Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 26, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-9317 | |
Entity Registrant Name | EQUITY COMMONWEALTH | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 04-6558834 | |
Entity Address, Address Line One | Two North Riverside Plaza, Suite 2100 | |
Entity Address, City or Town | Chicago | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60606 | |
City Area Code | (312) | |
Local Phone Number | 646-2800 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 121,940,355 | |
Entity Central Index Key | 0000803649 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Common Shares of Beneficial Interest | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Shares of Beneficial Interest | |
Trading Symbol | EQC | |
Security Exchange Name | NYSE | |
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest | |
Trading Symbol | EQCpD | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Real estate properties: | ||
Land | $ 44,060 | $ 44,060 |
Buildings and improvements | 361,592 | 357,650 |
Total real estate properties, at cost, gross | 405,652 | 401,710 |
Accumulated depreciation | (150,754) | (143,319) |
Total real estate properties, at cost, net | 254,898 | 258,391 |
Cash and cash equivalents | 2,965,788 | 2,987,225 |
Rents receivable | 15,310 | 14,702 |
Other assets, net | 20,272 | 17,353 |
Total assets | 3,256,268 | 3,277,671 |
LIABILITIES AND EQUITY | ||
Accounts payable, accrued expenses and other | 19,209 | 20,588 |
Rent collected in advance | 2,373 | 2,928 |
Distributions payable | 2,850 | 10,991 |
Total liabilities | 24,432 | 34,507 |
Shareholders’ equity: | ||
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; Series D preferred shares; 6.50% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880 | 119,263 | 119,263 |
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 121,940,355 and 121,522,555 shares issued and outstanding, respectively | 1,219 | 1,215 |
Additional paid in capital | 4,297,197 | 4,294,632 |
Cumulative net income | 3,802,994 | 3,814,948 |
Cumulative common distributions | (4,281,670) | (4,283,668) |
Cumulative preferred distributions | (713,706) | (709,712) |
Total shareholders’ equity | 3,225,297 | 3,236,678 |
Noncontrolling interest | 6,539 | 6,486 |
Total equity | 3,231,836 | 3,243,164 |
Total liabilities and equity | $ 3,256,268 | $ 3,277,671 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Statement of Financial Position [Abstract] | |||
Preferred shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred shares of beneficial interest, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 |
Preferred shares, dividend percentage | 6.50% | 6.50% | |
Preferred shares of beneficial interest, shares issued (in shares) | 4,915,196 | 4,915,196 | 4,915,196 |
Preferred shares, of beneficial interest, shares outstanding (in shares) | 4,915,196 | 4,915,196 | 4,915,196 |
Preferred shares, aggregate liquidation preference | $ 122,880 | $ 122,880 | $ 122,880 |
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common shares of beneficial interest, shares authorized (in shares) | 350,000,000 | 350,000,000 | 350,000,000 |
Common shares of beneficial interest, shares issued (in shares) | 121,940,355 | 121,940,355 | 121,522,555 |
Common shares of beneficial interest, shares outstanding (in shares) | 121,940,355 | 121,940,355 | 121,522,555 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues: | ||||
Rental revenue | $ 14,114 | $ 15,248 | $ 28,283 | $ 32,391 |
Other revenue | 761 | 1,017 | 1,443 | 2,694 |
Total revenues | 14,875 | 16,265 | 29,726 | 35,085 |
Expenses: | ||||
Operating expenses | 6,588 | 6,677 | 13,209 | 15,438 |
Depreciation and amortization | 4,432 | 4,398 | 8,783 | 9,512 |
General and administrative | 7,390 | 8,302 | 23,119 | 18,906 |
Total expenses | 18,410 | 19,377 | 45,111 | 43,856 |
Interest and other income, net | 1,626 | 4,443 | 3,469 | 16,338 |
Interest expense (including net amortization of debt premiums and deferred financing fees of $—, $(60), $— and $(116), respectively) | 0 | (302) | 0 | (611) |
Gain on sale of properties, net | 0 | 26,916 | 0 | 446,536 |
(Loss) income before income taxes | (1,909) | 27,945 | (11,916) | 453,492 |
Income tax expense | (31) | (59) | (62) | (99) |
Net (loss) income | (1,940) | 27,886 | (11,978) | 453,393 |
Net loss (income) attributable to noncontrolling interest | 4 | (54) | 24 | (802) |
Net (loss) income attributable to Equity Commonwealth | (1,936) | 27,832 | (11,954) | 452,591 |
Preferred distributions | (1,997) | (1,997) | (3,994) | (3,994) |
Net (loss) income attributable to Equity Commonwealth common shareholders | $ (3,933) | $ 25,835 | $ (15,948) | $ 448,597 |
Weighted average common shares outstanding — basic (in shares) | 122,189 | 121,655 | 122,096 | 121,901 |
Weighted average common shares outstanding — diluted (in shares) | 122,189 | 123,255 | 122,096 | 126,358 |
Earnings per common share attributable to Equity Commonwealth common shareholders: | ||||
Basic (in dollars per share) | $ (0.03) | $ 0.21 | $ (0.13) | $ 3.68 |
Diluted (in dollars per share) | $ (0.03) | $ 0.21 | $ (0.13) | $ 3.58 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Net amortization of debt premiums and deferred financing fees | $ 0 | $ (60) | $ 0 | $ (116) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (1,940) | $ 27,886 | $ (11,978) | $ 453,393 |
Total comprehensive (loss) income | (1,940) | 27,886 | (11,978) | 453,393 |
Comprehensive loss (income) attributable to noncontrolling interest | 4 | (54) | 24 | (802) |
Total comprehensive (loss) income attributable to Equity Commonwealth | $ (1,936) | $ 27,832 | $ (11,954) | $ 452,591 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Series D Preferred Shares | Common Shares | Additional Paid in Capital | Cumulative Net Income | Cumulative Common Distributions | Cumulative Preferred Distributions | Noncontrolling Interest |
Balance as of beginning of period (in shares) at Dec. 31, 2019 | 4,915,196 | 121,924,199 | ||||||
Balance as of beginning of period at Dec. 31, 2019 | $ 3,245,872 | $ 119,263 | $ 1,219 | $ 4,313,831 | $ 3,363,654 | $ (3,851,666) | $ (701,724) | $ 1,295 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net (loss) income | 453,393 | 452,591 | 802 | |||||
Repurchase of shares (in shares) | (711,000) | |||||||
Repurchase of shares | (20,869) | $ (7) | (20,862) | |||||
Surrender of shares for tax withholding (in shares) | (183,466) | |||||||
Surrender of shares for tax withholding | (6,012) | $ (2) | (6,010) | |||||
Share-based compensation (in shares) | 491,891 | |||||||
Share-based compensation | 6,571 | $ 5 | 5,859 | 707 | ||||
Contributions | 1 | 1 | ||||||
Distributions | (5,184) | (1,190) | (3,994) | |||||
Redemption of noncontrolling interest | (31) | (31) | ||||||
Adjustment for noncontrolling interest | (4,573) | 4,573 | ||||||
Balance as of end of period (in shares) at Jun. 30, 2020 | 4,915,196 | 121,521,624 | ||||||
