Equity Commonwealth 8K Reports Third Quarter 2023 Results | EQC 30 Oct 23

Exhibit 99.2

Equity Commonwealth

Supplemental Operating

and Financial Information

Third Quarter 2023


Corporate Headquarters						Investor Relations
Two North Riverside Plaza						(312) 646-2801
Suite 2000						ir@eqcre.com
Chicago, IL 60606						www.eqcre.com
(312) 646-2800

TABLE OF CONTENTS


Corporate Information
	Company Profile and Investor Information	3

Financial Information
	Key Financial Data	4
	Condensed Consolidated Balance Sheets	5
	Additional Balance Sheet Information	6
	Condensed Consolidated Statements of Operations	7
	Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI	8
	Same Property Results of Operations	10
	Calculation of EBITDA, EBITDAre, and Adjusted EBITDAre	11
	Calculation of Funds from Operations (FFO) and Normalized FFO	12

Portfolio Information
	Property Detail	13
	Leasing Summary	14
	Capital Summary - Expenditures & Same Property Leasing Commitments	15
	Tenants Representing 2.5% or More of Annualized Rental Revenue	16
	Same Property Lease Expiration Schedule	17

Additional Support
	Common & Potential Common Shares	18
	Definitions	19

Forward-Looking Statements
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to our capital resources, portfolio performance, lease expirations schedules, results of operations or anticipated market conditions, including statements regarding the overall impact of COVID-19 and other external factors on the foregoing. 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, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. You can identify forward-looking statements by the use of forward-looking terminology, including but not limited to, “may,” “will,” “should,” “could,” “would,” “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.

Any 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 section entitled “Risk Factors” in our most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q.

Regulation FD Disclosures
We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

COMPANY PROFILE AND INVESTOR INFORMATION

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States.


Same Property Statistics
No. of
Properties	Sq. Feet	% Leased	% Commenced
4	1,520,944	80.8%	79.9%


NYSE Trading Symbols
Common Stock: EQC
Preferred Stock Series D: EQCpD

Board of Trustees

David Helfand (Chair)

Peter Linneman (Lead Independent Trustee)

James A. Star

Ellen-Blair Chube

Mary Jane Robertson

Martin L. Edelman

Gerald A. Spector

Senior Management

David A. Helfand

David S. Weinberg

President and Chief Executive Officer

Executive Vice President and

Chief Operating Officer

William H. Griffiths

Orrin S. Shifrin

Executive Vice President,

Chief Financial Officer and Treasurer

General Counsel and Secretary


Equity Research Coverage (1)
Bank of America / Merrill Lynch	Camille Bonnel	(646) 855-5042	camille.bonnel@bofa.com
Citigroup	Nicholas Joseph	(212) 816-1909	nicholas.joseph@citi.com
Green Street Advisors	Daniel Ismail	(949) 640-8780	dismail@greenstreetadvisors.com


Certain terms are defined in the definitions section of this document. All financial data included herein is unaudited.

(1)			Any opinions, estimates or forecasts regarding EQC's performance made by these analysts do not represent opinions, forecasts or predictions of EQC or its management. EQC does not by its reference to the analysts above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts.

KEY FINANCIAL DATA

(Unaudited, amounts in thousands, except per share data)


		As of and for the Three Months Ended
		9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
OPERATING INFORMATION
	Ending property count	4			4			4			4			4
	Ending square footage (1)	1,521			1,521			1,507			1,507			1,507
	Percent leased	80.8		%	82.0		%	81.6		%	82.8		%	83.4		%
	Percent commenced	79.9		%	78.2		%	77.0		%	78.7		%	80.8		%
	Net income attributable to EQC common shareholders	$	24,149		$	13,787		$	20,688		$	18,878		$	10,193
	Adjusted EBITDAre (2)	30,698			27,103			28,141			25,927			16,605
SAME PROPERTY OPERATING INFORMATION
	Ending square footage (1)	1,521			1,521			1,507			1,507			1,507
	Percent leased	80.8		%	82.0		%	81.6		%	82.8		%	83.4		%
	Percent commenced	79.9		%	78.2		%	77.0		%	78.7		%	80.8		%
	Same Property NOI (2)	$	8,485		$	7,644		$	8,316		$	8,815		$	9,101
	Same Property Cash Basis NOI (2)	8,205			7,884			8,418			8,461			8,781
	Same Property NOI margin	55.8		%	52.4		%	53.4		%	55.8		%	60.2		%
	Same Property Cash Basis NOI margin	55.0		%	53.2		%	53.7		%	54.8		%	59.3		%
SHARES OUTSTANDING AND PER SHARE DATA(3)
	Shares Outstanding at End of Period
	Common shares outstanding	106,712			109,730			109,702			109,428			110,652
	Dilutive restricted share units (RSUs), Operating Partnership Units, and LTIP Units (3)	1,779			1,891			2,068			1,842			1,657

