 | |||||||||
Revolving credit facility, due in 2019 | ||||||||||
Indebtedness | ||||||||||
Unsecured revolving credit facility | $ 305,000 | $ 305,000 | 77,000 | |||||||
Revolving credit facility, due in 2019 | LIBOR | ||||||||||
Indebtedness | ||||||||||
Unsecured revolving credit facility | $ 750,000 | |||||||||
Spread on variable rate (as a percent) | 1.05% | |||||||||
Facility fee (as a percent) | 0.20% | |||||||||
Interest rate at the end of the period (as a percent) | 1.22% | 1.22% | ||||||||
Weighted average annual interest rate (as a percent) | 1.26% | 1.45% | 1.26% | 1.45% | ||||||
Principal repayment due until maturity | $ 0 | |||||||||
Revolving credit facility amount outstanding | $ 305,000 | 305,000 | $ 273,000 | |||||||
Term loan, prior | ||||||||||
Indebtedness | ||||||||||
Term loan | $ 350,000 | |||||||||
Term loan, due in 2020 | ||||||||||
Indebtedness | ||||||||||
Term loan | 350,000 | 350,000 | 350,000 | |||||||
Term loan, due in 2020 | LIBOR | ||||||||||
Indebtedness | ||||||||||
Term loan | $ 350 | $ 350 | ||||||||
Spread on variable rate (as a percent) | 1.15% | |||||||||
Interest rate at the end of the period (as a percent) | 1.35% | 1.35% | ||||||||
Weighted average annual interest rate (as a percent) | 1.34% | 1.69% | 1.34% | 1.69% | ||||||
Senior unsecured bridge loan facility member | Cole Corporate Income Trust, Inc. (CCIT) | ||||||||||
Indebtedness | ||||||||||
Loss (gain) on early extinguishment of debt | $ 6,845 | |||||||||
Term of loan | 364 days | |||||||||
Early Repayment of Senior Debt | $ 1,000,000 | |||||||||
Senior unsecured bridge loan facility member | Cole Corporate Income Trust, Inc. (CCIT) | LIBOR | ||||||||||
Indebtedness | ||||||||||
Spread on variable rate (as a percent) | 1.40% | |||||||||
Term of loan | 364 days | |||||||||
Bridge loan | $ 1,000,000 | $ 1,000,000 | ||||||||
Senior unsecured notes | Cole Corporate Income Trust, Inc. (CCIT) | ||||||||||
Indebtedness | ||||||||||
Aggregate principal amount | $ 1,450,000 | |||||||||
Senior unsecured notes, 2.85%, due in 2018 | ||||||||||
Indebtedness | ||||||||||
Senior unsecured notes, net | $ 350,000 | $ 350,000 | ||||||||
Interest rate (as a percent) | 2.85% | 2.85% | ||||||||
Senior unsecured notes, 3.60%, due in 2020 | ||||||||||
Indebtedness | ||||||||||
Senior unsecured notes, net | $ 400,000 | $ 400,000 | ||||||||
Interest rate (as a percent) | 3.60% | 3.60% | ||||||||
Senior unsecured notes, 4.15%, due in 2022 | ||||||||||
Indebtedness | ||||||||||
Senior unsecured notes, net | $ 300,000 | $ 300,000 | ||||||||
Interest rate (as a percent) | 4.15% | 4.15% | ||||||||
Senior unsecured notes, 4.50%, due in 2025 | ||||||||||
Indebtedness | ||||||||||
Senior unsecured notes, net | $ 400,000 | $ 400,000 | ||||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||||
Mortgage note payable, LIBOR plus 160 bps, due in 2016 | ||||||||||
Indebtedness | ||||||||||
Spread on variable rate (as a percent) | 1.60% | |||||||||
Mortgage note payable, LIBOR plus 160 bps, due in 2016 | LIBOR | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 40,233 | $ 40,233 | ||||||||
Mortgage note payable, 5.950%, due in 2017 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 17,818 | $ 17,818 | $ 17,999 | |||||||
Interest rate (as a percent) | 5.95% | 5.95% | ||||||||
Mortgage note payable 1, 4.50%, due in 2019 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 2,000 | $ 2,000 | ||||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||||
Mortgage note payable 2, 4.50%, due in 2019 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 2,400 | $ 2,400 | ||||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||||
Mortgage note payable, 3.87%, due in 2020 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 12,360 | $ 12,360 | ||||||||
Interest rate (as a percent) | 3.87% | 3.87% | ||||||||
Mortgage note payable, 4.16%, due in 2020 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 41,000 | $ 41,000 | ||||||||
Interest rate (as a percent) | 4.16% | 4.16% | ||||||||
Mortgage note payable, 3.99%, due in 2020 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 48,750 | $ 48,750 | ||||||||
Interest rate (as a percent) | 3.99% | 3.99% | ||||||||
Mortgage note payable, 3.55%, due in 2023 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 71,000 | $ 71,000 | ||||||||
