☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2017 | |
or | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland (State of Organization) | 26-4273474 (IRS Employer Identification No.) |
Title Of Each Class | Name Of Each Exchange On Which Registered | |
Common Shares of Beneficial Interest | The Nasdaq Stock Market LLC | |
5.875% Senior Notes due 2046 | The Nasdaq Stock Market LLC |
Large accelerated filer ☒ | Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company ☐ | |
(Do not check if a smaller reporting company) | Emerging growth company ☐ |
• | OUR ACQUISITIONS AND SALES OF PROPERTIES, |
• | OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY, |
• | THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT OR BE NEGATIVELY AFFECTED BY CYCLICAL ECONOMIC CONDITIONS OR GOVERNMENT BUDGET CONSTRAINTS, |
• | THE LIKELIHOOD THAT OUR TENANTS WILL RENEW OR EXTEND THEIR LEASES AND NOT EXERCISE EARLY TERMINATION OPTIONS PURSUANT TO THEIR LEASES OR THAT WE WILL OBTAIN REPLACEMENT TENANTS, |
• | THE LIKELIHOOD THAT OUR RENTS WILL INCREASE WHEN WE RENEW OR EXTEND OUR LEASES OR ENTER NEW LEASES, |
• | OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO SUSTAIN THE AMOUNT OF SUCH DISTRIBUTIONS, |
• | OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN SELECT INCOME REIT, OR SIR, |
• | OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS, |
• | THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY, |
• | OUR EXPECTATION THAT THERE WILL BE OPPORTUNITIES FOR US TO ACQUIRE, AND THAT WE WILL ACQUIRE, ADDITIONAL PROPERTIES IN THE METROPOLITAN WASHINGTON, D.C. MARKET AREA OR ELSEWHERE, INCLUDING PROPERTIES THAT ARE MAJORITY LEASED TO GOVERNMENT TENANTS, GOVERNMENT CONTRACTOR TENANTS OR OTHER PRIVATE TENANTS, |
• | OUR EXPECTATIONS REGARDING DEMAND FOR LEASED SPACE BY THE U.S. GOVERNMENT AND STATE AND LOCAL GOVERNMENTS, |
• | OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL, |
• | OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT, |
• | OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL, |
• | OUR CREDIT RATINGS, |
• | OUR EXPECTED BENEFITS FROM OUR ACQUISITION OF FIRST POTOMAC REALTY TRUST, OR FPO, AND SUCH ACQUISITION, THE FPO TRANSACTION, |
• | OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH THE RMR GROUP INC., OR RMR INC., |
• | OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH AFFILIATES INSURANCE COMPANY, OR AIC, AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC, |
• | THE CREDIT QUALITIES OF OUR TENANTS, |
• | OUR QUALIFICATION FOR TAXATION AS A REAL ESTATE INVESTMENT TRUST, OR REIT, AND |
• | OTHER MATTERS. |
• | THE IMPACT OF CONDITIONS AND CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS, |
• | COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED AND WITH RESPECT TO GOVERNMENT TENANCIES, |
• | THE IMPACT OF CHANGES IN THE REAL ESTATE NEEDS AND FINANCIAL CONDITIONS OF THE U.S. GOVERNMENT AND STATE AND LOCAL GOVERNMENTS, |
• | COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS, |
• | ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEE, THE RMR GROUP LLC, OR RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM, |
• | LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES, AND |
• | ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL. |
• | OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE OUR PROPERTIES, OUR WORKING CAPITAL REQUIREMENTS AND OUR RECEIPT OF DISTRIBUTIONS FROM SIR. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED, |
• | OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS, LESS THEIR PROPERTY OPERATING COSTS, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES, |
• | SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN OR INCREASE THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES, |
• | SOME GOVERNMENT TENANTS MAY EXERCISE THEIR RIGHTS TO VACATE THEIR SPACE BEFORE THE STATED EXPIRATION OF THEIR LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN THE HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES, |
• | RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE, |
• | CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE, |
• | WE MAY FAIL TO SELL PROPERTIES THAT WE IDENTIFY FOR SALE OR WE MAY REALIZE LOSSES ON ANY SUCH SALES OR IN CONNECTION WITH DECISIONS TO PURSUE SELLING CERTAIN OF OUR PROPERTIES, |
• | CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CUSTOMARY CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY, |
• | ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE DEBT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH DEBT, |
• | THE INTEREST RATES PAYABLE UNDER OUR FLOATING RATE DEBT OBLIGATIONS DEPEND UPON OUR CREDIT RATINGS. BOTH MOODY'S INVESTORS SERVICE, OR MOODY'S, AND STANDARD & POOR'S RATINGS SERVICES, OR S&P, HAVE RECENTLY UPDATED OUR RATING OUTLOOK TO NEGATIVE, WHICH MAY IMPLY THAT OUR CREDIT RATINGS MAY BE DOWNGRADED. IF OUR CREDIT RATINGS ARE DOWNGRADED, OUR BORROWING COSTS WILL INCREASE, |
• | OUR ABILITY TO ACCESS DEBT CAPITAL AND THE COST OF OUR DEBT CAPITAL WILL DEPEND IN PART ON OUR CREDIT RATINGS. IF OUR CREDIT RATINGS ARE DOWNGRADED, WE MAY NOT BE ABLE TO ACCESS DEBT CAPITAL OR THE DEBT CAPITAL WE CAN ACCESS MAY BE EXPENSIVE, |
• | WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE, |
• | THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS MAY BE INCREASED TO UP TO $2.5 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR, |
• | WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS; HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET, |
• | THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS, |
• | WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE, |
• | WE MAY FAIL TO EXECUTE SUCCESSFULLY ON THE EXPANDED BUSINESS STRATEGY OR INCREASED SCALE RESULTING FROM THE FPO TRANSACTION AND THEREFORE MAY NOT REALIZE THE BENEFITS WE EXPECT FROM THE FPO TRANSACTION, |
• | SIR MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US, |
• | RMR INC. MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US, |
• | WE MAY BE UNABLE TO SELL OUR SIR COMMON SHARES FOR AN AMOUNT EQUAL TO OUR CARRYING VALUE OF THOSE SHARES AND ANY SUCH SALE MAY BE AT A DISCOUNT TO MARKET PRICE BECAUSE OF THE LARGE SIZE OF OUR SIR HOLDINGS OR OTHERWISE; WE MAY REALIZE A LOSS ON OUR INVESTMENT IN OUR SIR SHARES, AND |
• | AS OF DECEMBER 31, 2017, WE HAVE ESTIMATED UNSPENT LEASING RELATED OBLIGATIONS OF $31.3 MILLION. OUR UNSPENT LEASING RELATED OBLIGATIONS MAY COST MORE OR |
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• | the historic and expected operating expenses, including real estate taxes, incurred and expected to be incurred at the property; |
• | the quality, experience and creditworthiness of the property’s tenant(s) and how essential the occupant’s mission at the property is to the tenant(s); |
• | the construction quality, physical condition, age and design of the property and expected capital expenditures that may be needed at the property; |
• | our weighted average long term cost of capital compared to the projected returns we may realize by owning the property; |
• | the occupancy of the property; |
• | the remaining length of the current leases and its (their) other terms; |
• | our expectation regarding tenant lease renewals or the likelihood of finding (a) replacement tenant(s) if the property has significant vacancies or is likely to become substantially vacant; |
• | the future expected space utilization of the tenant(s) and the potential impact that may have on occupancy at the property; |
• | the potential costs associated with finding (a) replacement tenant(s), including tenant improvements, leasing commissions and concessions, the cost to operate the property while vacant and building improvement capital, as compared to our projected returns from future rents; |
• | our evaluation of future rent for the property relative to leasing costs; |
• | the capital required to maintain the property; |
• | the strategic fit of the property or investment with the rest of our portfolio; |
• | the estimated value we may receive by selling the property; |
• | our intended use of the proceeds we may realize from the sale of a property; |
• | the proposed sale price; |
• | our financial position and needs from time to time; and |
• | the existence of alternative sources, uses or needs for capital, including our debt leverage. |
• | a bank, insurance company or other financial institution; |
• | a regulated investment company or REIT; |
• | a subchapter S corporation; |
• | a broker, dealer or trader in securities or foreign currency; |
• | a person who marks-to-market our shares for U.S. federal income tax purposes; |
• | a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar; |
• | a person who acquires or owns our shares in connection with employment or other performance of services; |
• | a person subject to alternative minimum tax; |
• | a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction; |
• | a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares; |
• | a U.S. expatriate; |
• | a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States; |
• | a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year; |
• | a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC); |
• | a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds; |
• | a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC); or |
• | except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person. |
• | an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws; |
• | an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate the income of which is subject to federal income taxation regardless of its source; or |
• | a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust; |
• | We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed ordinary income and net capital gains, if any. |
• | If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate. |
• | If we have net income from “prohibited transactions”—that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors—we will be subject to tax on this income at a 100% rate. |
• | If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure |
• | If we fail to satisfy any of the REIT asset tests described below (other than a de minimis failure of the 5% or 10% asset tests) due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test. |
• | If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below) due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure. |
• | If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed. |
• | If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements. |
• | If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution. |
• | Our subsidiaries that are C corporations, including our “taxable REIT subsidiaries” as defined in Section 856(l) of the IRC, or TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms. |
• | If it is determined that FPO failed to satisfy one or more of the REIT tests described below, the IRS might allow us, as FPO’s successor, the same opportunity for relief as though we were the remediating REIT. In such case, FPO would be deemed to have retained its qualification for taxation as a REIT and the relevant penalties or sanctions for remediation would fall upon us in a manner comparable to the above. |
• | As discussed below, we are invested in real estate through a subsidiary that we believe qualifies for taxation as a REIT. If it is determined that this entity failed to qualify for taxation as a REIT, we may fail one or more of the REIT asset tests. In such case, we expect that we would be able to avail ourselves of the relief provisions described below, but would be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income we earned from this subsidiary. |
(1) | that is managed by one or more trustees or directors; |
(2) | the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest; |
(3) | that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation; |
(4) | that is not a financial institution or an insurance company subject to special provisions of the IRC; |
(5) | the beneficial ownership of which is held by 100 or more persons; |
(6) | that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities); and |
(7) | that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below. |
• | At least 75% of our gross income for each taxable year (excluding: (a) gross income from sales or other dispositions of property subject to the 100% tax on prohibited transactions; (b) any income arising from “clearly identified” hedging transactions that we enter into to manage interest rate or price changes or currency fluctuations with respect to borrowings we incur to acquire or carry real estate assets; (c) any income arising from “clearly identified” hedging transactions that we enter into primarily to manage risk of currency fluctuations relating to any item that qualifies under the 75% gross income test or the 95% gross income test (or any property that generates such income or gain); (d) beginning with our 2016 taxable year, any income from “clearly identified” hedging transactions that we enter into to manage risk associated with extant, qualified hedges of liabilities or properties that have been extinguished or disposed; (e) real estate foreign |
• | At least 95% of our gross income for each taxable year (excluding: (a) gross income from sales or other dispositions of property subject to the 100% tax on prohibited transactions; (b) any income arising from “clearly identified” hedging transactions that we enter into to manage interest rate or price changes or currency fluctuations with respect to borrowings we incur to acquire or carry real estate assets; (c) any income arising from “clearly identified” hedging transactions that we enter into primarily to manage risk of currency fluctuations relating to any item that qualifies under the 75% gross income test or the 95% gross income test (or any property that generates such income or gain); (d) beginning with our 2016 taxable year, any income from “clearly identified” hedging transactions that we enter into to manage risk associated with extant, qualified hedges of liabilities or properties that have been extinguished or disposed; (e) passive foreign exchange gain (as defined in Section 856(n)(3) of the IRC); and (f) income from the repurchase or discharge of indebtedness) must be derived from a combination of items of real property income that satisfy the 75% gross income test described above, dividends, interest, or gains from the sale or disposition of stock, securities or real property (but excluding in all cases any gains subject to the 100% tax on prohibited transactions). |
• | The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales. |
• | Rents do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. Our declaration of trust generally disallows transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, we cannot be sure that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, we cannot be sure that we will be able to monitor and enforce these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules. |
• | There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants. |
• | In order for rents to qualify, we generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom we derive no income or through one of our TRSs. There is an exception to this rule permitting a REIT to perform customary management and tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income,” or UBTI, under Section 512(b)(3) of the IRC. In addition, a de minimis amount of noncustomary services provided to tenants will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property. |
• | If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property qualifies as “rents from real property.” None of the rent attributable to personal property received under a lease will qualify if this 15% threshold is exceeded. The portion |
• | In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we believe that our revenues from TRS-provided services, whether the charges are separately stated or not, qualify as “rents from real property” because the services satisfy the geographically customary standard, because the services have been provided by a TRS, or for both reasons. |
• | that is acquired by a REIT as a result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease of such property or on indebtedness that such property secured; |
• | for which any related loan acquired by the REIT was acquired at a time when the default was not imminent or anticipated; and |
• | for which the REIT makes a proper election to treat the property as foreclosure property. |
• | on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test; |
• | on which any construction takes place on the property, other than completion of a building or any other improvement where more than 10% of the construction was completed before default became imminent and other than specifically exempted forms of maintenance or deferred maintenance; or |
• | which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS. |
• | own our assets for investment with a view to long-term income production and capital appreciation; |
• | engage in the business of developing, owning, leasing and managing our existing properties and acquiring, developing, owning, leasing and managing new properties; and |
• | make occasional dispositions of our assets consistent with our long-term investment objectives. |
• | our failure to meet the test is due to reasonable cause and not due to willful neglect; and |
• | after we identify the failure, we file a schedule describing each item of our gross income included in the 75% gross income test or the 95% gross income test for that taxable year. |
• | At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above (beginning with our 2016 taxable year), cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC (beginning with our 2016 taxable year), government securities and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but in each case only for the one-year period commencing with our receipt of the new capital). |
• | Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test. |
• | Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests. |
• | Not more than 20% (25% before our 2018 taxable year) of the value of our total assets may be represented by stock or other securities of our TRSs. |
• | Beginning with our 2016 taxable year, not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC. |
(1) | the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over |
(2) | the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.” |
(1) | long-term capital gains, if any, recognized on the disposition of our shares; |
(2) | our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate); |
(3) | our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs; |
(4) | our dividends attributable to earnings and profits that we inherit from C corporations; and |
(5) | our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on built-in gains), net of the corporate income taxes thereon. |
(1) | we will be taxed at regular corporate capital gains tax rates on retained amounts; |
(2) | each of our U.S. shareholders will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend; |
(3) | each of our U.S. shareholders will receive a credit or refund for its designated proportionate share of the tax that we pay; |
(4) | each of our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and |
(5) | both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes. |
• | provides the U.S. shareholder’s correct taxpayer identification number; |
• | certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and |
• | certifies that it is a U.S. citizen or other U.S. person. |
• | their investment in our shares or other securities satisfies the diversification requirements of ERISA; |
• | the investment is prudent in light of possible limitations on the marketability of our shares; |
• | they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and |
• | the investment is otherwise consistent with their fiduciary responsibilities. |
• | any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order; |