Balance as of end of period at Jun. 30, 2020 | 3,673,741 | $ 119,263 | $ 1,215 | 4,288,245 | 3,816,245 | (3,852,856) | (705,718) | 7,347 |
Balance as of beginning of period (in shares) at Mar. 31, 2020 | 4,915,196 | 121,502,520 | ||||||
Balance as of beginning of period at Mar. 31, 2020 | 3,644,614 | $ 119,263 | $ 1,215 | 4,285,266 | 3,788,413 | (3,852,856) | (703,721) | 7,034 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net (loss) income | 27,886 | 27,832 | 54 | |||||
Share-based compensation (in shares) | 19,104 | |||||||
Share-based compensation | 3,268 | 2,906 | 362 | |||||
Contributions | 1 | 1 | ||||||
Distributions | (1,997) | 0 | (1,997) | 0 | ||||
Redemption of noncontrolling interest | (31) | (31) | ||||||
Adjustment for noncontrolling interest | 73 | (73) | ||||||
Balance as of end of period (in shares) at Jun. 30, 2020 | 4,915,196 | 121,521,624 | ||||||
Balance as of end of period at Jun. 30, 2020 | 3,673,741 | $ 119,263 | $ 1,215 | 4,288,245 | 3,816,245 | (3,852,856) | (705,718) | 7,347 |
Balance as of beginning of period (in shares) at Dec. 31, 2020 | 4,915,196 | 121,522,555 | ||||||
Balance as of beginning of period at Dec. 31, 2020 | 3,243,164 | $ 119,263 | $ 1,215 | 4,294,632 | 3,814,948 | (4,283,668) | (709,712) | 6,486 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net (loss) income | (11,978) | (11,954) | (24) | |||||
Surrender of shares for tax withholding (in shares) | (244,029) | |||||||
Surrender of shares for tax withholding | (7,041) | $ (2) | (7,039) | |||||
Share-based compensation (in shares) | 661,829 | |||||||
Share-based compensation | 9,601 | $ 6 | 9,088 | 507 | ||||
Distributions | (1,910) | 1,998 | (3,994) | 86 | ||||
Adjustment for noncontrolling interest | 516 | (516) | ||||||
Balance as of end of period (in shares) at Jun. 30, 2021 | 4,915,196 | 121,940,355 | ||||||
Balance as of end of period at Jun. 30, 2021 | 3,231,836 | $ 119,263 | $ 1,219 | 4,297,197 | 3,802,994 | (4,281,670) | (713,706) | 6,539 |
Balance as of beginning of period (in shares) at Mar. 31, 2021 | 4,915,196 | 121,916,875 | ||||||
Balance as of beginning of period at Mar. 31, 2021 | 3,231,618 | $ 119,263 | $ 1,219 | 4,295,226 | 3,804,930 | (4,283,753) | (711,709) | 6,442 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net (loss) income | (1,940) | (1,936) | (4) | |||||
Surrender of shares for tax withholding (in shares) | (33,695) | |||||||
Surrender of shares for tax withholding | (948) | (948) | ||||||
Share-based compensation (in shares) | 57,175 | |||||||
Share-based compensation | 2,914 | 2,683 | 231 | |||||
Distributions | 192 | 2,083 | (1,997) | 106 | ||||
Adjustment for noncontrolling interest | 236 | (236) | ||||||
Balance as of end of period (in shares) at Jun. 30, 2021 | 4,915,196 | 121,940,355 | ||||||
Balance as of end of period at Jun. 30, 2021 | $ 3,231,836 | $ 119,263 | $ 1,219 | $ 4,297,197 | $ 3,802,994 | $ (4,281,670) | $ (713,706) | $ 6,539 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net (loss) income | $ (1,940) | $ 27,886 | $ (11,978) | $ 453,393 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Depreciation | 7,531 | 8,105 | ||
Net amortization of debt premiums and deferred financing fees | 0 | (60) | 0 | (116) |
Straight-line rental income | (868) | 713 | ||
Other amortization | 1,252 | 1,407 | ||
Amortization of right-of-use asset | 0 | 379 | ||
Share-based compensation | 9,601 | 6,571 | ||
Net gain on sale of properties | 0 | (26,916) | 0 | (446,536) |
Change in assets and liabilities: | ||||
Rents receivable and other assets | 327 | 515 | ||
Accounts payable, accrued expenses and other | (2,199) | (576) | ||
Rent collected in advance | (555) | (606) | ||
Net cash provided by operating activities | 3,111 | 23,249 | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Real estate improvements | (4,074) | (2,937) | ||
Payment of transaction costs | (3,382) | 0 | ||
Proceeds from sale of properties, net | 0 | 655,053 | ||
Net cash (used in) provided by investing activities | (7,456) | 652,116 | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Repurchase and retirement of common shares | (7,041) | (26,881) | ||
Payments on borrowings | 0 | (294) | ||
Contributions from holders of noncontrolling interest | 0 | 1 | ||
Distributions to common shareholders | (6,024) | (1,936) | ||
Distributions to preferred shareholders | (3,994) | (3,994) | ||
Distributions to holders of noncontrolling interest | (33) | (997) | ||
Redemption of noncontrolling interest | 0 | (31) | ||
Net cash used in financing activities | (17,092) | (34,132) | ||
(Decrease) increase in cash, cash equivalents, and restricted cash | (21,437) | 641,233 | ||
Cash, cash equivalents, and restricted cash at beginning of period | 2,987,225 | 2,800,645 | ||
Cash, cash equivalents, and restricted cash at end of period | 2,965,788 | 3,441,878 | 2,965,788 | 3,441,878 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Interest paid | 0 | 732 | ||
Taxes paid (refunded), net | 263 | (1,555) | ||
NON-CASH INVESTING ACTIVITIES: | ||||
Accrued capital expenditures | 854 | 2,733 | ||
NON-CASH FINANCING ACTIVITIES: | ||||
Distributions payable | 2,850 | 5,791 | 2,850 | 5,791 |
Cash and cash equivalents | 2,965,788 | 3,437,775 | 2,965,788 | 3,437,775 |
Restricted cash | 0 | 4,103 | 0 | 4,103 |
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows | $ 2,965,788 | $ 3,441,878 | $ 2,965,788 | $ 3,441,878 |
Business
Business | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business Equity Commonwealth, or the Company, is a real estate investment trust, or REIT, formed in 1986 under the laws of the State of Maryland. Our business is primarily the ownership and operation of office properties in the United States. The Company operates in an umbrella partnership real estate investment trust, or UPREIT, and conducts substantially all of its activities through EQC Operating Trust, a Maryland real estate investment trust, or the Operating Trust. The Company beneficially owned 99.8% of the outstanding shares of beneficial interest, designated as units, in the Operating Trust, or OP Units, as of June 30, 2021, and the Company is the sole trustee of the Operating Trust. As the sole trustee, the Company generally has the power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units. At June 30, 2021, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet. As of June 30, 2021, we had $3.0 billion of cash and cash equivalents. Merger Agreement On May 4, 2021, the Company, Monmouth Real Estate Investment Corporation (NYSE: MNR), or Monmouth, and a subsidiary of the Company entered into a definitive agreement and plan of merger, or the Merger Agreement, pursuant to which Monmouth will merge with and into a subsidiary of the Company. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, upon closing of the merger, each share of Monmouth common stock issued and outstanding will be converted into the right to receive 0.67 of a newly issued share of our common shares of beneficial interest, with cash paid in lieu of any fractional shares. The Merger Agreement provides for Monmouth to declare and pay one additional regular quarterly common stock dividend of $0.18 per share without Equity Commonwealth paying a corresponding common dividend to its shareholders, which Monmouth declared on July 1, 2021, payable on September 15, 2021. In addition, upon closing, holders of Monmouth Series C preferred stock will receive $25.00 per share plus accumulated and unpaid dividends pursuant to the governing documents of the Monmouth Series C preferred stock. We currently expect the transaction to close in the second half of 2021, subject to the approval of our common shareholders and the Monmouth common shareholders and other customary closing conditions. As of June 30, 2021, we recorded transaction costs of $4.2 million, included in Other assets, net, in connection with the merger. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements of EQC have been prepared without audit. Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are appropriate. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2020. Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the assessment of the collectability of rental revenue, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets. Share amounts are presented in whole numbers, except where noted. |
Real Estate Properties
Real Estate Properties | 6 Months Ended |
Jun. 30, 2021 | |
Real Estate [Abstract] | |
Real Estate Properties | Real Estate Properties During the six months ended June 30, 2021 and 2020, we made improvements, excluding tenant-funded improvements, to our properties totaling $3.9 million and $4.3 million, respectively. Property Dispositions: We did not sell any properties during the six months ended June 30, 2021. During the six months ended June 30, 2020, we sold the following properties, which did not represent strategic shifts under the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 205 (dollars in thousands): Property Date Sold Number of Number of Square Gross Sale Price(1) Gain on Sale 109 Brookline Avenue February 2020 1 1 285,556 $ 270,000 $ 225,190 333 108 th Avenue NE (2) March 2020 1 1 435,406 401,500 194,424 Georgetown-Green and Harris Buildings May 2020 1 2 240,475 $ 85,000 $ 24,916 3 4 961,437 $ 756,500 $ 444,530 (1) Gross sale price is before transfer taxes and credits, such as capital costs, contractual lease costs and rent abatements. (2) The sale represents an individually significant disposition. The operating results of this property are included in continuing operations for all periods presented through the date of sale. Net (loss) income related to this property was $(9,000) and $28,000 for the three months ended June 30, 2021 and 2020, respectively, and $(14,000) and $193.2 million, of which $194.4 million related to the gain on sale, for the six months ended June 30, 2021 and 2020, respectively. Lease Payments The FASB has issued additional guidance for companies to account for any COVID-19 related rent concessions in the form of FASB staff and board members’ remarks at the April 8, 2020 public meeting and the FASB staff question-and-answer document issued on April 10, 2020. We have elected the practical expedient to account for COVID-19 related rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. This policy has been elected for our lessor portfolio for any rent deferrals, and we have elected to treat the related leases as if they are unchanged. For the three and six months ended June 30, 2021, we deferred collection of approximately $— and $20,000, respectively, of rental income on revenue that was recognized in that period. Rental revenue consists of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Lease payments $ 9,192 $ 9,983 $ 18,449 $ 21,753 Variable lease payments 4,922 5,265 9,834 10,638 Rental revenue $ 14,114 $ 15,248 $ 28,283 $ 32,391 |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Common Share Issuances: See Note 7 for information regarding equity issuances related to share-based compensation. Common Share Repurchases: On March 1, 2021, our Board of Trustees authorized the repurchase of up to $150.0 million of our outstanding common shares through June 30, 2022. We did not repurchase any common shares under our common share repurchase program during the six months ended June 30, 2021. During the six months ended June 30, 2021 and 2020, certain of our employees and former employees surrendered 244,029 and 183,466 common shares owned by them, respectively, to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares pursuant to our equity compensation plans. Common Share and Unit Distribution: In February 2021, the number of earned awards for recipients of the Company’s restricted stock units granted in January 2018 was determined. Pursuant to the terms of such awards, we paid a one-time catch-up cash distribution to these recipients in the aggregate amount of $6.0 million for distributions to common shareholders declared by our Board of Trustees during such awards' performance measurement period. Preferred Share Distributions: In 2021, our Board of Trustees declared distributions on our series D preferred shares to date as follows: Declaration Date Record Date Payment Date Series D Dividend Per Share January 11, 2021 January 28, 2021 February 16, 2021 $ 0.40625 April 9, 2021 April 29, 2021 May 17, 2021 $ 0.40625 July 6, 2021 July 30, 2021 August 16, 2021 $ 0.40625 |
Noncontrolling Interest
Noncontrolling Interest | 6 Months Ended |
Jun. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interest represents the portion of the OP Units not beneficially owned by the Company. The ownership of an OP Unit and a common share of beneficial interest have essentially the same economic characteristics. Distributions with respect to OP Units will generally mirror distributions with respect to the Company’s common shares. Unitholders (other than the Company) generally have the right, commencing six months from the date of issuance of such OP Units, to cause the Operating Trust to redeem their OP Units in exchange for cash or, at the option of the Company, common shares of the Company on a one-for-one basis. As sole trustee, the Company has the sole discretion to elect whether the redemption right will be satisfied by the Company in cash or the Company’s common shares. As a result, the Noncontrolling interest is classified as permanent equity. As of June 30, 2021, the portion of the Operating Trust not beneficially owned by the Company is in the form of OP Units and LTIP Units (see Note 7 for a description of LTIP Units). LTIP Units may be subject to additional vesting requirements. The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the six months ended June 30, 2021: Common Shares OP Units and LTIP Units Total Outstanding at January 1, 2021 121,522,555 243,516 121,766,071 Repurchase of shares (244,029) — (244,029) Share-based compensation grants and vesting, net of forfeitures 661,829 3,701 665,530 Outstanding at June 30, 2021 121,940,355 