Exhibit 99.2
Supplemental Operating and Financial Data
First Quarter 2015
Corporate Headquarters Investor Relations
Two North Riverside Plaza Sarah Byrnes
Suite 600 (312) 646-2801
Chicago, IL 60606 ir@eqcre.com
(312) 646-2800 www.eqcre.com
TABLE OF CONTENTS
Corporate Information | ||
Company Profile and Investor Information | ||
Financial Information | ||
Key Financial Data | ||
Condensed Consolidated Balance Sheets | ||
Additional Balance Sheet Information | ||
Condensed Consolidated Statements of Operations | ||
Additional Income Statement Information | ||
Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI | ||
Calculation of EBITDA and Adjusted EBITDA | ||
Calculation of Funds from Operations (FFO) and Normalized FFO | ||
Debt Summary | ||
Debt Maturity Schedule | ||
Leverage Ratios, Coverage Ratios and Public Debt Covenants | ||
Capital Expenditures & Leasing Commitments Summary | ||
2015 Acquisitions and Dispositions | ||
Portfolio Information | ||
Same Property Summary by Property Location | ||
Same Property Results of Operations by Property Location | ||
Top 30 Properties by Annualized Rental Revenue | ||
Leasing Summary | ||
Leasing Summary by Property Location | ||
Occupancy and Leasing Analysis by Property Location | ||
Tenants Representing 1% or More of Annualized Rental Revenue | ||
Portfolio Lease Expiration Schedule | ||
Property Detail | ||
Additional Support | ||
Summary of Equity Investments | ||
Definitions | ||
Forward-Looking Statements | ||
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws. Any forward-looking statements contained in this presentation are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions are forward-looking statements. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. | ||
The forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the sections entitled “Risk Factors” in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. |
2
COMPANY PROFILE AND INVESTOR INFORMATION
Equity Commonwealth (NYSE: EQC) is an internally managed and self-advised real estate investment trust (REIT). EQC is one of the largest commercial office REITs in the United States, with a portfolio of over 42 million square feet located in 30 states, DC and Australia.
No. of | % | Q1 2015 | Cash Basis | |||||||
Same Property Statistics (1) | Properties | Sq. Feet | Leased | Revenues | NOI (2) | |||||
CBD | 40 | 21,893 | 85.1 | % | 65.9 | % | 63.2 | % | ||
Suburban | 114 | 20,859 | 86.7 | % | 34.1 | % | 36.8 | % | ||
Total | 154 | 42,752 | 85.9 | % | 100 | % | 100 | % |
Senior Unsecured Debt Ratings | NYSE Trading Symbols | ||
Moody's -- Baa3 | Common Stock -- EQC | ||
Standard & Poor's -- BBB- | Preferred Stock Series D -- EQC-PD | ||
Preferred Stock Series E -- EQC-PE | |||
5.75% Senior Notes due 2042 -- EQCO |
Board of Trustees | ||||
Sam Zell (Chairman) | David A. Helfand | Kenneth Shea | ||
James S. Corl | Peter Linneman | Gerald A. Spector | ||
Martin L. Edelman | James L. Lozier, Jr. | James A. Star | ||
Edward A. Glickman | Mary Jane Robertson | |||
Senior Management | ||||
David A. Helfand | David S. Weinberg | |||
President and Chief Executive Officer | Executive Vice President and | |||
Chief Operating Officer | ||||
Adam S. Markman | Orrin S. Shifrin | |||
Executive Vice President, | Executive Vice President, | |||
Chief Financial Officer and Treasurer | General Counsel and Secretary |
Equity Research Coverage (3) | |||
APB Financial Group | Kim Opiatowski | (212) 293-3411 | kopiatowski@apbfinancial.com |
Bank of America / Merrill Lynch | James Feldman | (646) 855-5808 | james.feldman@baml.com |
Citigroup | Michael Bilerman | (212) 816-1383 | michael.bilerman@citi.com |
Green Street Advisors | John Bejjani | (949) 640-8780 | jbejjani@greenst.com |
JMP Securities | Mitch Germain | (212) 906-3546 | mgermain@jmpsecurities.com |
RBC Capital Markets | Rich Moore | (440) 715-2646 | rich.moore@rbccm.com |
Stifel Nicolaus | John Guinee | (443) 224-1307 | jwguinee@stifel.com |
Debt Research Coverage (3) | |||
Citigroup | Thomas Cook | (212) 723-1112 | thomas.n.cook@citi.com |
Credit Suisse | John Giordano | (212) 538-4935 | john.giordano@credit-suisse.com |
J.P.Morgan | Mark Streeter | (212) 834-5086 | mark.streeter@jpmorgan.com |
Wells Fargo Securities | Thierry Perrein | (704) 410-3262 | thierry.perrein@wellsfargo.com |
Rating Agencies (3) | |||
Moody's Investors Service | Lori Marks | (212) 553-1098 | lori.marks@moodys.com |
Standard & Poor's | Jaime Gitler | (212) 438-5049 | jaime.gitler@standardandpoors.com |
(1) | Same property results include properties continuously owned from January 1, 2014 through March 31, 2015. |
(2) | Non-GAAP financial measure which is defined in the "Definitions" section of this document. Please refer to the calculation in this document which reconciles the differences between the non-GAAP financial measure and the most directly comparable GAAP financial measure. |
(3) | Any opinions, estimates or forecasts regarding EQC's performance made by these analysts or agencies do not represent opinions, forecasts or predictions of EQC or its management. EQC does not by its reference to the analysts and agencies above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies. |
3
KEY FINANCIAL DATA
(dollar and share amounts in thousands, except per share data)
As of and for the Three Months Ended | ||||||||||||||||||||
3/31/2015 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | ||||||||||||||||
OPERATING INFORMATION | ||||||||||||||||||||
Percent leased | 85.9 | % | 85.8 | % | 85.9 | % | 86.7 | % | 86.5 | % | ||||||||||
Total revenues | $ | 213,055 | $ | 212,808 | $ | 216,595 | $ | 215,194 | $ | 217,260 | ||||||||||
NOI (1) | 115,184 | 118,650 | 117,203 | 122,493 | 115,529 | |||||||||||||||
Cash Basis NOI (1) | 114,890 | 116,947 | 114,571 | 124,435 | 111,292 | |||||||||||||||
Adjusted EBITDA (1) | 107,781 | 107,248 | 99,626 | 125,736 | 115,856 | |||||||||||||||
NOI margin (2) | 54.1 | % | 55.8 | % | 54.1 | % | 56.9 | % | 53.2 | % | ||||||||||
Net income (loss) | 13,630 | (158,561 | ) | 156,740 | 5,385 | 20,448 | ||||||||||||||
Net income (loss) attributable to EQC common shareholders | 6,649 | (165,542 | ) | 149,759 | (17,802 | ) | 9,297 | |||||||||||||
FFO attributable to EQC common shareholders(1) | 65,384 | 60,442 | 207,234 | 87,146 | 60,479 | |||||||||||||||
Normalized FFO attributable to EQC common shareholders(1) | 71,985 | 68,733 | 57,306 | 81,317 | 60,967 | |||||||||||||||
Common distributions paid | — | — | — | — | 29,597 | |||||||||||||||
SHARES OUTSTANDING AND PER SHARE DATA | ||||||||||||||||||||
Shares Outstanding at End of Period | ||||||||||||||||||||
Common stock outstanding - basic (includes unvested restricted Shares) | 129,734 | 129,607 | 128,894 | 128,860 | 118,414 | |||||||||||||||
Preferred Stock Outstanding (4) | 15,915 | 15,915 | 15,915 | 15,917 | 26,180 | |||||||||||||||
Weighted Average Shares Outstanding - EPS & FFO | ||||||||||||||||||||
Weighted Average Common shares outstanding - basic | 129,696 | 129,398 | 128,880 | 123,812 | 118,400 | |||||||||||||||
Weighted Average Common shares outstanding - diluted (3),(4) | 129,874 | 129,398 | 131,243 | 123,812 | 118,400 | |||||||||||||||
Weighted Average Shares Outstanding - Normalized FFO | ||||||||||||||||||||
Weighted Average Common shares outstanding - basic | 129,696 | 129,398 | 128,880 | 123,812 | 118,400 | |||||||||||||||
Weighted Average Common shares outstanding - diluted (3),(4) | 129,874 | 129,398 | 128,880 | 123,812 | 118,400 | |||||||||||||||
Per Share Data | ||||||||||||||||||||
Net income (loss) attributable to EQC common shareholders - basic | $ | 0.05 | $ | (1.28 | ) | $ | 1.16 | $ | (0.14 | ) | $ | 0.08 | ||||||||
Net income (loss) attributable to EQC common shareholders - diluted (4) | 0.05 | (1.28 | ) | 1.16 | (0.14 | ) | 0.08 | |||||||||||||
Normalized FFO attributable to EQC common shareholders - diluted (4) | 0.55 | 0.53 | 0.44 | 0.66 | 0.51 | |||||||||||||||
Common distributions paid | — | — | — | — | 0.25 | |||||||||||||||
BALANCE SHEET | ||||||||||||||||||||
Total assets | $ | 5,734,296 | $ | 5,761,639 | $ | 6,170,796 | $ | 6,593,360 | $ | 6,600,714 | ||||||||||
Total liabilities | 2,423,118 | 2,442,056 | 2,681,793 | 3,222,472 | 3,241,644 | |||||||||||||||
MARKET CAPITALIZATION | ||||||||||||||||||||
Total debt (book value) (5) | $ | 2,205,075 | $ | 2,207,665 | $ | 2,442,942 | $ | 2,986,604 | $ | 3,009,627 | ||||||||||
Plus: Market value of preferred shares (at end of period) | 407,335 | 398,570 | 400,571 | 403,997 | 657,820 | |||||||||||||||
Plus: Market value of common shares (at end of period) | 3,444,431 | 3,327,012 | 3,313,853 | 3,391,593 | 3,114,281 | |||||||||||||||
Total market capitalization | $ | 6,056,841 | $ | 5,933,247 | $ | 6,157,366 | $ | 6,782,194 | $ | 6,781,728 | ||||||||||
RATIOS | ||||||||||||||||||||
Total debt (5) / total market capitalization | 36.4 | % | 37.2 | % | 39.7 | % | 44.0 | % | 44.4 | % | ||||||||||
Net debt (6) / annualized adjusted EBITDA | 4.1x | 4.3x | 4.6x | 5.1x | 6.1X | |||||||||||||||
Adjusted EBITDA / interest expense | 3.6x | 3.3x | 2.8x | 3.3x | 3.0X |
(1) | Non-GAAP financial measure which is defined in the "Definitions" section of this document. Please refer to the calculation in this document which reconciles the differences between the non-GAAP financial measure and the most directly comparable GAAP financial measure. |
(2) | NOI margin is defined as NOI as a percentage of total revenues. |
(3) | As of March 31, 2015, we had granted restricted share units ("RSU"s) to certain employees, officers, and the chairman of the Board of Trustees. The RSUs contain both service and market-based vesting components. None of the RSUs have vested. If the market-based vesting component was measured as of March 31, 2015, 254 common shares would be issued to the RSU holders, and no shares would have been issued for the other periods presented. Using a weighted average basis, 178 common shares are reflected in diluted GAAP EPS, FFO per common share and Normalized FFO per common share. The RSUs are excluded from basic GAAP EPS, FFO per common share and Normalized FFO per common share for all periods presented because the market-based vesting measurement date has not yet occurred. |
(4) | As of March 31, 2015, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 of our common shares, which for GAAP earnings per common share and FFO per common share, were dilutive for the three months ended September 30, 2014 and anti-dilutive for all other periods presented. The series D preferred shares outstanding were anti-dilutive for all periods presented with respect to Normalized FFO per common share. |
(5) | Total debt includes mortgage debt related to properties classified as held for sale totaling $19,688 as of March 31, 2014, and net unamortized premiums and discounts for all periods presented. Total debt excludes the debt of our unconsolidated equity investees. |
(6) | Net debt is calculated as total debt minus cash and cash equivalents. |
4
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
March 31, 2015 | December 31, 2014 | ||||||
ASSETS | |||||||
Real estate properties: | |||||||
Land | $ | 705,222 | $ | 714,238 | |||
Buildings and improvements | 4,994,374 | 5,014,205 | |||||
5,699,596 | 5,728,443 | ||||||
Accumulated depreciation | (1,066,369 | ) | (1,030,445 | ) | |||
4,633,227 | 4,697,998 | ||||||
Acquired real estate leases, net | 184,894 | 198,287 | |||||
Cash and cash equivalents | 421,736 | 364,516 | |||||
Restricted cash | 33,349 | 32,257 | |||||
Rents receivable, net of allowance for doubtful accounts of $8,110 and $6,565, respectively | 249,408 | 248,101 | |||||
Other assets, net | 211,682 | 220,480 | |||||
Total assets | $ | 5,734,296 | $ | 5,761,639 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Revolving credit facility | $ | — | $ | — | |||
Senior unsecured debt, net | 1,598,652 | 1,598,416 | |||||
Mortgage notes payable, net | 606,423 | 609,249 | |||||
Accounts payable and accrued expenses | 149,009 | 162,204 | |||||
Assumed real estate lease obligations, net | 24,220 | 26,784 | |||||
Rent collected in advance | 30,719 | 31,359 | |||||
Security deposits | 14,095 | 14,044 | |||||
Total liabilities | $ | 2,423,118 | $ | 2,442,056 | |||
Shareholders’ equity: | |||||||
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; | |||||||
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 and 4,915,497 shares issued and outstanding, respectively, aggregate liquidation preference of $122,880 and $122,887, respectively | $ | 119,263 | $ | 119,266 | |||
Series E preferred shares; 7 1/4% cumulative redeemable on or after May 15, 2016; 11,000,000 shares issued and outstanding, aggregate liquidation preference $275,000 | 265,391 | 265,391 | |||||
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 129,733,742 and 129,607,279 shares issued and outstanding, respectively | 1,297 | 1,296 | |||||
Additional paid in capital | 4,491,093 | 4,487,133 | |||||
Cumulative net income | 2,247,482 | 2,233,852 | |||||
Cumulative other comprehensive loss | (72,228 | ) | (53,216 | ) | |||
Cumulative common distributions | (3,111,868 | ) | (3,111,868 | ) | |||
Cumulative preferred distributions | (629,252 | ) | (622,271 | ) | |||
Total shareholders’ equity | $ | 3,311,178 | $ | 3,319,583 | |||
Total liabilities and shareholders’ equity | $ | 5,734,296 | $ | 5,761,639 |
5
ADDITIONAL BALANCE SHEET INFORMATION
(amounts in thousands)
March 31, 2015 | December 31, 2014 | |||||
Additional Balance Sheet Information | ||||||
Straight-line rents receivable, net of allowance for doubtful accounts | $ | 218,989 | $ | 220,855 | ||
Accounts receivable, net of allowance for doubtful accounts | 30,419 | 27,246 | ||||
Rents receivable, net of allowance for doubtful accounts | $ | 249,408 | $ | 248,101 | ||
Capitalized lease incentives, net | $ | 16,854 | $ | 15,191 | ||
Deferred financing fees, net | 22,564 | 16,861 | ||||
Deferred leasing costs, net | 129,409 | 126,252 | ||||
Other | 42,855 | 62,176 | ||||
Other assets, net | $ | 211,682 | $ | 220,480 | ||
Accounts payable | $ | 8,543 | $ | 7,755 | ||
Accrued interest | 21,341 | 25,007 | ||||