Interest rate (as a percent) | 3.55% | 3.55% | ||||||||
Mortgage note payable, 3.70%, due in 2023 | ||||||||||
Indebtedness | ||||||||||
Mortgage note payable | $ 50,000 | $ 50,000 | ||||||||
Interest rate (as a percent) | 3.70% | 3.70% |
Fair Value of Financial Instr28
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Jan. 29, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes, net | $ 1,435,095 | ||
Mortgage note payable | 286,945 | $ 18,816 | |
Carrying Amount | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes, net | 1,435,095 | ||
Mortgage note payable | 246,712 | 18,816 | |
Estimated Fair Value | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Senior unsecured notes, net | 1,452,710 | ||
Mortgage note payable | 246,964 | $ 19,401 | |
Cole Corporate Income Trust, Inc. (CCIT) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Mortgage notes payable with related interest rate swap | $ 41,000 | ||
Cole Corporate Income Trust, Inc. (CCIT) | Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Mortgage notes payable with related interest rate swap | 41,000 | ||
Interest Rate Swap | Estimated Fair Value | Fair Value, Measurements, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Cash flow hedge derivative instrument liabilities at fair value | 1,814 | ||
Interest Rate Swap | Estimated Fair Value | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |||
Cash flow hedge derivative instrument liabilities at fair value | $ 1,814 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) $ in Thousands | Dec. 19, 2013USD ($)ft²property | Sep. 30, 2015USD ($)property | Sep. 30, 2015USD ($)ft²property |
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests [Abstract] | |||
Number of properties acquired | property | 3 | 3 | |
Square Feet | ft² | 790,894 | ||
Noncontrolling interest | $ 3,270 | $ 3,270 | |
Cole Corporate Income Trust, Inc. (CCIT) | Duluth, GA | |||
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests [Abstract] | |||
Number of properties acquired | property | 1 | ||
Square Feet | ft² | 344,000 | ||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 11.00% | ||
Noncontrolling interest | $ 3,422 | ||
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest | 46 | 135 | |
Aggregate net book value joint venture held real estate assets | 57,846 | 57,846 | |
Variable rate mortgage debt joint venture | $ 40,233 | $ 40,233 | |
Cole Corporate Income Trust, Inc. (CCIT) | Duluth, GA | Minimum | |||
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests [Abstract] | |||
Required purchase option (in years) | 2 years |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, $ in Thousands | Oct. 12, 2015USD ($)$ / shares | Sep. 24, 2015$ / sharesshares | Sep. 02, 2015$ / sharesshares | Aug. 20, 2015USD ($)$ / shares | Jun. 05, 2015shares | May. 21, 2015USD ($)$ / shares | May. 13, 2015item$ / sharesshares | Feb. 27, 2015USD ($)$ / shares | Feb. 24, 2015USD ($)$ / shares | Jan. 29, 2015shares | Sep. 30, 2015shares | Sep. 30, 2014USD ($) | Dec. 31, 2014shares |
Share Issuances: | |||||||||||||
Common shares, shares authorized | 125,000,000 | 125,000,000 | |||||||||||
Net proceeds from issuance of common shares | $ | $ 277,329 | ||||||||||||
Distributions | |||||||||||||
Quarterly dividend payable on common stock (in dollars per share) | $ / shares | $ 0.50 | ||||||||||||
Distribution to common shareholders | $ | $ 44,700 | ||||||||||||
Number of shares granted under the award plan | 52,600 | 2,500 | |||||||||||
Closing share price of the entity's common shares (in dollars per share) | $ / shares | $ 18.50 | $ 22.97 | |||||||||||
Number of trustees | item | 5 | ||||||||||||
Distribution declared | |||||||||||||
Distributions | |||||||||||||
Distribution paid on common shares (in dollars per share) | $ / shares | $ 0.48 | ||||||||||||
Quarterly dividend payable on common stock expected quarterly rate | $ / shares | $ 0.50 | ||||||||||||
Distribution to common shareholders | $ | $ 44,664 | $ 30,452 | $ 8,953 | $ 28,782 | |||||||||
Prorated distribution alignment rate | $ / shares | $ 0.50 | $ 0.3444 | $ 0.1493 | ||||||||||
RMR LLC | |||||||||||||
Share Issuances: | |||||||||||||
Common shares issued, including shares issued under business management agreement | 37,689 | ||||||||||||
Number of shares issued | 880,000 | ||||||||||||