	Preferred shares outstanding (4)	4,915			4,915			4,915			4,915			4,915
	Weighted Average Shares Outstanding - GAAP
	Basic (5)	108,931			109,839			109,720			109,695			111,305
	Diluted (5)	110,217			111,237			111,300			111,171			112,596
	Distributions Declared Per Common Share	$	—		$	—		$	4.25		$	—		$	1.00
BALANCE SHEET
	Total assets	$	2,393,786		$	2,421,843		$	2,399,324		$	2,854,885		$	2,968,520
	Total liabilities	31,550			30,016			30,252			31,153			137,925
MARKET CAPITALIZATION

	Market value of preferred shares	$	122,929		$	124,846		$	122,831		$	123,126		$	128,631
	Market value of diluted common shares	1,992,980			2,261,441			2,314,757			2,778,412			2,735,847
	Total market capitalization	$	2,115,909		$	2,386,287		$	2,437,588		$	2,901,538		$	2,864,478


(1)			Changes in total square footage result from remeasurement.
(2)			Non-GAAP financial measures are defined and reconciled to the most directly comparable GAAP measure herein.
(3)			Restricted share units (RSUs) and LTIP Units are equity awards that contain both service and market-based vesting components. Refer to the schedule of Common & Potential Common Shares for information regarding RSUs and LTIP Units and their impact on weighted average shares outstanding.
(4)			As of September 30, 2023, we had 4,915 series D preferred shares outstanding that were convertible into 4,032 common shares. The series D preferred shares are anti-dilutive for GAAP EPS for all periods presented. Refer to the schedule of Common & Potential Common Shares for information regarding the series D preferred shares and their impact on diluted weighted average shares outstanding for EPS, FFO per share and Normalized FFO per share.
(5)			Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share data)


	September 30, 2023		December 31, 2022
ASSETS
Real estate properties:
Land	$	44,060	$	44,060
Buildings and improvements	366,908		364,063
	410,968		408,123
Accumulated depreciation	(178,201)		(169,530)
	232,767		238,593



Cash and cash equivalents	2,127,788		2,582,222


Rents receivable	15,174		16,009
Other assets, net	18,057		18,061
Total assets	$	2,393,786	$	2,854,885

LIABILITIES AND EQUITY



Accounts payable, accrued expenses and other	$	23,027	$	25,935

Rent collected in advance	2,133		2,355

Distributions payable	6,390		2,863

Total liabilities	$	31,550	$	31,153

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; 106,712,046 and 109,428,252 shares issued and outstanding, respectively	1,067		1,094
Additional paid in capital	3,930,372		3,979,566
Cumulative net income	3,900,430		3,835,815

Cumulative common distributions	(4,865,190)		(4,393,522)
Cumulative preferred distributions	(731,679)		(725,688)
Total shareholders’ equity	2,354,263		2,816,528
Noncontrolling interest	7,973		7,204
Total equity	$	2,362,236	$	2,823,732
Total liabilities and equity	$	2,393,786	$	2,854,885

ADDITIONAL BALANCE SHEET INFORMATION

(Unaudited, amounts in thousands)


	September 30, 2023		December 31, 2022
Additional Balance Sheet Information

Straight-line rents receivable	$	14,457	$	14,901
Accounts receivable	717		1,108
Rents receivable	$	15,174	$	16,009

Capitalized lease incentives, net	$	1,231	$	1,479
Deferred leasing costs, net	11,287		10,714

Other	5,539		5,868
Other assets, net	$	18,057	$	18,061

Accounts payable	$	2,302	$	2,884

Accrued taxes	7,474		10,948
Accrued capital expenditures	1,819		934
Accrued leasing costs	850		389

Security deposits	2,474		2,652
Other accrued liabilities	8,108		8,128
Accounts payable, accrued expenses and other	$	23,027	$	25,935

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenues:
Rental revenue	$	13,928	$	13,869	$	41,512	$	44,135
Other revenue (1)	1,284		1,257		3,866		3,218
Total revenues	$	15,212	$	15,126	$	45,378	$	47,353