• | any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence; |
• | any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and |
• | any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer. |
• | competition from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies; |
• | our long term cost of capital; |
• | contingencies in our acquisition agreements; and |
• | the availability and terms of financing. |
• | we do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction; |
• | the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value; |
• | the occupancy of and rents from properties that we acquire may decline during our ownership; |
• | property operating costs for our acquired properties may be higher than anticipated and our acquired properties may not yield expected returns; |
• | we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the cleanup of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of the properties; |
• | acquired properties might require significant management attention that would otherwise be devoted to our other business activities; and |
• | we may encounter unexpected costs and delays in the transition of business and property management functions of FPO properties to us and RMR LLC. |
• | Tenants occupying approximately 8.6% of our consolidated rentable square feet and contributing approximately 6.8% of our annualized rental income as of December 31, 2017 have currently exercisable rights to terminate their leases before the stated term of their leases expire. |
• | In 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026 and 2027, early termination rights become exercisable by other tenants who currently occupy an additional approximately 2.2%, 5.2%, 7.2%, 1.4%, 3.4%, 0.5%, 0.2%, 0.1%, 0.6% and 0.4% of our consolidated rentable square feet, respectively, and contribute an additional approximately 3.6%, 4.9%, 7.0%, 1.4%, 2.9%, 0.6%, 0.3%, 0.2%, 0.8% and 0.4% of our annualized rental income, respectively, as of December 31, 2017. |
• | Pursuant to leases with 26 of our government tenants, these tenants have currently exercisable rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 26 tenants represent approximately 12.9% of our consolidated rentable square feet and 12.3% of our annualized rental income as of December 31, 2017. |
• | Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the value of our common shares. |
• | Amounts outstanding under our revolving credit facility and term loans require interest to be paid at variable interest rates. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our fixed rate debts when they become due and our ability to make or sustain distributions to our shareholders. |
• | Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the value of our securities to decline. |
• | the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions; |
• | the subjectivity of real estate valuations and changes in such valuations over time; |
• | current and future adverse national real estate trends, including increasing vacancy rates, declining rental rates and |
• | costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and |
• | liabilities and litigations arising from injuries on our properties or otherwise incidental to the ownership of our properties. |
• | we may share approval rights over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture; |
• | we may be required to contribute additional capital if our partners fail to fund their share of any required capital contributions; |
• | our joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals and that could affect our ability to lease or release the property, operate the property or maintain our qualification as a REIT; |
• | our joint venture partners may be subject to different laws or regulations than us, or may be structured differently than us for tax purposes, which could create conflicts of interest and/or affect our ability to maintain our qualification as a REIT; |
• | our ability to sell the interest on advantageous terms when we so desire may be limited or restricted under the terms of the applicable joint venture agreements; and |
• | disagreements with our joint venture partners could result in litigation or arbitration that could be expensive and distracting to management and could delay important decisions. |
• | SIR may incur substantial amounts of indebtedness, which may adversely impact the market price of SIR’s common shares, including our SIR common shares; |
• | SIR may determine to issue significant amounts of equity capital, which would dilute our ownership interest in SIR; |
• | SIR may issue additional common shares at a per share price below the per share carrying value of our SIR common shares, which may require us to reduce our cost basis for our SIR common shares and recognize losses on our SIR investment; |
• | SIR may incur losses if it is unable to maintain the occupancy or rents it now receives from its properties or its operating expenses increase or otherwise, and any such losses may reduce the market price of our SIR common shares; |
• | SIR’s board of trustees may change or revise SIR’s business plans and policies from time to time without shareholder approval, and any such changes could adversely affect SIR’s financial condition, results of operations, the market price of SIR’s common shares and SIR’s ability to make distributions to its shareholders; and |
• | our relationship with SIR may create conflicts of interest or the perception of such conflicts. |
• | the division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change of control of us; |
• | limitations on shareholder voting rights with respect to certain actions that are not approved by our Board of Trustees; |
• | the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees; |
• | shareholder voting standards which require a supermajority for approval of certain actions; |
• | the fact that only our Board of Trustees, or if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting; |
• | required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees”, as defined in our governing documents; |
• | limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders; |
• | limitations on the ability of our shareholders to remove our Trustees; and |
• | the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares. |
• | actual receipt of an improper benefit or profit in money, property or services; or |
• | active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated. |
• | our ability to make or sustain the rate of distributions will be adversely affected if any of the risks described in this Annual Report on Form 10-K occur; |
• | our making of distributions is subject to compliance with restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur; and |
• | the timing and amount of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including our financial condition, our results of operations, our liquidity, our capital requirements, our FFO, our Normalized FFO, restrictive covenants in our financial or other contractual arrangements, general economic conditions in the United States, requirements of the IRC to remain qualified for taxation as a REIT and restrictions under the laws of Maryland. |
• | the extent of investor interest in our securities; |
• | the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates; |
• | our underlying asset value; |
• | investor confidence in the stock and bond markets, generally; |
• | market interest rates; |
• | national economic conditions; |
• | changes in tax laws; |
• | changes in our credit ratings; and |
• | general market conditions. |
Consolidated Properties | ||||||||||||||||
Property Location | Number of Properties | Number of Buildings | Undepreciated Carrying Value (1) | Depreciated Carrying Value (1) | Annualized Rental Income (2) | |||||||||||
Alabama | 2 | 2 | $ | 23,065 | $ | 20,421 | $ | 3,086 | ||||||||
Arizona | 2 | 2 | 22,305 | 19,446 | 2,351 | |||||||||||
California | 11 | 11 | 302,492 | 244,081 | 40,844 | |||||||||||
Colorado | 3 | 5 | 68,945 | 49,118 | 10,653 | |||||||||||
District of Columbia | 8 | 8 | 567,256 | 526,055 | 75,416 | |||||||||||
Florida | 2 | 2 | 48,817 | 41,424 | 6,824 | |||||||||||
Georgia | 5 | 9 | 167,163 | 140,537 | 23,720 | |||||||||||
Idaho | 1 | 3 | 33,218 | 29,159 | 4,669 | |||||||||||
Illinois | 1 | 1 | 15,340 | 12,594 | 1,987 | |||||||||||
Indiana | 1 | 3 | 76,880 | 65,223 | 9,730 | |||||||||||
Kansas | 1 | 1 | 15,171 | 12,612 | 2,920 | |||||||||||
Kentucky | 1 | 1 | 13,501 | 12,032 | 2,554 | |||||||||||
Maryland | 18 | 43 | 426,417 | 384,601 | 63,419 | |||||||||||
Massachusetts | 4 | 4 | 84,436 | 71,068 | 13,554 | |||||||||||
Michigan | 1 | 1 | 18,990 | 15,530 | 2,731 | |||||||||||
Minnesota | 2 | 2 | 26,153 | 22,959 | 4,327 | |||||||||||
Mississippi | 1 | 1 | 25,946 | 22,487 | 3,974 | |||||||||||
Missouri | 2 | 2 | 26,586 | 21,080 | 4,275 | |||||||||||
New Hampshire | 1 | 1 | 18,597 | 15,641 | 2,433 | |||||||||||
New Jersey | 1 | 1 | 45,823 | 38,874 | 6,469 | |||||||||||
New York | 4 | 4 | 170,369 | 144,029 | 18,945 | |||||||||||
Oregon | 1 | 1 | 28,761 | 24,694 | 5,147 | |||||||||||
South Carolina | 1 | 3 | 17,385 | 13,667 | 2,192 | |||||||||||
Tennessee | 1 | 1 | 9,783 | 8,349 | 2,858 | |||||||||||
Texas | 1 | 1 | 13,293 | 8,584 | 2,993 | |||||||||||
Vermont | 1 | 1 | 9,236 | 7,580 | 1,118 | |||||||||||
Virginia | 26 | 46 | 634,449 | 615,674 | 98,962 | |||||||||||
Washington | 2 | 4 | 44,001 | 32,322 | 5,537 | |||||||||||
West Virginia | 1 | 1 | 5,074 | 2,964 | — | |||||||||||
Wisconsin | 1 | 1 | 5,587 | 4,824 | 801 | |||||||||||
Wyoming | 1 | 1 | 10,682 | 6,244 | 2,156 | |||||||||||
Total Consolidated | 108 | 167 | $ | 2,975,721 | $ | 2,633,873 | $ | 426,645 |
(1) | Excludes value assigned to real estate intangibles in purchase price allocation. |
(2) | Annualized rental income is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of December 31, 2017, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. |
High | Low | |||||||
2017 | ||||||||
First Quarter | $ | 21.08 | $ | 18.84 | ||||
Second Quarter | 22.99 | 18.26 | ||||||
Third Quarter | 18.83 | 17.36 | ||||||
Fourth Quarter | 19.60 | 17.79 | ||||||
2016 | ||||||||
First Quarter | $ | 17.90 | $ | 12.33 | ||||
Second Quarter | 23.07 | 17.59 | ||||||
Third Quarter | 24.61 | 21.82 | ||||||
Fourth Quarter | 22.67 | 17.66 |
Cash Distributions Per Common Share | ||||||||
2017 | 2016 | |||||||
First Quarter | $ | 0.43 | $ | 0.43 | ||||
Second Quarter | 0.43 | 0.43 | ||||||
Third Quarter | 0.43 | 0.43 | ||||||
Fourth Quarter | 0.43 | 0.43 | ||||||
Total | $ | 1.72 | $ | 1.72 |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Income statement data: | ||||||||||||||||||||
Rental income | $ | 316,532 | $ | 258,180 | $ | 248,549 | $ | 251,031 | $ | 226,910 | ||||||||||
Expenses: | ||||||||||||||||||||
Real estate taxes | 37,942 | 30,703 | 29,906 | 28,389 | 25,710 | |||||||||||||||
Utility expenses | 20,998 | 17,269 | 17,916 | 19,369 | 17,116 | |||||||||||||||
Other operating expenses | 65,349 | 54,290 | 50,425 | 45,982 | 41,134 | |||||||||||||||
Depreciation and amortization | 109,588 | 73,153 | 68,696 | 66,593 | 55,699 | |||||||||||||||
Loss on impairment of real estate | 9,490 | — | — | 2,016 | — | |||||||||||||||
Acquisition related costs | — | 1,191 | 811 | 1,344 | 2,439 | |||||||||||||||
General and administrative | 18,847 | 14,897 | 14,826 | 15,809 | 12,710 | |||||||||||||||
Total expenses | 262,214 | 191,503 | 182,580 | 179,502 | 154,808 | |||||||||||||||
Operating income | 54,318 | 66,677 | 65,969 | 71,529 | 72,102 | |||||||||||||||
Dividend income | 1,216 | 971 | 811 | — | — | |||||||||||||||
Interest income | 1,962 | 158 | 14 | 69 | 37 | |||||||||||||||
Interest expense | (65,406 | ) | (45,060 | ) | (37,008 | ) | (28,048 | ) | (16,831 | ) | ||||||||||
Gain (loss) on early extinguishment of debt | (1,715 | ) | 104 | 34 | (1,307 | ) | — | |||||||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | (12,368 | ) | — | — | ||||||||||||||
Net gain (loss) on issuance of shares by Select Income REIT | 72 | 86 | (42,145 | ) | (53 | ) | — | |||||||||||||
Loss on impairment of Select Income REIT investment | — | — | (203,297 | ) | — | — | ||||||||||||||
Income (loss) from continuing operations before income taxes and equity | ||||||||||||||||||||
in earnings of investees and gain on sale of real estate | (9,553 | ) | 22,936 | (227,990 | ) | 42,190 | 55,308 | |||||||||||||
Income tax expense | (101 | ) | (101 | ) | (86 | ) | (117 | ) | (133 | ) | ||||||||||
Equity in earnings of investees | 21,571 | 35,518 | 18,640 | 10,963 | 334 | |||||||||||||||
Income (loss) from continuing operations | 11,917 | 58,353 | (209,436 | ) | 53,036 | 55,509 | ||||||||||||||
Income (loss) from discontinued operations | 173 | (589 | ) | (525 | ) | 3,498 | (889 | ) | ||||||||||||
Income (loss) before gain on sale of real estate | 12,090 | 57,764 | (209,961 | ) | 56,534 | 54,620 | ||||||||||||||
Gain on sale of real estate | — | 79 | — | — | — | |||||||||||||||
Net income (loss) | 12,090 | 57,843 | (209,961 | ) | 56,534 | 54,620 | ||||||||||||||
Preferred units of limited partnership distributions | (275 | ) | — | — | — | — | ||||||||||||||
Net income (loss) available for common shareholders | $ | 11,815 | $ | 57,843 | $ | (209,961 | ) | $ | 56,534 | $ | 54,620 | |||||||||
Weighted average shares outstanding (basic) | 84,633 | 71,050 | 70,700 | 61,313 | 54,606 | |||||||||||||||
Weighted average shares outstanding (diluted) | 84,653 | 71,071 | 70,700 | 61,399 | 54,685 | |||||||||||||||
Per common share data: | ||||||||||||||||||||
Income (loss) from continuing operations (basic) | $ | 0.14 | $ | 0.82 | $ | (2.96 | ) | $ | 0.87 | $ | 1.02 | |||||||||
Income (loss) from continuing operations (diluted) | $ | 0.14 | $ | 0.82 | $ | (2.96 | ) | $ | 0.86 | $ | 1.02 | |||||||||
Income (loss) from discontinued operations (basic and diluted) | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.06 | $ | (0.02 | ) | |||||||
Net income (loss) available for common shareholders (basic and diluted) | $ | 0.14 | $ | 0.81 | $ | (2.97 | ) | $ | 0.92 | $ | 1.00 | |||||||||
Common distributions paid | $ | 1.72 | $ | 1.72 | $ | 1.72 | (1) | $ | 1.72 | $ | 1.72 | |||||||||
As of December 31, | ||||||||||||||||||||
Balance sheet data: | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Total real estate investments, gross (2) | $ | 2,975,721 | $ | 1,888,760 | $ | 1,696,132 | $ | 1,682,480 | $ | 1,568,562 | ||||||||||
Real estate investments, net (2) | 2,633,873 | 1,591,956 | 1,440,253 | 1,462,689 | 1,380,927 | |||||||||||||||
Total assets | 3,703,565 | 2,385,066 | 2,168,510 | 2,419,908 | 1,630,789 | |||||||||||||||
Debt, net | 2,245,092 | 1,381,852 | 1,145,598 | 1,077,410 | 596,063 | |||||||||||||||
Shareholders' equity | 1,330,043 | 935,004 | 956,651 | 1,297,449 | 989,675 |
(1) | Excludes a non-cash distribution of $0.1284 per share related to the distribution of shares of RMR Inc. class A common stock to our shareholders on December 14, 2015. |
(2) | Excludes properties classified as assets held for sale or discontinued operations and properties owned by unconsolidated joint ventures. |
Comparable | ||||||||||||
All Consolidated Properties (1) | Consolidated Properties (2) | |||||||||||
December 31, | December 31, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Total properties | 108 | 73 | 69 | 69 | ||||||||
Total buildings | 167 | 95 | 89 | 89 | ||||||||
Total square feet (3) | 17,499 | 11,443 | 10,572 | 10,583 | ||||||||
Percent leased (3)(4) | 94.2 | % | 95.1 | % | 94.9 | % | 95.4 | % |
(1) | Based on consolidated properties we owned on December 31, 2017 and 2016, respectively, and excludes one property (one building) classified as discontinued operations which was sold on August 31, 2017. |
(2) | Based on consolidated properties we owned on December 31, 2017 and which we owned continuously since January 1, 2016. Our comparable properties decreased from 70 properties (90 buildings) at December 31, 2016 as a result of the sale of one property (one building) during the year ended December 31, 2017. |
(3) | Subject to changes when space is re-measured or re-configured for tenants. |
(4) | Percent leased includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date. |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Average annualized effective rental rate per square foot (1): | ||||||||
All properties (2) | $ | 25.99 | $ | 25.26 | ||||
Comparable properties (3) | $ | 25.37 | $ | 25.04 |
(1) | Average annualized effective rental rate per square foot represents annualized total rental income during the period specified divided by the average rentable square feet leased during the period specified. Excludes one property (one building) classified as discontinued operations which was sold on August 31, 2017. |
(2) | Based on consolidated properties we owned on December 31, 2017 and 2016, respectively, and excludes one property (one building) classified as discontinued operations which was sold on August 31, 2017. |
(3) | Based on consolidated properties we owned on December 31, 2017 and which we owned continuously since January 1, 2016. |
Year Ended December 31, 2017 | |||||||||
Available | |||||||||
Leased (1) | for Lease | Total | |||||||
Beginning of year | 10,881,289 | 561,224 | 11,442,513 | ||||||
Changes resulting from: | |||||||||
Acquisition of properties | 5,655,477 | 441,969 | 6,097,446 | ||||||
Disposition of properties | — | (29,045 | ) | (29,045 | ) | ||||
Lease expirations | (1,664,210 | ) | 1,664,210 | — | |||||
Lease renewals (1) | 1,468,301 | (1,468,301 | ) | — | |||||
New leases (1)(2) | 136,482 | (136,482 | ) | — | |||||
Re-measurements (3) | — | (11,576 | ) | (11,576 | ) | ||||
End of year | 16,477,339 | 1,021,999 | 17,499,338 |
(1) | Rentable square footage excludes an expansion being constructed at an existing property we own prior to the commencement of the lease. |
(2) | Based on leases entered during the year ended December 31, 2017. |
(3) | Rentable square footage is subject to changes when space is re-measured or re-configured for tenants. |
Year Ended December 31, 2017 | |||||||||||
Old Effective | New Effective | ||||||||||
Rent Per | Rent Per | Rentable | |||||||||
Square Foot (1) | Square Foot (1) | Square Feet | |||||||||
New leases | $ | 22.76 | $ | 22.25 | 142,665 | ||||||
Lease renewals | $ | 23.42 | $ | 23.87 | 1,320,675 | ||||||
Total leasing activity | $ | 23.35 | $ | 23.71 | 1,463,340 |
(1) | Effective rental rate includes contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and excluding lease value amortization. |
Year Ended December 31, 2017 | ||||||||||||
Government | Non-Government | |||||||||||
Leases | Leases | Total | ||||||||||
Rentable square feet leased during the year | 1,232,389 | 372,394 | 1,604,783 | |||||||||
Tenant leasing costs and concession commitments (1) (in thousands) | $ | 11,062 | $ | 7,187 | $ | 18,249 | ||||||
Tenant leasing costs and concession commitments per rentable square foot (1) | $ | 8.98 | $ | 19.30 | $ | 11.37 | ||||||
Weighted (by square feet) average lease term (years) | 8.4 | 5.0 | 7.6 | |||||||||
Total leasing costs and concession commitments per rentable square foot per year (1) | $ | 1.07 | $ | 3.87 | $ | 1.50 |
(1) | Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. |
Year Ended | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
Tenant improvements (1) | $ | 16,050 | $ | 15,856 | ||||
Leasing costs (2) | $ | 5,796 | $ | 9,949 | ||||
Building improvements (3) | $ | 15,435 | $ | 11,261 | ||||
Development, redevelopment and other activities (4) | $ | 21,553 | $ | 7,818 |
(1) | Tenant improvements include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space. |
(2) | Leasing costs include leasing related costs, such as brokerage commissions and other tenant inducements. |
(3) | Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. |
(4) | Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of a property acquisition and incurred within a short time period after acquiring the property, and (ii) capital expenditure projects that reposition a property or result in new sources of revenue. |
Number | Expirations | Annualized | ||||||||||||||||||||||