Certain Our Officers And Employees Of RMR LLC | |||||||||||||
Distributions | |||||||||||||
Shares purchased from certain of our officers and other employees of RMR LLC | 6,851 | ||||||||||||
Closing share price of the entity's common shares (in dollars per share) | $ / shares | $ 19.04 | ||||||||||||
Cole Corporate Income Trust, Inc. (CCIT) | |||||||||||||
Share Issuances: | |||||||||||||
Share consideration, issued or issuable for each CCIT common share (in shares) | 28,439,111 | 28,439,111 |
Per Common Share Amounts (Detai
Per Common Share Amounts (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Per Common Share Amounts | ||||
Weighted average common shares outstanding, basic (in shares) | 89,267 | 59,857 | 85,827 | 54,642 |
Effect of dilutive securities restricted stock awards | 7 | 53 | 10 | 46 |
Weighted average common shares outstanding, diluted (in shares) | 89,274 | 59,910 | 85,837 | 54,688 |
Related Person Transactions - U
Related Person Transactions - Up-C Transaction (Details) - Up C Transaction $ in Thousands | Jun. 05, 2015USD ($)shares | Jun. 04, 2015shares | Sep. 30, 2015USD ($)Voteshares |
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Indirect economic interest in RMR LLC as a percent | 10.20% | ||
RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Aggregate consideration paid | $ | $ 15,880 | ||
Equity conversion ratio of RMR Inc. class B-1 common stock | 1 | ||
GOV | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Indirect economic interest in RMR LLC as a percent | 5.00% | ||
GOV | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Aggregate consideration paid | $ | $ 3,917 | ||
HPT | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Indirect economic interest in RMR LLC as a percent | 16.20% | ||
HPT | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Aggregate consideration paid | $ | $ 12,622 | ||
SNH | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Indirect economic interest in RMR LLC as a percent | 17.00% | ||
SNH | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Aggregate consideration paid | $ | $ 13,967 | ||
RMR Trust | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Equity conversion ratio of RMR LLC class A membership units | 1 | ||
Direct and indirect economic interest in RMR LLC as a percent | 51.60% | ||
Voting power of outstanding capital stock of RMR Inc | 91.40% | ||
RMR Trust | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Aggregate consideration paid | $ | $ 11,520 | ||
RMR LLC | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Additional consideration needed to cancel RMR Inc. B-2 common stock | $ | $ 0 | ||
Managing Trustees Barry And Adam Portnoy Member | RMR Trust | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Number of shares under lock up and registration agreement | 880,000 | ||
Period over which shares remain under lock up and registration agreement | 10 years | ||
Common shares | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 880,000 | ||
Common shares | GOV | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 700,000 | ||
Common shares | HPT | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 1,490,000 | ||
Common shares | SNH | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 2,345,000 | ||
Class A common shares | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 3,166,891 | ||
Number of votes per equity interest | Vote | 1 | ||
Class A common shares | GOV | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 1,541,201 | ||
Class A common shares | HPT | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 5,019,121 | ||
Class A common shares | SNH | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 5,272,787 | ||
Class B1 common shares | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Number of votes per equity interest | Vote | 10 | ||
Class B1 common shares | RMR Trust | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 1,000,000 | ||
Class B2 common shares | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Number of votes per equity interest | Vote | 10 | ||
Economic interest in RMR Inc as a percent | 0.00% | ||
Class B2 common shares | RMR Trust | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 15,000,000 | ||
Class A member units | RMR Trust | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