Accrued taxes | 52,653 | 57,237 | ||||
Other accrued liabilities | 66,472 | 72,205 | ||||
Accounts payable and accrued expenses | $ | 149,009 | $ | 162,204 |
6
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
For the Three Months Ended | |||||||
March 31, | |||||||
2015 | 2014 | ||||||
Revenues | |||||||
Rental income(1) | $ | 167,972 | $ | 172,040 | |||
Tenant reimbursements and other income | 45,083 | 45,220 | |||||
Total revenues | $ | 213,055 | $ | 217,260 | |||
Expenses: | |||||||
Operating expenses | $ | 97,871 | $ | 101,731 | |||
Depreciation and amortization | 62,699 | 51,649 | |||||
General and administrative | 16,558 | 24,848 | |||||
Loss (reversal of loss) on asset impairment | 1,904 | (4,761 | ) | ||||
Acquisition related costs | — | 5 | |||||
Total expenses | $ | 179,032 | $ | 173,472 | |||
Operating income | $ | 34,023 | $ | 43,788 | |||
Interest and other income | 3,448 | 384 | |||||
Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $29 and $(309), respectively) | (29,842 | ) | (37,935 | ) | |||
Loss on early extinguishment of debt | (428 | ) | — | ||||
Gain on issuance of shares by an equity investee | — | 109 | |||||
Gain on sale of properties | 5,868 | — | |||||
Income from continuing operations before income taxes and equity in earnings of investees | 13,069 | 6,346 | |||||
Income tax benefit (expense) | 561 | (555 | ) | ||||
Equity in earnings of investees | — | 10,934 | |||||
Income from continuing operations | 13,630 | 16,725 | |||||
Discontinued operations: | |||||||
Income from discontinued operations | — | 4,011 | |||||
Loss on asset impairment from discontinued operations | — | (288 | ) | ||||
Net income | $ | 13,630 | $ | 20,448 | |||
Preferred distributions | (6,981 | ) | (11,151 | ) | |||
Net income attributable to Equity Commonwealth common shareholders | $ | 6,649 | $ | 9,297 |
(1) | We report rental income on a straight line basis over the terms of the respective leases; rental income and income from discontinued operations include non-cash straight line rent adjustments. Rental income and income from discontinued operations also included non-cash amortization of intangible lease assets and liabilities. |
7
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
For the Three Months Ended | |||||||
March 31, | |||||||
2015 | 2014 | ||||||
Amounts attributable to Equity Commonwealth common shareholders: | |||||||
Income from continuing operations | $ | 6,649 | $ | 5,574 | |||
Income from discontinued operations | — | 4,011 | |||||
Loss on asset impairment from discontinued operations | — | (288 | ) | ||||
Net income | $ | 6,649 | $ | 9,297 | |||
Weighted average common shares outstanding — basic (1) | 129,696 | 118,400 | |||||
Weighted average common shares outstanding — diluted (1) | 129,874 | 118,400 | |||||
Basic and diluted earnings per common share attributable to Equity Commonwealth common shareholders: | |||||||
Income from continuing operations | $ | 0.05 | $ | 0.05 | |||
Income from discontinued operations | $ | — | $ | 0.03 | |||
Net income | $ | 0.05 | $ | 0.08 |
Additional Income Statement Information | |||||||
Continuing Operations: | |||||||
Straight line rent adjustments within rental income (2) | $ | (181 | ) | $ | 5,896 | ||
Lease value amortization within rental income (2) | (1,474 | ) | (2,252 | ) | |||
Lease termination fees within rental income | 1,949 | 593 | |||||
Shareholder litigation and transition related expenses within general and administrative (3) | 3,472 | 3,913 | |||||
General and administrative paid to RMR (4) | |||||||
Business management fee | $ | — | $ | 9,520 | |||
Business management incentive fee | — | 6,229 | |||||
Transition services fee | 2,235 | — | |||||
Discontinued Operations: | |||||||
Straight line rent adjustments (2) | $ | — | $ | 81 | |||
Lease termination fees | — | 83 |
(1 | ) | As of March 31, 2015, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 of our common shares, which were anti-dilutive for earnings per common share attributable to EQC common shareholders for all periods presented. 254 common shares (178 common shares on a weighted average basis) would be issued to the RSU holders if the market-based vesting component of the RSUs was measured as of March 31, 2015. No RSUs had been issued as of March 31, 2014. |
(2 | ) | We report rental income on a straight line basis over the terms of the respective leases; rental income and income from discontinued operations include non-cash straight line rent adjustments. Rental income and income from discontinued operations also include non-cash amortization of intangible lease assets and liabilities. |
(3 | ) | Shareholder litigation and transition related expenses within general and administrative for the three months ended March 31, 2015 includes $2.6 million for the increase in the fair value of the shareholder-approved liability for the reimbursement of expenses incurred by Related/Corvex since February 2013 in connection with their consent solicitations to remove our former Trustees, elect the new Board of Trustees and engage in related litigation. Approximately $8.4 million will be reimbursed only if the average closing price of our common shares is at least $26.00 (as adjusted for any share splits or share dividends) between July 31, 2014 and July 31, 2015. An additional $8.4 million will be reimbursed only if the average closing price of our common shares is at least $26.00 (as adjusted for any share splits or share dividends) between July 31, 2015 and July 31, 2016. As of March 31, 2015, the fair value of this aggregate liability is $9.3 million. |
(4 | ) | Amounts represent general and administrative expenses under our business management agreement. |
8
CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(amounts in thousands)
For the Three Months Ended | |||||||
March 31, | |||||||
2015 | 2014 | ||||||
Calculation of Same Property NOI and Same Property Cash Basis NOI (1): | |||||||
Rental income | $ | 167,972 | $ | 172,040 | |||
Tenant reimbursements and other income | 45,083 | 45,220 | |||||
Operating expenses | (97,871 | ) | (101,731 | ) | |||
NOI | $ | 115,184 | $ | 115,529 | |||
Straight line rent | 181 | (5,896 | ) | ||||
Lease value amortization | 1,474 | 2,252 | |||||
Lease termination fees | (1,949 | ) | (593 | ) | |||
Cash Basis NOI | $ | 114,890 | $ | 111,292 | |||
Cash Basis NOI from non-same properties (2) | (1,200 | ) | (397 | ) | |||
Same Property Cash Basis NOI | $ | 113,690 | $ | 110,895 | |||
Non-cash rental and termination income from same properties | 321 | 4,236 | |||||
Same Property NOI | $ | 114,011 | $ | 115,131 | |||
Reconciliation of Same Property NOI to GAAP Operating Income | |||||||
Same Property NOI | $ | 114,011 | $ | 115,131 | |||
Non-cash rental and termination income from same properties | (321 | ) | (4,236 | ) | |||
Same Property Cash Basis NOI | $ | 113,690 | $ | 110,895 | |||
Cash Basis NOI from non-same properties (2) | 1,200 | 397 | |||||
Cash Basis NOI | $ | 114,890 | $ | 111,292 | |||
Straight line rent | (181 | ) | 5,896 | ||||
Lease value amortization | (1,474 | ) | (2,252 | ) | |||
Lease termination fees | 1,949 | 593 | |||||
NOI | $ | 115,184 | $ | 115,529 | |||
Depreciation and amortization | (62,699 | ) | (51,649 | ) | |||
General and administrative | (16,558 | ) | (24,848 | ) | |||
(Loss) reversal of loss on asset impairment | (1,904 | ) | 4,761 | ||||
Acquisition related costs | — | (5 | ) | ||||
Operating Income | $ | 34,023 | $ | 43,788 |
(1) | Properties sold and properties classified as discontinued operations are excluded. Same property results include properties continuously owned from January 1, 2014 through March 31, 2015. Amounts related to the settlement of outstanding assets and liabilities of previously-disposed properties that are reflected in our consolidated results are excluded from same property results. |
(2) | Cash Basis NOI from non-same properties for the three months ended March 31, 2015 includes real estate tax refunds related to previously-disposed properties of $1.0 million. Cash Basis NOI from non-same properties for all periods presented includes the settlement of outstanding assets and liabilities of previously-disposed properties. |
9
CALCULATION OF EBITDA AND ADJUSTED EBITDA
(amounts in thousands)
For the Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net income | $ | 13,630 | $ | 20,448 | ||||
Plus: | Interest expense from continuing operations | 29,842 | 37,935 | |||||
Interest expense from discontinued operations | — | 303 | ||||||
Income tax (benefit) expense | (561 | ) | 555 | |||||
Depreciation and amortization from continuing operations | 62,699 | 51,649 | ||||||
EBITDA from equity investees | — | 16,427 | ||||||
Less: | Equity in earnings of investees | — | (10,934 | ) | ||||
EBITDA | $ | 105,610 | $ | 116,383 | ||||
Plus: | Loss on asset impairment from discontinued operations | — | 288 | |||||
Acquisition related costs | — | 5 | ||||||
Loss on early extinguishment of debt from continuing operations | 428 | — | ||||||
Shareholder litigation costs and transition-related expenses | 3,472 | 3,913 | ||||||
Transition services fee | 2,235 | — | ||||||
Adjusted EBITDA from equity investees, net of EBITDA | — | 137 | ||||||
Less: | Gain on sale of properties | (5,868 | ) | — | ||||
Loss (reversal of loss) on asset impairment from continuing operations (1) | 1,904 | (4,761 | ) | |||||
Gain on issuance of shares by an equity investee | — | (109 | ) | |||||
Adjusted EBITDA | $ | 107,781 | $ | 115,856 |
(1 | ) | During the three months ended March 31, 2015, we recorded an impairment charge of $1.9 million related to 12655 Olive Boulevard and 1285 Fern Ridge Parkway, based upon updated market information in accordance with our impairment analysis procedures. In 2014, we ceased to actively market properties which we had previously classified as held for sale. These properties were reclassified to properties held and used in operations because they no longer met the requirements for classification as held for sale. In connection with this reclassification, we reversed previously recorded impairment losses totaling $4.8 million, which includes the elimination of estimated costs to sell. |
10
CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(amounts in thousands, except per share data)
For the Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Calculation of FFO | ||||||||
Net income | $ | 13,630 | $ | 20,448 | ||||
Plus: | Depreciation and amortization | 62,699 | 51,649 | |||||
Loss on asset impairment from discontinued operations | — | 288 | ||||||
FFO from equity investees | — | 14,940 | ||||||
Less: | Loss (reversal of loss) on asset impairment from continuing operations (1) | 1,904 | (4,761 | ) | ||||
Gain on sale of properties | (5,868 | ) | — | |||||
Equity in earnings of investees | — | (10,934 | ) | |||||
FFO attributable to Equity Commonwealth | 72,365 | 71,630 | ||||||
Less: | Preferred distributions | (6,981 | ) | (11,151 | ) | |||
FFO attributable to EQC Common Shareholders | $ | 65,384 | $ | 60,479 | ||||
Calculation of Normalized FFO | ||||||||
FFO attributable to EQC common shareholders | $ | 65,384 | $ | 60,479 | ||||
Recurring adjustments: | ||||||||
Lease value amortization | 1,474 | 2,252 | ||||||
Straight line rent from continuing operations | 181 | (5,896 | ) | |||||
Straight line rent from discontinued operations | — | (81 | ) | |||||
Loss on early extinguishment of debt | 428 | — | ||||||
Minimum cash rent from direct financing lease (2) | 2,032 | 2,032 | ||||||
Gain on issuance of shares by an equity investee | — | (109 | ) | |||||
Interest earned from direct financing lease | (141 | ) | (229 | ) | ||||
Normalized FFO from equity investees, net of FFO | — | (1,399 | ) | |||||
Other items which affect comparability: | ||||||||
Shareholder litigation and transition related expenses (3) | 3,472 | 3,913 | ||||||
Transition services fee | 2,235 | — | ||||||
Acquisition related costs | — | 5 | ||||||
Gain on sale of securities | (3,080 | ) | — | |||||
Normalized FFO attributable to EQC Common Shareholders | $ | 71,985 | $ | 60,967 | ||||
Weighted average common shares outstanding -- basic | 129,696 | 118,400 | ||||||
Weighted average common shares outstanding -- diluted (4) | 129,874 | 118,400 | ||||||
FFO attributable to EQC common shareholders per share -- basic & diluted (4) | $ | 0.50 | $ | 0.51 | ||||
Normalized FFO attributable to EQC common shareholders per share -- basic (4) | $ | 0.56 | $ | 0.51 | ||||
Normalized FFO attributable to EQC common shareholders per share -- diluted (4) | $ | 0.55 | $ | 0.51 |
(1) | During the three months ended March 31, 2015, we recorded an impairment charge of $1.9 million related to 12655 Olive Boulevard and 1285 Fern Ridge Parkway, based upon updated market information in accordance with our impairment analysis procedures. In 2014, we ceased to actively market properties which we had previously classified as held for sale. These properties were reclassified to properties held and used in operations because they no longer met the requirements for classification as held for sale. In connection with this reclassification, we reversed previously recorded impairment losses totaling $4.8 million, which includes the elimination of estimated costs to sell. |
(2) | Contractual cash payments (including management fees) from one tenant at Arizona Center for the three months ended March 31, 2015 and 2014 were $2,032. These payments will decrease to approximately $515 per year beginning in 2016. Our calculation of Normalized FFO reflects the cash payments received from this tenant. The terms of this tenant's lease require us to classify the lease as a direct financing (or capital) lease. As such, the revenue recognized on a GAAP basis within our condensed consolidated statements of operations was $141 and $229 for the three months ended March 31, 2015 and 2014, respectively. This direct financing lease has an expiration date in 2045. |
(3) | Refer to the Additional Income Statement Information for a discussion of expenses related to the shareholder-approved Related/Corvex consent solicitation liability. |