of | of Leased | Cumulative | Rental | Cumulative | ||||||||||||||||||||
Tenants | Square | Percent | Percent | Income | Percent | Percent | ||||||||||||||||||
Year (1) | Expiring | Feet (2) | of Total | of Total | Expiring | of Total | of Total | |||||||||||||||||
2018 | 128 | 1,666,566 | 10.1 | % | 10.1 | % | $ | 48,215 | 11.3 | % | 11.3 | % | ||||||||||||
2019 | 97 | 2,567,338 | 15.6 | % | 25.7 | % | 73,723 | 17.3 | % | 28.6 | % | |||||||||||||
2020 | 110 | 2,415,770 | 14.7 | % | 40.4 | % | 63,570 | 14.9 | % | 43.5 | % | |||||||||||||
2021 | 90 | 1,728,712 | 10.5 | % | 50.9 | % | 34,102 | 8.0 | % | 51.5 | % | |||||||||||||
2022 | 91 | 1,630,325 | 9.9 | % | 60.8 | % | 36,985 | 8.7 | % | 60.2 | % | |||||||||||||
2023 | 46 | 1,173,462 | 7.1 | % | 67.9 | % | 34,434 | 8.1 | % | 68.3 | % | |||||||||||||
2024 | 40 | 1,405,259 | 8.5 | % | 76.4 | % | 35,541 | 8.3 | % | 76.6 | % | |||||||||||||
2025 | 34 | 1,090,044 | 6.6 | % | 83.0 | % | 25,023 | 5.9 | % | 82.5 | % | |||||||||||||
2026 | 27 | 820,395 | 5.0 | % | 88.0 | % | 23,621 | 5.5 | % | 88.0 | % | |||||||||||||
2027 and thereafter | 48 | 1,979,468 | (3) | 12.0 | % | 100.0 | % | 51,431 | 12.0 | % | 100.0 | % | ||||||||||||
Total | 711 | 16,477,339 | 100.0 | % | $ | 426,645 | 100.0 | % | ||||||||||||||||
Weighted average remaining lease term (in years) | 4.8 | 4.7 |
(1) | The year of lease expiration is pursuant to current contract terms. Some government tenants have the right to vacate their space before the stated expirations of their leases. As of December 31, 2017, government tenants occupying approximately 8.6% of our consolidated rentable square feet and responsible for approximately 6.8% of our annualized rental income as of December 31, 2017 have currently exercisable rights to terminate their leases before the stated terms of their leases expire. Also, in 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026 and 2027, early termination rights become exercisable by other tenants who currently occupy an additional approximately 2.2%, 5.2%, 7.2%, 1.4%, 3.4%, 0.5%, 0.2%, 0.1%, 0.6% and 0.4% of our consolidated rentable square feet, respectively, and contribute an additional approximately 3.6%, 4.9%, 7.0%, 1.4%, 2.9%, 0.6%, 0.3%, 0.2%, 0.8% and 0.4% of our annualized rental income, respectively, as of December 31, 2017. In addition, as of December 31, 2017, 26 of our government tenants have currently exercisable rights to terminate their leases if the legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 26 tenants occupy approximately 12.9% of our consolidated rentable square feet and contribute approximately12.3% of our annualized rental income as of December 31, 2017. |
(2) | Leased square feet is pursuant to leases existing as of December 31, 2017, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any. Square feet measurements are subject to changes when space is re-measured or re-configured for new tenants. |
(3) | Leased square footage excludes an expansion being constructed at an existing property we own prior to the commencement of the lease. |
Acquired Properties Results (2) | Disposed Properties Results (3) | |||||||||||||||||||||||||||||||||||||||||||||
Comparable Properties Results (1) | Year Ended | Year Ended | Consolidated Results | |||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | December 31, | December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | Change | Change | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | Change | Change | |||||||||||||||||||||||||||||||||||
Rental income | $ | 253,197 | $ | 249,429 | $ | 3,768 | 1.5 | % | $ | 63,335 | $ | 8,751 | $ | — | $ | — | $ | 316,532 | $ | 258,180 | $ | 58,352 | 22.6 | % | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||
Real estate taxes | 30,814 | 29,725 | 1,089 | 3.7 | % | 7,128 | 978 | — | — | 37,942 | 30,703 | 7,239 | 23.6 | % | ||||||||||||||||||||||||||||||||
Utility expenses | 16,535 | 16,652 | (117 | ) | (0.7 | %) | 4,463 | 617 | — | — | 20,998 | 17,269 | 3,729 | 21.6 | % | |||||||||||||||||||||||||||||||
Other operating expenses | 54,027 | 52,129 | 1,898 | 3.6 | % | 11,173 | 1,936 | 149 | 225 | 65,349 | 54,290 | 11,059 | 20.4 | % | ||||||||||||||||||||||||||||||||
Total operating expenses | 101,376 | 98,506 | 2,870 | 2.9 | % | 22,764 | 3,531 | 149 | 225 | 124,289 | 102,262 | 22,027 | 21.5 | % | ||||||||||||||||||||||||||||||||
Net operating income (4) | $ | 151,821 | $ | 150,923 | $ | 898 | 0.6 | % | $ | 40,571 | $ | 5,220 | $ | (149 | ) | $ | (225 | ) | 192,243 | 155,918 | 36,325 | 23.3 | % | |||||||||||||||||||||||
Other expenses: | ||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 109,588 | 73,153 | 36,435 | 49.8 | % | |||||||||||||||||||||||||||||||||||||||||
Loss on impairment of real estate | 9,490 | — | 9,490 | nm | ||||||||||||||||||||||||||||||||||||||||||
Acquisition related costs | — | 1,191 | (1,191 | ) | nm | |||||||||||||||||||||||||||||||||||||||||
General and administrative | 18,847 | 14,897 | 3,950 | 26.5 | % | |||||||||||||||||||||||||||||||||||||||||
Total other expenses | 137,925 | 89,241 | 48,684 | 54.6 | % | |||||||||||||||||||||||||||||||||||||||||
Operating income | 54,318 | 66,677 | (12,359 | ) | (18.5 | %) | ||||||||||||||||||||||||||||||||||||||||
Dividend income | 1,216 | 971 | 245 | 25.2 | % | |||||||||||||||||||||||||||||||||||||||||
Interest income | 1,962 | 158 | 1,804 | nm | ||||||||||||||||||||||||||||||||||||||||||
Interest expense (including net amortization of debt premium and discounts and debt issuance costs of $3,420 and $2,832, respectively) | (65,406 | ) | (45,060 | ) | (20,346 | ) | 45.2 | % | ||||||||||||||||||||||||||||||||||||||
Gain (loss) on early extinguishment of debt | (1,715 | ) | 104 | (1,819 | ) | nm | ||||||||||||||||||||||||||||||||||||||||
Net gain on issuance of shares by Select Income REIT | 72 | 86 | (14 | ) | (16.3 | %) | ||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes, equity in earnings of investees and gain on sale of real estate | (9,553 | ) | 22,936 | (32,489 | ) | (141.7 | %) | |||||||||||||||||||||||||||||||||||||||
Income tax expense | (101 | ) | (101 | ) | — | — | % | |||||||||||||||||||||||||||||||||||||||
Equity in earnings of investees | 21,571 | 35,518 | (13,947 | ) | (39.3 | %) | ||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | 11,917 | 58,353 | (46,436 | ) | (79.6 | %) | ||||||||||||||||||||||||||||||||||||||||
Income (loss) from discontinued operations | 173 | (589 | ) | 762 | nm | |||||||||||||||||||||||||||||||||||||||||
Income before gain on sale of real estate | 12,090 | 57,764 | (45,674 | ) | (79.1 | %) | ||||||||||||||||||||||||||||||||||||||||
Gain on sale of real estate | — | 79 | (79 | ) | nm | |||||||||||||||||||||||||||||||||||||||||
Net income | 12,090 | 57,843 | (45,753 | ) | (79.1 | %) | ||||||||||||||||||||||||||||||||||||||||
Preferred units of limited partnership distributions | (275 | ) | — | (275 | ) | nm | ||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 11,815 | $ | 57,843 | $ | (46,028 | ) | (79.6 | %) | |||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding (basic) | 84,633 | 71,050 | 13,583 | 19.1 | % | |||||||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding (diluted) | 84,653 | 71,071 | 13,582 | 19.1 | % | |||||||||||||||||||||||||||||||||||||||||
Per common share amounts (basic and diluted): | ||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 0.14 | $ | 0.82 | $ | (0.68 | ) | (82.9 | %) | |||||||||||||||||||||||||||||||||||||
Income (loss) from discontinued operations | $ | — | $ | (0.01 | ) | $ | 0.01 | — | % | |||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 0.14 | $ | 0.81 | $ | (0.67 | ) | (82.7 | %) | |||||||||||||||||||||||||||||||||||||
Reconciliation of Net Income Available for Common Shareholders to Consolidated Property NOI: | ||||||||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 11,815 | $ | 57,843 | ||||||||||||||||||||||||||||||||||||||||||
Preferred units of limited partnership distributions | 275 | — | ||||||||||||||||||||||||||||||||||||||||||||
Net income | 12,090 | 57,843 | ||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of real estate | — | (79 | ) | |||||||||||||||||||||||||||||||||||||||||||
Income before gain on sale of real estate | 12,090 | 57,764 | ||||||||||||||||||||||||||||||||||||||||||||
(Income) loss from discontinued operations | (173 | ) | 589 | |||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | 11,917 | 58,353 | ||||||||||||||||||||||||||||||||||||||||||||
Equity in earnings of investees | (21,571 | ) | (35,518 | ) | ||||||||||||||||||||||||||||||||||||||||||
Income tax expense | 101 | 101 | ||||||||||||||||||||||||||||||||||||||||||||
Net gain on issuance of shares by SIR | (72 | ) | (86 | ) | ||||||||||||||||||||||||||||||||||||||||||
(Gain) loss on early extinguishment of debt | 1,715 | (104 | ) | |||||||||||||||||||||||||||||||||||||||||||
Interest expense | 65,406 | 45,060 | ||||||||||||||||||||||||||||||||||||||||||||
Interest income | (1,962 | ) | (158 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividend income | (1,216 | ) | (971 | ) | ||||||||||||||||||||||||||||||||||||||||||
Operating income | 54,318 | 66,677 | ||||||||||||||||||||||||||||||||||||||||||||
General and administrative | 18,847 | 14,897 | ||||||||||||||||||||||||||||||||||||||||||||
Acquisition related costs | — | 1,191 | ||||||||||||||||||||||||||||||||||||||||||||
Loss on impairment of real estate | 9,490 | — | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 109,588 | 73,153 | ||||||||||||||||||||||||||||||||||||||||||||
Net operating income | $ | 192,243 | $ | 155,918 | ||||||||||||||||||||||||||||||||||||||||||
Calculation of Funds From Operations Available for Common Shareholders and Normalized Funds From Operations Available for Common Shareholders (5) | ||||||||||||||||||||||||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Net income available for common shareholders | $ | 11,815 | $ | 57,843 | ||||||||||||||||||||||||||||||||||||||||||
Plus: Depreciation and amortization: | ||||||||||||||||||||||||||||||||||||||||||||||
Consolidated properties | 109,588 | 73,153 | ||||||||||||||||||||||||||||||||||||||||||||
Unconsolidated joint venture properties | 2,185 | — | ||||||||||||||||||||||||||||||||||||||||||||
Plus: FFO attributable to Select Income REIT investment | 58,279 | 71,227 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Loss on impairment of real estate | 9,490 | — | ||||||||||||||||||||||||||||||||||||||||||||
Less: Equity in earnings from Select Income REIT | (21,584 | ) | (35,381 | ) | ||||||||||||||||||||||||||||||||||||||||||
Less: Increase in carrying value of property included in discontinued operations | (619 | ) | — | |||||||||||||||||||||||||||||||||||||||||||
Less: Gain on sale of real estate | — | (79 | ) | |||||||||||||||||||||||||||||||||||||||||||
Funds from operations available for common shareholders | 169,154 | 166,763 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Acquisition related costs | — | 1,191 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Normalized FFO attributable to Select Income REIT investment | 58,580 | 71,313 | ||||||||||||||||||||||||||||||||||||||||||||
Less: FFO attributable to Select Income REIT investment | (58,279 | ) | (71,227 | ) | ||||||||||||||||||||||||||||||||||||||||||
Less: (Gain) loss on early extinguishment of debt | 1,715 | (104 | ) | |||||||||||||||||||||||||||||||||||||||||||
Less: Net gain on issuance of shares by Select Income REIT | (72 | ) | (86 | ) | ||||||||||||||||||||||||||||||||||||||||||
Normalized funds from operations available for common shareholders | $ | 171,098 | $ | 167,850 | ||||||||||||||||||||||||||||||||||||||||||
Funds from operations per common share available for common shareholders (basic and diluted) | $ | 2.00 | $ | 2.35 | ||||||||||||||||||||||||||||||||||||||||||
Normalized funds from operations per common share available for common shareholders (basic and diluted) | $ | 2.02 | $ | 2.36 |
(1) | Comparable properties consist of 69 consolidated properties (89 buildings) we owned on December 31, 2017 and which we owned continuously since January 1, 2016. |
(2) | Acquired properties consist of 39 consolidated properties (78 buildings) we acquired since January 1, 2016. In October 2017, we acquired 35 of these properties (72 buildings) in connection with the FPO Transaction. We acquired one of these properties (one building) in a separate transaction during 2017. The remaining three properties (five buildings) were acquired during 2016. |
(3) | Disposed properties consist of one consolidated property (one building) which we sold during 2016 and one consolidated property (one building) we sold during the year ended December 31, 2017 and excludes one property (one building) classified as discontinued operations which was sold in August 2017. |
(4) | The calculations of Consolidated Property Net Operating Income, or NOI, exclude certain components of net income available for common shareholders in order to provide results that are more closely related to our consolidated property level results of operations. We define Consolidated Property NOI as consolidated income from our rental of real estate less our consolidated property operating expenses. Consolidated Property NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization. We consider Consolidated Property NOI to be an appropriate supplemental measure to net income available for common shareholders because it may help both investors and management to understand the operations of our consolidated properties. We use Consolidated Property NOI to evaluate individual and company wide consolidated property level performance, and we believe that Consolidated Property NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Consolidated Property NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income available for common shareholders or operating income as indicators of our operating performance or as measures of our liquidity. This measure should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in our consolidated statements of comprehensive income (loss). Other real estate companies and REITs may calculate Consolidated Property NOI differently than we do. |
(5) | We calculate FFO available for common shareholders and Normalized FFO available for common shareholders as shown above. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is net income available for common shareholders calculated in accordance with GAAP, plus real estate depreciation and amortization of consolidated properties and our proportionate share of the real estate depreciation and amortization of unconsolidated joint venture properties and the difference between FFO attributable to an equity investment and equity in earnings of an equity investee but excluding impairment charges on and increases in the carrying value of real estate assets, any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. Our calculation of Normalized FFO available for common shareholders differs from Nareit's definition of FFO available for common shareholders because we include SIR's Normalized FFO attributable to our equity investment in SIR (net of FFO attributable to our equity investment in SIR), we include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year and we exclude acquisition related costs expensed under GAAP, gains and losses on issuance of shares by SIR and gains and losses on early extinguishment of debt. We consider FFO available for common shareholders and Normalized FFO available for common shareholders to be appropriate supplemental measures of operating performance for a REIT, along with net income, net income available for our common shareholders and operating income. We believe that FFO available for common shareholders and Normalized FFO available for common shareholders provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO available for common shareholders and Normalized FFO available for common shareholders may facilitate a comparison of our operating performance between periods and with other REITs. FFO available for common shareholders and Normalized FFO available for common shareholders are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance, our receipt of distributions from SIR and our expected needs for and availability of cash to pay our obligations. FFO available for common shareholders and Normalized FFO available for common shareholders do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income available for common shareholders or operating income as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income, net income available for common shareholders and operating income as presented in our consolidated statements of comprehensive income (loss). Other real estate companies and REITs may calculate FFO available for common shareholders and Normalized FFO available for common shareholders differently than we do. |
Acquired Properties Results (2) | Disposed Property Results (3) | |||||||||||||||||||||||||||||||||||||||||||||
Comparable Properties Results (1) | Year Ended December 31, | Year Ended December 31, | Consolidated Results | |||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | Change | Change | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | Change | Change | |||||||||||||||||||||||||||||||||||
Rental income | $ | 249,430 | $ | 246,747 | $ | 2,683 | 1.1 | % | $ | 8,750 | $ | — | $ | — | $ | 1,802 | $ | 258,180 | $ | 248,549 | $ | 9,631 | 3.9 | % | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||
Real estate taxes | 29,757 | 29,633 | 124 | 0.4 | % | 918 | — | 28 | 273 | 30,703 | 29,906 | 797 | 2.7 | % | ||||||||||||||||||||||||||||||||
Utility expenses | 16,667 | 17,750 | (1,083 | ) | (6.1 | %) | 578 | — | 24 | 166 | 17,269 | 17,916 | (647 | ) | (3.6 | %) | ||||||||||||||||||||||||||||||
Other operating expenses | 52,212 | 49,946 | 2,266 | 4.5 | % | 2,019 | — | 59 | 479 | 54,290 | 50,425 | 3,865 | 7.7 | % | ||||||||||||||||||||||||||||||||
Total operating expenses | 98,636 | 97,329 | 1,307 | 1.3 | % | 3,515 | — | 111 | 918 | 102,262 | 98,247 | 4,015 | 4.1 | % | ||||||||||||||||||||||||||||||||
Net operating income (4) | $ | 150,794 | $ | 149,418 | $ | 1,376 | 0.9 | % | $ | 5,235 | $ | — | $ | (111 | ) | $ | 884 | 155,918 | 150,302 | 5,616 | 3.7 | % | ||||||||||||||||||||||||
Other expenses: | ||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization - consolidated properties | 73,153 | 68,696 | 4,457 | 6.5 | % | |||||||||||||||||||||||||||||||||||||||||
Acquisition related costs | 1,191 | 811 | 380 | 46.9 | % | |||||||||||||||||||||||||||||||||||||||||
General and administrative | 14,897 | 14,826 | 71 | 0.5 | % | |||||||||||||||||||||||||||||||||||||||||
Total other expenses | 89,241 | 84,333 | 4,908 | 5.8 | % | |||||||||||||||||||||||||||||||||||||||||
Operating income | 66,677 | 65,969 | 708 | 1.1 | % | |||||||||||||||||||||||||||||||||||||||||
Dividend income | 971 | 811 | 160 | 19.7 | % | |||||||||||||||||||||||||||||||||||||||||
Interest income | 158 | 14 | 144 | nm | ||||||||||||||||||||||||||||||||||||||||||
Interest expense (including net amortization of debt premium and discounts and debt issuance costs of $2,832, and $1,376, respectively) | (45,060 | ) | (37,008 | ) | (8,052 | ) | 21.8 | % | ||||||||||||||||||||||||||||||||||||||
Gain on early extinguishment of debt | 104 | 34 | 70 | nm | ||||||||||||||||||||||||||||||||||||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | (12,368 | ) | 12,368 | nm | |||||||||||||||||||||||||||||||||||||||||
Net gain (loss) on issuance of shares by Select Income REIT | 86 | (42,145 | ) | 42,231 | nm | |||||||||||||||||||||||||||||||||||||||||
Loss on impairment of Select Income REIT investment | — | (203,297 | ) | 203,297 | nm | |||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes, equity in earnings of investees and gain on sale of real estate | 22,936 | (227,990 | ) | 250,926 | nm | |||||||||||||||||||||||||||||||||||||||||
Income tax expense | (101 | ) | (86 | ) | (15 | ) | 17.4 | % | ||||||||||||||||||||||||||||||||||||||