Expenses:
Operating expenses	$	6,722	$	6,073	$	20,920	$	17,198
Depreciation and amortization	4,436		4,451		13,260		13,176
General and administrative	7,061		7,593		29,470		23,241

Total expenses	$	18,219	$	18,117	$	63,650	$	53,615

Interest and other income, net	29,269		15,145		84,997		22,682



Gain on sale of properties, net	—		90		—		90
Income before income taxes	26,262		12,244		66,725		16,510
Income tax expense	(30)		(23)		(1,906)		(81)
Net income	$	26,232	$	12,221	$	64,819	$	16,429
Net income attributable to noncontrolling interest	(86)		(31)		(204)		(41)
Net income attributable to Equity Commonwealth	$	26,146	$	12,190	$	64,615	$	16,388
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)


Net income attributable to Equity Commonwealth common shareholders	$	24,149	$	10,193	$	58,624	$	10,397



Weighted average common shares outstanding — basic (2)	108,931		111,305		109,494		112,341
Weighted average common shares outstanding — diluted (2)	110,217		112,596		110,916		113,383

Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic	$	0.22	$	0.09	$	0.54	$	0.09
Diluted	$	0.22	$	0.09	$	0.53	$	0.09


(1)			Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)			Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI

(Unaudited, amounts in thousands)


	For the Three Months Ended
	9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022
Calculation of Same Property NOI and Same Property Cash Basis NOI:
Rental revenue	$	13,928	$	13,358	$	14,226	$	14,628	$	13,869
Other revenue (1)	1,284		1,232		1,350		1,159		1,257
Operating expenses	(6,722)		(6,942)		(7,256)		(6,986)		(6,073)
NOI	$	8,490	$	7,648	$	8,320	$	8,801	$	9,053
Straight-line rent adjustments	(107)		273		279		389		(61)

Lease termination fees	(173)		(33)		(177)		(743)		(259)
Cash Basis NOI	$	8,210	$	7,888	$	8,422	$	8,447	$	8,733
Cash Basis NOI from non-same properties (2)	(5)		(4)		(4)		14		48
Same Property Cash Basis NOI	$	8,205	$	7,884	$	8,418	$	8,461	$	8,781
Non-cash rental income and lease termination fees from same properties	280		(240)		(102)		354		320
Same Property NOI	$	8,485	$	7,644	$	8,316	$	8,815	$	9,101

Reconciliation of Same Property NOI to GAAP Net Income:
Same Property NOI	$	8,485	$	7,644	$	8,316	$	8,815	$	9,101
Non-cash rental income and lease termination fees from same properties	(280)		240		102		(354)		(320)
Same Property Cash Basis NOI	$	8,205	$	7,884	$	8,418	$	8,461	$	8,781
Cash Basis NOI from non-same properties (2)	5		4		4		(14)		(48)
Cash Basis NOI	$	8,210	$	7,888	$	8,422	$	8,447	$	8,733
Straight-line rent adjustments	107		(273)		(279)		(389)		61

Lease termination fees	173		33		177		743		259
NOI	$	8,490	$	7,648	$	8,320	$	8,801	$	9,053
Depreciation and amortization	(4,436)		(4,514)		(4,310)		(4,634)		(4,451)
General and administrative	(7,061)		(13,854)		(8,555)		(7,137)		(7,593)

Interest and other income, net	29,269		27,352		28,376		24,263		15,145


Gain on sale of properties, net	—		—		—		7		90
Income before income taxes	$	26,262	$	16,632	$	23,831	$	21,300	$	12,244
Income tax expense	(30)		(796)		(1,080)		(372)		(23)
Net income	$	26,232	$	15,836	$	22,751	$	20,928	$	12,221


(1)			Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)			Cash Basis NOI from non-same properties for all periods presented includes the operations of disposed properties.

CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI

(Unaudited, amounts in thousands)


	For the Nine Months Ended September 30,
	2023		2022
Calculation of Same Property NOI and Same Property Cash Basis NOI:
Rental revenue	$	41,512	$	44,135
Other revenue (1)	3,866		3,218
Operating expenses	(20,920)		(17,198)
NOI	$	24,458	$	30,155
Straight-line rent adjustments	445		(151)

Lease termination fees	(383)		(761)
Cash Basis NOI	$	24,520	$	29,243
Cash Basis NOI from non-same properties (2)	(13)		(1,624)
Same Property Cash Basis NOI	$	24,507	$	27,619
Non-cash rental income and lease termination fees from same properties	(62)		912
Same Property NOI	$	24,445	$	28,531

Reconciliation of Same Property NOI to GAAP Net Income:
Same Property NOI	$	24,445	$	28,531
Non-cash rental income and lease termination fees from same properties	62		(912)
Same Property Cash Basis NOI	$	24,507	$	27,619
Cash Basis NOI from non-same properties (2)	13		1,624
Cash Basis NOI	$	24,520	$	29,243
Straight-line rent adjustments	(445)		151

Lease termination fees	383		761
NOI	$	24,458	$	30,155
Depreciation and amortization	(13,260)		(13,176)
General and administrative	(29,470)		(23,241)

Interest and other income, net	84,997		22,682


Gain on sale of properties, net	—		90
Income before income taxes	$	66,725	$	16,510
Income tax expense	(1,906)		(81)
Net income	$	64,819	$	16,429


(1)			Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.
(2)			Cash Basis NOI from non-same properties for all periods presented includes the operations of disposed properties.

SAME PROPERTY RESULTS OF OPERATIONS

(Unaudited, dollars and square feet in thousands)


	As of and for the Three Months Ended September 30,								As of and for the Nine Months Ended September 30,
	2023			2022			% Change		2023			2022			% Change
Properties	4			4					4			4
Square Feet	1,521			1,507					1,521			1,507
% Leased	80.8		%	83.4		%	(2.6)	%	80.8		%	83.4		%	(2.6)	%
% Commenced	79.9		%	80.8		%	(0.9)	%	79.9		%	80.8		%	(0.9)	%

Rental revenue	$	13,647		$	13,548		0.7	%	$	41,573		$	43,371		(4.1)	%
Other revenue (1)	1,277			1,252			2.0	%	3,848			3,203			20.1	%
Straight-line rent adjustment	107			61					(445)			151

Lease termination fees	173			259					383			761
Total revenue	15,204			15,120			0.6	%	45,359			47,486			(4.5)	%
Operating expenses	(6,719)			(6,019)			11.6	%	(20,914)			(18,955)			10.3	%
NOI	$	8,485		$	9,101		(6.8)	%	$	24,445		$	28,531		(14.3)	%
NOI Margin	55.8		%	60.2		%			53.9		%	60.1		%

Straight-line rent adjustment	$	(107)		$	(61)				$	445		$	(151)

Lease termination fees	(173)			(259)					(383)			(761)
Cash Basis NOI	$	8,205		$	8,781		(6.6)	%	$	24,507		$	27,619		(11.3)	%
Cash Basis NOI Margin	55.0		%	59.3		%			54.0		%	59.3		%


(1)			Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.

CALCULATION OF EBITDA, EBITDAre, AND ADJUSTED EBITDAre

(Unaudited, amounts in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net income	$	26,232	$	12,221	$	64,819	$	16,429

Income tax expense	30		23		1,906		81
Depreciation and amortization	4,436		4,451		13,260		13,176
EBITDA	$	30,698	$	16,695	$	79,985	$	29,686

Gain on sale of properties, net	—		(90)		—		(90)
EBITDAre	$	30,698	$	16,605	$	79,985	$	29,596
Adjustments to EBITDAre:

Former chairman accelerated compensation expense	—		—		5,957		—


Adjusted EBITDAre	$	30,698	$	16,605	$	85,942	$	29,596

CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO

(Unaudited, amounts in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Calculation of FFO
Net income	$	26,232	$	12,221	$	64,819	$	16,429
Real estate depreciation and amortization	4,429		4,412		13,231		13,058

Gain on sale of properties, net	—		(90)		—		(90)
FFO attributable to Equity Commonwealth	30,661		16,543		78,050		29,397
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)

FFO attributable to EQC common shareholders and unitholders	$	28,664	$	14,546	$	72,059	$	23,406

Calculation of Normalized FFO
FFO attributable to EQC common shareholders and unitholders	$	28,664	$	14,546	$	72,059	$	23,406

Straight-line rent adjustments	(107)		(61)		445		(151)



Former chairman accelerated compensation expense	—		—		5,957		—




Normalized FFO attributable to EQC common shareholders and unitholders	$	28,557	$	14,485	$	78,461	$	23,255

Weighted average common shares and units outstanding -- basic (1)	109,292		111,585		109,842		112,616
Weighted average common shares and units outstanding -- diluted (1)	110,578		112,876		111,264		113,658