(4) | As of March 31, 2015, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 of our common shares, which were anti-dilutive for FFO and Normalized FFO per common share for all periods presented. 254 common shares (178 common shares on a weighted average basis) would be issued to the RSU holders if the market-based vesting component of the RSUs was measured as of March 31, 2015. No RSUs had been issued as of March 31, 2014. |
11
DEBT SUMMARY
As of March 31, 2015
(dollars in thousands)
Interest Rate | Principal Balance | Maturity Date | Due at Maturity | Years to Maturity | |||||||||||
Unsecured Debt: | |||||||||||||||
Unsecured Floating Rate Debt: | |||||||||||||||
Revolving credit facility (LIBOR + 125 bps) (1) | 1.43 | % | $ | — | 1/28/2019 | $ | — | 3.8 | |||||||
Term loan (LIBOR + 140 bps) (2) | 1.58 | % | 200,000 | 1/28/2020 | 200,000 | 4.8 | |||||||||
Term loan (LIBOR + 180 bps) (2) | 1.98 | % | 200,000 | 1/28/2022 | 200,000 | 6.8 | |||||||||
Total / weighted average unsecured floating rate debt | 1.78 | % | $ | 400,000 | $ | 400,000 | 5.8 | ||||||||
Unsecured Fixed Rate Debt: | |||||||||||||||
5.75% Senior Unsecured Notes Due 2015 (3) | 5.75 | % | $ | 138,773 | 11/1/2015 | $ | 138,773 | 0.6 | |||||||
6.25% Senior Unsecured Notes Due 2016 | 6.25 | % | 139,104 | 8/15/2016 | 139,104 | 1.4 | |||||||||
6.25% Senior Unsecured Notes Due 2017 | 6.25 | % | 250,000 | 6/15/2017 | 250,000 | 2.2 | |||||||||
6.65% Senior Unsecured Notes Due 2018 | 6.65 | % | 250,000 | 1/15/2018 | 250,000 | 2.8 | |||||||||
5.875% Senior Unsecured Notes Due 2020 | 5.88 | % | 250,000 | 9/15/2020 | 250,000 | 5.5 | |||||||||
5.75% Senior Unsecured Notes Due 2042 | 5.75 | % | 175,000 | 8/1/2042 | 175,000 | 27.4 | |||||||||
Total / weighted average unsecured fixed rate debt | 6.13 | % | $ | 1,202,877 | $ | 1,202,877 | 6.4 | ||||||||
Secured Fixed Rate Debt: | |||||||||||||||
111 Monument Circle | 5.24 | % | $ | 116,000 | 3/1/2016 | $ | 116,000 | 0.9 | |||||||
225 Water Street (4) | 6.03 | % | 40,059 | 5/11/2016 | 38,994 | 1.1 | |||||||||
111 East Wacker Drive | 6.29 | % | 142,153 | 7/11/2016 | 139,478 | 1.3 | |||||||||
2501 20th Place South | 7.36 | % | 10,127 | 8/1/2016 | 9,333 | 1.3 | |||||||||
Parkshore Plaza | 5.67 | % | 41,275 | 5/1/2017 | 41,275 | 2.1 | |||||||||
1735 Market Street (5) | 5.66 | % | 171,039 | 12/2/2019 | 160,710 | 4.7 | |||||||||
206 East 9th Street | 5.69 | % | 27,850 | 1/5/2021 | 24,836 | 5.8 | |||||||||
1320 Main Street | 5.30 | % | 38,811 | 6/1/2021 | 34,113 | 6.2 | |||||||||
33 Stiles Lane | 6.75 | % | 3,047 | 3/1/2022 | — | 6.9 | |||||||||
97 Newberry Road | 5.71 | % | 6,711 | 3/1/2026 | — | 10.9 | |||||||||
Total / weighted average secured fixed rate debt | 5.77 | % | $ | 597,072 | $ | 564,739 | 2.9 | ||||||||
Total / weighted average (3), (6) | 5.24 | % | $ | 2,199,949 | $ | 2,167,616 | 5.3 | ||||||||
(1) | Represents amounts outstanding on EQC's $750,000 revolving credit facility as of March 31, 2015. The interest rate presented is as of March 31, 2015, and equals LIBOR plus 1.25%. We also pay a 25 basis point facility fee annually. The spread over LIBOR and the facility fee vary depending upon EQC's credit rating. |
(2) | Represents amounts outstanding on EQC's term loans as of March 31, 2015. The interest rate presented is as of March 31, 2015, and equals LIBOR plus 1.4% for the loan maturing on January 28, 2020, and LIBOR plus 1.8% for the loan maturing January 28, 2022. The spreads over LIBOR vary depending upon EQC's credit rating. |
(3) | On March 18, 2015, our Board of Trustees approved the redemption at par of $138.8 million of our 5.75% unsecured senior notes due 2015. The notes were redeemed on May 1, 2015. |
(4) | On October 10, 2014, we were notified by the lender that our decision to cease making loan servicing payments created an event of default effective July 11, 2014 and the lender has exercised its option to accelerate the maturity of the unpaid balance of the loan. The lender has filed a suit of foreclosure for this property. We have cooperated with the lender to allow for a consensual foreclosure process. The final step of the foreclosure process, the foreclosure sale, is expected to occur in the second quarter of 2015. Since July 11, 2014, we have accrued interest on this loan at 10.03% to include the 4% of default interest. |
(5) | Interest is payable at a rate equal to LIBOR plus 2.625% but has been fixed by a cash flow hedge, which sets the rate at approximately 5.66% until December 1, 2016. |
(6) | Total debt outstanding as of March 31, 2015, including net unamortized premiums and discounts, was $2,205,075. |
12
DEBT MATURITY SCHEDULE
(dollars in thousands)
Scheduled Payments During Period | ||||||||||||||||||
Year | Unsecured Floating Rate Debt | Unsecured Fixed Rate Debt | Secured Fixed Rate Debt | Total | Weighted Average Interest Rate (1) | |||||||||||||
2015 | $ | — | $ | 138,773 | (2) | $ | 5,612 | (3) | $ | 144,385 | 5.8 | % | ||||||
2016 | — | 139,104 | 309,604 | (3) | 448,708 | 6.0 | % | |||||||||||
2017 | — | 250,000 | 45,592 | 295,592 | 6.2 | % | ||||||||||||
2018 | — | 250,000 | 4,614 | 254,614 | 6.6 | % | ||||||||||||
2019 | — | — | 165,422 | (4) | 165,422 | 5.7 | % | |||||||||||
2020 | 200,000 | (5) | 250,000 | 2,523 | 452,523 | 4.0 | % | |||||||||||
2021 | — | — | 60,470 | 60,470 | 5.5 | % | ||||||||||||
2022 | 200,000 | (5) | — | 799 | 200,799 | 2.0 | % | |||||||||||
2023 | — | — | 702 | 702 | 5.7 | % | ||||||||||||
2024 | — | — | 743 | 743 | 5.7 | % | ||||||||||||
Thereafter | — | 175,000 | 991 | 175,991 | 5.8 | % | ||||||||||||
Total | $ | 400,000 | $ | 1,202,877 | $ | 597,072 | $ | 2,199,949 | (6) | 5.2 | % | |||||||
Percent | 18.2 | % | 54.7 | % | 27.1 | % | 100.0 | % |
(1) | Based on current contractual interest rates excluding an additional 4% of default interest incurred on the mortgage loan secured by 225 Water Street. |
(2) | On March 18, 2015, our Board of Trustees approved the redemption at par of $138.8 million of our 5.75% unsecured senior notes due 2015. The notes were redeemed on May 1, 2015. |
(3) | Scheduled payments for the fixed rate debt secured by 225 Water Street of $0.9 million and $39.2 million are included in 2015 and 2016, respectively. On October 10, 2014, we were notified by the lender that our decision to cease making loan servicing payments created an event of default effective July 11, 2014 and the lender has exercised its option to accelerate the maturity of the unpaid balance of the loan. The lender has filed a suit of foreclosure for this property. We have cooperated with the lender to allow for a consensual foreclosure process. The final step of the foreclosure process, the foreclosure sale, is expected to occur in the second quarter of 2015. Since July 11, 2014, we have accrued interest on this loan at 10.03% to include the 4% of default interest. |
(4) | Interest is payable at a rate equal to LIBOR plus 2.625% but has been fixed by a cash flow hedge, which sets the rate at approximately 5.66% until December 1, 2016. |
(5) | Represents amounts outstanding on EQC's term loans as of March 31, 2015. The interest rate presented is as of March 31, 2015, and equals LIBOR plus 1.4% for the loan maturing on January 28, 2020, and LIBOR plus 1.8% for the loan maturing January 28, 2022. The spreads over LIBOR vary depending upon EQC's credit rating. |
(6) | Total debt outstanding as of March 31, 2015, including net unamortized premiums and discounts, was $2,205,075. |
13
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
(dollars in thousands)
As of and for the Three Months Ended | ||||||||||||||
3/31/2015 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | ||||||||||
Leverage Ratios | ||||||||||||||
Total debt (1) / total assets | 38.5 | % | 38.3 | % | 39.6 | % | 45.3 | % | 45.6 | % | ||||
Total debt (1) / total market capitalization | 36.4 | % | 37.2 | % | 39.7 | % | 44.0 | % | 44.4 | % | ||||
Total debt (1) + preferred stock / total market capitalization | 43.1 | % | 43.9 | % | 46.2 | % | 50.0 | % | 54.1 | % | ||||
Total debt (1) / annualized adjusted EBITDA | 5.1x | 5.1x | 6.1x | 5.9x | 6.5x | |||||||||
Total debt (1) + preferred stock / annualized adjusted EBITDA | 6.1x | 6.1x | 7.1x | 6.7x | 7.9x | |||||||||
Net debt (2) / enterprise value (3) | 31.6 | % | 32.9 | % | 33.2 | % | 40.3 | % | 42.9 | % | ||||
Net debt (2) + preferred stock / enterprise value (3) | 38.9 | % | 40.1 | % | 40.4 | % | 46.6 | % | 52.8 | % | ||||
Net debt (2) / annualized adjusted EBITDA | 4.1x | 4.3x | 4.6x | 5.1x | 6.1x | |||||||||
Net debt (2) + preferred stock / annualized adjusted EBITDA | 5.1x | 5.2x | 5.6x | 5.9x | 7.5x | |||||||||
Secured debt / total assets | 10.6 | % | 10.6 | % | 10.0 | % | 13.6 | % | 13.9 | % | ||||
Variable rate debt / total debt (1) | 18.1 | % | 18.1 | % | 20.5 | % | 24.6 | % | 24.4 | % | ||||
Variable rate debt / total assets | 7.0 | % | 6.9 | % | 8.1 | % | 11.1 | % | 11.1 | % | ||||
Coverage Ratios | ||||||||||||||
Adjusted EBITDA (4) / interest expense | 3.6x | 3.3x | 2.8x | 3.3x | 3.0x | |||||||||
Adjusted EBITDA (4) / interest expense + preferred distributions | 2.9x | 2.7x | 2.4x | 2.8x | 2.4x | |||||||||
Public Debt Covenants | ||||||||||||||
Debt / adjusted total assets (5) (maximum 60%) | 30.9 | % | 31.0 | % | 33.4 | % | 38.9 | % | 38.8 | % | ||||
Secured debt / adjusted total assets (5) (maximum 40%) | 8.5 | % | 8.6 | % | 8.5 | % | 11.6 | % | 11.8 | % | ||||
Consolidated income available for debt service (6) / debt service (minimum 1.5x) | 3.9x | 3.9x | 3.4x | 3.1x | 3.2x | |||||||||
Total unencumbered assets (5) / unsecured debt (minimum 150% / 200%) | 386.5 | % | 385.6 | % | 348.7 | % | 302.8 | % | 304.4 | % |
(1) | Total debt includes net unamortized premiums and discounts and mortgage debt related to properties classified as held for sale totaling $19,688 as of March 31, 2014. Total debt excludes the debt of our unconsolidated equity investees. |
(2) | Net debt is calculated as total debt minus cash and cash equivalents. |
(3) | Enterprise value is calculated as total market capitalization minus cash and cash equivalents. |
(4) | Non-GAAP financial measure which is defined in the "Definitions" section of this document. Please refer to the calculation in this document which reconciles the differences between the non-GAAP financial measure and the most directly comparable GAAP financial measure. |
(5) | Adjusted total assets and total unencumbered assets includes original cost of real estate assets calculated in accordance with GAAP and excludes depreciation and amortization, accounts receivable, other intangible assets and impairment write downs, if any. |
(6) | Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, taxes, loss on asset impairment and gains and losses on acquisitions and sales of assets and early extinguishment of debt, determined together with debt service on a pro forma basis for the four consecutive fiscal quarters most recently ended. |
14
CAPITAL EXPENDITURES & LEASING COMMITMENTS SUMMARY
(dollars and square feet in thousands, except per square foot data)
CAPITAL EXPENDITURES SUMMARY | For the Three Months Ended | ||||||||||||||||||
3/31/2015 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | |||||||||||||||
Tenant improvements | $ | 8,167 | $ | 15,989 | $ | 10,719 | $ | 11,687 | $ | 19,843 | |||||||||
Leasing costs | 10,868 | 10,517 | 15,838 | 5,661 | 5,075 | ||||||||||||||
Building improvements | 2,674 | 8,206 | 5,897 | 4,659 | 4,244 | ||||||||||||||
Development, redevelopment and other activities | 76 | 1,544 | 2,273 | 2,804 | 3,743 | ||||||||||||||
Total capital expenditures | $ | 21,785 | $ | 36,256 | $ | 34,727 | $ | 24,811 | $ | 32,905 | |||||||||
Average square feet during period (1) | 42,835 | 42,919 | 42,919 | 44,309 | 45,698 | ||||||||||||||
Building improvements per average total sq. ft. during period | $ | 0.06 | $ | 0.19 | $ | 0.14 | $ | 0.11 | $ | 0.09 |
LEASING COMMITMENTS | For the Three Months Ended | |||||||||||
SUMMARY | March 31, 2015 | |||||||||||
New Leases | Renewals | Total | ||||||||||
Rentable square feet leased during the period | 720 | 758 | 1,478 | |||||||||
Tenant leasing costs and concession commitments (2) | $ | 31,644 | $ | 9,164 | $ | 40,808 | ||||||
Tenant leasing costs and concession commitments per rentable square foot (2) | $ | 43.95 | $ | 12.09 | $ | 27.61 | ||||||
Weighted average lease term by square foot (years) | 8.8 | 4.5 | 6.6 | |||||||||
Total leasing costs and concession commitments per rentable square foot per year (2) | $ | 4.99 | $ | 2.70 | $ | 4.20 |
(1) | Average square feet during each period includes properties held for sale at the end of each period. As of March 31, 2015, EQC did not have any properties classified as held for sale. |
(2) | Includes commitments made for leasing expenditures and concessions, such as improvements, leasing commissions, tenant reimbursements and free rent. |
15
2015 ACQUISITIONS AND DISPOSITIONS
(dollars in thousands)
Acquisitions: |
None |
Dispositions: | |||||||||||||||||||||||||
Date Sold | Year Acquired | Property | City | State | No. of Properties | Location | Sq. Feet | % Leased | Gross Sales Price | Net Book Value (1) | Annualized Rental Revenue | ||||||||||||||
1/22/15 | 2006 | 11350 N Meridian St. | Carmel | IN | 1 | Suburban | 72,264 | 78.4 | % | $ | 4,200 | $ | 2,537 | $ | 707 | ||||||||||
3/4/15 | 1998 | 333 Laurel Oak Dr. | Voorhees | NJ | 1(2) | Suburban | 27,164 | 0.0 | % | 2,450 | 1,441 | — | |||||||||||||
3/6/15 | 2003 | 1921 E Alton Ave. | Santa Ana | CA | 1 | Suburban | 67,846 | 84.7 | % | 14,533 | 8,567 | 1,683 | |||||||||||||
167,274 | 68.2 | % | $ | 21,183 | $ | 12,545 | $ | 2,390 |
Gain on sale of properties for the three months ended March 31, 2015: | $5,868 |
In April, the Company entered into several contracts to sell 52 properties, representing over 8 million square feet, in various portfolio and single asset transactions. Proceeds are anticipated to total approximately $750 million. These transactions are projected to close in the second and third quarter of 2015 but are subject to customary closing conditions. There is no certainty that these conditions will be met or that these transactions will close.