Equity in earnings of investees | 35,518 | 18,640 | 16,878 | 90.5 | % | |||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | 58,353 | (209,436 | ) | 267,789 | nm | |||||||||||||||||||||||||||||||||||||||||
Loss from discontinued operations | (589 | ) | (525 | ) | (64 | ) | 12.2 | % | ||||||||||||||||||||||||||||||||||||||
Income (loss) before gain on sale of real estate | 57,764 | (209,961 | ) | 267,725 | nm | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of real estate | 79 | — | 79 | nm | ||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 57,843 | $ | (209,961 | ) | $ | 267,804 | nm | ||||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding (basic) | 71,050 | 70,700 | 350 | 0.5 | % | |||||||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding (diluted) | 71,071 | 70,700 | 371 | 0.5 | % | |||||||||||||||||||||||||||||||||||||||||
Per common share amounts (basic and diluted): | ||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.82 | $ | (2.96 | ) | $ | 3.78 | nm | ||||||||||||||||||||||||||||||||||||||
Loss from discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | — | — | % | ||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 0.81 | $ | (2.97 | ) | $ | 3.78 | nm | ||||||||||||||||||||||||||||||||||||||
Reconciliation of Net Income (Loss) to Consolidated Property NOI: | ||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 57,843 | $ | (209,961 | ) | |||||||||||||||||||||||||||||||||||||||||
Gain on sale of real estate | (79 | ) | — | |||||||||||||||||||||||||||||||||||||||||||
Income (loss) before gain on sale of real estate | 57,764 | (209,961 | ) | |||||||||||||||||||||||||||||||||||||||||||
Loss from discontinued operations | 589 | 525 | ||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations | 58,353 | (209,436 | ) | |||||||||||||||||||||||||||||||||||||||||||
Equity in earnings of investees | (35,518 | ) | (18,640 | ) | ||||||||||||||||||||||||||||||||||||||||||
Income tax expense | 101 | 86 | ||||||||||||||||||||||||||||||||||||||||||||
Loss on impairment of SIR investment | — | 203,297 | ||||||||||||||||||||||||||||||||||||||||||||
Net (gain) loss on issuance of shares by SIR | (86 | ) | 42,145 | |||||||||||||||||||||||||||||||||||||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | 12,368 | ||||||||||||||||||||||||||||||||||||||||||||
Gain on early extinguishment of debt | (104 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||||
Interest expense | 45,060 | 37,008 | ||||||||||||||||||||||||||||||||||||||||||||
Interest income | (158 | ) | (14 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividend income | (971 | ) | (811 | ) | ||||||||||||||||||||||||||||||||||||||||||
Operating income | 66,677 | 65,969 | ||||||||||||||||||||||||||||||||||||||||||||
General and administrative | 14,897 | 14,826 | ||||||||||||||||||||||||||||||||||||||||||||
Acquisition related costs | 1,191 | 811 | ||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 73,153 | 68,696 | ||||||||||||||||||||||||||||||||||||||||||||
Consolidated Property NOI | $ | 155,918 | $ | 150,302 | ||||||||||||||||||||||||||||||||||||||||||
Calculation of Funds From Operations and Normalized Funds From Operations(5) | ||||||||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 57,843 | $ | (209,961 | ) | |||||||||||||||||||||||||||||||||||||||||
Plus: Depreciation and amortization - consolidated properties | 73,153 | 68,696 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: FFO attributable to Select Income REIT investment | 71,227 | 56,105 | ||||||||||||||||||||||||||||||||||||||||||||
Less: Equity in earnings from Select Income REIT | (35,381 | ) | (18,620 | ) | ||||||||||||||||||||||||||||||||||||||||||
Less: Gain on sale of real estate | (79 | ) | — | |||||||||||||||||||||||||||||||||||||||||||
Funds from operations | 166,763 | (103,780 | ) | |||||||||||||||||||||||||||||||||||||||||||
Plus: Acquisition related costs | 1,191 | 811 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | 12,368 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Net loss on issuance of shares by Select Income REIT | — | 42,145 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Loss on impairment of Select Income REIT investment | — | 203,297 | ||||||||||||||||||||||||||||||||||||||||||||
Plus: Normalized FFO attributable to Select Income REIT investment | 71,313 | 70,012 | ||||||||||||||||||||||||||||||||||||||||||||
Less: FFO attributable to Select Income REIT investment | (71,227 | ) | (56,105 | ) | ||||||||||||||||||||||||||||||||||||||||||
Less: Gain on early extinguishment of debt | (104 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||||
Less: Net gain on issuance of shares by Select Income REIT | (86 | ) | — | |||||||||||||||||||||||||||||||||||||||||||
Normalized funds from operations | $ | 167,850 | $ | 168,714 | ||||||||||||||||||||||||||||||||||||||||||
Funds from operations (basic and diluted) | $ | 2.35 | $ | (1.47 | ) | |||||||||||||||||||||||||||||||||||||||||
Normalized funds from operations (basic and diluted) | $ | 2.36 | $ | 2.39 |
(1) | Comparable properties consist of 70 consolidated properties (90 buildings) we owned on December 31, 2016 and which we owned continuously since January 1, 2015, and excludes one property (one building) classified as discontinued operations. |
(2) | Acquired properties consist of three consolidated properties (five buildings) we acquired during the year ended December 31, 2016. |
(3) | Disposed properties consist of one consolidated property (one building) we sold during the year ended December 31, 2015 and one consolidated property (one building) we sold during the year ended December 31, 2016. |
(4) | See footnote (4) on page 60 for the definition of NOI. |
(5) | See footnote (5) on page 60 for the definition of FFO and Normalized FFO. |
• | our ability to maintain or increase the occupancy of, and the rental rates at, our properties; |
• | our ability to control operating expenses at our properties; |
• | our ability to purchase additional properties which produce cash flows from operations in excess of our cost of acquisition capital and property operating expenses; and |
• | our receipt of distributions from our investments in SIR and RMR Inc. |
• | Our $300,000 term loan, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at LIBOR plus a premium, which was 140 basis points per annum at December 31, 2017, on the amount outstanding under our $300,000 term loan. The interest rate premium is subject to adjustment |
• | Our $250,000 term loan, which matures on March 31, 2022, is prepayable without penalty at any time. We are required to pay interest at LIBOR plus a premium, which was 180 basis points per annum at December 31, 2017, on the amount outstanding under our $250,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2017, the annual interest rate for the amount outstanding under our $250,000 term loan was 3.4%. |
Payments Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Contractual Obligations | Total | 1 Year | Years | Years | 5 Years | |||||||||||||||
Long term debt obligations | $ | 2,263,147 | $ | 3,672 | $ | 1,269,974 | $ | 589,938 | $ | 399,563 | ||||||||||
Tenant related obligations (1) | 31,311 | 21,867 | 6,861 | 2,583 | — | |||||||||||||||
Operating leases (2) | 4,893 | 1,543 | 3,211 | 139 | — | |||||||||||||||
Projected interest expense (3) | 683,284 | 85,549 | 112,834 | 75,471 | 409,430 | |||||||||||||||
Total | $ | 2,982,635 | $ | 112,631 | $ | 1,392,880 | $ | 668,131 | $ | 808,993 |
(1) | Committed tenant related obligations includes leasing commissions and tenant improvements and are based on leases in effect as of December 31, 2017. |
(2) | Reflects the lease obligations we assumed related to FPO's former corporate headquarters, net of sublease income. |
(3) | Projected interest expense is attributable to only our debt obligations at existing rates as of December 31, 2017 and is not intended to project future interest costs which may result from debt prepayments, additional borrowings under our revolving credit facility, new debt issuances or changes in interest rates. |
• | allocation of purchase prices between various asset categories, including allocations to above and below market leases and the related impact on the recognition of rental income and depreciation and amortization expenses; and |
• | assessment of the carrying values and impairments of long lived assets and equity investments. |
Annual | Annual | Interest | |||||||||||||
Principal | Interest | Interest | Payments | ||||||||||||
Debt | Balance (1) | Rate (1) | Expense (1) | Maturity | Due | ||||||||||
Senior unsecured notes | $ | 350,000 | 3.750 | % | $ | 13,125 | 2019 | Semi-annually | |||||||
Senior unsecured notes | 310,000 | 5.875 | % | 18,213 | 2046 | Quarterly | |||||||||
Senior unsecured notes | 300,000 | 4.000 | % | 12,000 | 2022 | Semi-annually | |||||||||
Mortgage note (one property (one building) in Tampa, FL) | 8,221 | 7.000 | % | 583 | 2019 | Monthly | |||||||||
Mortgage note (one property (one building) in Washington, DC) | 34,474 | 5.720 | % | 1,999 | 2020 | Monthly | |||||||||
Mortgage note (one property (one building) in Chesapeake, VA) | 3,173 | 4.260 | % | 137 | 2020 | Monthly | |||||||||
Mortgage note (one property (one building) in Lakewood, CO) | 4,045 | 8.150 | % | 334 | 2021 | Monthly | |||||||||
Mortgage note (one property (one building) in Fairfax, VA) | 13,693 | 5.877 | % | 816 | 2021 | Monthly | |||||||||
Mortgage note (one property (one building) in Washington, DC) | 27,870 | 4.220 | % | 1,192 | 2022 | Monthly | |||||||||
Mortgage note (one property (one building) in Washington, DC) | 24,891 | 4.800 | % | 1,211 | 2023 | Monthly | |||||||||
Mortgage note (one property (one building) in Washington, DC) | 66,780 | 4.050 | % | 2,742 | 2030 | Monthly | |||||||||
$ | 1,143,147 | $ | 52,352 |
(1) | The principal balances and interest rates are the amounts stated in the contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we issued or assumed these debts. For more information, see Notes 9 and 10 to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. |
Our JV | Annual | Annual | Interest | ||||||||||||||
Ownership | Principal | Interest | Interest | Payments | |||||||||||||
Debt | Interest | Balance (1)(2) | Rate (1) | Expense (1) | Maturity | Due | |||||||||||
Mortgage note one property (one building) in Washington, DC | 50% | $ | 32,000 | 3.920 | % | $ | 1,254 | 2024 | Monthly | ||||||||
Mortgage note one property (two buildings) in Fairfax, VA | 51% | 50,000 | 3.910 | % | 1,955 | 2029 | Monthly | ||||||||||
$ | 82,000 | $ | 3,209 |
(1) | The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contract. In accordance with GAAP, recorded interest expense may differ from these amounts because of market conditions at the time we acquired the joint venture interests. |
(2) | Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the part of the joint venture arrangement interests we do not own. |
Impact of Changes in Interest Rates | |||||||||||||||
Annual | Outstanding | Total Interest | Annual Earnings | ||||||||||||
Interest Rate (1) | Debt | Expense Per Year | Per Share Impact (2) | ||||||||||||
At December 31, 2017 | 2.9 | % | $ | 1,120,000 | $ | 32,931 | $ | 0.39 | |||||||
100 bps increase | 3.9 | % | $ | 1,120,000 | $ | 44,287 | $ | 0.52 |
(1) | Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility and term loans as of December 31, 2017. |
(2) | Based on the weighted average shares outstanding (diluted) for the year ended December 31, 2017. |
Impact of Changes in Interest Rates | |||||||||||||||
Annual | Outstanding | Total Interest | Annual Earnings | ||||||||||||
Interest Rate (1) | Debt | Expense Per Year | Per Share Impact (2) | ||||||||||||
At December 31, 2017 | 2.9 | % | $ | 1,300,000 | $ | 38,224 | $ | 0.45 | |||||||
100 bps increase | 3.9 | % | $ | 1,300,000 | $ | 51,404 | $ | 0.61 |
(1) | Weighted based on the respective interest rates and outstanding borrowings under our revolving credit facility (assuming fully drawn) and term loans as of December 31, 2017. |
(2) | Based on the weighted average shares outstanding (diluted) for the year ended December 31, 2017. |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
(a) | (b) | (c) | ||||
Equity compensation plans approved by securityholders—2009 Plan | None. | None. | 1,493,119 (1) | |||
Equity compensation plans not approved by securityholders | None. | None. | None. | |||
Total | None. | None. | 1,493,119 (1) |
(1) | Consists of common shares available for issuance pursuant to the terms of the 2009 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2009 Plan. |
(a) | Index to Financial Statements and Financial Statement Schedules |
Exhibit Number | Description |
2.1 | |
3.1 | |
3.2 | |
4.1 | |
4.2 | |
4.3 | |
4.4 | |
4.5 | |
4.6 | |
4.7 |
4.8 | |
8.1 | |
10.1 | |
10.2 | |
10.3 | |
10.4 | |
10.5 | |
10.6 | |
10.7 | |
10.8 | |
10.9 | |
10.10 | |
10.11 | |
10.12 | |
10.13 | |
12.1 | |
21.1 | |
23.1 | |
23.2 | |
31.1 | |
31.2 | |
31.3 | |
32.1 | |
99.1 | |
99.2 | |
99.3 | |
99.4 |
101.1 | The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.) |
/s/ Ernst & Young LLP | |
We have served as the Company's auditor since 2008. | |
Boston, Massachusetts February 26, 2018 |
/s/ Ernst & Young LLP | |
Boston, Massachusetts February 26, 2018 |
As of December 31, | ||||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Real estate properties: | ||||||||
Land | $ | 627,108 | $ | 267,855 | ||||
Buildings and improvements | 2,348,613 | 1,620,905 | ||||||
Total real estate properties, gross | 2,975,721 | 1,888,760 | ||||||
Accumulated depreciation | (341,848 | ) | (296,804 | ) | ||||
Total real estate properties, net | 2,633,873 | 1,591,956 | ||||||
Equity investment in Select Income REIT | 467,499 | 487,708 | ||||||
Investment in unconsolidated joint ventures | 50,202 | — | ||||||
Assets of discontinued operations | — | 12,541 | ||||||
Acquired real estate leases, net | 351,872 | 124,848 | ||||||
Cash and cash equivalents | 16,569 | 29,941 | ||||||
Restricted cash | 3,111 | 530 | ||||||
Rents receivable, net | 61,429 | 48,458 | ||||||
Deferred leasing costs, net | 22,977 | 21,079 | ||||||
Other assets, net | 96,033 | 68,005 | ||||||
Total assets | $ | 3,703,565 | $ | 2,385,066 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Unsecured revolving credit facility | $ | 570,000 | $ | 160,000 | ||||
Unsecured term loans, net | 547,852 | 547,171 | ||||||
Senior unsecured notes, net | 944,140 | 646,844 | ||||||
Mortgage notes payable, net | 183,100 | 27,837 | ||||||
Liabilities of discontinued operations | — | 45 | ||||||
Accounts payable and other liabilities | 89,440 | 54,019 | ||||||
Due to related persons | 4,859 | 3,520 | ||||||
Assumed real estate lease obligations, net | 13,635 | 10,626 | ||||||
Total liabilities | 2,353,026 | 1,450,062 | ||||||
Commitments and contingencies | ||||||||
Preferred units of limited partnership | 20,496 | — | ||||||
Shareholders’ equity: | ||||||||
Common shares of beneficial interest, $.01 par value: 150,000,000 and 100,000,000 shares | ||||||||
authorized, respectively, 99,145,921 and 71,177,906 shares issued and outstanding, respectively | 991 | 712 | ||||||
Additional paid in capital | 1,968,217 | 1,473,533 | ||||||
Cumulative net income | 108,144 | 96,329 | ||||||
Cumulative other comprehensive income | 60,427 | 26,957 | ||||||
Cumulative common distributions | (807,736 | ) | (662,527 | ) | ||||
Total shareholders’ equity | 1,330,043 | 935,004 | ||||||
Total liabilities and shareholders’ equity | $ | 3,703,565 | $ | 2,385,066 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Rental income | $ | 316,532 | $ | 258,180 | $ | 248,549 | |||||
Expenses: | |||||||||||
Real estate taxes | 37,942 | 30,703 | 29,906 | ||||||||
Utility expenses | 20,998 | 17,269 | 17,916 | ||||||||
Other operating expenses | 65,349 | 54,290 | 50,425 | ||||||||
Depreciation and amortization | 109,588 | 73,153 | 68,696 | ||||||||
Loss on impairment of real estate | 9,490 | — | — | ||||||||
Acquisition related costs | — | 1,191 | 811 | ||||||||
General and administrative | 18,847 | 14,897 | 14,826 | ||||||||
Total expenses | 262,214 | 191,503 | 182,580 | ||||||||
Operating income | 54,318 | 66,677 | 65,969 | ||||||||
Dividend income | 1,216 | 971 | 811 | ||||||||
Interest income | 1,962 | 158 | 14 | ||||||||
Interest expense (including net amortization of debt premium and discounts | |||||||||||
and debt issuance costs of $3,420, $2,832 and $1,376, respectively) | (65,406 | ) | (45,060 | ) | (37,008 | ) | |||||
Gain (loss) on early extinguishment of debt | (1,715 | ) | 104 | 34 | |||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | (12,368 | ) | |||||||
Net gain (loss) on issuance of shares by Select Income REIT | 72 | 86 | (42,145 | ) | |||||||
Loss on impairment of Select Income REIT investment | — | — | (203,297 | ) | |||||||
Income (loss) from continuing operations before income taxes, | |||||||||||
equity in earnings of investees and gain on sale of real estate | (9,553 | ) | 22,936 | (227,990 | ) | ||||||
Income tax expense | (101 | ) | (101 | ) | (86 | ) | |||||
Equity in earnings of investees | 21,571 | 35,518 | 18,640 | ||||||||
Income (loss) from continuing operations | 11,917 | 58,353 | (209,436 | ) | |||||||
Income (loss) from discontinued operations | 173 | (589 | ) | (525 | ) | ||||||
Income (loss) before gain on sale of real estate | 12,090 | 57,764 | (209,961 | ) | |||||||
Gain on sale of real estate | — | 79 | — | ||||||||
Net income (loss) | 12,090 | 57,843 | (209,961 | ) | |||||||
Other comprehensive income (loss): | |||||||||||
Unrealized gain (loss) on investment in available for sale securities | 24,042 | 30,465 | (9,391 | ) | |||||||
Equity in unrealized gain (loss) of investees | 9,428 | 11,359 | (5,513 | ) | |||||||
Other comprehensive income (loss) | 33,470 | 41,824 | (14,904 | ) | |||||||
Comprehensive income (loss) | $ | 45,560 | $ | 99,667 | $ | (224,865 | ) | ||||
Net income (loss) | $ | 12,090 | $ | 57,843 | $ | (209,961 | ) | ||||
Preferred units of limited partnership distributions | (275 | ) | — | — | |||||||
Net income (loss) available for common shareholders | $ | 11,815 | $ | 57,843 | $ | (209,961 | ) | ||||
Weighted average common shares outstanding (basic) | 84,633 | 71,050 | 70,700 | ||||||||
Weighted average common shares outstanding (diluted) | 84,653 | 71,071 | 70,700 | ||||||||
Per common share amounts (basic and diluted): | |||||||||||
Income (loss) from continuing operations | $ | 0.14 | $ | 0.82 | $ | (2.96 | ) | ||||
Income (loss) from discontinued operations | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |||
Net income (loss) available for common shareholders | $ | 0.14 | $ | 0.81 | $ | (2.97 | ) |
Number of Shares | Common Shares | Additional Paid In Capital | Cumulative Net Income (Loss) | Cumulative Other Comprehensive Income (Loss) | Cumulative Common Distributions | Total | ||||||||||||||||||||
Balance at December 31, 2014 | 70,349,227 | $ | 703 | $ | 1,457,631 | $ | 248,447 | $ | 37 | $ | (409,369 | ) | $ | 1,297,449 | ||||||||||||
Issuance of shares, net | 723,222 | 7 | 14,039 | — | — | — | 14,046 | |||||||||||||||||||
Share grants | 65,600 | 1 | 984 | — | — | — | 985 | |||||||||||||||||||
Share repurchases | (11,741 | ) | — | (172 | ) | — | — | — | (172 | ) | ||||||||||||||||
Equity in unrealized loss of investees | — | — | — | — | (5,513 | ) | — | (5,513 | ) | |||||||||||||||||
Unrealized loss on investment in available for sale of securities | — | — | — | — | (9,391 | ) | — | (9,391 | ) | |||||||||||||||||
Net loss available for common shareholders | — | — | — | (209,961 | ) | — | — | (209,961 | ) | |||||||||||||||||
Distributions to common shareholders | — | — | — | — | — | (130,792 | ) | (130,792 | ) | |||||||||||||||||
Balance at December 31, 2015 | 71,126,308 | 711 | 1,472,482 | 38,486 | (14,867 | ) | (540,161 | ) | 956,651 | |||||||||||||||||
Share grants | 65,900 | 1 | 1,388 | — | — | — | 1,389 | |||||||||||||||||||
Share repurchases | (14,302 | ) | — | (337 | ) | — | — | — | (337 | ) | ||||||||||||||||
Equity in unrealized gain of investees | — | — | — | — | 11,359 | — | 11,359 | |||||||||||||||||||
Unrealized gain on investment in available for sale of securities | — | — | — | — | 30,465 | — | 30,465 | |||||||||||||||||||