P-Business acquisition related party equity interests delivered | 30,000,000 | ||
Class A member units | RMR Trust | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
P-Business acquisition related party equity interests delivered | 15,000,000 | ||
Class B member units | RMR LLC | RMR Inc | |||
Related Party Transaction, Due from (to) Related Party [Abstract] | |||
Shares issued in connection with acquisition | 1,000,000 |
Related Person Transactions - A
Related Person Transactions - Amendment and Restatement of Management Agreements with RMR LLC (Details) - Amended agreement - Up C Transaction - RMR LLC | Jun. 05, 2015agreement |
Related Person Transactions | |
Number of business days notice for termination of property management agreement for convenience by the related party | 60 days |
Number of business days notice for termination of property management agreement for performance by the related party | 60 days |
Window for providing notice of termination of property management agreement for performance by the related party | 60 days |
Window for providing notice of termination of property management agreement after change of control by the related party | 12 months |
Number of terminated management agreements for convenience before termination fee is incurred | 1 |
Number of RMR LLC terminated management agreements for good cause before termination fee is incurred | 1 |
Number of terminated management agreements for a performance reason before termination fee is incurred | 1 |
Termination fee remaining term assumption | 10 years |
Related Person Transactions - R
Related Person Transactions - RMR LLC Management Fees and Reimbursements (Details) - RMR LLC - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Related Person Transactions | ||||
Business management fees incurred | $ 4,943 | $ 2,275 | $ 14,958 | $ 7,608 |
Incentive fees payable | $ 0 | $ 0 | ||
Estimated incentive fees recorded | 347 | |||
Shares issued under the business management agreement | 34,206 | 26,477 | ||
Base business management fee payable in cash (as a percent) | 100.00% | 100.00% | ||
Property management and construction supervision fees incurred | $ 2,887 | 1,561 | $ 8,467 | $ 4,628 |
Related party reimbursement expenses | 1,371 | 588 | 3,155 | 1,697 |
Accrual for RMR LLC employee share grants and internal audit costs | $ 315 | $ 411 | $ 676 | $ 712 |
Related Person Transactions -35
Related Person Transactions - Accounting for Investment in RMR Inc (Details) - RMR LLC - Up C Transaction - RMR Inc - USD ($) $ in Thousands | Jun. 05, 2015 | Sep. 30, 2015 |
Schedule of Cost-method Investments | ||
Amount of investment acquired | $ 35,954 | |
Fair value of investment | $ 81,850 | |
Initial other liabilities | $ 45,187 | |
Period of amortization | 20 years | |
Other assets | ||
Schedule of Cost-method Investments | ||
Investment at carrying value, including transaction costs | $ 84,431 | |
General and administrative expense | ||
Schedule of Cost-method Investments | ||
Amortization of other liabilities allocated to reduce business and property management fees | $ 567 | |
Class A common shares | ||
Schedule of Cost-method Investments | ||
Number of shares acquired | 3,166,891 |
Related Person Transactions -36
Related Person Transactions - REITs, for which RMR LLC provides Management Services (Details) $ in Thousands | Jun. 05, 2015USD ($)shares | Mar. 05, 2015itemshares | Mar. 04, 2015USD ($)shares | Jan. 29, 2015USD ($)property | Sep. 30, 2015USD ($)propertyshares | Aug. 31, 2015USD ($)company | Jun. 30, 2015USD ($) | Sep. 30, 2014shares | Sep. 30, 2015USD ($)property | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)property | Sep. 30, 2014USD ($) | Oct. 26, 2015shares |
Schedule of Cost-method Investments | |||||||||||||
Repurchase of common shares | $ 130 | ||||||||||||
Repurchase of common shares (in shares) | shares | 6,851 | ||||||||||||
Common shares outstanding | shares | 89,374,029 | ||||||||||||
Number of properties owned | property | 118 | 118 | 118 | ||||||||||
Equity in earnings (loss) of an investee | $ (25) | $ 38 | $ 70 | $ 59 | |||||||||
Equity in unrealized gain (loss) of an investee | (72) | (33) | $ (91) | 8 | |||||||||
Cole Corporate Income Trust, Inc. (CCIT) | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Gross purchase price | $ 2,997,601 | ||||||||||||