(1 | ) | Represents the carrying value of real estate properties, after depreciation and amortization, purchase price allocations, impairment writedowns and currency adjustments, if any. Net Book Value excludes deferred leasing costs, certain intangible assets and working capital, which are included in the calculation of Gain on on sale of properties. |
(2 | ) | We sold one building in a property containing three buildings. |
16
SAME PROPERTY SUMMARY BY PROPERTY LOCATION (1)
(square feet and dollars in thousands)
As of and for the Three Months Ended March 31, 2015 | |||||||||
CBD Properties | Suburban Properties | Total | |||||||
Number of Properties | 40 | 114 | 154 | ||||||
Percent of total | 26.0 | % | 74.0 | % | 100.0 | % | |||
Total square feet | 21,893 | 20,859 | 42,752 | ||||||
Percent of total | 51.2 | % | 48.8 | % | 100.0 | % | |||
Leased square feet | 18,628 | 18,091 | 36,719 | ||||||
Percent leased (2) | 85.1 | % | 86.7 | % | 85.9 | % | |||
Total revenues | $ | 139,540 | $ | 72,101 | $ | 211,641 | |||
Percent of total | 65.9 | % | 34.1 | % | 100.0 | % | |||
NOI (3) | $ | 73,947 | $ | 40,064 | $ | 114,011 | |||
Percent of total | 64.9 | % | 35.1 | % | 100.0 | % | |||
Cash Basis NOI (3) | $ | 71,847 | $ | 41,843 | $ | 113,690 | |||
Percent of total | 63.2 | % | 36.8 | % | 100.0 | % |
(1) | Includes properties continuously owned from January 1, 2014 through March 31, 2015, and excludes amounts related to the settlement of outstanding assets and liabilities of previously-disposed properties that are reflected in our consolidated results. |
(2) | Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased but is not occupied or is being offered for sublease by tenants. |
(3) | Non-GAAP financial measure which is defined in the "Definitions" section of this document. Please refer to the calculation in this document which reconciles the differences between the non-GAAP financial measure and the most directly comparable GAAP financial measure. |
17
SAME PROPERTY RESULTS OF OPERATIONS BY PROPERTY LOCATION
(dollars and square feet in thousands)
As of and for the Three Months Ended March 31, | ||||||||||
2015 (1) | 2014 (1) | % Change | ||||||||
Total | ||||||||||
Properties | 154 | 154 | ||||||||
Square Feet (2) | 42,752 | 42,746 | ||||||||
% Leased | 85.9 | % | 86.6 | % | (0.7 | )% | ||||
Revenues | ||||||||||
Rental income | $ | 167,720 | $ | 171,519 | ||||||
Straight line adjustment | 177 | (5,895 | ) | |||||||
Above/below market rent amortization | 1,474 | 2,252 | ||||||||
Early termination income | (1,972 | ) | (593 | ) | ||||||
Cash basis rental income | 167,399 | 167,283 | ||||||||
Tenant reimbursements | 42,874 | 44,034 | ||||||||
Other income | 1,047 | 1,070 | ||||||||
Total revenues | 211,641 | 216,623 | (2.3 | )% | ||||||
Cash basis revenue | 211,320 | 212,387 | (0.5 | )% | ||||||
Operating expenses | 97,630 | 101,492 | (3.8 | )% | ||||||
NOI | 114,011 | 115,131 | (1.0 | )% | ||||||
NOI margin | 53.9 | % | 53.1 | % | ||||||
Cash Basis NOI | $ | 113,690 | $ | 110,895 | 2.5 | % | ||||
Cash Basis NOI margin | 53.8 | % | 52.2 | % | ||||||
CBD | ||||||||||
Properties | 40 | 40 | ||||||||
Square Feet (2) | 21,893 | 21,889 | ||||||||
% Leased | 85.1 | % | 85.1 | % | 0.0 | % | ||||
Revenues | ||||||||||
Rental income | $ | 109,843 | $ | 110,239 | ||||||
Straight line adjustment | (2,036 | ) | (4,630 | ) | ||||||
Above/below market rent amortization | 1,300 | 1,776 | ||||||||
Termination income | (1,364 | ) | (535 | ) | ||||||
Cash basis rental income | 107,743 | 106,850 | ||||||||
Tenant reimbursements | 28,834 | 29,389 | ||||||||
Other income | 863 | 864 | ||||||||
Total revenues | 139,540 | 140,492 | (0.7 | )% | ||||||
Cash basis revenue | 137,440 | 137,103 | 0.2 | % | ||||||
Operating expenses | 65,593 | 67,304 | (2.5 | )% | ||||||
NOI | 73,947 | 73,188 | 1.0 | % | ||||||
NOI margin | 53.0 | % | 52.1 | % | ||||||
CBD Cash Basis NOI | $ | 71,847 | $ | 69,799 | 2.9 | % | ||||
Cash Basis NOI margin | 52.3 | % | 50.9 | % | ||||||
Suburban | ||||||||||
Properties | 114 | 114 | ||||||||
Square Feet (2) | 20,859 | 20,857 | ||||||||
% Leased | 86.7 | % | 88.1 | % | (1.4 | )% | ||||
Revenues | ||||||||||
Rental income | $ | 57,877 | $ | 61,280 | ||||||
Straight line adjustment | 2,213 | (1,265 | ) | |||||||
Above/below market rent amortization | 174 | 476 | ||||||||
Termination income | (608 | ) | (58 | ) | ||||||
Cash basis rental income | 59,656 | 60,433 | ||||||||
Tenant reimbursements | 14,040 | 14,645 | ||||||||
Other income | 184 | 206 | ||||||||
Total revenues | 72,101 | 76,131 | (5.3 | )% | ||||||
Cash basis revenue | 73,880 | 75,284 | (1.9 | )% | ||||||
Operating expenses | 32,037 | 34,188 | (6.3 | )% | ||||||
NOI | 40,064 | 41,943 | (4.5 | )% | ||||||
NOI margin | 55.6 | % | 55.1 | % | ||||||
Suburban Cash Basis NOI | $ | 41,843 | $ | 41,096 | 1.8 | % | ||||
Cash Basis NOI margin | 56.6 | % | 54.6 | % |
(1) | Quarter-to-date results include properties continuously owned from January 1, 2014 through March 31, 2015. Amounts related to the settlement of outstanding assets and liabilities of previously-disposed properties that are reflected in our consolidated results are excluded. |
(2) | Total square footage changed due to remeasurement. |
18
TOP 30 PROPERTIES BY ANNUALIZED RENTAL REVENUE (1)
As of March 31, 2015
(sorted by annualized rental revenue, dollars in thousands)
Property | City | State | No. of Buildings | CBD/SUB | Sq. Feet | % Leased | Annualized Rental Revenue (2) | Undepreciated Book Value (3) | Net Book Value (4) | Year Acquired | Weighted Average Year Built or Substantially Renovated (5) | |||||||||||||||||||||||
1 | 600 West Chicago Avenue | Chicago | IL | 2 | CBD | 1,512 | 90.9 | % | 45,597 | 355,386 | 325,879 | 2011 | 2001 | |||||||||||||||||||||
2 | Illinois Center | Chicago | IL | 2 | CBD | 2,090 | 73.5 | % | 42,958 | 333,944 | 308,757 | 2011; 2012 | 2001 | |||||||||||||||||||||
3 | 1735 Market Street | Philadelphia | PA | 1 | CBD | 1,291 | 91.8 | % | 37,338 | 298,361 | 184,690 | 1998 | 1990 | |||||||||||||||||||||
4 | 1500 Market Street | Philadelphia | PA | 1 | CBD | 1,774 | 79.5 | % | 36,270 | 283,925 | 212,633 | 2002 | 1974 | |||||||||||||||||||||
5 | 111 River Street | Hoboken | NJ | 1 | CBD | 566 | 95.7 | % | 22,810 | 134,801 | 115,741 | 2009 | 2002 | |||||||||||||||||||||
6 | 111 Monument Circle | Indianapolis | IN | 2 | CBD | 1,064 | 83.1 | % | 22,549 | 173,116 | 163,314 | 2012 | 1990 | |||||||||||||||||||||
7 | 185 Asylum Street | Hartford | CT | 1 | CBD | 868 | 98.6 | % | 21,314 | 78,021 | 73,362 | 2012 | 2010 | |||||||||||||||||||||
8 | 1225 Seventeenth Street | Denver | CO | 1 | CBD | 672 | 94.6 | % | 20,346 | 145,739 | 127,303 | 2009 | 1982 | |||||||||||||||||||||
9 | 701 Poydras Street | New Orleans | LA | 1 | CBD | 1,257 | 95.6 | % | 19,921 | 97,897 | 89,971 | 2011 | 2010 | |||||||||||||||||||||
10 | 333 108th Avenue NE | Bellevue | WA | 1 | CBD | 417 | 100.0 | % | 18,563 | 152,543 | 133,205 | 2009 | 2008 | |||||||||||||||||||||
11 | 1600 Market Street | Philadelphia | PA | 1 | CBD | 826 | 84.5 | % | 17,878 | 131,877 | 79,386 | 1998 | 1983 | |||||||||||||||||||||
12 | 6600 North Military Trail | Boca Raton | FL | 3 | SUB | 640 | 100.0 | % | 17,086 | 145,698 | 131,908 | 2011 | 2008 | |||||||||||||||||||||
13 | North Point Office Complex | Cleveland | OH | 2 | CBD | 873 | 79.3 | % | 16,113 | 121,954 | 102,228 | 2008 | 1988 | |||||||||||||||||||||
14 | 8750 Bryn Mawr Avenue | Chicago | IL | 2 | SUB | 632 | 88.7 | % | 15,989 | 90,924 | 81,126 | 2010 | 2005 | |||||||||||||||||||||
15 | 310-320 Pitt Street | Sydney | Australia | 1 | CBD | 314 | 100.0 | % | 14,445 | 129,100 | 120,156 | 2010 | 1989 | |||||||||||||||||||||
16 | Arizona Center (6) | Phoenix | AZ | 4 | CBD | 1,071 | 94.0 | % | 13,843 | 97,912 | 90,306 | 2011 | 1992 | |||||||||||||||||||||
17 | Foster Plaza | Pittsburgh | PA | 8 | SUB | 727 | 84.9 | % | 12,133 | 73,423 | 55,972 | 2005 | 1993 | |||||||||||||||||||||
18 | Bridgepoint Parkway | Austin | TX | 5 | SUB | 440 | 93.0 | % | 11,670 | 88,040 | 52,517 | 1997 | 1995 | |||||||||||||||||||||
19 | Research Park | Austin | TX | 4 | SUB | 1,110 | 98.0 | % | 11,666 | 90,585 | 63,065 | 1998 | 1976 | |||||||||||||||||||||
20 | 101-115 W. Washington Street | Indianapolis | IN | 1 | CBD | 634 | 94.4 | % | 11,208 | 89,379 | 67,730 | 2005 | 1977 | |||||||||||||||||||||
21 | 100 East Wisconsin Avenue | Milwaukee | WI | 1 | CBD | 435 | 89.2 | % | 10,833 | 82,054 | 72,634 | 2010 | 1989 | |||||||||||||||||||||
22 | 111 Market Place | Baltimore | MD | 1 | CBD | 541 | 97.0 | % | 10,740 | 76,075 | 53,504 | 2003 | 1990 | |||||||||||||||||||||
23 | 420 20th Street North | Birmingham | AL | 1 | CBD | 515 | 75.6 | % | 9,618 | 55,760 | 50,652 | 2011 | 2006 | |||||||||||||||||||||
24 | East Eisenhower Parkway | Ann Arbor | MI | 2 | SUB | 410 | 92.8 | % | 9,461 | 55,045 | 49,192 | 2010 | 2006 | |||||||||||||||||||||
25 | 109 Brookline Avenue | Boston | MA | 1 | CBD | 286 | 94.3 | % | 9,397 | 45,458 | 27,861 | 1995 | 1915 | |||||||||||||||||||||
26 | 111 East Kilbourn Avenue | Milwaukee | WI | 1 | CBD | 374 | 96.7 | % | 9,309 | 55,065 | 45,743 | 2008 | 1988 | |||||||||||||||||||||
27 | Woodcliff Drive | Fairport | NY | 6 | SUB | 517 | 80.9 | % | 8,346 | 47,832 | 43,810 | 2006 | 1995 | |||||||||||||||||||||
28 | 1320 Main Street | Columbia | SC | 1 | CBD | 334 | 91.8 | % | 8,334 | 55,168 | 51,814 | 2012 | 2004 | |||||||||||||||||||||
29 | Inverness Center | Birmingham | AL | 4 | SUB | 476 | 87.0 | % | 8,248 | 51,756 | 46,140 | 2010 | 1981 | |||||||||||||||||||||
30 | 1601 Dry Creek Drive | Longmont | CO | 1 | SUB | 553 | 97.0 | % | 8,227 | 32,359 | 23,907 | 2004 | 1982 | |||||||||||||||||||||
Subtotal (30 properties) | 63 | 23,218 | 89.0 | % | $ | 522,210 | $ | 3,669,197 | $ | 3,044,506 | ||||||||||||||||||||||||
All other properties (124 properties) | 196 | 19,534 | 82.2 | % | 252,212 | 2,030,399 | 1,588,721 | |||||||||||||||||||||||||||
Total (154 properties) | 259 | 42,752 | 85.9 | % | $ | 774,422 | $ | 5,699,596 | $ | 4,633,227 | ||||||||||||||||||||||||
Q1 2015 NOI (7) | % of NOI | Q1 2015 Cash Basis NOI (7) | % of Cash Basis NOI | |||||||||||||||||||||||||||||||
Subtotal (30 properties) | $ | 80,520 | 70.6 | % | $ | 77,811 | 68.4 | % | ||||||||||||||||||||||||||
All other properties (124 properties) | 33,491 | 29.4 | % | 35,879 | 31.6 | % | ||||||||||||||||||||||||||||
Total (154 properties) | $ | 114,011 | 100 | % | $ | 113,690 | 100.0 | % |
(1) | Excludes properties sold prior to April 1, 2015. |
(2) | Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2015, plus straight line rent adjustments and estimated recurring expense reimbursements; includes some triple net lease rents and excludes lease value amortization. |
(3) | Represents the carrying value of real estate properties, after purchase price allocations, impairment write downs and currency adjustments, if any. |