Net income available for common shareholders | — | — | — | 57,843 | — | — | 57,843 | |||||||||||||||||||
Distributions to common shareholders | — | — | — | — | — | (122,366 | ) | (122,366 | ) | |||||||||||||||||
Balance at December 31, 2016 | 71,177,906 | 712 | 1,473,533 | 96,329 | 26,957 | (662,527 | ) | 935,004 | ||||||||||||||||||
Issuance of shares, net | 27,907,029 | 279 | 493,587 | 493,866 | ||||||||||||||||||||||
Share grants | 75,350 | 1,361 | — | — | — | 1,361 | ||||||||||||||||||||
Share repurchases | (14,364 | ) | (264 | ) | — | — | — | (264 | ) | |||||||||||||||||
Equity in unrealized gain of investees | — | — | — | — | 9,428 | — | 9,428 | |||||||||||||||||||
Unrealized gain on investment in available for sale of securities | — | — | — | — | 24,042 | — | 24,042 | |||||||||||||||||||
Net income available for common shareholders | — | — | — | 11,815 | — | — | 11,815 | |||||||||||||||||||
Distributions to common shareholders | — | — | — | — | — | (145,209 | ) | (145,209 | ) | |||||||||||||||||
Balance at December 31, 2017 | 99,145,921 | $ | 991 | $ | 1,968,217 | $ | 108,144 | $ | 60,427 | $ | (807,736 | ) | $ | 1,330,043 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | 12,090 | $ | 57,843 | $ | (209,961 | ) | ||||
Adjustments to reconcile net income (loss) to cash provided by operating activities: | |||||||||||
Depreciation | 52,427 | 42,489 | 38,987 | ||||||||
Net amortization of debt premiums and discounts and debt issuance costs | 3,420 | 2,832 | 1,376 | ||||||||
Gain on sale of real estate | — | (79 | ) | — | |||||||
(Gain) loss on early extinguishment of debt | 1,715 | (104 | ) | (34 | ) | ||||||
Straight line rental income | (5,582 | ) | (2,691 | ) | (3,978 | ) | |||||
Amortization of acquired real estate leases | 56,174 | 29,003 | 28,624 | ||||||||
Amortization of deferred leasing costs | 3,802 | 3,265 | 2,349 | ||||||||
Other non-cash expenses, net | 300 | 284 | 817 | ||||||||
Loss on impairment of real estate | 9,490 | — | — | ||||||||
Increase in carrying value of property included in discontinued operations | (619 | ) | — | — | |||||||
Equity in earnings of investees | (21,571 | ) | (35,518 | ) | (18,640 | ) | |||||
Net (gain) loss on issuance of shares by Select Income REIT | (72 | ) | (86 | ) | 42,145 | ||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | 12,368 | ||||||||
Loss on impairment of Select Income REIT investment | — | — | 203,297 | ||||||||
Distributions of earnings from Select Income REIT | 18,640 | 32,425 | 21,882 | ||||||||
Change in assets and liabilities: | |||||||||||
Restricted cash | (1,563 | ) | 492 | 1,258 | |||||||
Deferred leasing costs | (5,017 | ) | (10,196 | ) | (4,741 | ) | |||||
Rents receivable | (4,990 | ) | 1,670 | (2,729 | ) | ||||||
Other assets | 1,368 | 25 | 515 | ||||||||
Accounts payable and accrued expenses | 11,696 | 1,970 | 1,097 | ||||||||
Due to related persons | 1,339 | 634 | 725 | ||||||||
Net cash provided by operating activities | 133,047 | 124,258 | 115,357 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Real estate acquisitions and deposits | (1,188,030 | ) | (200,331 | ) | — | ||||||
Real estate improvements | (45,940 | ) | (32,999 | ) | (19,163 | ) | |||||
Investment in Select Income REIT | — | — | (95,821 | ) | |||||||
Investment in The RMR Group Inc. | — | — | (7,226 | ) | |||||||
Distributions in excess of earnings from Select Income REIT | 32,192 | 17,910 | 25,148 | ||||||||
Distributions in excess of earnings from our unconsolidated joint ventures | 482 | — | — | ||||||||
Proceeds from sale of properties, net | 15,083 | 263 | 30,460 | ||||||||
Net cash used in investing activities | (1,186,213 | ) | (215,157 | ) | (66,602 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Repayment of mortgage notes payable | (11,909 | ) | (107,933 | ) | (48,908 | ) | |||||
Proceeds from issuance of senior notes, after discounts | 297,954 | 300,235 | — | ||||||||
Proceeds from issuance of common shares, net | 493,866 | — | — | ||||||||
Borrowings on unsecured revolving credit facility | 645,000 | 399,000 | 195,000 | ||||||||
Repayments on unsecured revolving credit facility | (235,000 | ) | (356,000 | ) | (78,000 | ) | |||||
Payment of debt issuance costs | (4,644 | ) | (544 | ) | (21 | ) | |||||
Repurchase of common shares | (264 | ) | (337 | ) | (172 | ) | |||||
Distributions to common shareholders | (145,209 | ) | (122,366 | ) | (121,660 | ) | |||||
Net cash provided by (used in) financing activities | 1,039,794 | 112,055 | (53,761 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (13,372 | ) | 21,156 | (5,006 | ) | ||||||
Cash and cash equivalents at beginning of year | 29,941 | 8,785 | 13,791 | ||||||||
Cash and cash equivalents at end of year | $ | 16,569 | $ | 29,941 | $ | 8,785 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Supplemental cash flow information: | |||||||||||
Interest paid | $ | 55,048 | $ | 41,139 | $ | 35,500 | |||||
Income taxes paid | $ | 117 | $ | 111 | $ | 143 | |||||
Non-cash investing activities: | |||||||||||
Investment in The RMR Group Inc. paid in common shares | $ | — | $ | — | $ | 13,545 | |||||
Sale of real estate | $ | — | $ | 3,600 | $ | — | |||||
Mortgage note receivable related to sale of real estate | $ | — | $ | (3,600 | ) | $ | — | ||||
Distribution of The RMR Group Inc. common stock received from Select Income REIT | $ | — | $ | — | $ | 5,244 | |||||
Working capital assumed | $ | (1,596 | ) | $ | — | $ | — | ||||
Non-cash financing activities: | |||||||||||
Assumption of mortgage debt | $ | 167,548 | $ | — | $ | — | |||||
Distribution to common shareholders of The RMR Group Inc. common stock | $ | — | $ | — | $ | (9,132 | ) | ||||
Preferred units of limited partnership issued | $ | 20,221 | $ | — | $ | — |
For the Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Weighted average common shares for basic earnings per share | 84,633 | 71,050 | 70,700 | |||||
Effect of dilutive securities: unvested share awards | 20 | 21 | — | |||||
Weighted average common shares for diluted earnings per share | 84,653 | 71,071 | 70,700 |
Total Purchase Price: | |||||
Cash consideration | $ | 1,175,140 | |||
Acquisition related costs | 9,575 | ||||
Total cash consideration | 1,184,715 | ||||
Preferred units of limited partnership issued (1) | 20,221 | ||||
Acquired net working capital | (1,596 | ) | |||
Assumed mortgage notes | 167,548 | ||||
Non-cash portion of purchase price | 186,173 | ||||
Gross purchase price | $ | 1,370,888 | |||
Purchase Price Allocation: | |||||
Land | $ | 360,909 | |||
Buildings and improvements | 681,340 | ||||
Acquired real estate leases (2) | 283,498 | ||||
Investment in unconsolidated joint ventures | 51,305 | ||||
Cash | 11,191 | ||||
Restricted cash | 1,018 | ||||
Rents receivable | 2,672 | ||||
Other assets | 3,640 | ||||
Total assets | 1,426,694 | ||||
Mortgage notes payable (3) | (167,936 | ) | |||
Assumed real estate lease obligations (2) | (5,776 | ) | |||
Accounts payable and accrued expenses | (10,640 | ) | |||
Rents collected in advance | (1,436 | ) | |||
Security deposits | (4,849 | ) | |||
Net assets acquired | 1,204,936 | ||||
Assumed working capital | (1,596 | ) | |||
Assumed principal balance of debt | 167,548 | ||||
Gross purchase price | $ | 1,370,888 | |||
(1) | Pursuant to the terms of the FPO Transaction, each unit of limited partnership interest in FPO's operating partnership that was not liquidated on the closing date was exchanged on a one-for-one basis for 5.5% Series A Cumulative Preferred Units of the surviving subsidiary. As of December 31, 2017, there are 1,814 of 5.5% Series A Cumulative Preferred Units outstanding. Beginning on October of each year and ending January 15 of the following year, with the first such period beginning October 1, 2019, holders have the right to redeem their 5.5% Series A Cumulative Preferred Units for cash equal to $11.15 per unit. Beginning on April 1 of each year and ending June 30 of that year, with the first such period beginning April 1, 2018, we have the right to redeem all or any portion of the outstanding 5.5% Series A Cumulative Preferred Units for cash at $11.15 per unit. As of December 31, 2017, the carrying value of |
(2) | As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 3.2 years, 3.1 years and 3.8 years, respectively. |
(3) | Includes fair value adjustments totaling $388 on $167,936 principal amount of mortgage notes we assumed in connection with the FPO Transaction. |
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
Rental income | $ | 437,101 | $ | 412,245 | |||
Net income (loss) | (25,898 | ) | 11,630 | ||||
Net income (loss) per share | $ | (0.26 | ) | $ | 0.12 |
Joint Venture | GOV Ownership | GOV Carrying Value of Investment at December 31, 2017 | Property Type | Number of Buildings | Location | Square Feet | ||||||||
Prosperity Metro Plaza | 51% | $ | 27,888 | Office | 2 | Fairfax, VA | 328,456 | |||||||
1750 H Street, NW | 50% | 22,314 | Office | 1 | Washington, DC | 115,411 | ||||||||
Total | $ | 50,202 | 3 | 443,867 | ||||||||||
Joint Venture | Interest Rate (1) | Maturity Date | Principal Balance at December 31, 2017 | |||||
Prosperity Metro Plaza | 4.09% | 12/1/2029 | $ | 50,000 | ||||
1750 H Street, NW | 3.69% | 8/1/2024 | 32,000 | |||||
Weighted Average/Total | 3.93% | $ | 82,000 | |||||
(1) | Includes the effect of mark to market purchase accounting. |
Number | ||||||||||||||||||||||||||
of | Buildings | Other | ||||||||||||||||||||||||
Acquisition | Properties/ | Square | Purchase | and | Assumed | |||||||||||||||||||||
Date | Location | Type | Buildings | Feet | Price | Land | Improvements | Assets | ||||||||||||||||||
Jan-17 | Manassas, VA | Office | 1/1 | 69,374 | $ | 12,657 | $ | 1,562 | $ | 8,253 | $ | 2,842 |
Number | |||||||||||||||||||||||||||||||||
of | Buildings | Other | Acquired | ||||||||||||||||||||||||||||||
Acquisition | Properties/ | Square | Purchase | and | Assumed | Acquired | Lease | ||||||||||||||||||||||||||
Date | Location | Type | Buildings | Feet | Price (1) | Land | Improvements | Assets | Leases | Obligations | |||||||||||||||||||||||
Jan-16 | Sacramento, CA (2) | Office | 1/1 | 337,811 | $ | 79,508 | $ | 4,688 | $ | 61,995 | $ | 2,167 | $ | 11,245 | $ | (587 | ) | ||||||||||||||||
Jul-16 | Atlanta, GA (3) | Land | — | — | 1,670 | 1,670 | — | — | — | — | |||||||||||||||||||||||
Dec-16 | Rancho Cordova, CA (2) | Office | 1/1 | 82,896 | 13,943 | 1,466 | 8,797 | — | 3,680 | — | |||||||||||||||||||||||
Dec-16 | Chantilly, VA (2) | Office | 1/3 | 409,478 | 104,183 | 6,966 | 74,214 | — | 23,003 | — | |||||||||||||||||||||||
3/5 | 830,185 | $ | 199,304 | $ | 14,790 | $ | 145,006 | $ | 2,167 | $ | 37,928 | $ | (587 | ) |
(1) | Excludes acquisition costs. |
(2) | Accounted for as a business combination. |
(3) | On July 6, 2016, we acquired a land parcel adjacent to on our existing properties for $1,623. We accounted for this transaction as an asset acquisition and capitalized acquisition related costs of $47. |
As of December 31, | ||||
2016 | ||||
Real estate properties, net | $ | 12,260 | ||
Other assets | 281 | |||
Assets of discontinued operations | $ | 12,541 | ||
Other liabilities | $ | 45 | ||
Liabilities of discontinued operations | $ | 45 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Rental income | $ | 17 | $ | 68 | $ | 114 | ||||||
Real estate taxes | (88 | ) | (97 | ) | (92 | ) | ||||||
Utility expenses | (97 | ) | (146 | ) | (161 | ) | ||||||
Other operating expenses | (202 | ) | (300 | ) | (272 | ) | ||||||
General and administrative | (76 | ) | (114 | ) | (114 | ) | ||||||
Increase in carrying value of property included in discontinued operations | 619 | — | — | |||||||||
Income (loss) from discontinued operations | $ | 173 | $ | (589 | ) | $ | (525 | ) |
2018 | $ | 367,883 | |
2019 | 330,792 | ||
2020 | 258,847 | ||
2021 | 220,758 | ||
2022 | 180,558 | ||
Thereafter | 564,621 | ||
$ | 1,923,459 |
2018 | $ | 1,543 | ||
2019 | 1,584 | |||
2020 | 1,627 | |||
2021 | 139 | |||
$ | 4,893 |
• | Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of: |
◦ | the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, plus (b) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and |
◦ | the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000. |
• | Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows: |
◦ | An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of: |
– | our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period (or, for purposes of calculating any incentive fee for 2015, our equity market capitalization on December 31, 2013), and |
– | the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Equity Index, or the benchmark return per share, for the relevant measurement period. |
◦ | The calculation of the incentive management fee (including the determinations of our equity market capitalization and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued during the measurement period. |
◦ | No incentive management fee is payable by us unless our total return per share during the measurement period is positive. |
◦ | The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated. |
◦ | If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the SNL U.S. REIT Equity Index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the SNL U.S. REIT Equity Index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the SNL U.S. REIT Equity Index. |
◦ | The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period. |
◦ | Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements. |
• | Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs. |
• | Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $15,045, $12,276 and $9,641 for property management related expenses for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included in other operating expenses in our consolidated statements of comprehensive income (loss) for these periods. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of centralized accounting personnel and our share of RMR LLC’s costs for providing our internal audit function. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. The amounts recognized as expense for internal audit costs were $276, $235 and $252 for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods. |
• | Term. Our management agreements with RMR LLC have terms that end on December 31, 2037, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension. |
• | Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (1) at any time on 60 days’ written notice for convenience, (2) immediately on written notice for cause, as defined therein, (3) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (4) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein. |
• | Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination, would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC. |
• | Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable. |
• | Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC |
• | Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC. |
• | We contributed 700,000 of our common shares and $3,917 in cash to RMR Inc. and RMR Inc. issued 1,541,201 shares of its class A common stock to us. |
• | We agreed to distribute approximately half of the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction to our shareholders as a special distribution. |
• | We entered into amended and restated business and property management agreements with RMR LLC which, among other things, amended the term, termination and termination fee provisions of those agreements. See Note 6 for further information regarding our management agreements with RMR LLC. |
• | We entered into a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations. |
• | We entered into a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they agreed not to transfer the 700,000 of our common shares ABP Trust received in the Up-C Transaction for a 10 year period ending on June 5, 2025 and we granted them certain registration rights, subject, in each case, to certain exceptions. |
Year | Principal payment | ||||
2018 | $ | 3,672 | |||
2019 | 931,541 | ||||
2020 | 338,433 | ||||
2021 | 14,420 | ||||
2022 | 575,518 | ||||
Thereafter | 399,563 | ||||
$ | 2,263,147 | (1) |
(1) | Total consolidated debt outstanding as of December 31, 2017, net of unamortized premiums, discounts and certain issuance costs totaling $18,055 was $2,245,092. |
Fair Value at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Estimated | Active Markets for | Significant Other | Unobservable | |||||||||||||
Fair | Identical Assets | Observable Inputs | Inputs | |||||||||||||
Description | Value | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Recurring Fair Value Measurements Assets: | ||||||||||||||||
Investment in RMR Inc. (1) | $ | 72,005 | $ | 72,005 | $ | — | $ | — | ||||||||
Non-Recurring Fair Value Measurements Assets: | ||||||||||||||||
One property (2) | $ | 19,667 | $ | — | $ | 19,667 | $ | — |
(1) | Our 1,214,225 shares of class A common stock of RMR Inc., which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP). Our historical cost basis for these shares is $26,888 as of December 31, 2017. The net unrealized gain of $45,117 for these shares as of December 31, 2017 is included in cumulative other comprehensive income (loss) in our consolidated balance sheets. |
(2) | We estimated the fair value of a property we agreed to sell located in Minneapolis, MN at December 31, 2017 based upon the selling price agreed to with a third party (Level 2 inputs as defined in the fair value hierarchy under GAAP). See Note 5 for further details. |
As of December 31, 2017 | As of December 31, 2016 | |||||||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | |||||||||||||
Senior unsecured notes, 3.750% interest rate, due in 2019 | $ | 348,096 | $ | 354,993 | $ | 346,952 | $ | 354,078 | ||||||||
Senior unsecured notes, 5.875% interest rate, due in 2046 | 300,232 | 320,416 | 299,892 | 292,268 | ||||||||||||
Senior unsecured notes, 4.000% interest rate, due in 2022 | 295,812 | 302,655 | — | — | ||||||||||||
Mortgage note payable, 4.050% interest rate, due in 2030(2)(3) | 64,293 | 65,198 | — | — | ||||||||||||
Mortgage note payable, 5.720% interest rate, due in 2020(2)(3) | 36,085 | 36,332 | — | — | ||||||||||||
Mortgage note payable, 4.220% interest rate, due in 2022(2)(3) | 27,906 | 28,432 | — | — | ||||||||||||
Mortgage note payable, 4.800% interest rate, due in 2023(2)(3) | 25,501 | 25,904 | — | — | ||||||||||||
Mortgage note payable, 5.877% interest rate, due in 2021(2) | 13,620 | 14,565 | 13,841 | 14,492 | ||||||||||||
Mortgage note payable, 7.000% interest rate, due in 2019(2) | 8,391 | 8,555 | 8,778 | 9,188 | ||||||||||||
Mortgage note payable, 8.150% interest rate, due in 2021(2) | 4,111 | 4,340 | 5,218 | 5,575 | ||||||||||||
Mortgage note payable, 4.260% interest rate, due in 2020(2)(3) | 3,193 | 3,216 | — | — | ||||||||||||
$ | 1,127,240 | $ | 1,164,606 | $ | 674,681 | $ | 675,601 |
(1) | Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts. |
(2) | We assumed these mortgages in connection with our acquisitions of the encumbered properties. The stated interest rates for these mortgage debts are the contractually stated rates. We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition. |
(3) | In connection with the FPO Transaction, we assumed five fixed rate mortgage notes with an aggregate principal balance of $167,548. We recorded these mortgage notes at their estimated fair value aggregating $167,936 on the date of acquisition. |
2017 | 2016 | 2015 | |||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested shares, beginning of year | 98,970 | $20.59 | 96,725 | $20.11 | 90,338 | $23.40 | |||||||||
Shares granted | 75,350 | 19.36 | 65,900 | 21.66 | 65,600 | 16.59 | |||||||||
Shared forfeited | — | — | — | — | (1,020 | ) | 23.41 | ||||||||
Shares vested | (70,070 | ) | 20.80 | (63,655 | ) | 20.97 | (58,193 | ) | 21.20 | ||||||
Unvested shares, end of year | 104,250 | $19.56 | 98,970 | $20.59 | 96,725 | $20.11 |
Unrealized Gain (Loss) on Investment in Available for Sale Securities | Equity in Unrealized Gains (Losses) of Investees | Total | |||||||||