FFO attributable to EQC common shareholders and unitholders per share and unit -- basic	$	0.26	$	0.13	$	0.66	$	0.21
FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted	$	0.26	$	0.13	$	0.65	$	0.21
Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- basic	$	0.26	$	0.13	$	0.71	$	0.21
Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted	$	0.26	$	0.13	$	0.71	$	0.20


(1)			Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic for the three months ended September 30, 2023 and 2022 include 361 and 280 LTIP/Operating Partnership Units, respectively, that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only). Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic for the nine months ended September 30, 2023 and 2022 include 348 and 275 LTIP/Operating Partnership Units, respectively, that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only). Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares and units outstanding.

PROPERTY DETAIL

As of September 30, 2023

(Unaudited, sorted by annualized rental revenue, dollars in thousands)


Same Property Portfolio(1)
	Property	City, State	Type	No. of Buildings	Square Feet	% Leased		% Commenced		Annualized Rental Revenue		Undepreciated Book Value		Net Book Value		Year Acquired
1	1225 Seventeenth Street	Denver, CO	Office	1	708,937	92.7	%	92.7	%	$	30,653	$	175,230	$	111,607	2009
	(17th Street Plaza)
2	Bridgepoint Square	Austin, TX	Office	5	440,007	71.9	%	68.8	%	12,763		105,534		45,866		1997
3	206 East 9th Street	Austin, TX	Office	1	175,510	77.0	%	77.0	%	8,502		54,390		40,824		2012
	(Capitol Tower)
4	1250 H Street, NW	Washington, D.C.	Office	1	196,490	61.3	%	61.3	%	7,330		75,814		34,470		1998
	Total Same Properties			8	1,520,944	80.8	%	79.9	%	$	59,248	$	410,968	$	232,767


(1)			Refer to the definitions section of this document for a description of our same property portfolio.

LEASING SUMMARY

(Unaudited, dollars and square feet in thousands, except per square foot data)


	As of and for the Three Months Ended
	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
Properties	4			4			4			4			4
Total square feet	1,521			1,521			1,507			1,507			1,507
Percentage leased	80.8		%	82.0		%	81.6		%	82.8		%	83.4		%
Percentage commenced	79.9		%	78.2		%	77.0		%	78.7		%	80.8		%

Total Leases
Square feet	54			68			60			76			55
Lease term (years)	6.4			4.9			5.8			6.1			4.4
Starting cash rent	$	48.17		$	48.34		$	61.15		$	47.43		$	46.88
Percent change in cash rent (1)	(1.8)		%	(0.7)		%	3.6		%	0.4		%	(3.3)		%
Percent change in GAAP rent (1)	6.0		%	15.3		%	13.8		%	3.6		%	2.2		%
Total TI & LC per square foot (2)	$	40.57		$	43.44		$	64.87		$	54.55		$	29.49
Total TI & LC per sq. ft. per year of lease term (2)	$	6.38		$	8.92		$	11.22		$	8.91		$	6.73

Renewal Leases
Square feet	39			54			37			30			30
Lease term (years)	7.0			4.7			5.3			3.2			3.5
Starting cash rent	$	49.47		$	49.63		$	63.26		$	45.11		$	49.67
Percent change in cash rent (1)	(1.7)		%	(0.7)		%	4.8		%	(2.9)		%	(3.3)		%
Percent change in GAAP rent (1)	8.8		%	15.3		%	16.8		%	(1.6)		%	2.2		%
Total TI & LC per square foot (2)	$	41.02		$	25.17		$	58.65		$	7.56		$	18.53
Total TI & LC per sq. ft. per year of lease term (2)	$	5.84		$	5.40		$	11.00		$	2.39		$	5.34

New Leases
Square feet	15			14			23			46			25
Lease term (years)	4.6			5.7			6.5			8.1			5.5
Starting cash rent	$	44.73		$	43.34		$	57.87		$	48.96		$	43.45
Percent change in cash rent (1)	(2.2)		%	—			1.5		%	3.4		%	—
Percent change in GAAP rent (1)	(1.3)		%	—			8.9		%	8.6		%	—
Total TI & LC per square foot (2)	$	39.38		$	114.17		$	74.56		$	85.43		$	42.92
Total TI & LC per sq. ft. per year of lease term (2)	$	8.50		$	20.15		$	11.50		$	10.59		$	7.81


The above leasing summary is based on leases executed during the periods indicated and excludes leasing activity for assets during the quarter in which the asset was sold or classified as held for sale. Our same property leasing activity is identical to the information above for all periods presented. Refer to the definitions section of this document for a description of our same property portfolio.