247,217 122,187,572 Noncontrolling ownership interest in the Operating Trust 0.20 % The carrying value of the Noncontrolling interest is allocated based on the number of OP Units and LTIP Units in proportion to the number of OP Units and LTIP Units plus the number of common shares. We adjust the Noncontrolling interest balance at the end of each period to reflect the noncontrolling partners’ interest in the net assets of the Operating Trust. Net income is allocated to the Noncontrolling interest in the Operating Trust based on the weighted average ownership percentage during the period. Equity Commonwealth’s weighted average ownership interest in the Operating Trust was 99.80% and 99.80% for the three and six months ended June 30, 2021, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and are generally not subject to federal and state income taxes provided we distribute a sufficient amount of our taxable income to our shareholders and meet other requirements for qualifying as a REIT. However, we are subject to certain state and local taxes without regard to our REIT status. Our provision for income taxes consists of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Current: State and local $ (31) $ (59) $ (62) $ (99) Income tax expense $ (31) $ (59) $ (62) $ (99) |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation Recipients of the Company’s restricted shares have the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder. The restricted shares are service based awards and vest over a four-year period. Recipients of the Company’s restricted stock units, or RSUs, are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market-based awards with a service condition and recipients may earn RSUs based on the Company’s total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards will be determined. The earned awards vest in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Compensation Committee of our Board of Trustees, or the Committee, determines the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient’s continued employment. Compensation expense for the RSUs is determined using a Monte Carlo simulation model and is recognized ratably from the grant date to the vesting date of each tranche. LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries. Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time. 2021 Equity Award Activity During the six months ended June 30, 2021, 520,858 RSUs vested, and, as a result, we issued 520,858 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 4). On June 23, 2021, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2021-2022 year of service on the Board of Trustees. These awards equated to 3,701 shares or time-based LTIP Units per Trustee, for a total of 18,505 shares and 3,701 time-based LTIP Units, valued at $27.02 per share and unit, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on that day. These shares and time-based LTIP Units vest one year after the date of the award, on June 23, 2022. On January 25, 2021, the Committee approved grants in the aggregate amount of 122,466 restricted shares and 248,646 RSUs at target (619,750 RSUs at maximum) to the Company’s officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2020. The restricted shares were valued at $28.25 per share, the closing price of our common shares on the NYSE on the grant date. The assumptions and fair value for the RSUs and market-based LTIP Units granted during the six months ended June 30, 2021 are included in the following table on a per share basis. 2021 Fair value of market-based awards granted $ 37.87 Expected term (years) 4 Expected volatility 16.99 % Risk-free rate 0.17 % 2020 Equity Award Activity During the six months ended June 30, 2020, 387,729 RSUs vested, and, as a result, we issued 387,729 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations. On June 23, 2020, in accordance with the Company’s compensation program for independent Trustees, the Committee awarded each of the then nine independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2020-2021 year of service on the Board of Trustees. These awards equated to 3,184 shares or time-based LTIP Units per Trustee, for a total of 19,104 shares and 9,552 time-based LTIP Units, valued at $31.41 per share and unit, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on that day. These shares and time-based LTIP Units vested on June 23, 2021. On January 27, 2020, the Committee approved grants in the aggregate amount of 20,116 time-based LTIP Units, 40,841 market-based LTIP Units at target (101,796 market-based LTIP Units at maximum), 85,058 restricted shares and 172,697 RSUs at target (430,447 RSUs at maximum) to the Company’s officers, certain employees, an eligible consultant and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2019. The restricted shares and time-based LTIP Units were valued at $32.81 per share and per unit, the closing price of our common shares on the NYSE on the grant date. The RSUs and market-based LTIP Units were valued at $40.17 per share and per unit, their fair value on the grant date. Outstanding Equity Awards As of June 30, 2021, the estimated future compensation expense for all unvested restricted shares and time-based LTIP Units was $6.9 million. Compensation expense for the restricted share and time-based LTIP Unit awards is being recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The weighted average period over which the future compensation expense will be recorded for the restricted shares and time-based LTIP units is approximately 2.5 years. As of June 30, 2021, the estimated future compensation expense for all unvested RSUs and market-based LTIP Units was $14.4 million. The weighted average period over which the future compensation expense will be recorded for the RSUs and market-based LTIP Units is approximately 2.4 years. During the three months ended June 30, 2021 and 2020, we recorded $2.9 million and $3.3 million, respectively, and during the six months ended June 30, 2021 and 2020, we recorded $9.6 million and $6.6 million, respectively, of compensation expense, net of forfeitures, in general and administrative expense for grants to our trustees, eligible consultants and employees related to our equity compensation plans. Compensation expense recorded during the six months ended June 30, 2021 and 2020 includes $3.4 million and $18,000, respectively, of accelerated vesting due to staffing reductions. We did not record any accelerated vesting due to staffing reductions during the three months ended June 30, 2021 and 2020. Forfeitures are recognized as they occur. At June 30, 2021, 1,526,730 shares/units remain available for issuance under the Equity Commonwealth 2015 Omnibus Incentive Plan, as amended. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities As of June 30, 2021, we do not have any assets or liabilities measured at fair value. Financial Instruments Our financial instruments include our cash and cash equivalents. At June 30, 2021 and December 31, 2020, the fair value of these financial instruments was not different from their carrying values. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator for earnings per common share - basic: Net (loss) income $ (1,940) $ 27,886 $ (11,978) $ 453,393 Net loss (income) attributable to noncontrolling interest 4 (54) 24 (802) Preferred distributions (1,997) (1,997) (3,994) (3,994) Numerator for net (loss) income per share - basic $ (3,933) $ 25,835 $ (15,948) $ 448,597 Numerator for earnings per common share - diluted: Net (loss) income $ (1,940) $ 27,886 $ (11,978) $ 453,393 Net loss (income) attributable to noncontrolling interests 4 (54) 24 (802) Preferred distributions (1,997) (1,997) (3,994) — Numerator for net (loss) income per share - diluted $ (3,933) $ 25,835 $ (15,948) $ 452,591 Denominator for earnings per common share - basic and diluted: Weighted average number of common shares outstanding - basic (1) 122,189 121,655 122,096 121,901 RSUs (2) — 1,524 — 1,524 LTIP Units (3) — 76 — 76 Series D preferred shares; 6.50% cumulative convertible — — — 2,857 Weighted average number of common shares outstanding - diluted 122,189 123,255 122,096 126,358 Net (loss) income per common share attributable to Equity Commonwealth common shareholders: Basic $ (0.03) $ 0.21 $ (0.13) $ 3.68 Diluted $ (0.03) $ 0.21 $ (0.13) $ 3.58 Anti-dilutive securities (4) : Effect of Series D preferred shares; 6.50% cumulative convertible 3,237 2,857 3,237 — Effect of RSUs (2) 466 — 657 — Effect of LTIP Units 65 124 107 107 Effect of OP Units (5) 215 110 193 92 (1) The three months ended June 30, 2021 and 2020, include 266 and 150 weighted-average, unvested, earned RSUs, respectively, and the six months ended June 30, 2021 and 2020, include 251 and 164 weighted-average, unvested, earned RSUs, respectively. (2) Represents weighted-average number of common shares that would have been issued if the quarter-end was the measurement date for unvested, unearned RSUs. (3) Represents the weighted-average dilutive shares issuable from LTIP Units if the quarter-end was the measurement date for the periods shown. (4) The Series D preferred shares are excluded from the diluted earnings per share calculation for the three and six months ended June 30, 2021 and for the three months ended June 30, 2020, because including the Series D preferred shares would also require that the preferred distributions be added back to net income, resulting in anti-dilution. The RSUs and market-based LTIP Units are excluded from the diluted earnings per share calculation for the three and six months ended June 30, 2021, because including them results in anti-dilution. (5) Beneficial interests in the Operating Trust. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Our primary business is the ownership and operation of office properties, and we currently have one reportable segment. One hundred percent of our revenues for the six months ended June 30, 2021 were from office properties. |
Related Person Transactions
Related Person Transactions | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions The following discussion includes a description of our related person transactions for the six months ended June 30, 2021 and 2020. Two North Riverside Plaza Joint Venture Limited Partnership: We entered into a lease on July 20, 2015 with Two North Riverside Plaza Joint Venture Limited Partnership, an entity associated with Mr. Zell, our Chairman, to occupy office space on the twentieth and twenty-first floors of Two North Riverside Plaza in Chicago, Illinois (20th/21st Floor Office Lease). The initial term of the lease was approximately five years, expiring on December 31, 2020. We made improvements to the office space utilizing the $0.7 million tenant improvement allowance pursuant to the lease. In connection with the 20th/21st Floor Office Lease, we also had a storage lease with Two North Riverside Plaza Joint Venture Limited Partnership for storage space in the basement of Two North Riverside Plaza. We terminated the storage lease, effective August 31, 2020. In December 2020, we entered into an amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2021. There are no renewal options. The lease payment for the extended term is approximately $0.3 million. During the three months ended June 30, 2021 and 2020, we recognized expense of $0.1 million and $0.2 million, respectively, and during the six months ended June 30, 2021 and 2020, we recognized expense of $0.2 million and $0.5 million, respectively, pursuant to the 20th/21st Floor Office Lease and the related storage space. As of June 30, 2021 and December 31, 2020, we did not have any amounts due to Two North Riverside Plaza Joint Venture Limited Partnership pursuant to the 20th/21st Floor Office Lease. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Merger Agreement In connection with the proposed merger and following the filing of the Company’s registration statement on Form S-4, the Company was named in a lawsuit challenging the merger-related disclosures in the Form S-4 (Whitfield v. Monmouth Real Estate Investment Corporation, et. al., Case No. 1:21-cv-05875 (D. Ct. S.D.N.Y., July 8, 2021) (the “Whitfield Complaint”). The Whitfield Complaint alleges that the Company, EQC Maple Industrial LLC (f/k/a RS18 LLC), a subsidiary of the Company, Monmouth Real Estate Investment Corporation (“Monmouth”) and the Monmouth board of directors violated federal securities laws by omitting certain allegedly material information from the Form S-4. The Whitfield Complaint seeks, among other things, (i) injunctive relief enjoining the consummation of the merger, (ii) rescission or rescissory damages, if the merger is consummated, and (iii) an award of the plaintiff’s costs, including attorneys’ and experts’ fees. Although the ultimate outcome of litigation cannot be predicted with certainty, the Company believes this lawsuit is without merit and intends to defend against this action vigorously. The Company may be named in additional lawsuits concerning the merger in the future. Preferred Share Distribution On July 6, 2021, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on August 16, 2021 to shareholders of record on July 30, 2021. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of EQC have been prepared without audit. Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are appropriate. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2020. Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the assessment of the collectability of rental revenue, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets. Share amounts are presented in whole numbers, except where noted. |
Real Estate Properties (Tables)
Real Estate Properties (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Real Estate [Abstract] | |