Balance at December 31, 2014 | $ | — | $ | 37 | $ | 37 | |||||
Other comprehensive loss before reclassifications | (9,391 | ) | (5,592 | ) | (14,983 | ) | |||||
Amounts reclassified from cumulative other | |||||||||||
comprehensive loss to net income (1) | — | 79 | 79 | ||||||||
Net current period other comprehensive loss | (9,391 | ) | (5,513 | ) | (14,904 | ) | |||||
Balance at December 31, 2015 | (9,391 | ) | (5,476 | ) | (14,867 | ) | |||||
Other comprehensive income before reclassifications | 30,465 | 11,254 | 41,719 | ||||||||
Amounts reclassified from cumulative other | |||||||||||
comprehensive income to net income (1) | — | 105 | 105 | ||||||||
Net current period other comprehensive income | 30,465 | 11,359 | 41,824 | ||||||||
Balance at December 31, 2016 | 21,074 | 5,883 | 26,957 | ||||||||
Other comprehensive income before reclassifications | 24,042 | 9,462 | 33,504 | ||||||||
Amounts reclassified from cumulative other | |||||||||||
comprehensive income to net income (loss) (1) | — | (34 | ) | (34 | ) | ||||||
Net current period other comprehensive income | 24,042 | 9,428 | 33,470 | ||||||||
Balance at December 31, 2017 | $ | 45,116 | $ | 15,311 | $ | 60,427 |
(1) | Amounts reclassified from cumulative other comprehensive income (loss) is included in equity in earnings of investees in our consolidated statements of comprehensive income (loss). |
As of December 31, | ||||||||
2017 | 2016 | |||||||
Real estate properties, net | $ | 3,905,616 | $ | 3,899,792 | ||||
Properties held for sale | 5,829 | — | ||||||
Acquired real estate leases, net | 477,577 | 506,298 | ||||||
Cash and cash equivalents | 658,719 | 22,127 | ||||||
Rents receivable, net | 127,672 | 124,089 | ||||||
Other assets, net | 127,617 | 87,376 | ||||||
Total assets | $ | 5,303,030 | $ | 4,639,682 | ||||
Unsecured revolving credit facility | $ | — | $ | 327,000 | ||||
ILPT revolving credit facility | 750,000 | — | ||||||
Unsecured term loan, net | 348,870 | 348,373 | ||||||
Senior unsecured notes, net | 1,777,425 | 1,430,300 | ||||||
Mortgage notes payable, net | 210,785 | 245,643 | ||||||
Assumed real estate lease obligations, net | 68,783 | 77,622 | ||||||
Other liabilities | 155,348 | 136,782 | ||||||
Shareholders' equity | 1,991,819 | 2,073,962 | ||||||
Total liabilities and shareholders' equity | $ | 5,303,030 | $ | 4,639,682 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Rental income | $ | 392,285 | $ | 387,015 | $ | 364,139 | ||||||
Tenant reimbursements and other income | 75,818 | 74,992 | 64,226 | |||||||||
Total revenues | 468,103 | 462,007 | 428,365 | |||||||||
Real estate taxes | 44,131 | 42,879 | 37,460 | |||||||||
Other operating expenses | 55,567 | 52,957 | 41,953 | |||||||||
Depreciation and amortization | 137,672 | 133,762 | 122,906 | |||||||||
Acquisition and transaction related costs | 1,075 | 306 | 21,987 | |||||||||
General and administrative | 54,818 | 28,602 | 25,859 | |||||||||
Write-off of straight line rents receivable, net | 12,517 | 5,484 | — | |||||||||
Loss on asset impairment | 4,047 | — | — | |||||||||
Loss on impairment of real estate assets | 229 | — | — | |||||||||
Total expenses | 310,056 | 263,990 | 250,165 | |||||||||
Operating income | 158,047 | 198,017 | 178,200 | |||||||||
Dividend income | 1,587 | 1,268 | 1,666 | |||||||||
Interest expense | (92,870 | ) | (82,620 | ) | (73,885 | ) | ||||||
Loss on early extinguishment of debt | — | — | (6,845 | ) | ||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | (23,717 | ) | ||||||||
Income before income tax expense and equity in earnings of an investee | 66,764 | 116,665 | 75,419 | |||||||||
Income tax expense | (466 | ) | (448 | ) | (515 | ) | ||||||
Equity in earnings of an investee | 608 | 137 | 20 | |||||||||
Net income | 66,906 | 116,354 | 74,924 | |||||||||
Net income allocated to noncontrolling interest | — | (33 | ) | (176 | ) | |||||||
Net income attributed to SIR | $ | 66,906 | $ | 116,321 | $ | 74,748 | ||||||
Weighted average common shares outstanding (basic) | 89,351 | 89,304 | 86,699 | |||||||||
Weighted average common shares outstanding (diluted) | 89,370 | 89,324 | $ | 86,708 | ||||||||
Net income attributed to SIR per common share (basic and diluted) | $ | 0.75 | $ | 1.30 | $ | 0.86 |
Year Ended December 31, 2017 | |||||||||||||||
Investment in Real Estate | Investment in SIR | Corporate | Consolidated | ||||||||||||
Rental income | $ | 316,532 | $ | — | $ | — | $ | 316,532 | |||||||
Expenses: | |||||||||||||||
Real estate taxes | 37,942 | — | — | 37,942 | |||||||||||
Utility expenses | 20,998 | — | — | 20,998 | |||||||||||
Other operating expenses | 65,349 | — | — | 65,349 | |||||||||||
Depreciation and amortization | 109,588 | — | — | 109,588 | |||||||||||
Loss on impairment of real estate | 9,490 | — | — | 9,490 | |||||||||||
General and administrative | — | — | 18,847 | 18,847 | |||||||||||
Total expenses | 243,367 | — | 18,847 | 262,214 | |||||||||||
Operating income (loss) | 73,165 | — | (18,847 | ) | 54,318 | ||||||||||
Dividend income | — | — | 1,216 | 1,216 | |||||||||||
Interest income | 196 | — | 1,766 | 1,962 | |||||||||||
Interest expense | (3,209 | ) | — | (62,197 | ) | (65,406 | ) | ||||||||
Loss on early extinguishment of debt | — | — | (1,715 | ) | (1,715 | ) | |||||||||
Gain on issuance of shares by Select Income REIT | — | 72 | — | 72 | |||||||||||
Income (loss) from continuing operations before income taxes, | |||||||||||||||
equity in earnings (losses) of investees and gain on sale of real estate | 70,152 | 72 | (79,777 | ) | (9,553 | ) | |||||||||
Income tax expense | — | — | (101 | ) | (101 | ) | |||||||||
Equity in earnings (losses) of investees | (621 | ) | 21,584 | 608 | 21,571 | ||||||||||
Income (loss) from continuing operations | 69,531 | 21,656 | (79,270 | ) | 11,917 | ||||||||||
Income from discontinued operations | 173 | — | — | 173 | |||||||||||
Net income (loss) | 69,704 | 21,656 | (79,270 | ) | 12,090 | ||||||||||
Preferred units of limited partnership distributions | — | — | (275 | ) | (275 | ) | |||||||||
Net income (loss) available for common shareholders | $ | 69,704 | $ | 21,656 | $ | (79,545 | ) | $ | 11,815 | ||||||
As of December 31, 2017 | |||||||||||||||
Investment in Real Estate | Investment in SIR | Corporate | Consolidated | ||||||||||||
Total Assets | $ | 3,138,764 | $ | 467,499 | $ | 97,302 | $ | 3,703,565 |
Year Ended December 31, 2016 | |||||||||||||||
Investment in Real Estate | Investment in SIR | Corporate | Consolidated | ||||||||||||
Rental income | $ | 258,180 | $ | — | $ | — | $ | 258,180 | |||||||
Expenses: | |||||||||||||||
Real estate taxes | 30,703 | — | — | 30,703 | |||||||||||
Utility expenses | 17,269 | — | — | 17,269 | |||||||||||
Other operating expenses | 54,290 | — | — | 54,290 | |||||||||||
Depreciation and amortization | 73,153 | — | — | 73,153 | |||||||||||
Acquisition related costs | 1,191 | — | — | 1,191 | |||||||||||
General and administrative | — | — | 14,897 | 14,897 | |||||||||||
Total expenses | 176,606 | — | 14,897 | 191,503 | |||||||||||
Operating income (loss) | 81,574 | — | (14,897 | ) | 66,677 | ||||||||||
Dividend income | — | — | 971 | 971 | |||||||||||
Interest income | 124 | — | 34 | 158 | |||||||||||
Interest expense | (2,375 | ) | — | (42,685 | ) | (45,060 | ) | ||||||||
Gain on early extinguishment of debt | 104 | — | — | 104 | |||||||||||
Net gain on issuance of shares by Select Income REIT | — | 86 | — | 86 | |||||||||||
Income (loss) from continuing operations before income taxes, | |||||||||||||||
equity in earnings (losses) of investees and gain on sale of real estate | 79,427 | 86 | (56,577 | ) | 22,936 | ||||||||||
Income tax expense | — | — | (101 | ) | (101 | ) | |||||||||
Equity in earnings of investees | — | 35,381 | 137 | 35,518 | |||||||||||
Income (loss) from continuing operations | 79,427 | 35,467 | (56,541 | ) | 58,353 | ||||||||||
Loss from discontinued operations | (589 | ) | — | — | (589 | ) | |||||||||
Income (loss) before gain on sale of real estate | 78,838 | 35,467 | (56,541 | ) | 57,764 | ||||||||||
Gain on sale of real estate | 79 | — | — | 79 | |||||||||||
Net income (loss) | 78,917 | 35,467 | (56,541 | ) | 57,843 | ||||||||||
Preferred units of limited partnership distributions | — | — | — | — | |||||||||||
Net income (loss) available for common shareholders | $ | 78,917 | $ | 35,467 | $ | (56,541 | ) | $ | 57,843 | ||||||
As of December 31, 2016 | |||||||||||||||
Investment in Real Estate | Investment in SIR | Corporate | Consolidated | ||||||||||||
Total Assets | $ | 1,807,560 | $ | 487,708 | $ | 89,798 | $ | 2,385,066 |
Year Ended December 31, 2015 | ||||||||||||||||
Investment in Real Estate | Investment in SIR | Corporate | Consolidated | |||||||||||||
Rental income | $ | 248,549 | $ | — | $ | — | $ | 248,549 | ||||||||
Expenses: | ||||||||||||||||
Real estate taxes | 29,906 | — | — | 29,906 | ||||||||||||
Utility expenses | 17,916 | — | — | 17,916 | ||||||||||||
Other operating expenses | 50,425 | — | — | 50,425 | ||||||||||||
Depreciation and amortization | 68,696 | — | — | 68,696 | ||||||||||||
Acquisition related costs | 561 | — | 250 | 811 | ||||||||||||
General and administrative | — | — | 14,826 | 14,826 | ||||||||||||
Total expenses | 167,504 | — | 15,076 | 182,580 | ||||||||||||
Operating income (loss) | 81,045 | — | (15,076 | ) | 65,969 | |||||||||||
Dividend income | — | — | 811 | 811 | ||||||||||||
Interest income | 10 | — | 4 | 14 | ||||||||||||
Interest expense | (7,908 | ) | — | (29,100 | ) | (37,008 | ) | |||||||||
Gain on early extinguishment of debt | 34 | — | — | 34 | ||||||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | (12,368 | ) | (12,368 | ) | ||||||||||||
Net loss on issuance of shares by Select Income REIT | — | (42,145 | ) | — | (42,145 | ) | ||||||||||
Loss on impairment of Select Income REIT investment | — | (203,297 | ) | — | (203,297 | ) | ||||||||||
Income (loss) from continuing operations before income taxes, | ||||||||||||||||
equity in earnings (losses) of investees and gain on sale of real estate | 73,181 | (245,442 | ) | (55,729 | ) | (227,990 | ) | |||||||||
Income tax expense | — | — | (86 | ) | (86 | ) | ||||||||||
Equity in earnings of investees | — | 18,620 | 20 | 18,640 | ||||||||||||
Income (loss) from continuing operations | 73,181 | (226,822 | ) | (55,795 | ) | (209,436 | ) | |||||||||
Loss from discontinued operations | (525 | ) | — | — | (525 | ) | ||||||||||
Net income (loss) | 72,656 | (226,822 | ) | (55,795 | ) | (209,961 | ) | |||||||||
Preferred units of limited partnership distributions | — | — | — | — | ||||||||||||
Net income (loss) available for common shareholders | $ | 72,656 | $ | (226,822 | ) | $ | (55,795 | ) | $ | (209,961 | ) | |||||
As of December 31, 2015 | ||||||||||||||||
Investment in Real Estate | Investment in SIR | Corporate | Consolidated | |||||||||||||
Total Assets | $ | 1,639,462 | $ | 491,369 | $ | 37,679 | $ | 2,168,510 |
2017 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Rental income | $ | 69,296 | $ | 69,887 | $ | 70,179 | $ | 107,170 | |||||||
Net income (loss) available for common shareholders per common share | $ | 7,415 | $ | 11,677 | $ | 10,989 | $ | (18,266 | ) | ||||||
Net income (loss) available for common shareholders per common share (basic and diluted) | $ | 0.10 | $ | 0.16 | $ | 0.11 | $ | (0.18 | ) | ||||||
Common distributions declared | $ | 0.43 | $ | 0.43 | $ | 0.43 | $ | 0.43 |
2016 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Rental income | $ | 63,611 | $ | 64,061 | $ | 64,478 | $ | 66,030 | |||||||
Net income available for common shareholders | $ | 17,387 | $ | 16,813 | $ | 11,578 | $ | 12,065 | |||||||
Net income available for common shareholders per common share (basic and diluted) | $ | 0.24 | $ | 0.24 | $ | 0.16 | $ | 0.17 | |||||||
Common distributions declared | $ | 0.43 | $ | 0.43 | $ | 0.43 | $ | 0.43 |
Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Cost amount carried at Close of Period | |||||||||||||||||||||||||||||||||||||||||
Property | Location | Encumbrances (1) | Land | Buildings and Equipment | Impairments/ Writedowns | Land | Buildings and Equipment | Total (2) | Accumulated Depreciation (3) | Date(s) Acquired | Original Construction Date(s) | ||||||||||||||||||||||||||||||||
1 | 131 Clayton Street | Montgomery, AL | $ | — | $ | 920 | $ | 9,084 | $ | 29 | $ | — | $ | 920 | $ | 9,113 | $ | 10,033 | $ | (1,479 | ) | 6/22/2011 | 2007 | ||||||||||||||||||||
2 | 4344 Carmichael Road | Montgomery, AL | — | 1,374 | 11,658 | — | — | 1,374 | 11,658 | 13,032 | (1,166 | ) | 12/17/2013 | 2009 | |||||||||||||||||||||||||||||
3 | 15451 North 28th Avenue | Phoenix, AZ | — | 1,917 | 7,416 | 456 | — | 1,917 | 7,872 | 9,789 | (628 | ) | 9/10/2014 | 1996 | |||||||||||||||||||||||||||||
4 | 711 S 14th Avenue | Safford, AZ | — | 460 | 11,708 | 348 | — | 460 | 12,056 | 12,516 | (2,232 | ) | 6/16/2010 | 1992 | |||||||||||||||||||||||||||||
5 | 5045 East Butler Street | Fresno, CA | — | 7,276 | 61,118 | 58 | — | 7,276 | 61,176 | 68,452 | (23,497 | ) | 8/29/2002 | 1971 | |||||||||||||||||||||||||||||
6 | 10949 N. Mather Boulevard | Rancho Cordova, CA | — | 562 | 16,923 | 101 | — | 562 | 17,024 | 17,586 | (1,769 | ) | 10/30/2013 | 2012 | |||||||||||||||||||||||||||||
7 | 11020 Sun Center Drive | Rancho Cordova, CA | — | 1,466 | 8,797 | 408 | — | 1,466 | 9,205 | 10,670 | (237 | ) | 12/20/2016 | 1983 | |||||||||||||||||||||||||||||
8 | 801 K Street | Sacramento, CA | — | 4,688 | 61,995 | 4,915 | — | 4,688 | 66,910 | 71,598 | (3,608 | ) | 1/29/2016 | 1989 | |||||||||||||||||||||||||||||
9 | 9800 Goethe Road | Sacramento, CA | — | 1,550 | 12,263 | 949 | — | 1,550 | 13,212 | 14,762 | (2,598 | ) | 12/23/2009 | 1993 | |||||||||||||||||||||||||||||
10 | 9815 Goethe Road | Sacramento, CA | — | 1,450 | 9,465 | 1,523 | — | 1,450 | 10,988 | 12,438 | (1,731 | ) | 9/14/2011 | 1992 | |||||||||||||||||||||||||||||
11 | Capitol Place | Sacramento, CA | — | 2,290 | 35,891 | 7,032 | — | 2,290 | 42,923 | 45,213 | (8,331 | ) | 12/17/2009 | 1988 | |||||||||||||||||||||||||||||
12 | 4181 Ruffin Road | San Diego, CA | — | 5,250 | 10,549 | 4,294 | — | 5,250 | 14,843 | 20,093 | (3,332 | ) | 7/16/2010 | 1981 | |||||||||||||||||||||||||||||
13 | 4560 Viewridge Road | San Diego, CA | — | 4,269 | 18,316 | 4,195 | — | 4,347 | 22,433 | 26,780 | (9,882 | ) | 3/31/1997 | 1996 | |||||||||||||||||||||||||||||
14 | 9174 Sky Park Centre | San Diego, CA | — | 685 | 5,530 | 2,653 | — | 685 | 8,183 | 8,868 | (2,684 | ) | 6/24/2002 | 1986 | |||||||||||||||||||||||||||||
15 | 603 San Juan Avenue | Stockton, CA | — | 563 | 5,470 | — | — | 563 | 5,470 | 6,033 | (741 | ) | 7/20/2012 | 2012 | |||||||||||||||||||||||||||||
16 | 16194 West 45th Street | Golden, CO | — | 494 | 152 | 6,495 | — | 494 | 6,647 | 7,141 | (3,316 | ) | 3/31/1997 | 1997 | |||||||||||||||||||||||||||||
17 | 12795 West Alameda Parkway | Lakewood, CO | 4,111 | 2,640 | 23,777 | 1,065 | — | 2,640 | 24,842 | 27,482 | (4,931 | ) | 1/15/2010 | 1988 | |||||||||||||||||||||||||||||
18 | Corporate Center | Lakewood, CO | — | 2,887 | 27,537 | 3,898 | — | 2,887 | 31,435 | 34,322 | (11,581 | ) | 10/11/2002 | 1980 | |||||||||||||||||||||||||||||
19 | 20 Massachusetts Avenue | Washington, DC | — | 12,009 | 51,528 | 21,245 | — | 12,231 | 72,551 | 84,782 | (33,237 | ) | 3/31/1997 | 1996 | |||||||||||||||||||||||||||||
20 | 625 Indiana Avenue | Washington, DC | — | 26,000 | 25,955 | 6,555 | — | 26,000 | 32,510 | 58,510 | (6,374 | ) | 8/17/2010 | 1989 | |||||||||||||||||||||||||||||
21 | 11 Dupont Circle, NW | Washington, DC | 64,293 | 28,255 | 44,743 | 1,299 | — | 28,255 | 46,042 | 74,297 | (316 | ) | 10/2/2017 | 1974 | |||||||||||||||||||||||||||||
22 | 1211 Connecticut Avenue, NW | Washington, DC | 27,906 | 30,388 | 24,667 | 220 | — | 30,388 | 24,887 | 55,275 | (176 | ) | 10/2/2017 | 1967 | |||||||||||||||||||||||||||||
23 | 1401 K Street, NW | Washington, DC | 25,501 | 29,215 | 34,656 | 1,194 | — | 29,215 | 35,850 | 65,065 | (291 | ) | 10/2/2017 | 1929 | |||||||||||||||||||||||||||||
24 | 440 First Street, NW | Washington, DC | — | 27,903 | 38,624 | 683 | — | 27,903 | 39,307 | 67,210 | (241 | ) | 10/2/2017 | 1982 | |||||||||||||||||||||||||||||
25 | 500 First Street, NW | Washington, DC | — | 30,478 | 15,660 | — | — | 30,478 | 15,660 | 46,138 | (112 | ) | 10/2/2017 | 1969 | |||||||||||||||||||||||||||||
26 | 840 First Street, NE | Washington, DC | 36,085 | 42,727 | 73,249 | — | — | 42,727 | 73,249 | 115,976 | (458 | ) | 10/2/2017 | 2003 | |||||||||||||||||||||||||||||
27 | 7850 Southwest 6th Court | Plantation, FL | — | 4,800 | 30,592 | 383 | — | 4,800 | 30,975 | 35,775 | (5,224 | ) | 5/12/2011 | 1999 | |||||||||||||||||||||||||||||
28 | 8900 Grand Oak Circle | Tampa, FL | 8,391 | 1,100 | 11,773 | 169 | — | 1,100 | 11,942 | 13,042 | (2,169 | ) | 10/15/2010 | 1994 |
Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Cost amount carried at Close of Period | |||||||||||||||||||||||||||||||||||||||||
Property | Location | Encumbrances (1) | Land | Buildings and Equipment | Impairments/ Writedowns | Land | Buildings and Equipment | Total (2) | Accumulated Depreciation (3) | Date(s) Acquired | Original Construction Date(s) | ||||||||||||||||||||||||||||||||
29 | 181 Spring Street NW | Atlanta, GA | $ | — | 5,717 | $ | 20,017 | 136 | $ | — | 5,717 | 20,153 | 25,871 | (2,719 | ) | 7/25/2012 | 2007 | ||||||||||||||||||||||||||
30 | Corporate Square | Atlanta, GA | — | 3,996 | 29,762 | 27,321 | — | 3,996 | 57,083 | 61,079 | (11,541 | ) | 7/16/2004 | 1967 | |||||||||||||||||||||||||||||
31 | Executive Park | Atlanta, GA | — | 1,521 | 11,826 | 4,003 | — | 1,521 | 15,829 | 17,350 | (5,127 | ) | 7/16/2004 | 1972 | |||||||||||||||||||||||||||||
32 | One Georgia Center | Atlanta, GA | — | 10,250 | 27,933 | 3,581 | — | 10,250 | 31,514 | 41,764 | (4,576 | ) | 9/30/2011 | 1968 | |||||||||||||||||||||||||||||
33 | 4712 Southpark Boulevard | Ellenwood, GA | — | 1,390 | 19,635 | 74 | — | 1,390 | 19,709 | 21,099 | (2,661 | ) | 7/25/2012 | 2005 | |||||||||||||||||||||||||||||
34 | 1185, 1249 & 1387 S. Vinnell Way | Boise, ID | — | 3,390 | 29,026 | 802 | — | 3,390 | 29,828 | 33,218 | (4,059 | ) | 9/11/2012 | 1996; 1997; 2002 | |||||||||||||||||||||||||||||
35 | 2020 S. Arlington Heights | Arlington Heights, IL | — | 1,450 | 13,160 | 730 | — | 1,450 | 13,890 | 15,340 | (2,746 | ) | 12/29/2009 | 1988 | |||||||||||||||||||||||||||||
36 | Intech Park | Indianapolis, IN | — | 4,170 | 68,888 | 3,822 | — | 4,170 | 72,710 | 76,880 | (11,657 | ) | 10/14/2011 | 2000; 2001; 2008 | |||||||||||||||||||||||||||||
37 | 400 State Street | Kansas City, KS | — | 640 | 9,932 | 4,599 | — | 640 | 14,531 | 15,171 | (2,559 | ) | 6/16/2010 | 1971 | |||||||||||||||||||||||||||||
38 | 7125 Industrial Road | Florence, KY | — | 1,698 | 11,722 | 81 | — | 1,698 | 11,803 | 13,501 | (1,468 | ) | 12/31/2012 | 1980 | |||||||||||||||||||||||||||||
39 | 251 Causeway Street | Boston, MA | — | 5,100 | 17,293 | 1,752 | — | 5,100 | 19,045 | 24,145 | (3,427 | ) | 8/17/2010 | 1987 | |||||||||||||||||||||||||||||
40 | 75 Pleasant Street | Malden, MA | — | 1,050 | 31,086 | 159 | — | 1,050 | 31,245 | 32,295 | (5,970 | ) | 5/24/2010 | 2008 | |||||||||||||||||||||||||||||
41 | 25 Newport Avenue | Quincy, MA | — | 2,700 | 9,199 | 1,297 | — | 2,700 | 10,496 | 13,196 | (1,662 | ) | 2/16/2011 | 1985 | |||||||||||||||||||||||||||||
42 | One Montvale Avenue | Stoneham, MA | — | 1,670 | 11,035 | 2,095 | — | 1,670 | 13,130 | 14,800 | (2,308 | ) | 6/16/2010 | 1945 | |||||||||||||||||||||||||||||
43 | Annapolis Commerce Center | Annapolis, MD | — | 4,057 | 7,665 | — | — | 4,057 | 7,665 | 11,722 | (55 | ) | 10/2/2017 | 1989 | |||||||||||||||||||||||||||||
44 | 4201 Patterson Avenue | Baltimore, MD | — | 901 | 8,097 | 3,976 | — | 901 | 12,073 | 12,974 | (4,520 | ) | 10/15/1998 | 1989 | |||||||||||||||||||||||||||||
45 | Ammendale Commerce Center | Beltsville, MD | — | 4,879 | 9,498 | — | — | 4,879 | 9,498 | 14,377 | (70 | ) | 10/2/2017 | 1987 | |||||||||||||||||||||||||||||
46 | Indian Creek Technology Park | Beltsville, MD | — | 8,796 | 12,093 | 24 | — | 8,796 | 12,117 | 20,913 | (86 | ) | 10/2/2017 | 1988 | |||||||||||||||||||||||||||||