(4) | Represents the carrying value of real estate properties, after depreciation and amortization, purchase price allocations, impairment write downs and currency adjustments, if any. |
(5) | Weighted based on square feet. |
(6) | Contractual cash payments (including management fees) from one tenant at Arizona Center for the three months ended March 31, 2015 were $2,032 and will decrease to approximately $515 per year beginning in 2016. The terms of this tenant's lease require us to classify the lease as a direct financing (or capital) lease. As such, the revenue recognized on a GAAP basis within our condensed consolidated statements of operations was $141 and $229 for the three months ended March 31, 2015 and 2014, respectively. Annualized rental revenue excludes the cash payments received from this tenant. This direct financing lease has an expiration date in 2045. |
(7) | Non-GAAP financial measure which is defined in the "Definitions" section of this document. Please refer to the calculation in this document which reconciles the differences between the non-GAAP financial measure and the most directly comparable GAAP financial measure. |
19
LEASING SUMMARY
(dollars and square feet in thousands, except per square foot data)
As of and for the Three Months Ended | ||||||||||||||||||||
03/31/15 | 12/31/14 | 09/30/14 | 06/30/14 | 03/31/14 | ||||||||||||||||
Properties | 154 | 156 | 156 | 156 | 156 | |||||||||||||||
Total square feet (1) | 42,752 | 42,919 | 42,919 | 42,920 | 42,913 | |||||||||||||||
Percentage leased (2) | 85.9 | % | 85.8 | % | 85.9 | % | 86.7 | % | 86.5 | % | ||||||||||
Renewal Leases | ||||||||||||||||||||
Square feet | 758 | 1,173 | 792 | 1,204 | 459 | |||||||||||||||
Lease term (years) | 4.5 | 4.5 | 12.4 | 6.0 | 5.5 | |||||||||||||||
Percent change in cash rent (3) | (2.8 | )% | 1.6 | % | (2.8 | )% | (2.2 | )% | (3.9 | )% | ||||||||||
Percent change in GAAP rent (3) | (0.1 | )% | 8.8 | % | 0.4 | % | 3.7 | % | (1.2 | )% | ||||||||||
Total TI & LC per square foot (4) | $ | 12.09 | $ | 10.17 | $ | 37.39 | $ | 9.37 | $ | 10.98 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 2.70 | $ | 2.28 | $ | 3.02 | $ | 1.56 | $ | 2.00 | ||||||||||
New Leases | ||||||||||||||||||||
Square feet | 720 | 275 | 317 | 358 | 214 | |||||||||||||||
Lease term (years) | 8.8 | 6.4 | 7.0 | 5.9 | 8.1 | |||||||||||||||
Percent change in cash rent (3) | 3.6 | % | (2.9 | )% | (2.9 | )% | (8.9 | )% | 6.2 | % | ||||||||||
Percent change in GAAP rent (3) | 12.7 | % | 1.3 | % | (1.6 | )% | (3.6 | )% | 12.7 | % | ||||||||||
Total TI & LC per square foot (4) | $ | 43.95 | $ | 35.16 | $ | 13.83 | $ | 29.89 | $ | 27.78 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 4.99 | $ | 5.48 | $ | 1.98 | $ | 5.07 | $ | 3.43 | ||||||||||
Total Leases | ||||||||||||||||||||
Square feet | 1,478 | 1,448 | 1,109 | 1,562 | 673 | |||||||||||||||
Lease term (years) | 6.6 | 4.8 | 10.8 | 6.0 | 6.3 | |||||||||||||||
Percent change in cash rent (3) | 0.0 | % | 1.2 | % | (2.8 | )% | (3.7 | )% | (0.7 | )% | ||||||||||
Percent change in GAAP rent (3) | 5.6 | % | 8.1 | % | 0.1 | % | 2.0 | % | 3.3 | % | ||||||||||
Total TI & LC per square foot (4) | $ | 27.61 | $ | 14.92 | $ | 30.66 | $ | 14.07 | $ | 16.32 | ||||||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 4.20 | $ | 3.08 | $ | 2.84 | $ | 2.36 | $ | 2.45 |
(1) | Total square footage changed due to remeasurement. |
(2) | Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased but is not occupied or is being offered for sublease by tenants. |
(3) | Percent change in GAAP and cash rent is a comparison of current rent (including tenant expense reimbursements, if any, and excluding any initial period free rent), to the rent (including tenant expense reimbursements, if any) last received for the same space during EQC's ownership on a GAAP and cash basis, respectively. Beginning in Q4 2014, new leasing in suites vacant longer than 2 years were excluded from the calculation. |
(4) | Includes commitments made for leasing expenditures and concessions, such as tenant improvements and leasing commissions. |
The above leasing summary is based on leases executed during the periods indicated. |
20
LEASING SUMMARY BY PROPERTY LOCATION
(dollars and square feet in thousands, except per square foot data)
As of and for the Three Months Ended | ||||||||||||
March 31, 2015 | ||||||||||||
CBD Properties | Suburban Properties | Total | ||||||||||
Properties | 40 | 114 | 154 | |||||||||
Total square feet (1) | 21,893 | 20,859 | 42,752 | |||||||||
Percentage leased (2) | 85.1 | % | 86.7 | % | 85.9 | % | ||||||
Renewal Leases | ||||||||||||
Square feet | 257 | 501 | 758 | |||||||||
Lease term (years) | 6.8 | 3.3 | 4.5 | |||||||||
Percentage change in cash rent (3) | (1.3 | )% | (3.8 | )% | (2.8 | )% | ||||||
Percentage change in GAAP rent (3) | 4.5 | % | (3.2 | )% | (0.1 | )% | ||||||
Total TI & LC per square foot (4) | $ | 25.59 | $ | 5.17 | $ | 12.09 | ||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 3.76 | $ | 1.58 | $ | 2.70 | ||||||
New Leases | ||||||||||||
Square feet | 193 | 527 | 720 | |||||||||
Lease term (years) | 7.7 | 9.2 | 8.8 | |||||||||
Percentage change in cash rent (3) | 8.9 | % | 1.2 | % | 3.6 | % | ||||||
Percentage change in GAAP rent (3) | 16.9 | % | 10.9 | % | 12.7 | % | ||||||
Total TI & LC per square foot (4) | $ | 44.24 | $ | 43.84 | $ | 43.95 | ||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 5.75 | $ | 4.77 | $ | 4.99 | ||||||
Total Leases | ||||||||||||
Square feet | 450 | 1,028 | 1,478 | |||||||||
Lease term (years) | 7.2 | 6.3 | 6.6 | |||||||||
Percentage change in cash rent (3) | 2.5 | % | (1.4 | )% | 0.0 | % | ||||||
Percentage change in GAAP rent (3) | 9.1 | % | 3.5 | % | 5.6 | % | ||||||
Total TI & LC per square foot (4) | $ | 33.55 | $ | 24.98 | $ | 27.61 | ||||||
Total TI & LC per sq. ft. per year of lease term (4) | $ | 4.66 | $ | 3.97 | $ | 4.20 |
(1) | Total square footage changed due to remeasurement. |
(2) | Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased but is not occupied or is being offered for sublease by tenants. |
(3) | Percent change in GAAP and cash rent is a comparison of current rent (including tenant expense reimbursements, if any, and excluding any initial period free rent), to the rent (including tenant expense reimbursements, if any) last received for the same space during EQC's ownership on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years is excluded from the calculation. |
(4) | Includes commitments made for leasing expenditures and concessions, such as tenant improvements and leasing commissions. |
The above leasing summary is based on leases executed during the periods indicated. |
21
OCCUPANCY AND LEASING ANALYSIS BY PROPERTY LOCATION
(square feet in thousands)
Total Square | Leases Executed During the | ||||||||
Feet as of | Three Months Ended March 31, 2015 | ||||||||
Property Location | March 31, 2015 | Renewals | New | Total | |||||
CBD Properties | 21,893 | 257 | 193 | 450 | |||||
Suburban Properties | 20,859 | 501 | 527 | 1028 | |||||
Total | 42,752 | 758 | 720 | 1,478 |
Square Footage Leased | |||||||||||||||||||||
December 31, 2014 | Renewals | March 31, 2015 | |||||||||||||||||||
Property Location | Total | % Leased (1) | Expired | and New | Disposed | Total | % Leased (1) | ||||||||||||||
CBD Properties | 18,552 | 84.7 | % | (374 | ) | 450 | — | 18,628 | 85.1 | % | |||||||||||
Suburban Properties | 18,288 | 87.0 | % | (1,111 | ) | 1,028 | (114 | ) | 18,091 | 86.7 | % | ||||||||||
Total | 36,840 | 85.8 | % | (1,485 | ) | 1,478 | (114 | ) | 36,719 | 85.9 | % |
(1) | Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased but is not occupied or is being offered for sublease by tenants. |
22
TENANTS REPRESENTING 1% OR MORE OF ANNUALIZED RENTAL REVENUE
As of March 31, 2015
(square feet in thousands)
Tenant | Square Feet (1) | % of Total Sq. Ft. (1) | % of Annualized Rental Revenue (2) | Weighted Average Remaining Lease Term | ||||||||||
1 | Office Depot, Inc. | 651 | 1.5 | % | 2.2 | % | 8.5 | |||||||
2 | Expedia, Inc. | 398 | 0.9 | % | 2.1 | % | 3.6 | |||||||
3 | John Wiley & Sons, Inc. | 396 | 1.0 | % | 2.1 | % | 17.6 | |||||||
4 | PNC Financial Services Group | 587 | 1.4 | % | 1.9 | % | 5.9 | |||||||
5 | Telstra Corporation Limited | 311 | 0.7 | % | 1.9 | % | 5.2 | |||||||
6 | U.S. Government | 463 | 1.1 | % | 1.6 | % | 5.0 | |||||||
7 | Royal Dutch Shell plc | 700 | 1.6 | % | 1.5 | % | 11.1 | |||||||
8 | The Bank of New York Mellon Corp. | 395 | 0.9 | % | 1.4 | % | 2.7 | |||||||
9 | Flextronics International Ltd. | 1,051 | 2.5 | % | 1.4 | % | 4.8 | |||||||
10 | J.P. Morgan Chase & Co. | 388 | 0.9 | % | 1.4 | % | 9.2 | |||||||
11 | United Healthcare Services Inc. | 479 | 1.1 | % | 1.4 | % | 7.6 | |||||||
12 | Towers Watson & Co | 347 | 0.8 | % | 1.3 | % | 4.1 | |||||||
13 | Bankers Life and Casualty Company | 349 | 0.8 | % | 1.3 | % | 5.5 | |||||||
14 | Level 3 Communications, Inc. | 219 | 0.5 | % | 1.2 | % | 5.1 | |||||||
15 | Wells Fargo & Co | 338 | 0.8 | % | 1.2 | % | 3.4 | |||||||
16 | Jones Day | 343 | 0.8 | % | 1.2 | % | 11.3 | |||||||
17 | Ballard Spahr LLP | 218 | 0.5 | % | 1.1 | % | 14.9 | |||||||
18 | RE/MAX Holdings, Inc. | 248 | 0.6 | % | 1.0 | % | 13.1 | |||||||
Total | 7,881 | 18.4 | % | 27.2 | % | 7.6 |
(1) | Square footage is pursuant to existing leases as of March 31, 2015 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease. |
(2) | Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2015, plus straight line rent adjustments and estimated recurring expense reimbursements; includes some triple net lease rents and excludes lease value amortization. |
23
PORTFOLIO LEASE EXPIRATION SCHEDULE
As of March 31, 2015 (dollars and sq. ft. in thousands)
Total Properties | ||||||||||||||||||||
Year | Number of Tenants Expiring | Sq. Ft. Expiring (1) | % of Sq. Ft. Expiring | Cumulative % of Sq. Ft. Expiring | Annualized Rental Revenue Expiring (2) | % of Annualized Rental Revenue Expiring | Cumulative % of Annualized Rental Revenue Expiring | |||||||||||||
2015 | 319 | 3,029 | 8.2 | % | 8.2 | % | 71,848 | 9.3 | % | 9.3 | % | |||||||||
2016 | 310 | 4,568 | 12.4 | % | 20.6 | % | 72,447 | 9.4 | % | 18.7 | % | |||||||||
2017 | 276 | 3,823 | 10.4 | % | 31.0 | % | 84,435 | 10.9 | % | 29.6 | % | |||||||||
2018 | 237 | 4,180 | 11.4 | % | 42.4 | % | 88,010 | 11.4 | % | 41.0 | % | |||||||||
2019 | 184 | 3,768 | 10.3 | % | 52.7 | % | 68,824 | 8.9 | % | 49.9 | % | |||||||||
2020 | 156 | 4,213 | 11.5 | % | 64.2 | % | 89,093 | 11.4 | % | 61.3 | % | |||||||||
2021 | 88 | 2,380 | 6.5 | % | 70.7 | % | 52,909 | 6.7 | % | 68.0 | % | |||||||||
2022 | 62 | 1,960 | 5.3 | % | 76.0 | % | 46,281 | 6.0 | % | 74.0 | % | |||||||||
2023 | 64 | 2,713 | 7.4 | % | 83.4 | % | 67,065 | 8.7 | % | 82.7 | % | |||||||||
2024 | 40 | 1,317 | 3.6 | % | 87.0 | % | 26,896 | 3.5 | % | 86.2 | % | |||||||||