(1)			Percent change in GAAP and cash rents is a comparison of current rent, including estimated tenant expense reimbursements, if any, to the rent, including actual/projected tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. Cash rent during the reporting period is calculated before deducting any initial period free rent. Leasing in suites vacant longer than two years was excluded from the calculation.
(2)			Includes tenant improvements (TI) and leasing commissions (LC).

CAPITAL SUMMARY

EXPENDITURES & SAME PROPERTY LEASING COMMITMENTS

(Unaudited, dollars and square feet in thousands)


CAPITAL SUMMARY	Three Months Ended
EXPENDITURES	9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022
Tenant improvements	$	224	$	1,351	$	1,757	$	822	$	557
Leasing costs	646		673		1,162		977		501
Building improvements (1)	1,438		533		195		231		59
Total capital expenditures	$	2,308	$	2,557	$	3,114	$	2,030	$	1,117


Average square feet during period	1,521		1,514		1,507		1,507		1,507

Building improvements per average total sq. ft. during period	$	0.95	$	0.35	$	0.13	$	0.15	$	0.04


CAPITAL SUMMARY	Three Months Ended
SAME PROPERTY LEASING COMMITMENTS	September 30, 2023
	New Leases		Renewal Leases		Total
Square feet leased during the period	15		39		54
Total TI & LC (2)	$	591	$	1,600	$	2,191
Total TI & LC per square foot (2)	$	39.38	$	41.02	$	40.57
Weighted average lease term by square foot (years)	4.6		7.0		6.4
Total TI & LC per square foot per year of lease term (2)	$	8.50	$	5.84	$	6.38



(1)			Tenant-funded capital expenditures are excluded.
(2)			Includes tenant improvements (TI) and leasing commissions (LC).

TENANTS REPRESENTING 2.5% OR MORE OF ANNUALIZED RENTAL REVENUE

As of September 30, 2023

(Unaudited, square feet in thousands)


	Tenant	Square Feet (1)	% of Total Sq. Ft. (1)		% of Annualized Rental Revenue		Weighted Average Remaining Lease Term
1	Equinor Energy Services, Inc. (2)	80	6.5	%	5.8	%	0.3
2	Salesforce.com, Inc.	66	5.4	%	5.3	%	2.2
3	Crowdstrike, Inc.	48	3.9	%	4.9	%	6.4
4	KPMG, LLP	66	5.4	%	4.8	%	5.7
5	CBRE, Inc.	41	3.3	%	3.6	%	4.5
6	RSM US LLP	32	2.6	%	3.3	%	8.7
7	Jones Lang LaSalle Americas, Inc.	42	3.4	%	3.0	%	6.8
8	SonarSource US, Inc.	28	2.3	%	2.9	%	3.9
9	Alden Torch Financial, LLC	35	2.8	%	2.7	%	3.4

	Total	438	35.6	%	36.3	%	4.2


(1)			Square footage as of September 30, 2023 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants.
(2)			Approximately 4,000 square feet of Equinor Energy Services, Inc.'s space has been backfilled and will expire in 2026.

SAME PROPERTY LEASE EXPIRATION SCHEDULE

As of September 30, 2023

(Unaudited, dollars and sq. ft. in thousands)


Year	Number of Tenants Expiring	Leased Sq. Ft. Expiring (1)	% of Leased Sq. Ft. Expiring		Cumulative % of Leased Sq. Ft. Expiring		Annualized Rental Revenue Expiring (2)		% of Annualized Rental Revenue Expiring		Cumulative % of Annualized Rental Revenue Expiring
2023	3	6	0.5	%	0.5	%	$	339	0.6	%	0.6	%
2024	21	224	18.2	%	18.7	%	10,045		17.0	%	17.6	%
2025	6	115	9.4	%	28.1	%	5,441		9.2	%	26.8	%
2026	11	80	6.5	%	34.6	%	4,083		6.9	%	33.7	%
2027	16	226	18.3	%	52.9	%	11,242		19.0	%	52.7	%
2028	11	128	10.4	%	63.3	%	6,016		10.1	%	62.8	%
2029	8	142	11.6	%	74.9	%	6,185		10.4	%	73.2	%
2030	8	147	12.0	%	86.9	%	7,233		12.2	%	85.4	%
2031	4	58	4.7	%	91.6	%	2,553		4.3	%	89.7	%
2032	1	32	2.6	%	94.2	%	1,954		3.3	%	93.0	%
Thereafter	6	71	5.8	%	100.0	%	4,157		7.0	%	100.0	%
Total	95	1,229	100.0	%			$	59,248	100.0	%
Weighted average remaining
lease term (in years)		4.3					4.4