47 | Gateway 270 West | Clarksburg, MD | — | 12,104 | 9,688 | — | — | 12,104 | 9,688 | 21,792 | (64 | ) | 10/2/2017 | 2002 | |||||||||||||||||||||||||||||
48 | Hillside Center | Columbia, MD | — | 3,437 | 4,228 | — | — | 3,437 | 4,228 | 7,665 | (25 | ) | 10/2/2017 | 2001 | |||||||||||||||||||||||||||||
49 | Snowden Center | Columbia, MD | — | 7,955 | 10,128 | 54 | — | 7,955 | 10,182 | 18,137 | (63 | ) | 10/2/2017 | 1982 | |||||||||||||||||||||||||||||
50 | TenThreeTwenty | Columbia, MD | — | 3,126 | 16,361 | 118 | — | 3,126 | 16,479 | 19,605 | (103 | ) | 10/2/2017 | 1982 | |||||||||||||||||||||||||||||
51 | 20400 Century Boulevard | Germantown, MD | — | 2,305 | 9,890 | 1,282 | — | 2,347 | 11,130 | 13,477 | (5,296 | ) | 3/31/1997 | 1995 | |||||||||||||||||||||||||||||
52 | Cloverleaf Center | Germantown, MD | — | 11,890 | 4,639 | — | — | 11,890 | 4,639 | 16,529 | (39 | ) | 10/2/2017 | 2000 | |||||||||||||||||||||||||||||
53 | 3300 75th Avenue | Landover, MD | — | 4,110 | 36,371 | 1,045 | — | 4,110 | 37,416 | 41,526 | (7,271 | ) | 2/26/2010 | 1985 | |||||||||||||||||||||||||||||
54 | 1401 Rockville Pike | Rockville, MD | — | 3,248 | 29,258 | 16,534 | — | 3,248 | 45,792 | 49,040 | (17,237 | ) | 2/2/1998 | 1986 | |||||||||||||||||||||||||||||
55 | 2115 East Jefferson Street | Rockville, MD | — | 3,349 | 11,152 | 328 | — | 3,349 | 11,480 | 14,829 | (1,229 | ) | 8/27/2013 | 1981 | |||||||||||||||||||||||||||||
56 | Metro Park North | Rockville, MD | — | 11,159 | 7,624 | — | — | 11,159 | 7,624 | 18,783 | (59 | ) | 10/2/2017 | 2001 |
Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Cost amount carried at Close of Period | |||||||||||||||||||||||||||||||||||||||||
Property | Location | Encumbrances (1) | Land | Buildings and Equipment | Impairments/ Writedowns | Land | Buildings and Equipment | Total (2) | Accumulated Depreciation (3) | Date(s) Acquired | Original Construction Date(s) | ||||||||||||||||||||||||||||||||
57 | Redland 520/530 | Rockville, MD | — | 12,714 | 61,377 | 1,217 | — | 12,714 | 62,594 | 75,308 | (384 | ) | 10/2/2017 | 2008 | |||||||||||||||||||||||||||||
58 | Redland 540 | Rockville, MD | — | 10,740 | 17,714 | 2,028 | — | 10,740 | 19,742 | 30,482 | (111 | ) | 10/2/2017 | 2003 | |||||||||||||||||||||||||||||
59 | Rutherford Business Park | Windsor Mill, MD | — | 1,598 | 10,219 | 10 | — | 1,598 | 10,229 | 11,827 | (1,299 | ) | 11/16/2012 | 1972 | |||||||||||||||||||||||||||||
60 | Meadows Business Park | Woodlawn, MD | — | 3,735 | 21,509 | 2,187 | — | 3,735 | 23,696 | 27,431 | (3,907 | ) | 2/15/2011 | 1973 | |||||||||||||||||||||||||||||
61 | 11411 E. Jefferson Avenue | Detroit, MI | — | 630 | 18,002 | 358 | — | 630 | 18,360 | 18,990 | (3,460 | ) | 4/23/2010 | 2009 | |||||||||||||||||||||||||||||
62 | 330 2nd Avenue South | Minneapolis, MN | — | 3,991 | 18,186 | (4,246 | ) | (9,260 | ) | 1,489 | 16,442 | 17,931 | — | 7/16/2010 | 1980 | ||||||||||||||||||||||||||||
63 | Rosedale Corporate Plaza | Roseville, MN | — | 672 | 6,045 | 1,505 | — | 672 | 7,550 | 8,222 | (3,194 | ) | 12/1/1999 | 1987 | |||||||||||||||||||||||||||||
64 | 1300 Summit Street | Kansas City, MO | — | 2,776 | 12,070 | 253 | — | 2,776 | 12,323 | 15,099 | (1,614 | ) | 9/27/2012 | 1998 | |||||||||||||||||||||||||||||
65 | 4241-4300 NE 34th Street | Kansas City, MO | — | 1,443 | 6,193 | 3,851 | — | 1,780 | 9,707 | 11,487 | (3,893 | ) | 3/31/1997 | 1995 | |||||||||||||||||||||||||||||
66 | 1220 Echelon Parkway | Jackson, MS | — | 440 | 25,458 | 48 | — | 440 | 25,506 | 25,946 | (3,459 | ) | 7/25/2012 | 2009 | |||||||||||||||||||||||||||||
67 | 10-12 Celina Avenue | Nashua, NH | — | 3,000 | 14,052 | 1,545 | — | 3,000 | 15,597 | 18,597 | (2,956 | ) | 8/31/2009 | 1979 | |||||||||||||||||||||||||||||
68 | 50 West State Street | Trenton, NJ | — | 5,000 | 38,203 | 2,620 | — | 5,000 | 40,823 | 45,823 | (6,948 | ) | 12/30/2010 | 1989 | |||||||||||||||||||||||||||||
69 | 138 Delaware Avenue | Buffalo, NY | — | 4,405 | 18,899 | 5,226 | — | 4,485 | 24,045 | 28,530 | (11,064 | ) | 3/31/1997 | 1994 | |||||||||||||||||||||||||||||
70 | Airline Corporate Center | Colonie, NY | — | 790 | 6,400 | 32 | — | 790 | 6,432 | 7,222 | (881 | ) | 6/22/2012 | 2004 | |||||||||||||||||||||||||||||
71 | 5000 Corporate Court | Holtsville, NY | — | 6,530 | 17,711 | 2,477 | — | 6,530 | 20,188 | 26,718 | (3,183 | ) | 8/31/2011 | 2000 | |||||||||||||||||||||||||||||
72 | 305 East 46th Street | New York, NY | — | 36,800 | 66,661 | 4,438 | — | 36,800 | 71,099 | 107,899 | (11,212 | ) | 5/27/2011 | 1928 | |||||||||||||||||||||||||||||
73 | 4600 25th Avenue | Salem, OR | — | 6,510 | 17,973 | 4,278 | — | 6,510 | 22,251 | 28,761 | (4,066 | ) | 12/20/2011 | 1957 | |||||||||||||||||||||||||||||
74 | Synergy Business Park | Columbia, SC | — | 1,439 | 11,143 | 4,803 | — | 1,439 | 15,946 | 17,385 | (3,718 | ) | 5/10/2006;9/17/2010 | 1982; 1985 | |||||||||||||||||||||||||||||
75 | One Memphis Place | Memphis, TN | — | 1,630 | 5,645 | 2,508 | — | 1,630 | 8,153 | 9,783 | (1,434 | ) | 9/17/2010 | 1985 | |||||||||||||||||||||||||||||
76 | 701 Clay Road | Waco, TX | — | 2,030 | 8,708 | 2,555 | — | 2,060 | 11,233 | 13,293 | (4,708 | ) | 12/23/1997 | 1997 | |||||||||||||||||||||||||||||
77 | 14660, 14672 & 14668 Lee Road | Chantilly, VA | — | 6,966 | 74,214 | 294 | — | 6,966 | 74,508 | 81,474 | (1,856 | ) | 12/22/2016 | 1998; 2002; 2006 | |||||||||||||||||||||||||||||
78 | 1408 Stephanie Way | Chesapeake, VA | — | 1,403 | 2,555 | — | — | 1,403 | 2,555 | 3,958 | (21 | ) | 10/2/2017 | 1998 | |||||||||||||||||||||||||||||
79 | 1434 Crossways | Chesapeake, VA | — | 3,617 | 19,527 | 276 | — | 3,617 | 19,803 | 23,420 | (135 | ) | 10/2/2017 | 1998 | |||||||||||||||||||||||||||||
80 | 1441 Crossways Boulevard | Chesapeake, VA | — | 2,485 | 10,189 | — | — | 2,485 | 10,189 | 12,674 | (73 | ) | 10/2/2017 | 1988 | |||||||||||||||||||||||||||||
81 | 535 Independence Parkway | Chesapeake, VA | 3,193 | 2,465 | 5,801 | — | — | 2,465 | 5,801 | 8,266 | (41 | ) | 10/2/2017 | 1987 | |||||||||||||||||||||||||||||
82 | Crossways | Chesapeake, VA | — | 6,522 | 40,267 | — | — | 6,522 | 40,267 | 46,789 | (318 | ) | 10/2/2017 | 1989 | |||||||||||||||||||||||||||||
83 | Crossways II | Chesapeake, VA | — | 1,633 | 8,035 | 153 | — | 1,633 | 8,188 | 9,821 | (57 | ) | 10/2/2017 | 1989 | |||||||||||||||||||||||||||||
84 | Greenbrier Circle Corporate Center | Chesapeake, VA | — | 4,489 | 15,149 | 14 | — | 4,489 | 15,163 | 19,652 | (126 | ) | 10/2/2017 | 1981 |
Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Cost amount carried at Close of Period | |||||||||||||||||||||||||||||||||||||||||
Property | Location | Encumbrances (1) | Land | Buildings and Equipment | Impairments/ Writedowns | Land | Buildings and Equipment | Total (2) | Accumulated Depreciation (3) | Date(s) Acquired | Original Construction Date(s) | ||||||||||||||||||||||||||||||||
85 | Greenbrier Technology Center I | Chesapeake, VA | — | 2,514 | 6,102 | — | — | 2,514 | 6,102 | 8,616 | (51 | ) | 10/2/2017 | 1987 | |||||||||||||||||||||||||||||
86 | Greenbrier Technology Center II | Chesapeake, VA | — | 2,084 | 5,581 | 3 | — | 2,084 | 5,584 | 7,668 | (47 | ) | 10/2/2017 | 1987 | |||||||||||||||||||||||||||||
87 | Greenbrier Towers | Chesapeake, VA | — | 3,437 | 11,241 | 27 | — | 3,437 | 11,268 | 14,705 | (94 | ) | 10/2/2017 | 1985 | |||||||||||||||||||||||||||||
88 | Enterchange at Meadowville | Chester, VA | — | 1,478 | 9,594 | 283 | — | 1,478 | 9,877 | 11,355 | (1,060 | ) | 8/28/2013 | 1999 | |||||||||||||||||||||||||||||
89 | 3920 Pender Drive | Fairfax, VA | 13,620 | 2,963 | 12,840 | 12 | — | 2,963 | 12,852 | 15,815 | (1,204 | ) | 3/21/2014 | 1981 | |||||||||||||||||||||||||||||
90 | Pender Business Park | Fairfax, VA | — | 2,529 | 21,386 | 193 | — | 2,529 | 21,579 | 24,108 | (2,312 | ) | 11/4/2013 | 2000 | |||||||||||||||||||||||||||||
91 | 3201 Jermantown Road | Fairfax, VA | — | 5,991 | 25,619 | 329 | — | 5,991 | 25,948 | 31,939 | (213 | ) | 10/2/2017 | 1984 | |||||||||||||||||||||||||||||
92 | 7987 Ashton Avenue | Manassas, VA | — | 1,562 | 8,253 | 333 | — | 1,562 | 8,586 | 10,148 | (210 | ) | 1/3/2017 | 1989 | |||||||||||||||||||||||||||||
93 | Gateway II | Norfolk, VA | — | 1,194 | 1,563 | — | — | 1,194 | 1,563 | 2,757 | (13 | ) | 10/2/2017 | 1984 | |||||||||||||||||||||||||||||
94 | Norfolk Business Center | Norfolk, VA | — | 2,134 | 5,430 | — | — | 2,134 | 5,430 | 7,564 | (45 | ) | 10/2/2017 | 1985 | |||||||||||||||||||||||||||||
95 | Norfolk Commerce Park II | Norfolk, VA | — | 3,116 | 10,709 | 34 | — | 3,116 | 10,743 | 13,859 | (76 | ) | 10/2/2017 | 1990 | |||||||||||||||||||||||||||||
96 | 1759 & 1760 Business Center Drive | Reston, VA | — | 9,066 | 78,658 | 2,413 | — | 9,066 | 81,071 | 90,137 | (7,185 | ) | 5/28/2014 | 1987 | |||||||||||||||||||||||||||||
97 | 1775 Wiehle Avenue | Reston, VA | — | 4,138 | 26,120 | 29 | — | 4,138 | 26,149 | 30,287 | (163 | ) | 10/2/2017 | 2001 | |||||||||||||||||||||||||||||
98 | 9960 Mayland Drive | Richmond, VA | — | 2,614 | 15,930 | 1,844 | — | 2,614 | 17,774 | 20,388 | (1,550 | ) | 5/20/2014 | 1994 | |||||||||||||||||||||||||||||
99 | Aquia Commerce Center | Stafford, VA | — | 2,090 | 7,465 | 730 | — | 2,090 | 8,195 | 10,285 | (1,308 | ) | 6/22/2011 | 1988; 1999 | |||||||||||||||||||||||||||||
100 | Atlantic Corporate Park | Sterling, VA | — | 5,752 | 29,323 | — | — | 5,752 | 29,323 | 35,075 | (183 | ) | 10/2/2017 | 2008 | |||||||||||||||||||||||||||||
101 | Sterling Business Park Lots 8 & 9 | Sterling, VA | — | 9,178 | 44,324 | — | — | 9,178 | 44,324 | 53,502 | (277 | ) | 10/2/2017 | 2016 | |||||||||||||||||||||||||||||
102 | Sterling Park Business Center | Sterling, VA | — | 18,935 | 21,191 | 63 | — | 18,935 | 21,254 | 40,189 | (154 | ) | 10/2/2017 | 1990 | |||||||||||||||||||||||||||||
103 | 65 Bowdoin Street | S. Burlington, VT | — | 700 | 8,416 | 120 | — | 700 | 8,536 | 9,236 | (1,656 | ) | 4/9/2010 | 2009 | |||||||||||||||||||||||||||||
104 | 840 North Broadway | Everett, WA | — | 3,360 | 15,376 | 1,829 | — | 3,360 | 17,205 | 20,565 | (2,504 | ) | 6/28/2012 | 1985 | |||||||||||||||||||||||||||||
105 | Stevens Center | Richland, WA | — | 3,970 | 17,035 | 2,431 | — | 4,042 | 19,394 | 23,436 | (9,176 | ) | 3/31/1997 | 1995 | |||||||||||||||||||||||||||||
106 | 11050 West Liberty Drive | Milwaukee, WI | — | 945 | 4,539 | 103 | — | 945 | 4,642 | 5,587 | (763 | ) | 6/9/2011 | 2006 | |||||||||||||||||||||||||||||
107 | 882 TJ Jackson Drive | Falling Waters, WV | — | 906 | 3,886 | 282 | — | 922 | 4,152 | 5,074 | (2,110 | ) | 3/31/1997 | 1993 | |||||||||||||||||||||||||||||
108 | 5353 Yellowstone Road | Cheyenne, WY | — | 1,915 | 8,217 | 550 | — | 1,950 | 8,732 | 10,682 | (4,438 | ) | 3/31/1997 | 1995 | |||||||||||||||||||||||||||||
$ | 183,100 | $ | 628,698 | $ | 2,153,005 | $ | 194,018 | $ | (9,260 | ) | $ | 627,108 | $ | 2,348,613 | $ | 2,975,721 | $ | (341,848 | ) |
Real Estate Properties | Accumulated Depreciation | ||||||
Balance at December 31, 2014 | $ | 1,682,480 | $ | 219,791 | |||
Additions | 19,622 | 38,987 | |||||
Disposals | (2,624 | ) | (2,624 | ) | |||
Reclassification of assets held for sale | (3,346 | ) | (275 | ) | |||
Balance at December 31, 2015 | 1,696,132 | 255,879 | |||||
Additions | 194,107 | 42,404 | |||||
Disposals | (1,479 | ) | (1,479 | ) | |||
Balance at December 31, 2016 | 1,888,760 | 296,804 | |||||
Additions | 1,100,138 | 45,315 | |||||
Loss on asset impairment | (9,490 | ) | — | ||||
Disposals | (3,687 | ) | (271 | ) | |||
Balance at December 31, 2017 | $ | 2,975,721 | $ | 341,848 |
GOVERNMENT PROPERTIES INCOME TRUST | |||
By: | /s/ David M. Blackman | ||
David M. Blackman President and Chief Operating Officer | |||
Dated: February 26, 2018 |
Signature | Title | Date |
/s/ David M. Blackman | President and Chief Operating Officer | February 26, 2018 |
David M. Blackman | ||
/s/ Mark L. Kleifges | Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) | February 26, 2018 |
Mark L. Kleifges | ||
/s/ Adam D. Portnoy | Managing Trustee | February 26, 2018 |
Adam D. Portnoy | ||
/s/ Barbara D. Gilmore | Independent Trustee | February 26, 2018 |
Barbara D. Gilmore | ||
/s/ John L. Harrington | Independent Trustee | February 26, 2018 |
John L. Harrington | ||
/s/ Elena Poptodorova | Independent Trustee | February 26, 2018 |
Elena Poptodorova | ||
/s/ Jeffrey P. Somers | Independent Trustee | February 26, 2018 |
Jeffrey P. Somers | ||
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Earnings: | ||||||||||||||||||||
Add: | ||||||||||||||||||||
Income (loss) from continuing operations (including gain on sale of properties, if any) before income tax expense and equity in earnings (losses) of investees | $ | (9,553 | ) | $ | 22,936 | $ | (227,990 | ) | $ | 42,190 | $ | 55,308 | ||||||||
Distributions of earnings from equity investees | 18,640 | 32,425 | 21,882 | 17,046 | — | |||||||||||||||
Fixed charges | 65,917 | 45,164 | 37,008 | 28,048 | 16,831 | |||||||||||||||
Subtract: | ||||||||||||||||||||
Interest capitalized | (511 | ) | (52 | ) | — | — | — | |||||||||||||
Preferred distributions | (275 | ) | — | — | — | — | ||||||||||||||
Total earnings (loss) | $ | 74,218 | $ | 100,473 | $ | (169,100 | ) | $ | 87,284 | $ | 72,139 | |||||||||
Fixed Charges: | ||||||||||||||||||||
Interest on indebtedness and net amortization of debt issuance costs and debt premiums and discounts | $ | 65,131 | $ | 45,112 | $ | 37,008 | 28,048 | 16,831 | ||||||||||||
Interest capitalized | 511 | 52 | — | — | — | |||||||||||||||
Preferred distributions | 275 | — | — | — | — | |||||||||||||||
Total fixed charges | $ | 65,917 | $ | 45,164 | $ | 37,008 | $ | 28,048 | $ | 16,831 | ||||||||||
Ratio of adjusted earnings (loss) to fixed charges | 1.1x | 2.2x | (4.6x) | (1) | 3.1x | 4.3x |
Name | State of Formation, Organization or Incorporation | ||
1434 Crossways Boulevard I, LLC | Delaware | ||
1434 Crossways Boulevard II, LLC | Delaware | ||
1441 Crossways Blvd., LLC | Virginia | ||
3300 75th Avenue LLC | Delaware | ||
403 & 405 Glenn Drive Manager, LLC | Virginia | ||
403 & 405 Glenn Drive, LLC | Virginia | ||
ACP East LLC | Maryland | ||
AP Indian Creek, LLC | Delaware | ||
Columbia Holding Associates LLC | Delaware | ||
Crossways Associates LLC | Delaware | ||
Crossways II LLC | Delaware | ||
Crossways Land, LLC | Virginia | ||
First Potomac DC Holdings, LLC | Delaware | ||
First Potomac DC Management LLC | Delaware | ||
First Potomac Management LLC | Delaware | ||
First Potomac TRS Holdings, Inc. | Virginia | ||
First Snowden LLC | Delaware | ||
FP 11 Dupont Circle Managing Member, LLC | Delaware | ||
FP 11 Dupont Circle, LLC | Delaware | ||
FP 1211 Connecticut Avenue, LLC | Delaware | ||
FP 1401 K, LLC | Delaware | ||
FP 1408 Stephanie Way, LLC | Virginia | ||
FP 1775 Wiehle Avenue, LLC | Virginia | ||
FP 2550 Ellsmere Avenue, LLC | Virginia | ||
FP 3 Flint Hill, LLC | Virginia | ||
FP 440 1st Street, LLC | Delaware | ||
FP 500 First Street REIT GP, LLC | Delaware | ||
FP 500 First Street, LLC | Delaware | ||
FP 535 Independence Parkway, LLC | Virginia | ||
FP 540 Gaither, LLC | Maryland | ||
FP 6310 Hillside Center, LLC | Delaware | ||
FP 6315 Hillside Center, LLC | Delaware | ||
FP 840 First Street, LLC | Delaware | ||
FP Ammendale Commerce Center, LLC | Maryland | ||
FP Atlantic Corporate Park, LLC | Virginia | ||
FP Cloverleaf Investor, LLC | Delaware | ||
FP Cloverleaf, LLC | Maryland | ||
FP CPT 1750 H Street, LLC | Delaware | ||
FP CPT 1750 Holdings, LLC | Delaware | ||
FP Davis Drive Lot 5, LLC | Virginia | ||
FP Gateway 270, LLC | New Jersey | ||
FP Greenbrier Circle, LLC | Virginia | ||
FP Greenbrier Towers, LLC | Virginia | ||
FP Gude Manager, LLC | Delaware | ||
FP Gude, LLC | Maryland | ||
FP Indian Creek, LLC | Delaware | ||
FP Metro Place, LLC | Delaware | ||
FP Patuxent Parkway, LLC | Delaware | ||
FP Redland GP, LLC | Delaware | ||
FP Redland Technology Center LP | Delaware | ||
FP Redland, LLC | Delaware | ||
FP Sterling Park 6, LLC | Virginia | ||
FP Sterling Park 7, LLC | Virginia | ||
FP Sterling Park 8 & 9, LLC | Virginia | ||
FP Sterling Park I, LLC | Virginia | ||
FP Sterling Park Land, LLC | Virginia | ||
GOV Grand Oak Properties Trust | Maryland | ||
GOV Intech LLC | Delaware | ||
GOV Lake Fairfax Inc. | Maryland | ||
GOV Lakewood Properties Trust | Maryland | ||
GOV NEW OPPTY LP | Delaware | ||
GOV NEW OPPTY LP REIT | Maryland | ||
GOV NEW OPPTY REIT | Maryland | ||
GOV NEW OPPTY TRS Inc. | Maryland | ||
GOV Pender Drive Inc. | Maryland | ||
GOV TRS, Inc. | Maryland | ||
Government Properties Income Trust LLC | Delaware | ||
GPT Properties LLC | Delaware | ||
GPT Properties Trust | Maryland | ||
GPT Realty Trust (Nominee Trust) | Massachusetts | ||
Greenbrier Holding Associates LLC | Delaware | ||
Greenbrier Land, LLC | Virginia | ||
Greenbrier/Norfolk Holding LLC | Delaware | ||
Greenbrier/Norfolk Investment LLC | Delaware | ||
GTC I Second LLC | Virginia | ||
GTC II First LLC | Delaware | ||
Indian Creek Investors, LLC | Maryland | ||
Kristina Way Investments LLC | Delaware | ||
Norfolk Commerce Park LLC | Delaware | ||
Norfolk First LLC | Delaware | ||
Norfolk Land, LLC | Virginia | ||
One State Street Square Urban Renewal L.L.C. | New Jersey | ||
Prosperity Metro Plaza of Virginia, LLC | Delaware | ||
Rumsey/Snowden Holding LLC | Delaware | ||
Rumsey/Snowden Investment LLC | Delaware | ||
Snowden First LLC | Delaware | ||
VEF 500 First REIT L.P. | Delaware |
1. | I have reviewed this Annual Report on Form 10-K of Government Properties Income Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 26, 2018 | /s/ Adam D. Portnoy |
Adam D. Portnoy Managing Trustee |
1. | I have reviewed this Annual Report on Form 10-K of Government Properties Income Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 26, 2018 | /s/ David M. Blackman |
David M. Blackman President and Chief Operating Officer |
1. | I have reviewed this Annual Report on Form 10-K of Government Properties Income Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 26, 2018 | /s/ Mark L. Kleifges |
Mark L. Kleifges Chief Financial Officer and Treasurer |
/s/ Adam D. Portnoy | /s/ David M. Blackman | |
Adam D. Portnoy Managing Trustee | David M. Blackman President and Chief Operating Officer | |
/s/ Mark L. Kleifges | ||
Mark L. Kleifges Chief Financial Officer and Treasurer |
(a) | Index to Financial Statements and Financial Statement Schedules |
Reports of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets as of December 31, 2017 and 2016 | |
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2017 | |
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2017 | |
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2017 | |
Notes to Consolidated Financial Statements | |
Schedule II—Valuation and Qualifying Accounts | |
Schedule III—Real Estate and Accumulated Depreciation |
/s/ Ernst & Young LLP |
December 31, | ||||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Real estate properties: | ||||||||
Land | $ | 1,041,767 | $ | 1,038,686 | ||||
Buildings and improvements | 3,178,098 | 3,103,734 | ||||||
4,219,865 | 4,142,420 | |||||||
Accumulated depreciation | (314,249 | ) | (242,628 | ) | ||||
3,905,616 | 3,899,792 | |||||||
Properties held for sale | 5,829 | — | ||||||
Acquired real estate leases, net | 477,577 | 506,298 | ||||||
Cash and cash equivalents | 658,719 | 22,127 | ||||||
Restricted cash | 178 | 44 | ||||||
Rents receivable, including straight line rents of $122,010 and $117,008, respectively, net of allowance for doubtful accounts of $1,396 and $873, respectively | 127,672 | 124,089 | ||||||
Deferred leasing costs, net | 14,295 | 10,051 | ||||||
Other assets, net | 113,144 | 77,281 | ||||||
Total assets | $ | 5,303,030 | $ | 4,639,682 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Unsecured revolving credit facility | $ | — | $ | 327,000 | ||||
ILPT revolving credit facility | 750,000 | — | ||||||
Unsecured term loan, net | 348,870 | 348,373 | ||||||
Senior unsecured notes, net | 1,777,425 | 1,430,300 | ||||||
Mortgage notes payable, net | 210,785 | 245,643 | ||||||
Accounts payable and other liabilities | 101,352 | 101,605 | ||||||
Assumed real estate lease obligations, net | 68,783 | 77,622 | ||||||
Rents collected in advance | 15,644 | 18,815 | ||||||
Security deposits | 8,346 | 11,887 | ||||||