Thereafter | 68 | 4,768 | 13.0 | % | 100.0 | % | 106,614 | 13.8 | % | 100.0 | % | |||||||||
Total | 1,804 | 36,719 | 100.0 | % | 774,422 | 100.0 | % | |||||||||||||
Weighted average remaining | ||||||||||||||||||||
lease term (in years) | 5.5 | 5.8 | ||||||||||||||||||
CBD Properties | ||||||||||||||||||||
Year | Number of Tenants Expiring | Sq. Ft. Expiring (1) | % of Sq. Ft. Expiring | Cumulative % of Sq. Ft. Expiring | Annualized Rental Revenue Expiring (2) | % of Annualized Rental Revenue Expiring | Cumulative % of Annualized Rental Revenue Expiring | |||||||||||||
2015 | 187 | 1,547 | 8.3 | % | 8.3 | % | 44,719 | 9.1 | % | 9.1 | % | |||||||||
2016 | 145 | 1,390 | 7.7 | % | 16.0 | % | 33,750 | 6.9 | % | 16.0 | % | |||||||||
2017 | 150 | 1,685 | 9.0 | % | 25.0 | % | 45,788 | 9.3 | % | 25.3 | % | |||||||||
2018 | 137 | 2,589 | 13.9 | % | 38.9 | % | 62,841 | 12.8 | % | 38.1 | % | |||||||||
2019 | 104 | 1,487 | 8.0 | % | 46.9 | % | 38,902 | 7.9 | % | 46.0 | % | |||||||||
2020 | 77 | 2,193 | 11.8 | % | 58.7 | % | 63,885 | 13.0 | % | 59.0 | % | |||||||||
2021 | 47 | 1,279 | 6.9 | % | 65.6 | % | 33,622 | 6.8 | % | 65.8 | % | |||||||||
2022 | 38 | 1,042 | 5.6 | % | 71.2 | % | 30,581 | 6.2 | % | 72.0 | % | |||||||||
2023 | 42 | 1,225 | 6.6 | % | 77.8 | % | 32,153 | 6.6 | % | 78.6 | % | |||||||||
2024 | 27 | 754 | 4.0 | % | 81.8 | % | 21,380 | 4.4 | % | 83.0 | % | |||||||||
Thereafter | 49 | 3,437 | 18.2 | % | 100.0 | % | 83,286 | 17.0 | % | 100.0 | % | |||||||||
Total | 1,003 | 18,628 | 100.0 | % | 490,907 | 100.0 | % | |||||||||||||
Weighted average remaining | ||||||||||||||||||||
lease term (in years) | 6.4 | 6.4 | ||||||||||||||||||
Suburban Properties | ||||||||||||||||||||
Year | Number of Tenants Expiring | Sq. Ft. Expiring (1) | % of Sq. Ft. Expiring | Cumulative % of Sq. Ft. Expiring | Annualized Rental Revenue Expiring (2) | % of Annualized Rental Revenue Expiring | Cumulative % of Annualized Rental Revenue Expiring | |||||||||||||
2015 | 132 | 1,482 | 8.2 | % | 8.2 | % | 27,129 | 9.6 | % | 9.6 | % | |||||||||
2016 | 165 | 3,178 | 17.5 | % | 25.7 | % | 38,697 | 13.6 | % | 23.2 | % | |||||||||
2017 | 126 | 2,138 | 11.8 | % | 37.5 | % | 38,647 | 13.6 | % | 36.8 | % | |||||||||
2018 | 100 | 1,591 | 8.8 | % | 46.3 | % | 25,169 | 8.9 | % | 45.7 | % | |||||||||
2019 | 80 | 2,281 | 12.6 | % | 58.9 | % | 29,922 | 10.6 | % | 56.3 | % | |||||||||
2020 | 79 | 2,020 | 11.2 | % | 70.1 | % | 25,208 | 8.9 | % | 65.2 | % | |||||||||
2021 | 41 | 1,101 | 6.1 | % | 76.2 | % | 19,287 | 6.8 | % | 72.0 | % | |||||||||
2022 | 24 | 918 | 5.1 | % | 81.3 | % | 15,700 | 5.5 | % | 77.5 | % | |||||||||
2023 | 22 | 1,488 | 8.2 | % | 89.5 | % | 34,912 | 12.4 | % | 89.9 | % | |||||||||
2024 | 13 | 563 | 3.1 | % | 92.6 | % | 5,516 | 1.9 | % | 91.8 | % | |||||||||
Thereafter | 19 | 1,331 | 7.4 | % | 100.0 | % | 23,328 | 8.2 | % | 100.0 | % | |||||||||
Total | 801 | 18,091 | 100.0 | % | 283,515 | 100.0 | % | |||||||||||||
Weighted average remaining | ||||||||||||||||||||
lease term (in years) | 4.7 | 4.9 |
(1) | Square feet is pursuant to existing leases as of March 31, 2015 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease. |
(2) | Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2015, plus straight line rent adjustments and estimated recurring expense reimbursements; includes some triple net lease rents and excludes lease value amortization. |
24
PROPERTY DETAIL
As of March 31, 2015
(sorted by geographic location, dollars and square feet in thousands)
Property | City and State/Country | No. of Bldgs. | CBD/SUB | Sq. Feet | % Leased | Annualized Rental Revenue (2) | Undepreciated Book Value (3) | Net Book Value (4) | Year Acquired | Weighted Average Year Built or Substantially Renovated (5) | ||||||||||||||||||||||
1 | 2501 20th Place South | Birmingham | AL | 1 | CBD | 126 | 98.6 | % | $ | 2,947 | $ | 24,116 | $ | 19,815 | 2006 | 2001 | ||||||||||||||||
2 | 420 20th Street North | Birmingham | AL | 1 | CBD | 515 | 75.6 | % | 9,618 | 55,760 | 50,652 | 2011 | 2006 | |||||||||||||||||||
3 | Inverness Center | Birmingham | AL | 4 | SUB | 476 | 87.0 | % | 8,248 | 51,756 | 46,140 | 2010 | 1981 | |||||||||||||||||||
4 | 785 Schilinger Road South | Mobile | AL | 1 | SUB | 72 | 100.0 | % | 951 | 11,269 | 9,462 | 2007 | 1998 | |||||||||||||||||||
5 | Arizona Center (6) | Phoenix | AZ | 4 | CBD | 1,071 | 94.0 | % | 13,843 | 97,912 | 90,306 | 2011 | 1992 | |||||||||||||||||||
6 | 4 South 84th Avenue | Tolleson | AZ | 1 | SUB | 236 | 100.0 | % | 1,515 | 11,401 | 8,700 | 2003 | 1989 | |||||||||||||||||||
7 | One South Church Avenue | Tucson | AZ | 1 | CBD | 241 | 65.4 | % | 3,800 | 33,727 | 24,351 | 2002 | 1986 | |||||||||||||||||||
8 | Parkshore Plaza | Folsom | CA | 4 | SUB | 269 | 91.4 | % | 5,175 | 47,137 | 43,076 | 2011 | 1999 | |||||||||||||||||||
9 | Leased Land | Gonzalez | CA | 7 | SUB | — | 100.0 | % | 3,181 | 31,825 | 29,402 | 2010 | — | |||||||||||||||||||
10 | Sky Park Centre | San Diego | CA | 2 | SUB | 63 | 100.0 | % | 1,281 | 9,786 | 6,687 | 2002 | 1986 | |||||||||||||||||||
11 | Sorrento Valley Business Park | San Diego | CA | 4 | SUB | 105 | 100.0 | % | 2,125 | 17,530 | 10,405 | 1996 | 1984 | |||||||||||||||||||
12 | 9110 East Nichols Avenue | Centennial | CO | 1 | SUB | 144 | 96.2 | % | 2,417 | 20,290 | 14,377 | 2001 | 1984 | |||||||||||||||||||
13 | 7450 Campus Drive | Colorado Springs | CO | 1 | SUB | 77 | 88.1 | % | 1,807 | 9,481 | 8,462 | 2010 | 1996 | |||||||||||||||||||
14 | 1225 Seventeenth Street | Denver | CO | 1 | CBD | 672 | 94.6 | % | 20,346 | 145,739 | 127,303 | 2009 | 1982 | |||||||||||||||||||
15 | 5073, 5075, & 5085 S. Syracuse Street | Denver | CO | 1 | SUB | 248 | 100.0 | % | 8,035 | 63,610 | 56,371 | 2010 | 2007 | |||||||||||||||||||
16 | 1601 Dry Creek Drive | Longmont | CO | 1 | SUB | 553 | 97.0 | % | 8,227 | 32,359 | 23,907 | 2004 | 1982 | |||||||||||||||||||
17 | 129 Worthington Ridge Road | Berlin | CT | 1 | SUB | 228 | 100.0 | % | 781 | 5,252 | 4,473 | 2006 | 1968 | |||||||||||||||||||
18 | 97 Newberry Road | East Windsor | CT | 1 | SUB | 289 | 100.0 | % | 2,149 | 15,350 | 12,718 | 2006 | 1989 | |||||||||||||||||||
19 | 185 Asylum Street | Hartford | CT | 1 | CBD | 868 | 98.6 | % | 21,314 | 78,021 | 73,362 | 2012 | 2010 | |||||||||||||||||||
20 | 599 Research Parkway | Meriden | CT | 1 | SUB | 48 | 100.0 | % | 823 | 8,092 | 6,090 | 2003 | 1982 | |||||||||||||||||||
21 | 33 Stiles Lane | North Haven | CT | 1 | SUB | 175 | 100.0 | % | 1,089 | 9,793 | 7,790 | 2006 | 2002 | |||||||||||||||||||
22 | 181 Marsh Hill Road | Orange | CT | 1 | SUB | 162 | 100.0 | % | 1,199 | 10,794 | 9,080 | 2006 | 2006 | |||||||||||||||||||
23 | 101 Barnes Road | Wallingford | CT | 1 | SUB | 46 | 90.5 | % | 869 | 1,423 | 1,371 | 1998 | 1988 | |||||||||||||||||||
24 | 15 Sterling Drive | Wallingford | CT | 1 | SUB | 173 | 60.5 | % | 1,144 | 4,808 | 4,653 | 2006 | 1978 | |||||||||||||||||||
25 | 35 Thorpe Avenue | Wallingford | CT | 1 | SUB | 80 | 87.2 | % | 1,321 | 6,464 | 6,212 | 1998 | 1986 | |||||||||||||||||||
26 | 50 Barnes Industrial Road North | Wallingford | CT | 1 | SUB | 154 | 100.0 | % | 1,398 | 11,404 | 8,866 | 2006 | 1976 | |||||||||||||||||||
27 | 5-9 Barnes Industrial Road | Wallingford | CT | 1 | SUB | 38 | 99.3 | % | 430 | 3,510 | 2,945 | 2006 | 1980 | |||||||||||||||||||
28 | 860 North Main Street | Wallingford | CT | 1 | SUB | 31 | 99.5 | % | 471 | 3,850 | 2,898 | 2006 | 1982 | |||||||||||||||||||
29 | One Barnes Industrial Road South | Wallingford | CT | 1 | SUB | 30 | 100.0 | % | 351 | 2,366 | 1,890 | 2006 | 1977 | |||||||||||||||||||
30 | Village Lane | Wallingford | CT | 2 | SUB | 58 | 100.0 | % | 708 | 4,199 | 4,051 | 2006 | 1977 | |||||||||||||||||||
31 | 100 Northfield Drive | Windsor | CT | 1 | SUB | 117 | 99.6 | % | 1,742 | 13,272 | 8,964 | 2003 | 1988 | |||||||||||||||||||
32 | 1250 H Street, NW | Washington | DC | 1 | CBD | 188 | 86.8 | % | 6,804 | 66,415 | 41,893 | 1998 | 1992 | |||||||||||||||||||
33 | Georgetown-Green and Harris Buildings | Washington | DC | 2 | CBD | 240 | 100.0 | % | 6,073 | 60,023 | 55,001 | 2009 | 2006 | |||||||||||||||||||
34 | 802 Delaware Avenue | Wilmington | DE | 1 | CBD | 241 | 100.0 | % | 3,528 | 43,467 | 21,221 | 1998 | 1986 | |||||||||||||||||||
35 | 6600 North Military Trail | Boca Raton | FL | 3 | SUB | 640 | 100.0 | % | 17,086 | 145,698 | 131,908 | 2011 | 2008 | |||||||||||||||||||
36 | 225 Water Street | Jacksonville | FL | 1 | CBD | 319 | 44.7 | % | 3,056 | 20,012 | 19,357 | 2008 | 1985 | |||||||||||||||||||
37 | 9040 Roswell Road | Atlanta | GA | 1 | SUB | 179 | 78.9 | % | 2,553 | 23,243 | 17,665 | 2004 | 1985 | |||||||||||||||||||
38 | Executive Park | Atlanta | GA | 9 | SUB | 427 | 66.4 | % | 4,867 | 43,519 | 29,364 | 2004; 2007 | 1972 | |||||||||||||||||||
39 | The Exchange | Atlanta | GA | 2 | SUB | 188 | 79.7 | % | 2,255 | 17,907 | 13,386 | 2004; 2005 | 1995 | |||||||||||||||||||
40 | 3920 Arkwright Road | Macon | GA | 1 | SUB | 196 | 79.5 | % | 2,741 | 20,498 | 15,505 | 2006 | 1988 | |||||||||||||||||||
41 | 1775 West Oak Commons Court | Marietta | GA | 1 | SUB | 80 | 100.0 | % | 1,180 | 8,305 | 6,769 | 2007 | 1998 | |||||||||||||||||||
42 | 633 Ahua Street | Honolulu | HI | 1 | SUB | 121 | 89.6 | % | 1,800 | 16,401 | 12,912 | 2003 | 2006 | |||||||||||||||||||
43 | 625 Crane Street | Aurora | IL | 1 | SUB | 104 | 100.0 | % | 408 | 1,611 | 1,547 | 2007 | 1977 |
25
PROPERTY DETAIL
As of March 31, 2015
(sorted by geographic location, dollars and square feet in thousands)
Property | City and State/Country | No. of Bldgs. | CBD/SUB | Sq. Feet | % Leased | Annualized Rental Revenue (2) | Undepreciated Book Value (3) | Net Book Value (4) | Year Acquired | Weighted Average Year Built or Substantially Renovated (5) | ||||||||||||||||||||||
44 | 905 Meridian Lake Drive | Aurora | IL | 1 | SUB | 75 | 93.1 | % | 1,848 | 12,298 | 9,636 | 2007 | 1999 | |||||||||||||||||||
45 | 1200 Lakeside Drive | Bannockburn | IL | 1 | SUB | 260 | 100.0 | % | 2,331 | 59,494 | 46,597 | 2005 | 1999 | |||||||||||||||||||
46 | 600 West Chicago Avenue | Chicago | IL | 2 | CBD | 1,512 | 90.9 | % | 45,597 | 355,386 | 325,879 | 2011 | 2001 | |||||||||||||||||||
47 | 8750 Bryn Mawr Avenue | Chicago | IL | 2 | SUB | 632 | 88.7 | % | 15,989 | 90,924 | 81,126 | 2010 | 2005 | |||||||||||||||||||
48 | Illinois Center | Chicago | IL | 2 | CBD | 2,090 | 73.5 | % | 42,958 | 333,944 | 308,757 | 2011; 2012 | 2001 | |||||||||||||||||||
49 | 1717 Deerfield Road | Deerfield | IL | 1 | SUB | 141 | 69.5 | % | 2,288 | 8,499 | 8,214 | 2005 | 1986 | |||||||||||||||||||
50 | 1955 West Field Court | Lake Forest | IL | 1 | SUB | 59 | 100.0 | % | 1,176 | 11,925 | 8,782 | 2005 | 2001 | |||||||||||||||||||
51 | 101-115 W. Washington Street | Indianapolis | IN | 1 | CBD | 634 | 94.4 | % | 11,208 | 89,379 | 67,730 | 2005 | 1977 | |||||||||||||||||||