Summary of Properties Sold and Income Statement Information for Properties Disposed of | During the six months ended June 30, 2020, we sold the following properties, which did not represent strategic shifts under the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 205 (dollars in thousands): Property Date Sold Number of Number of Square Gross Sale Price(1) Gain on Sale 109 Brookline Avenue February 2020 1 1 285,556 $ 270,000 $ 225,190 333 108 th Avenue NE (2) March 2020 1 1 435,406 401,500 194,424 Georgetown-Green and Harris Buildings May 2020 1 2 240,475 $ 85,000 $ 24,916 3 4 961,437 $ 756,500 $ 444,530 (1) Gross sale price is before transfer taxes and credits, such as capital costs, contractual lease costs and rent abatements. (2) The sale represents an individually significant disposition. The operating results of this property are included in continuing operations for all periods presented through the date of sale. Net (loss) income related to this property was $(9,000) and $28,000 for the three months ended June 30, 2021 and 2020, respectively, and $(14,000) and $193.2 million, of which $194.4 million related to the gain on sale, for the six months ended June 30, 2021 and 2020, respectively. |
Schedule of Rental Revenue | Rental revenue consists of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Lease payments $ 9,192 $ 9,983 $ 18,449 $ 21,753 Variable lease payments 4,922 5,265 9,834 10,638 Rental revenue $ 14,114 $ 15,248 $ 28,283 $ 32,391 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Declared Distributions | In 2021, our Board of Trustees declared distributions on our series D preferred shares to date as follows: Declaration Date Record Date Payment Date Series D Dividend Per Share January 11, 2021 January 28, 2021 February 16, 2021 $ 0.40625 April 9, 2021 April 29, 2021 May 17, 2021 $ 0.40625 July 6, 2021 July 30, 2021 August 16, 2021 $ 0.40625 |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Noncontrolling Interest [Abstract] | |
Schedule of Issued and Outstanding Common Shares | The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the six months ended June 30, 2021: Common Shares OP Units and LTIP Units Total Outstanding at January 1, 2021 121,522,555 243,516 121,766,071 Repurchase of shares (244,029) — (244,029) Share-based compensation grants and vesting, net of forfeitures 661,829 3,701 665,530 Outstanding at June 30, 2021 121,940,355 247,217 122,187,572 Noncontrolling ownership interest in the Operating Trust 0.20 % |
Schedule of Issued and Outstanding Units | The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the six months ended June 30, 2021: Common Shares OP Units and LTIP Units Total Outstanding at January 1, 2021 121,522,555 243,516 121,766,071 Repurchase of shares (244,029) — (244,029) Share-based compensation grants and vesting, net of forfeitures 661,829 3,701 665,530 Outstanding at June 30, 2021 121,940,355 247,217 122,187,572 Noncontrolling ownership interest in the Operating Trust 0.20 % |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | Our provision for income taxes consists of the following (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Current: State and local $ (31) $ (59) $ (62) $ (99) Income tax expense $ (31) $ (59) $ (62) $ (99) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Assumptions and Fair Values for RSUs and Market-based LTIP Units Granted in the Period | The assumptions and fair value for the RSUs and market-based LTIP Units granted during the six months ended June 30, 2021 are included in the following table on a per share basis. 2021 Fair value of market-based awards granted $ 37.87 Expected term (years) 4 Expected volatility 16.99 % Risk-free rate 0.17 % |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Numerator for earnings per common share - basic: Net (loss) income $ (1,940) $ 27,886 $ (11,978) $ 453,393 Net loss (income) attributable to noncontrolling interest 4 (54) 24 (802) Preferred distributions (1,997) (1,997) (3,994) (3,994) Numerator for net (loss) income per share - basic $ (3,933) $ 25,835 $ (15,948) $ 448,597 Numerator for earnings per common share - diluted: Net (loss) income $ (1,940) $ 27,886 $ (11,978) $ 453,393 Net loss (income) attributable to noncontrolling interests 4 (54) 24 (802) Preferred distributions (1,997) (1,997) (3,994) — Numerator for net (loss) income per share - diluted $ (3,933) $ 25,835 $ (15,948) $ 452,591 Denominator for earnings per common share - basic and diluted: Weighted average number of common shares outstanding - basic (1) 122,189 121,655 122,096 121,901 RSUs (2) — 1,524 — 1,524 LTIP Units (3) — 76 — 76 Series D preferred shares; 6.50% cumulative convertible — — — 2,857 Weighted average number of common shares outstanding - diluted 122,189 123,255 122,096 126,358 Net (loss) income per common share attributable to Equity Commonwealth common shareholders: Basic $ (0.03) $ 0.21 $ (0.13) $ 3.68 Diluted $ (0.03) $ 0.21 $ (0.13) $ 3.58 Anti-dilutive securities (4) : Effect of Series D preferred shares; 6.50% cumulative convertible 3,237 2,857 3,237 — Effect of RSUs (2) 466 — 657 — Effect of LTIP Units 65 124 107 107 Effect of OP Units (5) 215 110 193 92 (1) The three months ended June 30, 2021 and 2020, include 266 and 150 weighted-average, unvested, earned RSUs, respectively, and the six months ended June 30, 2021 and 2020, include 251 and 164 weighted-average, unvested, earned RSUs, respectively. (2) Represents weighted-average number of common shares that would have been issued if the quarter-end was the measurement date for unvested, unearned RSUs. (3) Represents the weighted-average dilutive shares issuable from LTIP Units if the quarter-end was the measurement date for the periods shown. (4) The Series D preferred shares are excluded from the diluted earnings per share calculation for the three and six months ended June 30, 2021 and for the three months ended June 30, 2020, because including the Series D preferred shares would also require that the preferred distributions be added back to net income, resulting in anti-dilution. The RSUs and market-based LTIP Units are excluded from the diluted earnings per share calculation for the three and six months ended June 30, 2021, because including them results in anti-dilution. (5) Beneficial interests in the Operating Trust. |
Business (Details)
Business (Details) $ / shares in Units, $ in Thousands, ft² in Millions | May 04, 2021$ / shares | Jun. 30, 2021USD ($)ft²propertybuilding | Dec. 31, 2020USD ($) | Jun. 30, 2020USD ($) |
Noncontrolling Interest [Line Items] | ||||
Cash and cash equivalents | $ | $ 2,965,788 | $ 2,987,225 | $ 3,437,775 | |
Monmouth Real Estate Investment Corporation | ||||
Noncontrolling Interest [Line Items] | ||||
Business acquisition, conversion basis | 0.67 | |||
Business acquisition, quarterly dividend (in dollars per share) | $ / shares | $ 0.18 | |||
Business acquisition, share price (in dollars per share) | $ / shares | $ 25 | |||
Business acquisition, transaction costs | $ | $ 4,200 | |||
Consolidated Properties | ||||
Noncontrolling Interest [Line Items] | ||||
Number of real estate properties | property | 4 | |||