(1)			Leased square footage as of September 30, 2023 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. The year expiring corresponds to the latest-expiring signed lease for a given suite. Thus, backfilled suites expire in the year stipulated by the new lease.
(2)			Excludes the Annualized Rental Revenue of space that is leased but not commenced.

COMMON & POTENTIAL COMMON SHARES

(Unaudited, share amounts in thousands)


	Three Months Ended		Nine Months Ended
	September 30,		September 30,
Weighted Average Share Calculation - GAAP EPS	2023	2022	2023	2022



Weighted average common shares outstanding - basic (1)	108,931	111,305	109,494	112,341

Weighted average dilutive RSUs and maket-based LTIP Units (2)	1,286	1,291	1,422	1,042
Weighted average common shares outstanding - diluted (1)	110,217	112,596	110,916	113,383

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
Weighted Average Share and Unit Calculation - FFO and Normalized FFO per share and unit	2023	2022	2023	2022
Weighted average EQC common shares outstanding (1)	108,931	111,305	109,494	112,341
Weighted average Operating Partnership Units outstanding (3)	256	227	240	225
Weighted average time-based LTIP Units (2)(3)	105	53	108	50
Weighted average common shares and units outstanding - basic (1)	109,292	111,585	109,842	112,616
Weighted average dilutive RSUs and market-based LTIP Units (2)	1,286	1,291	1,422	1,042
Weighted average common shares and units outstanding - diluted (1)	110,578	112,876	111,264	113,658


Rollforward of Share Count to September 30, 2023	Series D Preferred Shares (4)	EQC Common Shares (5)
Outstanding on December 31, 2022	4,915	109,428
Repurchase of common shares	—	(3,018)
Share-based compensation grants and vesting, net (6)	—	302
Outstanding on September 30, 2023	4,915	106,712
Common shares issuable from RSUs, Operating Partnership Units, and LTIP Units as measured on September 30, 2023 (2)		1,779
Potential common shares as measured on September 30, 2023 (7)		108,491


(1)			Weighted average common shares outstanding for the three months ended September 30, 2023 and 2022 includes 131 and 86 unvested, earned RSUs, respectively. Weighted average common shares outstanding for the nine months ended September 30, 2023 and 2022 includes 125 and 111 unvested, earned RSUs, respectively.
(2)			We have granted RSUs and LTIP Units to certain trustees, employees and eligible consultants. RSUs and market-based LTIP Units contain service and market-based vesting components. Time-based LTIP Units contain service-based vesting components. 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.
(3)			Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic include time-based LTIP Units and OP Units that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only).
(4)			As of September 30, 2023, we had 4,915 series D preferred shares that were convertible into 4,032 common shares. The series D preferred shares are anti-dilutive for GAAP EPS for all periods presented. The series D preferred shares are anti-dilutive for all periods presented with respect to FFO and Normalized FFO per common share and unit.
(5)			EQC common shares include unvested restricted shares.
(6)			This amount is net of forfeitures and shares surrendered to satisfy statutory tax withholding obligations.
(7)			Potential common shares as measured on September 30, 2023 include unvested earned RSUs. The 4,915 series D preferred shares outstanding that were convertible into 4,032 common shares as of September 30, 2023 are excluded.

DEFINITIONS

Annualized Rental Revenue

Annualized Rental Revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of September 30, 2023, plus estimated recurring expense reimbursements; excludes lease value amortization, straight-line rent adjustments, abated (free) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues. The annualized rental revenue of disposed properties, if any, is presented for the quarter-ended preceding each disposition.

Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.

Building Improvements

Building improvements are expenditures to replace obsolete building components or extend the useful life of existing assets. Tenant-funded capital expenditures are excluded.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), EBITDAre and Adjusted EBITDAre

We calculate EBITDA as net income (loss) excluding interest expense, income tax expense and depreciation and amortization.