52 | 111 Monument Circle | Indianapolis | IN | 2 | CBD | 1,064 | 83.1 | % | 22,549 | 173,116 | 163,314 | 2012 | 1990 | |||||||||||||||||||
53 | 5015 S. Water Circle | Wichita | KS | 1 | SUB | 114 | 100.0 | % | 581 | 5,874 | 5,103 | 2007 | 1995 | |||||||||||||||||||
54 | 701 Poydras Street | New Orleans | LA | 1 | CBD | 1,257 | 95.6 | % | 19,921 | 97,897 | 89,971 | 2011 | 2010 | |||||||||||||||||||
55 | 109 Brookline Avenue | Boston | MA | 1 | CBD | 286 | 94.3 | % | 9,397 | 45,458 | 27,861 | 1995 | 1915 | |||||||||||||||||||
56 | Adams Place | Braintree/Quincy | MA | 2 | SUB | 230 | 72.7 | % | 3,523 | 19,775 | 18,628 | 1998 | 2006 | |||||||||||||||||||
57 | Cabot Business Park | Mansfield | MA | 2 | SUB | 253 | 50.0 | % | 1,980 | 14,829 | 14,088 | 2003 | 1980 | |||||||||||||||||||
58 | Cabot Business Park Land | Mansfield | MA | — | SUB | — | 100.0 | % | — | 1,033 | 1,033 | 2003 | 0 | |||||||||||||||||||
59 | 2300 Crown Colony Drive | Quincy | MA | 1 | SUB | 46 | 95.5 | % | 998 | 7,144 | 4,646 | 2004 | 1999 | |||||||||||||||||||
60 | Myles Standish Industrial Park | Taunton | MA | 2 | SUB | 75 | 100.0 | % | 1,091 | 7,664 | 7,479 | 2007 | 1988 | |||||||||||||||||||
61 | 340 Thompson Road | Webster | MA | 1 | SUB | 25 | 100.0 | % | 191 | 3,188 | 1,900 | 1997 | 1995 | |||||||||||||||||||
62 | 100 South Charles Street | Baltimore | MD | 1 | CBD | 160 | 86.0 | % | 2,792 | 16,362 | 9,285 | 1997 | 1988 | |||||||||||||||||||
63 | 111 Market Place | Baltimore | MD | 1 | CBD | 541 | 97.0 | % | 10,740 | 76,075 | 53,504 | 2003 | 1990 | |||||||||||||||||||
64 | 25 S. Charles Street | Baltimore | MD | 1 | CBD | 344 | 94.4 | % | 7,346 | 38,504 | 27,016 | 2004 | 1972 | |||||||||||||||||||
65 | 820 W. Diamond | Gaithersburg | MD | 1 | SUB | 135 | 82.1 | % | 2,677 | 33,374 | 22,836 | 1997 | 1995 | |||||||||||||||||||
66 | 6710 Oxon Hill | Oxon Hill | MD | 1 | SUB | 118 | 60.3 | % | 1,768 | 17,538 | 10,380 | 1997 | 1992 | |||||||||||||||||||
67 | Danac Stiles Business Park | Rockville | MD | 3 | SUB | 277 | 85.4 | % | 6,643 | 65,564 | 48,021 | 2004 | 2002 | |||||||||||||||||||
68 | East Eisenhower Parkway | Ann Arbor | MI | 2 | SUB | 410 | 92.8 | % | 9,461 | 55,045 | 49,192 | 2010 | 2006 | |||||||||||||||||||
69 | 8800 Queen Avenue South | Bloomington | MN | 1 | SUB | 281 | 92.7 | % | 4,020 | 13,639 | 13,155 | 1998 | 1957 | |||||||||||||||||||
70 | 2250 Pilot Knob Road | Mendota Heights | MN | 1 | SUB | 87 | 100.0 | % | 804 | 6,530 | 4,076 | 1998 | 1995 | |||||||||||||||||||
71 | 9800 Shelard Parkway | Plymouth | MN | 1 | SUB | 47 | 80.3 | % | 859 | 5,289 | 2,865 | 1999 | 1987 | |||||||||||||||||||
72 | Rosedale Corporate Plaza | Roseville | MN | 3 | SUB | 149 | 100.0 | % | 2,898 | 27,548 | 18,462 | 1999 | 1987 | |||||||||||||||||||
73 | 411 Farwell Avenue | South St. Paul | MN | 1 | SUB | 423 | 100.0 | % | 1,916 | 16,355 | 13,221 | 2004 | 1970 | |||||||||||||||||||
74 | 6200 Glenn Carlson Drive | St. Cloud | MN | 1 | SUB | 338 | 100.0 | % | 2,275 | 15,753 | 13,855 | 2009 | 2013 | |||||||||||||||||||
75 | 1000 Shelard Parkway | St. Louis Park | MN | 1 | SUB | 62 | 64.7 | % | 887 | 7,917 | 4,839 | 1999 | 1986 | |||||||||||||||||||
76 | 525 Park Street | St. Paul | MN | 1 | CBD | 76 | 89.1 | % | 1,228 | 8,456 | 5,280 | 1999 | 1987 | |||||||||||||||||||
77 | 1900 Meyer Drury Drive | Arnold | MO | 1 | SUB | 65 | 100.0 | % | 1,076 | 8,610 | 6,518 | 2004 | 1999 | |||||||||||||||||||
78 | 4700 Belleview Avenue | Kansas City | MO | 1 | SUB | 81 | 79.1 | % | 1,090 | 6,765 | 5,915 | 2008 | 1986 | |||||||||||||||||||
79 | 131-165 West Ninth Street | N. Kansas City | MO | 1 | SUB | 76 | 100.0 | % | 273 | 1,753 | 1,544 | 2008 | 1970 | |||||||||||||||||||
80 | 12655 Olive Boulevard | St. Louis | MO | 1 | SUB | 99 | 98.6 | % | 2,015 | 13,134 | 11,010 | 2006 | 1988 | |||||||||||||||||||
81 | 1285 Fern Ridge Parkway | St. Louis | MO | 1 | SUB | 67 | 46.5 | % | 628 | 6,039 | 3,490 | 2003 | 1998 | |||||||||||||||||||
82 | 300 North Greene Street | Greensboro | NC | 1 | CBD | 324 | 86.3 | % | 6,660 | 40,799 | 36,175 | 2010 | 1989 | |||||||||||||||||||
83 | 7-9 Vreeland Road | Florham Park | NJ | 1 | SUB | 156 | 66.0 | % | 1,782 | 7,215 | 6,635 | 1998 | 1979 | |||||||||||||||||||
84 | 111 River Street | Hoboken | NJ | 1 | CBD | 566 | 95.7 | % | 22,810 | 134,801 | 115,741 | 2009 | 2002 | |||||||||||||||||||
85 | 5 Paragon Drive | Montvale | NJ | 1 | SUB | 119 | 100.0 | % | 3,649 | 14,426 | 12,993 | 2011 | 2008 | |||||||||||||||||||
86 | 1000 Voorhees Drive 400 Laurel Oak Drive | Voorhees | NJ | 2 | SUB | 125 | 55.0 | % | 1,318 | 6,165 | 5,788 | 1998 | 1989 | |||||||||||||||||||
87 | One Park Square | Albuquerque | NM | 6 | CBD | 260 | 86.4 | % | 4,505 | 29,839 | 21,119 | 2002 | 1986 | |||||||||||||||||||
88 | Widewaters Parkway | Dewitt | NY | 8 | SUB | 514 | 73.9 | % | 6,601 | 19,189 | 18,110 | 1999; 2006 | 1988 | |||||||||||||||||||
89 | 5062 Brittonfield Parkway | East Syracuse | NY | 1 | SUB | 40 | 100.0 | % | 1,033 | 3,764 | 3,665 | 2006 | 1995 |
26
PROPERTY DETAIL
As of March 31, 2015
(sorted by geographic location, dollars and square feet in thousands)
Property | City and State/Country | No. of Bldgs. | CBD/SUB | Sq. Feet | % Leased | Annualized Rental Revenue (2) | Undepreciated Book Value (3) | Net Book Value (4) | Year Acquired | Weighted Average Year Built or Substantially Renovated (5) | ||||||||||||||||||||||
90 | Woodcliff Drive | Fairport | NY | 6 | SUB | 517 | 80.9 | % | 8,346 | 47,832 | 43,810 | 2006 | 1995 | |||||||||||||||||||
91 | 1601 Veterans Highway | Islandia | NY | 1 | SUB | 64 | 92.1 | % | 1,389 | 3,535 | 3,373 | 1999 | 1987 | |||||||||||||||||||
92 | Two Corporate Center Drive | Melville | NY | 1 | SUB | 291 | 49.3 | % | 3,327 | 11,831 | 10,798 | 1999 | 1985 | |||||||||||||||||||
93 | Interstate Place | North Syracuse | NY | 2 | SUB | 61 | 81.0 | % | 810 | 2,930 | 2,825 | 2006 | 1973 | |||||||||||||||||||
94 | 1000 Pittsford-Victor Road | Pittsford | NY | 1 | SUB | 73 | 54.5 | % | 1,181 | 2,938 | 2,813 | 2006 | 1986 | |||||||||||||||||||
95 | 1200 Pittsford - Victor Road | Pittsford | NY | 1 | SUB | 19 | 100.0 | % | 364 | 1,854 | 1,803 | 2004 | 2003 | |||||||||||||||||||
96 | Corporate Crossing | Pittsford | NY | 5 | SUB | 216 | 81.8 | % | 3,270 | 14,422 | 13,968 | 2004 | 2000 | |||||||||||||||||||
97 | Canal View Boulevard | Rochester | NY | 3 | SUB | 118 | 91.1 | % | 1,468 | 11,624 | 9,724 | 2006 | 2000 | |||||||||||||||||||
98 | 14 Classic Street | Sherburne | NY | 1 | SUB | 37 | 100.0 | % | 204 | 1,389 | 1,107 | 2006 | 2000 | |||||||||||||||||||
99 | 110 W Fayette Street | Syracuse | NY | 1 | CBD | 305 | 81.9 | % | 3,637 | 15,563 | 14,743 | 1999 | 2012 | |||||||||||||||||||
100 | 251 Salina Meadows Parkway | Syracuse | NY | 1 | SUB | 66 | 87.5 | % | 921 | 2,906 | 2,739 | 1999 | 1990 | |||||||||||||||||||
101 | 11311 Cornell Park Drive | Blue Ash | OH | 1 | SUB | 93 | 69.3 | % | 1,017 | 6,617 | 6,332 | 2006 | 1982 | |||||||||||||||||||
102 | North Point Office Complex | Cleveland | OH | 2 | CBD | 873 | 79.3 | % | 16,113 | 121,954 | 102,228 | 2008 | 1988 | |||||||||||||||||||
103 | 5300 Kings Island Drive | Mason | OH | 1 | SUB | 159 | 68.1 | % | 343 | 11,072 | 10,264 | 1998 | 1994 | |||||||||||||||||||
104 | 3 Crown Point Court | Sharonville | OH | 1 | SUB | 74 | 100.0 | % | 1,324 | 10,750 | 8,762 | 2005 | 1999 | |||||||||||||||||||
105 | Raintree Industrial Park | Solon | OH | 12 | SUB | 563 | 87.9 | % | 1,922 | 12,164 | 11,660 | 2004 | 1975 | |||||||||||||||||||
106 | 401 Vine Street | Delmont | PA | 1 | SUB | 54 | 100.0 | % | 528 | 7,117 | 6,091 | 2007 | 1999 | |||||||||||||||||||
107 | 515 Pennsylvania Avenue | Fort Washington | PA | 1 | SUB | 82 | 77.0 | % | 1,435 | 10,710 | 6,236 | 1997 | 1998 | |||||||||||||||||||
108 | 443 Gulph Road | King of Prussia | PA | 1 | SUB | 21 | 100.0 | % | 453 | 4,673 | 3,115 | 1997 | 1966 | |||||||||||||||||||
109 | 4350 Northern Pike | Monroeville | PA | 1 | SUB | 504 | 46.9 | % | 3,979 | 40,818 | 25,466 | 2004 | 2012 | |||||||||||||||||||
110 | Cherrington Corporate Center | Moon Township | PA | 7 | SUB | 455 | 78.5 | % | 4,934 | 64,218 | 44,627 | 1998; 1999 | 1997 | |||||||||||||||||||
111 | 1500 Market Street | Philadelphia | PA | 1 | CBD | 1,774 | 79.5 | % | 36,270 | 283,925 | 212,633 | 2002 | 1974 | |||||||||||||||||||
112 | 1525 Locust Street | Philadelphia | PA | 1 | CBD | 98 | 95.3 | % | 2,245 | 11,161 | 7,338 | 1999 | 1987 | |||||||||||||||||||
113 | 1600 Market Street | Philadelphia | PA | 1 | CBD | 826 | 84.5 | % | 17,878 | 131,877 | 79,386 | 1998 | 1983 | |||||||||||||||||||
114 | 16th and Race Street | Philadelphia | PA | 1 | CBD | 609 | 0.0 | % | — | 36,306 | 34,696 | 1997 | 1980 | |||||||||||||||||||
115 | 1735 Market Street | Philadelphia | PA | 1 | CBD | 1,291 | 91.8 | % | 37,338 | 298,361 | 184,690 | 1998 | 1990 | |||||||||||||||||||
116 | Foster Plaza | Pittsburgh | PA | 8 | SUB | 727 | 84.9 | % | 12,133 | 73,423 | 55,972 | 2005 | 1993 | |||||||||||||||||||
117 | 128 Crews Drive | Columbia | SC | 1 | SUB | 186 | 100.0 | % | 771 | 3,747 | 3,336 | 2007 | 2011 | |||||||||||||||||||
118 | 1320 Main Street | Columbia | SC | 1 | CBD | 334 | 91.8 | % | 8,334 | 55,168 | 51,814 | 2012 | 2004 | |||||||||||||||||||
119 | 111 Southchase Boulevard | Fountain Inn | SC | 1 | SUB | 168 | 0.0 | % | — | 6,155 | 4,728 | 2007 | 1987 | |||||||||||||||||||
120 | 1043 Global Avenue | Graniteville | SC | 1 | SUB | 450 | 100.0 | % | 1,480 | 16,870 | 13,704 | 2007 | 1998 | |||||||||||||||||||
121 | 633 Frazier Drive | Franklin | TN | 1 | SUB | 150 | 100.0 | % | 2,004 | 18,980 | 16,516 | 2007 | 1999 | |||||||||||||||||||
122 | 775 Ridge Lake Boulevard | Memphis | TN | 1 | CBD | 121 | 78.1 | % | 2,340 | 20,829 | 15,658 | 2004 | 2000 | |||||||||||||||||||
123 | 1601 Rio Grande Street | Austin | TX | 1 | CBD | 56 | 97.7 | % | 1,527 | 8,235 | 5,299 | 1999 | 1985 | |||||||||||||||||||
124 | 206 East 9th Street | Austin | TX | 1 | CBD | 170 | 100.0 | % | 6,210 | 48,274 | 45,424 | 2012 | 1984 | |||||||||||||||||||
125 | 4515 Seton Center Parkway | Austin | TX | 1 | SUB | 117 | 96.8 | % | 2,668 | 22,863 | 14,351 | 1999 | 1997 | |||||||||||||||||||
126 | 4516 Seton Center Parkway | Austin | TX | 1 | SUB | 121 | 94.8 | % | 2,623 | 23,321 | 14,366 | 1999 | 1985 | |||||||||||||||||||
127 | 7800 Shoal Creek Boulevard | Austin | TX | 4 | SUB | 152 | 94.3 | % | 3,212 | 21,210 | 14,170 | 1999 | 1974 | |||||||||||||||||||
128 | 812 San Antonio Street | Austin | TX | 1 | CBD | 59 | 97.9 | % | 1,362 | 8,472 | 5,596 | 1999 | 1987 | |||||||||||||||||||
129 | 8701 N Mopac | Austin | TX | 1 | SUB | 122 | 75.1 | % | 1,533 | 18,253 | 11,899 | 1999 | 1982 | |||||||||||||||||||
130 | Bridgepoint Parkway | Austin | TX | 5 | SUB | 440 | 93.0 | % | 11,670 | 88,040 | 52,517 | 1997 | 1995 | |||||||||||||||||||
131 | Lakewood on the Park | Austin | TX | 2 | SUB | 181 | 97.3 | % | 4,246 | 37,179 | 23,322 | 1998 | 1998 | |||||||||||||||||||