Number of buildings | building | 8 | |||
Square footage (in sqft) | ft² | 1.5 | |||
Operating Trust | ||||
Noncontrolling Interest [Line Items] | ||||
Noncontrolling interest, ownership percentage by parent | 99.80% |
Real Estate Properties - Narrat
Real Estate Properties - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Real Estate [Abstract] | |||
Real estate improvements | $ 3,900 | $ 4,300 | |
COVID-19 | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Deferred collection of rental income | $ 0 | $ 20 |
Real Estate Properties - Summar
Real Estate Properties - Summary of Properties Sold (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
May 31, 2020USD ($)ft²propertybuilding | Mar. 31, 2020USD ($)ft²propertybuilding | Feb. 29, 2020USD ($)ft²buildingproperty | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($)ft²propertybuilding | |
Real Estate Properties [Line Items] | |||||||
Gain on Sale | $ 0 | $ 26,916 | $ 0 | $ 446,536 | |||
Disposed of by Sale | |||||||
Real Estate Properties [Line Items] | |||||||
Number of Properties | property | 3 | ||||||
Number of Buildings | building | 4 | ||||||
Square Footage (in sqft) | ft² | 961,437 | ||||||
Gross Sale Price | $ 756,500 | ||||||
Gain on Sale | 444,530 | ||||||
Disposed of by Sale | 109 Brookline Avenue | |||||||
Real Estate Properties [Line Items] | |||||||
Number of Properties | property | 1 | ||||||
Number of Buildings | building | 1 | ||||||
Square Footage (in sqft) | ft² | 285,556 | ||||||
Gross Sale Price | $ 270,000 | ||||||
Gain on Sale | $ 225,190 | ||||||
Disposed of by Sale | 333 108th Avenue NE | |||||||
Real Estate Properties [Line Items] | |||||||
Number of Properties | property | 1 | ||||||
Number of Buildings | building | 1 | ||||||
Square Footage (in sqft) | ft² | 435,406 | ||||||
Gross Sale Price | $ 401,500 | ||||||
Gain on Sale | $ 194,424 | 194,400 | |||||
Net (loss) income included in continued operations | $ (9) | $ 28 | $ (14) | $ 193,200 | |||
Disposed of by Sale | Georgetown-Green and Harris Buildings | |||||||
Real Estate Properties [Line Items] | |||||||
Number of Properties | property | 1 | ||||||
Number of Buildings | building | 2 | ||||||
Square Footage (in sqft) | ft² | 240,475 | ||||||
Gross Sale Price | $ 85,000 | ||||||
Gain on Sale | $ 24,916 |
Real Estate Properties - Rental
Real Estate Properties - Rental Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Real Estate [Abstract] | ||||
Lease payments | $ 9,192 | $ 9,983 | $ 18,449 | $ 21,753 |
Variable lease payments | 4,922 | 5,265 | 9,834 | 10,638 |
Rental revenue | $ 14,114 | $ 15,248 | $ 28,283 | $ 32,391 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Feb. 28, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Mar. 01, 2021 | |
Class of Stock [Line Items] | ||||
Distributions to common shareholders/unitholders | $ 6,000,000 | $ 6,024,000 | $ 1,936,000 | |
Common Shares | ||||
Class of Stock [Line Items] | ||||
Stock repurchase program, authorized amount (up to) | $ 150,000,000 | |||
Repurchase of shares (in shares) | 0 | |||
Surrender of shares for tax withholding (in shares) | 244,029 | 183,466 |
Shareholders' Equity - Schedule
Shareholders' Equity - Schedule of Declared Distributions (Details) - $ / shares | Aug. 16, 2021 | Jul. 06, 2021 | May 17, 2021 | Apr. 09, 2021 | Feb. 16, 2021 | Jan. 11, 2021 |
Class of Stock [Line Items] | ||||||
Dividend declared (in dollars per share) | $ 0.40625 | $ 0.40625 | ||||
Dividend paid (in dollars per share) | $ 0.40625 | $ 0.40625 | ||||
Subsequent event | ||||||
Class of Stock [Line Items] | ||||||
Dividend declared (in dollars per share) | $ 0.40625 | |||||
Subsequent event | Scenario, Forecast | ||||||
Class of Stock [Line Items] | ||||||
Dividend paid (in dollars per share) | $ 0.40625 |
Noncontrolling Interest - Narra
Noncontrolling Interest - Narrative (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Noncontrolling Interest [Abstract] | ||
Common stock, conversion term | 6 months | |
Common stock, conversion basis | 1 | |
Operating Trust | ||
Noncontrolling Interest [Line Items] | ||
Noncontrolling interest, weighted average ownership percentage by parent | 99.80% | 99.80% |
Noncontrolling Interest - Commo
Noncontrolling Interest - Common Shares and Units Activity (Details) - shares | 6 Months Ended |
Jun. 30, 2021 | |
Equity Commonwealth | |
Increase (Decrease) in Stockholders' Equity | |
Ownership percentage by noncontrolling owners | 0.20% |
Common Shares | |
Increase (Decrease) in Stockholders' Equity | |
Balance as of beginning of period (in shares) | 121,522,555 |
Repurchase of shares (in shares) | (244,029) |
Share-based compensation grants and vesting, net of forfeitures (in shares) | 661,829 |
Balance as of end of period (in shares) | 121,940,355 |
OP Units and LTIP Units | Noncontrolling Interest | |
Increase (Decrease) in Stockholders' Equity | |
Balance as of beginning of period (in shares) | 243,516 |
Repurchase of shares (in shares) | 0 |
Share-based compensation grants and vesting, net of forfeitures (in shares) | 3,701 |
Balance as of end of period (in shares) | 247,217 |
Common Stock, OP Units, and LTIP Units | |
Increase (Decrease) in Stockholders' Equity | |
Balance as of beginning of period (in shares) | 121,766,071 |
Repurchase of shares (in shares) | (244,029) |
Share-based compensation grants and vesting, net of forfeitures (in shares) | 665,530 |
Balance as of end of period (in shares) | 122,187,572 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Current: | ||||
State and local | $ (31) | $ (59) | $ (62) | $ (99) |
Income tax expense | $ (31) | $ (59) | $ (62) | $ (99) |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) | Jun. 23, 2021USD ($)trustee$ / sharesshares | Jan. 25, 2021$ / sharesshares | Jun. 23, 2020USD ($)trustee$ / sharesshares | Jan. 27, 2020$ / sharesshares | Jun. 30, 2021USD ($)shares | Jun. 30, 2020USD ($)shares | Jun. 30, 2021USD ($)tranche$ / sharesshares | Jun. 30, 2020USD ($)shares | Dec. 31, 2020shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Common stock issued (in shares) | 121,940,355 | 121,940,355 | 121,522,555 | ||||||
Compensation expense, accelerated vesting due to a staffing reduction | $ | $ 0 | $ 0 | $ 3,400,000 | $ 18,000 | |||||
Common shares available for issuance (in shares) | 1,526,730 | 1,526,730 | |||||||
General and Administrative Expense | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Compensation expense | $ | $ 2,900,000 | $ 3,300,000 | $ 9,600,000 | $ 6,600,000 | |||||
Restricted Shares | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of independent trustees | trustee | 6 | 9 | |||||||
Number of equity awards granted (in shares) | 18,505 | 122,466 | 19,104 | 85,058 | |||||
Exercise price (in dollars per share) | $ / shares | $ 27.02 | $ 31.41 | |||||||
Vesting period | 4 years | ||||||||
RSUs | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of tranches | tranche | 2 | ||||||||
Share-based compensation arrangement (in shares) | 520,858 | 387,729 | |||||||