We calculate EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts (Nareit). Nareit defines EBITDAre as net income (loss), calculated in accordance with GAAP, plus interest expense, plus income tax expense, plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated joint ventures, plus adjustments to reflect the entity's share of EBITDAre of unconsolidated joint ventures. Our calculation of Adjusted EBITDAre differs from our calculations of EBITDA and EBITDAre because we exclude certain items that we view as nonrecurring or impacting comparability from period to period. EBITDA, EBITDAre and Adjusted EBITDAre are supplemental non-GAAP financial measures.

We consider EBITDA, EBITDAre and Adjusted EBITDAre to be appropriate measures of our operating performance, along with net income (loss), net income (loss) attributable to EQC common shareholders, and cash flow from operating activities. We believe that EBITDA, EBITDAre and Adjusted EBITDAre provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA, EBITDAre and Adjusted EBITDAre may facilitate a comparison of current operating performance with our past operating performance. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income (loss), net income (loss) attributable to EQC common shareholders 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 (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than we do.

Funds from Operations (FFO) and Normalized FFO

We compute FFO in accordance with standards established by 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. Our calculation of Normalized FFO differs from Nareit’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period. FFO and Normalized FFO are supplemental non-GAAP financial measures. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income (loss), net income (loss) attributable to EQC common shareholders 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 do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income (loss), net income (loss) attributable to EQC common shareholders 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 (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

Leasing Costs

Leasing costs include leasing commissions (LCs) and related legal expenses.

DEFINITIONS

LTIP Units

LTIP Units are a class of beneficial interests in EQC Operating Trust (the Operating Trust) that may be issued to employees, officers or trustees of the Operating Trust, EQC, or their subsidiaries.

Net Operating Income (NOI), Same Property NOI, Cash Basis NOI and Same Property Cash Basis NOI

NOI is income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses. Cash Basis NOI is NOI excluding the effects of straight-line rent adjustments, lease value amortization and lease termination fees. The quarter-to-date same property versions of these measures include the results of properties continuously owned from July 1, 2022 through September 30, 2023. The year-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2022 through September 30, 2023. Properties classified as held for sale within our condensed consolidated balance sheets are excluded from the same property versions of these measures.

We consider these supplemental non-GAAP financial measures to be appropriate supplemental measures to net income (loss) because they may help to understand the operations of our properties. We use these measures internally to evaluate property level performance, and we believe that they provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Cash Basis NOI is among the factors considered with respect to acquisition, disposition and financing decisions. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss), net income (loss) attributable to Equity Commonwealth common shareholders 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 (loss), net income (loss) attributable to EQC common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate these measures differently than we do.

Net Book Value

Net book value represents the carrying value of real estate properties after depreciation and amortization, purchase price allocations and impairment write-downs, if any.

NOI Margin

NOI Margin is NOI (or the same property or cash basis derivations of NOI defined above) divided by the total revenues used to calculate NOI (or its derivation).

Operating Partnership Units

Operating Partnership Units are beneficial interests in the Operating Trust.

Other Revenue

Other revenue is primarily comprised of parking revenue that does not represent a component of a lease.

Percentage Commenced

Percentage commenced is the percentage of space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, which includes the space of tenants in a free rent period.

Percentage Leased

Percentage leased is the percentage of space subject to signed leases.

Rental Revenue

Rental revenue is primarily comprised of minimum lease payments from tenants, including tenant reimbursements. In addition, rental revenue includes lease termination fees and straight-line rent adjustments.

Same Properties

Our quarter-to-date same property portfolio is comprised of those properties continuously owned from July 1, 2022 through September 30, 2023. Our year-to-date same property portfolio is comprised of those properties continuously owned from January 1, 2022 through September 30, 2023. Properties classified as held for sale within our condensed consolidated balance sheets are excluded.

Tenant Improvements

Tenant improvements are capital expenditures to improve tenant spaces.

DEFINITIONS

Total Market Capitalization

Total market capitalization is the market value of preferred shares plus the market value of diluted common shares. The market value of preferred shares is the product of the number of Series D preferred shares outstanding at the end of the period and the closing share price of the Series D preferred shares (EQCpD) at the end of the period. The market value of diluted common shares is the product of the number of diluted common shares outstanding at the end of the period and the closing share price of the common shares (EQC) at the end of the period.

Undepreciated Book Value

Undepreciated book value represents the carrying value of real estate properties after purchase price allocations, and impairment write-downs, if any.

Equity Commonwealth (EQC) 8-KEquity Commonwealth Reports Third Quarter 2023 Results