Assumed mortgage principal | $ 297,698 | ||||||||||||
RMR LLC | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Share grants (in shares) | shares | 52,600 | 51,500 | |||||||||||
Successive renewal period for business and property management agreements | 3 years | ||||||||||||
Number of entities to whom RMR provides management services | company | 5 | ||||||||||||
Aggregate coverage of combined directors' and officers' liability insurance policy purchased by the related party | $ 10,000 | ||||||||||||
Aggregate additional coverage of combined directors' and officers' liability insurance policy purchased by the related party | 20,000 | ||||||||||||
Non-indemnifiable coverage of combined directors' and officers' liability insurance policy purchased by the related party | 5,000 | ||||||||||||
Premium paid for combined directors' and officers' liability insurance policy | $ 355 | ||||||||||||
RMR LLC | Up C Transaction | RMR Inc | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Amount of investment acquired | $ 35,954 | ||||||||||||
Fair value of investment | $ 81,850 | ||||||||||||
Initial other liabilities | $ 45,187 | $ 45,187 | $ 45,187 | ||||||||||
Period of amortization | 20 years | ||||||||||||
RMR LLC | Up C Transaction | RMR Inc | Other assets | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Investment at carrying value, including transaction costs | $ 84,431 | $ 84,431 | 84,431 | ||||||||||
RMR LLC | Up C Transaction | RMR Inc | General and administrative expense | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Amortization of other liabilities allocated to reduce business and property management fees | $ 567 | ||||||||||||
RMR LLC | Up C Transaction | RMR Inc | Operating expense | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Amortization of other liabilities allocated to reduce property management fees | $ 709 | ||||||||||||
GOV | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Percentage of interest, equity method | 27.90% | 27.90% | 27.90% | ||||||||||
GOV | Lakewood | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number shares purchased under shareholder agreement | shares | 3,418,421 | ||||||||||||
Percentage of interest, equity method | 3.90% | ||||||||||||
Aggregate value of shares purchased under the shareholders agreement | $ 95,203 | ||||||||||||
Standstill provision period (in years) | 50 years | ||||||||||||
Lakewood Parties, William Lenehan | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number of related parties | item | 1 | ||||||||||||
SNH | Healthcare properties | Cole Corporate Income Trust, Inc. (CCIT) | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number of properties owned | property | 23 | ||||||||||||
Gross purchase price | $ 539,000 | ||||||||||||
Assumed mortgage principal | $ 30,000 | ||||||||||||
AIC | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Investment at carrying value | $ 6,807 | $ 6,807 | $ 6,807 | ||||||||||
Equity in earnings (loss) of an investee | (25) | 38 | 70 | 59 | |||||||||
Equity in unrealized gain (loss) of an investee | $ (72) | $ (33) | $ (91) | $ 8 | |||||||||
Coverage of property insurance | $ 500,000 | ||||||||||||
Terrorism property insurance term | 1 year | ||||||||||||
Terrorism coverage of property insurance | $ 200,000 | ||||||||||||
Property insurance premium | $ 2,325 | ||||||||||||
Managing Trustee, Barry Portnoy | Lakewood | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number shares purchased under shareholder agreement | shares | 107,606,000 | ||||||||||||
Managing Trustee, Barry Portnoy | Lakewood Parties, William Lenehan | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number shares purchased under shareholder agreement | shares | 2,429,000 | ||||||||||||
Managing Trustee, Adam Portnoy | Lakewood | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number shares purchased under shareholder agreement | shares | 87,606,000 | ||||||||||||
Managing Trustee, Adam Portnoy | Lakewood Parties, William Lenehan | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number shares purchased under shareholder agreement | shares | 2,429,000 | ||||||||||||
Class A common shares | RMR LLC | Up C Transaction | RMR Inc | |||||||||||||
Schedule of Cost-method Investments | |||||||||||||
Number of shares acquired | shares | 3,166,891 |