132 | Research Park | Austin | TX | 4 | SUB | 1,110 | 98.0 | % | 11,666 | 90,585 | 63,065 | 1998 | 1976 | |||||||||||||||||||
133 | 9840 Gateway Boulevard North | El Paso | TX | 1 | SUB | 72 | 100.0 | % | 1,086 | 11,432 | 9,619 | 2007 | 1999 | |||||||||||||||||||
134 | 3003 South Expressway 281 | Hidalgo | TX | 1 | SUB | 150 | 100.0 | % | 1,851 | 17,004 | 14,102 | 2007 | 1999 | |||||||||||||||||||
135 | 3330 N Washington Boulevard | Arlington | VA | 1 | SUB | 56 | 15.3 | % | 194 | 8,843 | 5,692 | 1998 | 1987 |
27
PROPERTY DETAIL
As of March 31, 2015
(sorted by geographic location, dollars and square feet in thousands)
Property | City and State/Country | No. of Bldgs. | CBD/SUB | Sq. Feet | % Leased | Annualized Rental Revenue (2) | Undepreciated Book Value (3) | Net Book Value (4) | Year Acquired | Weighted Average Year Built or Substantially Renovated (5) | ||||||||||||||||||||||
136 | Thunderbolt Place | Chantilly | VA | 2 | SUB | 101 | 87.9 | % | 1,493 | 14,562 | 9,464 | 1999 | 1988 | |||||||||||||||||||
137 | 6160 Kempsville Circle | Norfolk | VA | 1 | SUB | 130 | 44.8 | % | 886 | 15,288 | 11,107 | 2002 | 1987 | |||||||||||||||||||
138 | 448 Viking Drive | Virginia Beach | VA | 1 | SUB | 75 | 75.7 | % | 995 | 7,576 | 5,845 | 2004 | 1991 | |||||||||||||||||||
139 | 333 108th Avenue NE | Bellevue | WA | 1 | CBD | 417 | 100.0 | % | 18,563 | 152,543 | 133,205 | 2009 | 2008 | |||||||||||||||||||
140 | 600 108th Avenue NE | Bellevue | WA | 1 | CBD | 244 | 88.7 | % | 5,462 | 46,166 | 35,632 | 2004 | 2012 | |||||||||||||||||||
141 | 1331 North Center Parkway | Kennewick | WA | 1 | SUB | 54 | 100.0 | % | 909 | 9,187 | 7,818 | 2007 | 1999 | |||||||||||||||||||
142 | 100 East Wisconsin Avenue | Milwaukee | WI | 1 | CBD | 435 | 89.2 | % | 10,833 | 82,054 | 72,634 | 2010 | 1989 | |||||||||||||||||||
143 | 111 East Kilbourn Avenue | Milwaukee | WI | 1 | CBD | 374 | 96.7 | % | 9,309 | 55,065 | 45,743 | 2008 | 1988 | |||||||||||||||||||
144 | 7 Modal Crescent | Canning Vale | Aust. | 1 | SUB | 164 | 100.0 | % | 1,228 | 12,313 | 11,861 | 2010 | 2001 | |||||||||||||||||||
145 | 71-93 Whiteside Road | Clayton | Aust. | 1 | SUB | 303 | 100.0 | % | 1,449 | 14,213 | 13,475 | 2010 | 1965 | |||||||||||||||||||
146 | 9-13 Titanium Court | Crestmead | Aust. | 1 | SUB | 70 | 46.8 | % | 106 | 4,699 | 4,422 | 2010 | 2005 | |||||||||||||||||||
147 | 16 Rodborough Road | Frenchs Forest | Aust. | 1 | SUB | 91 | 100.0 | % | 1,747 | 13,468 | 12,620 | 2010 | 1987 | |||||||||||||||||||
148 | 22 Rodborough Road | Frenchs Forest | Aust. | 1 | SUB | 43 | 100.0 | % | 174 | 6,356 | 5,888 | 2010 | 1997 | |||||||||||||||||||
149 | 127-161 Cherry Lane | Laverton North | Aust. | 1 | SUB | 279 | 100.0 | % | 995 | 7,680 | 7,222 | 2010 | 1965 | |||||||||||||||||||
150 | 310-314 Invermay Road | Mowbray | Aust. | 1 | SUB | 47 | 100.0 | % | 368 | 44 | — | 2010 | 1970 | |||||||||||||||||||
151 | 253-293 George Town Road | Rocherlea | Aust. | 1 | SUB | 144 | 100.0 | % | 1,017 | 109 | — | 2010 | 1970 | |||||||||||||||||||
152 | 310-320 Pitt Street | Sydney | Aust. | 1 | CBD | 314 | 100.0 | % | 14,445 | 129,100 | 120,156 | 2010 | 1989 | |||||||||||||||||||
153 | 44-46 Mandarin Street | Villawood | Aust. | 1 | SUB | 227 | 82.7 | % | 981 | 12,542 | 11,730 | 2010 | 1980 | |||||||||||||||||||
154 | 19 Leadership Way | Wangara | Aust. | 1 | SUB | 77 | 100.0 | % | 820 | 5,531 | 5,287 | 2010 | 2000 | |||||||||||||||||||
259 | 42,752 | 85.9 | % | $ | 774,422 | $ | 5,699,596 | $ | 4,633,227 |
(1 | ) | Excludes properties sold prior to April 1, 2015. |
(2 | ) | Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2015, plus straight line rent adjustments and estimated recurring expense reimbursements; includes some triple net lease rents and excludes lease value amortization. |
(3 | ) | Represents the carrying value of real estate properties, after purchase price allocations, impairment writedowns and currency adjustments, if any. |
(4 | ) | Represents the carrying value of real estate properties, after depreciation and amortization, purchase price allocations, impairment writedowns and currency adjustments, if any. |
(5 | ) | Weighted based on square feet. |
(6 | ) | Contractual cash payments (including management fees) from one tenant at Arizona Center for the three months ended March 31, 2015 were $2,032 and will decrease to approximately $515 per year beginning in 2016. The terms of this tenant's lease require us to classify the lease as a direct financing (or capital) lease. As such, the revenue recognized on a GAAP basis within our condensed consolidated statements of operations was $141 and $229 for the three months ended March 31, 2015 and 2014, respectively. Annualized rental revenue excludes the cash payments received from this tenant. This direct financing lease has an expiration date in 2045. |
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SUMMARY OF EQUITY INVESTMENTS
(dollars in thousands)
3/31/2015 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 | ||||||||||||||||
Common Shares Owned: | ||||||||||||||||||||
Select Income REIT (1) | — | — | — | 22,000,000 | 22,000,000 | |||||||||||||||
Affiliates Insurance Company (2) | — | — | — | — | 20,000 | |||||||||||||||
Percent Owned: | ||||||||||||||||||||
Select Income REIT (1) | 0.0 | % | 0.0 | % | 0.0 | % | 36.7 | % | 44.1 | % | ||||||||||
Affiliates Insurance Company (2) | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 12.5 | % | ||||||||||
Percent of Total Assets (book value): | ||||||||||||||||||||
Select Income REIT (1) | 0.0 | % | 0.0 | % | 0.0 | % | 8.1 | % | 7.8 | % | ||||||||||
Affiliates Insurance Company (2) | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | ||||||||||
Total | 0.0 | % | 0.0 | % | 0.0 | % | 8.1 | % | 7.9 | % | ||||||||||
Carrying Book Value on Balance Sheet: | ||||||||||||||||||||
Select Income REIT (1) | $ | — | $ | — | $ | — | $ | 531,862 | $ | 513,099 | ||||||||||
Affiliates Insurance Company (2) | — | — | — | — | 5,835 | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 531,862 | $ | 518,934 | ||||||||||
Market Value of Shares Owned: | ||||||||||||||||||||
Select Income REIT (1) | $ | — | $ | — | $ | — | $ | 652,080 | $ | 665,940 | ||||||||||
Affiliates Insurance Company (2) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||
Total | $ | — | $ | — | $ | — | $ | 652,080 | $ | 665,940 |
For the Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Equity in earnings of investees | ||||||||
Select Income REIT (1) | $ | — | $ | 11,032 | ||||
Affiliates Insurance Company (2) | — | (98 | ) | |||||
Total | $ | — | $ | 10,934 | ||||
FFO From Investees | ||||||||
Select Income REIT (1) | $ | — | $ | 15,038 | ||||
Affiliates Insurance Company (2) | — | (98 | ) | |||||
Total | $ | — | $ | 14,940 |
(1 | ) | Beginning on July 2, 2013, EQC no longer consolidated its investment in SIR, but instead accounted for its investment in SIR under the equity method. In addition, in May and June 2014, SIR issued 10,000,000 of its common shares in a public offering, which reduced EQC's ownership interest in SIR to 36.7%. On July 9, 2014, EQC sold its entire stake of 22,000,000 common shares of SIR. |
(2 | ) | Affiliates Insurance Company, or AIC, is a private company that, until May 9, 2014, was owned equally by Reit Management & Research LLC, or RMR, and each of the public companies to which RMR provides management services, including EQC and SIR. On May 9, 2014, as a result of the change in control of EQC and in accordance with the terms of a shareholders agreement among EQC and the other AIC shareholders, the other AIC shareholders purchased pro rata from EQC all 20,000 shares of AIC that EQC then owned for aggregate proceeds of $5,776. |
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DEFINITIONS
Funds from Operations (FFO) and Normalized FFO
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate, and our portion of these items related to equity investees and noncontrolling interests. Normalized FFO begins with FFO and excludes lease value amortization, straight line rent, gains and losses on early extinguishment of debt, gains and losses on the sale of equity investments, gains and losses on the issuance of shares by an equity investee, shareholder litigation and transition-related expenses, acquisition related costs, interest earned from a direct financing lease, gain on sale of securities, and our portion of these items related to equity investees and noncontrolling interests. Normalized FFO also includes the minimum cash rent from a direct financing lease. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income attributable to Equity Commonwealth, net income attributable to EQC common shareholders, operating income and cash flow from operating activities.
We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to EQC common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income, net income attributable to EQC common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
We calculate EBITDA as net income (loss) excluding 1) interest expense, 2) income tax expense, 3) depreciation and amortization, and 4) our portion of these items related to equity investees.
We calculate Adjusted EBITDA as EBITDA excluding 1) loss on asset impairment, 2) acquisition related costs, 3) loss on early extinguishment of debt, 4) shareholder litigation costs and transition-related expenses, 5) gains or losses on sale of properties, 6) gains or losses on sale of equity investments, 7) gains or losses on issuance of shares by an equity investee, and 8) our portion of these items related to equity investees.
We consider EBITDA and Adjusted EBITDA to be appropriate measures of our operating performance, along with net income, net income attributable to EQC common shareholders, operating income and cash flow from operating activities. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with our past operating performance. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income attributable to EQC common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income, net income attributable to EQC common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate EBITDA and Adjusted EBITDA differently than we do.
30
DEFINITIONS
Tenant Improvements
Capital expenditures to improve tenant spaces.
Leasing Costs
Leasing costs such as brokerage commissions and related legal expenses.
Building Improvements
Expenditures to replace obsolete building components or extend the useful life of existing assets.
Development, Redevelopment and Other Activities
Includes 1) major capital expenditures that are identified at the time of a property acquisition and incurred within a short time period after acquiring the property, and 2) major capital expenditure projects that reposition a property or result in new sources of revenue.
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