Common stock issued (in shares) | 520,858 | 387,729 | 520,858 | 387,729 | |||||
Vesting period | 3 years | ||||||||
RSUs | Vesting in three years | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percent | 50.00% | ||||||||
RSUs | Vesting in four years | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percent | 50.00% | ||||||||
Vesting period | 1 year | ||||||||
RSUs at target | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of equity awards granted (in shares) | 248,646 | 172,697 | |||||||
RSUs at maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of equity awards granted (in shares) | 619,750 | 430,447 | |||||||
LTIP Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Conversion basis | 1 | 1 | |||||||
Time-based LTIP Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of equity awards granted (in shares) | 3,701 | 9,552 | 20,116 | ||||||
Time-based LTIP Units | Independent Trustee | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of equity awards granted (in shares) | 3,701 | 3,184 | |||||||
Market-Based LTIP Units, Target | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of equity awards granted (in shares) | 40,841 | ||||||||
Market-Based LTIP Units, Maximum | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of equity awards granted (in shares) | 101,796 | ||||||||
Restricted Shares and Time-Based LTIP Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Share based compensation amount | $ | $ 100,000 | $ 100,000 | |||||||
Vesting period | 1 year | ||||||||
Granted shares value (in dollars per share) | $ / shares | $ 28.25 | ||||||||
Estimated future compensation expense for unvested shares | $ | $ 6,900,000 | $ 6,900,000 | |||||||
Weighted average period over which compensation expense will be recorded | 2 years 6 months | ||||||||
Time-Based LTIP Units and Restricted Shares | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Granted shares value (in dollars per share) | $ / shares | $ 32.81 | ||||||||
RSUs and Market-Based LTIP Units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Granted shares value (in dollars per share) | $ / shares | $ 40.17 | $ 37.87 | |||||||
Estimated future compensation expense for unvested shares | $ | $ 14,400,000 | $ 14,400,000 | |||||||
Weighted average period over which compensation expense will be recorded | 2 years 4 months 24 days |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Assumptions and Fair Values for RSUs and Market-based LTIP Units Granted in the Period (Details) - RSUs and Market-Based LTIP Units - $ / shares | Jan. 27, 2020 | Jun. 30, 2021 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
Fair value of market-based awards granted (in dollars per share) | $ 40.17 | $ 37.87 |
Expected term | 4 years | |
Expected volatility | 16.99% | |
Risk-free rate | 0.17% |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities - Narrative (Details) | Jun. 30, 2021USD ($) |
Fair Value Disclosures [Abstract] | |
Fair value, net asset (liability) | $ 0 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator for earnings per common share - basic: | ||||
Net (loss) income | $ (1,940) | $ 27,886 | $ (11,978) | $ 453,393 |
Net loss (income) attributable to noncontrolling interest | 4 | (54) | 24 | (802) |
Preferred distributions | (1,997) | (1,997) | (3,994) | (3,994) |
Net (loss) income attributable to Equity Commonwealth common shareholders | (3,933) | 25,835 | (15,948) | 448,597 |
Numerator for earnings per common share - diluted: | ||||
Net (loss) income | (1,940) | 27,886 | (11,978) | 453,393 |
Net loss (income) attributable to noncontrolling interests | 4 | (54) | 24 | (802) |
Preferred distributions | (1,997) | (1,997) | (3,994) | 0 |
Numerator for net (loss) income per share - diluted | $ (3,933) | $ 25,835 | $ (15,948) | $ 452,591 |
Denominator for earnings per common share - basic and diluted: | ||||
Weighted average number of common shares outstanding — basic (in shares) | 122,189 | 121,655 | 122,096 | 121,901 |
Series D preferred shares; 6.5% cumulative convertible (in shares) | 0 | 0 | 0 | 2,857 |
Weighted average number of common shares outstanding — diluted (in shares) | 122,189 | 123,255 | 122,096 | 126,358 |
Preferred shares, dividend percentage | 6.50% | 6.50% | 6.50% | 6.50% |
Net (loss) income per common share attributable to Equity Commonwealth common shareholders: | ||||
Basic (in dollars per share) | $ (0.03) | $ 0.21 | $ (0.13) | $ 3.68 |
Diluted (in dollars per share) | $ (0.03) | $ 0.21 | $ (0.13) | $ 3.58 |
Anti-dilutive securities(4): | ||||
Weighted average number of shares, restricted stock units, unvested (in shares) | 266 | 150 | 251 | 164 |
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest | ||||
Anti-dilutive securities(4): | ||||
Effect of anti-dilutive securities (in shares) | 3,237 | 2,857 | 3,237 | 0 |
RSUs | ||||
Anti-dilutive securities(4): | ||||
Effect of anti-dilutive securities (in shares) | 466 | 0 | 657 | 0 |
LTIP Units | ||||
Anti-dilutive securities(4): | ||||
Effect of anti-dilutive securities (in shares) | 65 | 124 | 107 | 107 |
OP Units | ||||
Anti-dilutive securities(4): | ||||
Effect of anti-dilutive securities (in shares) | 215 | 110 | 193 | 92 |
RSUs | ||||
Denominator for earnings per common share - basic and diluted: | ||||
Weighted average number of common shares outstanding, dilutive adjustment (in shares) | 0 | 1,524 | 0 | 1,524 |
LTIP Units | ||||
Denominator for earnings per common share - basic and diluted: | ||||
Weighted average number of common shares outstanding, dilutive adjustment (in shares) | 0 | 76 | 0 | 76 |
Segment Information (Details)
Segment Information (Details) | 6 Months Ended |
Jun. 30, 2021segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Office Building | Total rents | Product Concentration Risk | |
Segment Reporting Information [Line Items] | |
Concentration risk (more than) | 100.00% |
Related Person Transactions (De
Related Person Transactions (Details) - Two North Riverside Plaza Joint Venture Limited Partnership $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($)option | Jul. 20, 2015 | |
Related Party Transaction [Line Items] | ||||||
Lease term | 5 years | |||||
Tenant improvements | $ 0.7 | $ 0.7 | ||||
Renewal term of lease arrangement | 1 year | |||||
Number of renewal options of lease arrangement | option | 0 | |||||
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||||||
2021 | $ 0.3 | |||||
Operating lease, expense | $ 0.1 | $ 0.2 | $ 0.2 | $ 0.5 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Aug. 16, 2021 | Jul. 06, 2021 | May 17, 2021 | Apr. 09, 2021 | Feb. 16, 2021 | Jan. 11, 2021 |
Subsequent Event [Line Items] | ||||||
Dividend declared (in dollars per share) | $ 0.40625 | $ 0.40625 | ||||
Dividend paid (in dollars per share) | $ 0.40625 | $ 0.40625 | ||||
Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Dividend declared (in dollars per share) | $ 0.40625 | |||||
Subsequent event | Scenario, Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Dividend paid (in dollars per share) | $ 0.40625 |