Due to related persons | 30,006 | 4,475 | ||||||
Total liabilities | 3,311,211 | 2,565,720 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,487,371 and 89,427,869 shares issued and outstanding, respectively | 895 | 894 | ||||||
Additional paid in capital | 2,180,896 | 2,179,669 | ||||||
Cumulative net income | 508,213 | 441,307 | ||||||
Cumulative other comprehensive income | 52,665 | 20,472 | ||||||
Cumulative common distributions | (750,850 | ) | (568,380 | ) | ||||
Total shareholders' equity | 1,991,819 | 2,073,962 | ||||||
Total liabilities and shareholders' equity | $ | 5,303,030 | $ | 4,639,682 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
REVENUES: | ||||||||||||
Rental income | $ | 392,285 | $ | 387,015 | $ | 364,139 | ||||||
Tenant reimbursements and other income | 75,818 | 74,992 | 64,226 | |||||||||
Total revenues | 468,103 | 462,007 | 428,365 | |||||||||
EXPENSES: | ||||||||||||
Real estate taxes | 44,131 | 42,879 | 37,460 | |||||||||
Other operating expenses | 55,567 | 52,957 | 41,953 | |||||||||
Depreciation and amortization | 137,672 | 133,762 | 122,906 | |||||||||
Acquisition and transaction related costs | 1,075 | 306 | 21,987 | |||||||||
General and administrative | 54,818 | 28,602 | 25,859 | |||||||||
Write-off of straight line rents receivable, net | 12,517 | — | — | |||||||||
Loss on asset impairment | 4,047 | — | — | |||||||||
Loss on impairment of real estate assets | 229 | 5,484 | — | |||||||||
Total expenses | 310,056 | 263,990 | 250,165 | |||||||||
Operating income | 158,047 | 198,017 | 178,200 | |||||||||
Dividend income | 1,587 | 1,268 | 1,666 | |||||||||
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $6,182, $5,508 and $5,100, respectively) | (92,870 | ) | (82,620 | ) | (73,885 | ) | ||||||
Loss on early extinguishment of debt | — | — | (6,845 | ) | ||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | (23,717 | ) | ||||||||
Income before income tax expense and equity in earnings of an investee | 66,764 | 116,665 | 75,419 | |||||||||
Income tax expense | (466 | ) | (448 | ) | (515 | ) | ||||||
Equity in earnings of an investee | 608 | 137 | 20 | |||||||||
Net income | 66,906 | 116,354 | 74,924 | |||||||||
Net income allocated to noncontrolling interest | — | (33 | ) | (176 | ) | |||||||
Net income attributed to SIR | 66,906 | 116,321 | 74,748 | |||||||||
Other comprehensive income (loss): | ||||||||||||
Unrealized gain (loss) on investment in available for sale securities | 31,419 | 39,814 | (19,820 | ) | ||||||||
Unrealized gain on interest rate swap | 313 | 93 | 276 | |||||||||
Equity in unrealized gain (loss) of an investee | 461 | 152 | (20 | ) | ||||||||
Other comprehensive income (loss) | 32,193 | 40,059 | (19,564 | ) | ||||||||
Comprehensive income | 99,099 | 156,413 | 55,360 | |||||||||
Comprehensive income allocated to noncontrolling interest | — | (33 | ) | (176 | ) | |||||||
Comprehensive income attributed to SIR | $ | 99,099 | $ | 156,380 | $ | 55,184 | ||||||
Weighted average common shares outstanding - basic | 89,351 | 89,304 | 86,699 | |||||||||
Weighted average common shares outstanding - diluted | 89,370 | 89,324 | 86,708 | |||||||||
Net income attributed to SIR per common share - basic and diluted | $ | 0.75 | $ | 1.30 | $ | 0.86 |
Cumulative | |||||||||||||||||||||||||||
Number of | Additional | Cumulative | Other | Cumulative | |||||||||||||||||||||||
Common | Common | Paid In | Net | Comprehensive | Common | ||||||||||||||||||||||
Shares | Shares | Capital | Income | Income (Loss) | Distributions | Total | |||||||||||||||||||||
Balance at December 31, 2014 | 59,959,750 | $ | 600 | $ | 1,441,036 | $ | 250,238 | $ | (23 | ) | $ | (211,404 | ) | $ | 1,480,447 | ||||||||||||
Net income and other equity adjustments | — | — | (662 | ) | 74,748 | — | — | 74,086 | |||||||||||||||||||
Issuance of shares, net | 29,356,800 | 293 | 737,338 | — | — | — | 737,631 | ||||||||||||||||||||
Share grants | 65,100 | 1 | 895 | — | — | — | 896 | ||||||||||||||||||||
Share repurchases | (6,851 | ) | — | (130 | ) | — | — | — | (130 | ) | |||||||||||||||||
Forfeited share grants | (770 | ) | — | — | — | — | — | — | |||||||||||||||||||
Other comprehensive loss | — | — | — | — | (19,564 | ) | — | (19,564 | ) | ||||||||||||||||||
Distributions to common shareholders | — | — | — | — | — | (157,597 | ) | (157,597 | ) | ||||||||||||||||||
Distribution to common shareholders of The RMR Group Inc. common stock | — | — | — | — | — | (18,809 | ) | (18,809 | ) | ||||||||||||||||||
Balance at December 31, 2015 | 89,374,029 | 894 | 2,178,477 | 324,986 | (19,587 | ) | (387,810 | ) | 2,096,960 | ||||||||||||||||||
Net income | — | — | — | 116,321 | — | — | 116,321 | ||||||||||||||||||||
Share grants | 65,900 | — | 1,523 | — | — | — | 1,523 | ||||||||||||||||||||
Share repurchases | (12,060 | ) | — | (331 | ) | — | — | — | (331 | ) | |||||||||||||||||
Other comprehensive income | — | — | — | — | 40,059 | — | 40,059 | ||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | — | (180,570 | ) | (180,570 | ) | ||||||||||||||||||
Balance at December 31, 2016 | 89,427,869 | 894 | 2,179,669 | 441,307 | 20,472 | (568,380 | ) | 2,073,962 | |||||||||||||||||||
Net income | — | — | — | 66,906 | — | — | 66,906 | ||||||||||||||||||||
Share grants | 72,850 | 1 | 1,536 | — | — | — | 1,537 | ||||||||||||||||||||
Share repurchases | (13,348 | ) | — | (309 | ) | — | — | — | (309 | ) | |||||||||||||||||
Other comprehensive income | — | — | — | — | 32,193 | — | 32,193 | ||||||||||||||||||||
Distributions to common shareholders | — | — | — | — | — | (182,470 | ) | (182,470 | ) | ||||||||||||||||||
Balance at December 31, 2017 | 89,487,371 | $ | 895 | $ | 2,180,896 | $ | 508,213 | $ | 52,665 | $ | (750,850 | ) | $ | 1,991,819 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 66,906 | $ | 116,354 | $ | 74,924 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation | 80,239 | 78,151 | 72,448 | |||||||||
Net amortization of debt issuance costs, premiums and discounts | 6,182 | 5,508 | 5,100 | |||||||||
Amortization of acquired real estate leases and assumed real estate lease obligations | 54,061 | 52,691 | 46,059 | |||||||||
Amortization of deferred leasing costs | 1,591 | 1,413 | 1,058 | |||||||||
Write-off of straight line rents and provision for losses on rents receivable | 13,104 | 496 | (463 | ) | ||||||||
Straight line rental income | (20,969 | ) | (24,744 | ) | (27,370 | ) | ||||||
Impairment losses | 4,276 | 5,484 | — | |||||||||
Loss on early extinguishment of debt | — | — | 6,845 | |||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | 23,717 | |||||||||
Other non-cash expenses, net | (651 | ) | (607 | ) | 484 | |||||||
Equity in earnings of an investee | (608 | ) | (137 | ) | (20 | ) | ||||||
Change in assets and liabilities: | ||||||||||||
Restricted cash | — | 1,127 | 16 | |||||||||
Rents receivable | 543 | (534 | ) | 1,265 | ||||||||
Deferred leasing costs | (5,239 | ) | (4,485 | ) | (1,888 | ) | ||||||
Other assets | (3,042 | ) | (883 | ) | (1,772 | ) | ||||||
Accounts payable and other liabilities | 3,934 | (572 | ) | 28,287 | ||||||||
Rents collected in advance | (3,171 | ) | 2,520 | (3,587 | ) | |||||||
Security deposits | 198 | 42 | 436 | |||||||||
Due to related persons | 25,531 | 735 | 2,234 | |||||||||
Net cash provided by operating activities | 222,885 | 232,559 | 227,773 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Real estate acquisitions | (117,468 | ) | (18,046 | ) | (2,179,621 | ) | ||||||
Real estate improvements | (15,162 | ) | (8,862 | ) | (3,797 | ) | ||||||
Proceeds from sale of properties, net | — | — | 501,668 | |||||||||
Cash placed in escrow for investing activities | (134 | ) | — | — | ||||||||
Investment in The RMR Group Inc. | — | — | (19,219 | ) | ||||||||
Net cash used in investing activities | (132,764 | ) | (26,908 | ) | (1,700,969 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from issuance of senior unsecured notes, after discounts | 345,394 | — | 1,433,694 | |||||||||
Repayment of mortgage notes payable | (34,223 | ) | (40,525 | ) | (245 | ) | ||||||
Borrowings under revolving credit facilities and bridge loan | 1,012,000 | 205,000 | 1,819,000 | |||||||||
Repayments of revolving credit facility and bridge loan | (589,000 | ) | (181,000 | ) | (1,593,000 | ) | ||||||
Payment of debt issuance costs | (4,921 | ) | — | (23,761 | ) | |||||||
Distributions to common shareholders | (182,470 | ) | (180,570 | ) | (157,597 | ) | ||||||
Repurchase of common shares | (309 | ) | (331 | ) | (130 | ) | ||||||
Purchase of noncontrolling interest | — | (3,908 | ) | — | ||||||||
Distributions to noncontrolling interest | — | (66 | ) | (393 | ) | |||||||
Net cash provided by (used) in financing activities | 546,471 | (201,400 | ) | 1,477,568 | ||||||||
Increase in cash and cash equivalents | 636,592 | 4,251 | 4,372 | |||||||||
Cash and cash equivalents at beginning of period | 22,127 | 17,876 | 13,504 | |||||||||
Cash and cash equivalents at end of period | $ | 658,719 | $ | 22,127 | $ | 17,876 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
SUPPLEMENTAL DISCLOSURES: | ||||||||||||
Interest paid | $ | 84,589 | $ | 76,930 | $ | 45,078 | ||||||
Income taxes paid | $ | 348 | $ | 428 | $ | 293 | ||||||
NON-CASH INVESTING ACTIVITIES: | ||||||||||||
Real estate and investment acquired by issuance of shares | $ | — | $ | — | $ | (736,740 | ) | |||||
Real estate acquired by assumption of mortgage notes payable | $ | — | $ | — | $ | (297,698 | ) | |||||
Real estate sold by assumption of mortgage notes payable | $ | — | $ | — | $ | 29,955 | ||||||
Working capital assumed | $ | — | $ | — | $ | (13,333 | ) | |||||
NON-CASH FINANCING ACTIVITIES: | ||||||||||||
Assumption of mortgage notes payable | $ | — | $ | — | $ | 297,698 | ||||||
Mortgage notes payable assumed in real estate sale | $ | — | $ | — | $ | (29,955 | ) | |||||
Issuance of SIR common shares | $ | — | $ | — | $ | 736,740 | ||||||
Distribution to common shareholders of The RMR Group Inc. common stock | $ | — | $ | — | $ | (18,809 | ) |
December 31, | ||||||||
2017 | 2016 | |||||||
Acquired real estate leases: | ||||||||
Capitalized above market lease values | $ | 92,887 | $ | 100,746 | ||||
Less: accumulated amortization | (31,364 | ) | (28,611 | ) | ||||
Capitalized above market lease values, net | 61,523 | 72,135 | ||||||
Lease origination value | 598,927 | 563,898 | ||||||
Less: accumulated amortization | (182,873 | ) | (129,735 | ) | ||||
Lease origination value, net | 416,054 | 434,163 | ||||||
Acquired real estate leases, net | $ | 477,577 | $ | 506,298 | ||||
Assumed real estate lease obligations: | ||||||||
Capitalized below market lease values | $ | 107,290 | $ | 107,375 | ||||
Less: accumulated amortization | (38,507 | ) | (29,753 | ) | ||||
Assumed real estate lease obligations, net | $ | 68,783 | $ | 77,622 |
Number of | Rentable | Acquired | |||||||||||||||||||||
Properties/ | Square | Purchase | Building and | Real Estate | |||||||||||||||||||
Date | Location | Buildings | Feet | Price | Land | Improvements | Leases | ||||||||||||||||
April 2017 | Norfolk, VA | 1 / 1 | 288,662 | $ | 55,506 | $ | 4,497 | $ | 32,505 | $ | 18,504 | ||||||||||||
May 2017 | Houston, TX | 1 / 1 | 84,150 | 20,459 | 887 | 12,594 | 6,978 | ||||||||||||||||
July 2017 | Indianapolis, IN | 1 / 2 | 275,205 | 41,222 | 3,279 | 25,200 | 12,743 | ||||||||||||||||
3 / 4 | 648,017 | $ | 117,187 | $ | 8,663 | $ | 70,299 | $ | 38,225 |
Number of | Rentable | Acquired | |||||||||||||||||||||
Properties/ | Square | Purchase | Building and | Real Estate | |||||||||||||||||||
Date | Location | Buildings | Feet | Price | Land | Improvements | Leases | ||||||||||||||||
July 2016 | Huntsville, AL (2) | 1 / 1 | 57,420 | $ | 10,200 | $ | 1,652 | $ | 8,548 | $ | — | ||||||||||||
October 2016 | Richmond, VA | 1 / 1 | 50,237 | 7,760 | 1,270 | 4,824 | 1,666 | ||||||||||||||||
2 / 2 | 107,657 | $ | 17,960 | $ | 2,922 | $ | 13,372 | $ | 1,666 |
(1) | Purchase price excludes acquisition related costs. |
(2) | This property was acquired and simultaneously leased back to the seller. We accounted for this acquisition as an asset acquisition and capitalized acquisition related costs of $86 related to this transaction. |
Total Purchase Price (excluding acquisition costs): | ||||
Aggregate share consideration | $ | 716,666 | ||
Assumed working capital | (3,794 | ) | ||
Assumed mortgage principal | 297,698 | |||
Non-cash portion of purchase price | 1,010,570 | |||
Cash consideration paid to former holders of CCIT common stock | 1,245,321 | |||
CCIT shareholders distribution, debt and loan assumption costs paid at closing | 734,319 | |||
Cash portion of purchase price | 1,979,640 | |||
Gross purchase price | $ | 2,990,210 | ||
Purchase Price Allocation: | ||||
Land | $ | 315,352 | ||
Buildings and improvements | 2,260,870 | |||
Acquired real estate leases | 492,997 | |||
Cash | 17,127 | |||
Restricted cash | 1,145 | |||
Rents receivable | 4,354 | |||
Other assets | 565 | |||
Total assets | 3,092,410 | |||
Mortgage notes payable (1) | (299,710 | ) | ||
Fair value of derivative instrument (2) | (1,779 | ) | ||
Accounts payable and accrued expenses | (8,142 | ) | ||
Assumed real estate lease obligations | (71,701 | ) | ||
Rents collected in advance | (10,194 | ) | ||
Security deposits | (1,061 | ) | ||
Amount allocated to noncontrolling interest | (3,517 | ) | ||
Net assets acquired | 2,696,306 | |||
Assumed working capital | (3,794 | ) | ||
Assumed principal balance of debt | 297,698 | |||
Gross purchase price | $ | 2,990,210 | ||
Reconciliation to Net Purchase Price (excluding acquisition costs): | ||||
Gross purchase price | $ | 2,990,210 | ||
Proceeds from properties sold to SNH | (501,668 | ) | ||
Mortgage principal assumed by SNH, including loan assumption costs of $300 (3) | (30,255 | ) | ||
Net purchase price | $ | 2,458,287 |
(1) | Includes the fair value adjustment totaling $2,012 on $297,698 of mortgage principal assumed in connection with the CCIT Merger. |
(2) | Represents the fair value of an interest rate swap agreement relating to a $41,000 mortgage note assumed in connection with the CCIT Merger. |
(3) | Excludes the fair value adjustment totaling $1,073. |
Assumed | |||||||||||||||||||||||||||||||
Number of | Rentable | Acquired | Real Estate | Other | |||||||||||||||||||||||||||
Properties/ | Square | Purchase | Building and | Real Estate | Lease | Assumed | |||||||||||||||||||||||||
Date | Location | Buildings | Feet | Price (1) | Land | Improvements | Leases | Obligations | Liabilities | ||||||||||||||||||||||
April 2015 | Phoenix, AZ | 1 / 1 | 106,397 | $ | 16,850 | $ | 2,490 | $ | 10,799 | $ | 3,649 | $ | (78 | ) | $ | (10 | ) | ||||||||||||||
April 2015 | Birmingham, AL | — | — | 2,000 | 2,000 | — | — | — | — | ||||||||||||||||||||||
July 2015 | Richmond, VA | 1 / 3 | 88,890 | 12,750 | 2,401 | 7,289 | 3,060 | — | — | ||||||||||||||||||||||
July 2015 | Kansas City, MO | 1 / 1 | 595,607 | 153,500 | 4,263 | 73,891 | 75,346 | — | — | ||||||||||||||||||||||
November 2015 | Parsippany, NJ | 1 / 1 | 100,010 | 32,000 | 4,188 | 14,919 | 12,893 | — | — | ||||||||||||||||||||||
4 / 6 | 890,904 | $ | 217,100 | $ | 15,342 | $ | 106,898 | $ | 94,948 | $ | (78 | ) | $ | (10 | ) |
(1) | Purchase price excludes acquisition related costs. |
Minimum | ||||
Lease | ||||
Year | Payment | |||
2018 | $ | 379,134 | ||
2019 | 379,425 | |||
2020 | 380,551 | |||
2021 | 377,971 | |||
2022 | 366,126 | |||
Thereafter | 2,032,881 | |||
$ | 3,916,088 |
For the Year Ended December 31, 2017 | ||||||||||||||||
SIR | ILPT | Corporate | Consolidated | |||||||||||||
REVENUES: | ||||||||||||||||
Rental income | $ | 257,459 | $ | 134,826 | $ | — | $ | 392,285 | ||||||||
Tenant reimbursements and other income | 54,138 | 21,680 | — | 75,818 | ||||||||||||
Total revenues | 311,597 | 156,506 | — | 468,103 | ||||||||||||
EXPENSES: | ||||||||||||||||
Real estate taxes | 26,263 | 17,868 | — | 44,131 | ||||||||||||
Other operating expenses | 44,654 | 10,913 | — | 55,567 | ||||||||||||
Depreciation and amortization | 110,357 | 27,315 | — | 137,672 | ||||||||||||
Acquisition and transaction related costs | — | — | 1,075 | 1,075 | ||||||||||||
General and administrative | — | — | 54,818 | 54,818 | ||||||||||||
Write-off of straight line rents receivable, net | 12,517 | — | — | 12,517 | ||||||||||||
Loss on asset impairment | 4,047 | — | — | 4,047 | ||||||||||||
Loss on impairment of real estate assets | 229 | — | — | 229 | ||||||||||||
Total expenses | 198,067 | 56,096 | 55,893 | 310,056 | ||||||||||||
Operating income (loss) | 113,530 | 100,410 | (55,893 | ) | 158,047 | |||||||||||
Dividend income | — | — | 1,587 | 1,587 | ||||||||||||
Interest expense | (6,332 | ) | (2,259 | ) | (84,279 | ) | (92,870 | ) | ||||||||
Income (loss) before income tax expense and equity in earnings of an investee | 107,198 | 98,151 | (138,585 | ) | 66,764 | |||||||||||
Income tax expense | — | — | (466 | ) | (466 | ) | ||||||||||
Equity in earnings of an investee | — | — | 608 | 608 | ||||||||||||
Net income (loss) | $ | 107,198 | $ | 98,151 | $ | (138,443 | ) | $ | 66,906 | |||||||
At December 31, 2017 | ||||||||||||||||
SIR | ILPT | Corporate | Consolidated | |||||||||||||
Total assets | $ | 3,128,182 | $ | 1,405,592 | $ | 769,256 | $ | 5,303,030 |
For the Year Ended December 31, 2016 | ||||||||||||||||
SIR | ILPT | Corporate | Consolidated | |||||||||||||
REVENUES: | ||||||||||||||||
Rental income | $ | 254,497 | $ | 132,518 | $ | — | $ | 387,015 | ||||||||
Tenant reimbursements and other income | 54,200 | 20,792 | — | 74,992 | ||||||||||||
Total revenues | 308,697 | 153,310 | — | 462,007 | ||||||||||||
EXPENSES: | ||||||||||||||||
Real estate taxes | 25,675 | 17,204 | — | 42,879 | ||||||||||||
Other operating expenses | 42,364 | 10,593 | — | 52,957 | ||||||||||||
Depreciation and amortization | 106,688 | 27,074 | — | 133,762 | ||||||||||||
Acquisition and transaction related costs | — | — | 306 | 306 | ||||||||||||
General and administrative | — | — | 28,602 | 28,602 | ||||||||||||
Loss on impairment of real estate assets | 5,484 | — | — | 5,484 | ||||||||||||
Total expenses | 180,211 | 54,871 | 28,908 | 263,990 | ||||||||||||
Operating income (loss) | 128,486 | 98,439 | (28,908 | ) | 198,017 | |||||||||||
Dividend income | — | — | 1,268 | 1,268 | ||||||||||||
Interest expense | (7,431 | ) | (2,262 | ) | (72,927 | ) | (82,620 | ) | ||||||||
Income (loss) before income tax expense and equity in earnings of an investee | 121,055 | 96,177 | (100,567 | ) | 116,665 | |||||||||||
Income tax expense | — | — | (448 | ) | (448 | ) | ||||||||||
Equity in earnings of an investee | — | — | 137 | 137 | ||||||||||||
Net income (loss) | 121,055 | 96,177 | (100,878 | ) | 116,354 | |||||||||||
Net income allocated to noncontrolling interest | (33 | ) | — | — | (33 | ) | ||||||||||
Net income (loss) attributed to SIR | $ | 121,022 | $ | 96,177 | $ | (100,878 | ) | $ | 116,321 | |||||||
At December 31, 2016 | ||||||||||||||||
SIR | ILPT | Corporate | Consolidated | |||||||||||||
Total assets | $ | 3,120,475 | $ | 1,422,335 | $ | 96,872 | $ | 4,639,682 |
For the Year Ended December 31, 2015 | ||||||||||||||||
SIR | ILPT | Corporate | Consolidated | |||||||||||||
REVENUES: | ||||||||||||||||
Rental income | $ | 235,837 | $ | 128,302 | $ | — | $ | 364,139 | ||||||||
Tenant reimbursements and other income | 44,637 | 19,589 | — | 64,226 | ||||||||||||
Total revenues | 280,474 | 147,891 | — | 428,365 | ||||||||||||
EXPENSES: | ||||||||||||||||
Real estate taxes | 21,144 | 16,316 | — | 37,460 | ||||||||||||
Other operating expenses | 33,475 | 8,478 | — | 41,953 | ||||||||||||
Depreciation and amortization | 97,621 | 25,285 | — | 122,906 | ||||||||||||
Acquisition and transaction related costs | — | — | 21,987 | 21,987 | ||||||||||||
General and administrative | — | — | 25,859 | 25,859 | ||||||||||||
Total expenses | 152,240 | 50,079 | 47,846 | 250,165 | ||||||||||||
Operating income (loss) | 128,234 | 97,812 | (47,846 | ) | 178,200 | |||||||||||
Dividend income | — | — | 1,666 | 1,666 | ||||||||||||
Interest expense | (7,028 | ) | (2,092 | ) | (64,765 | ) | (73,885 | ) | ||||||||
Loss on early extinguishment of debt | — | — | (6,845 | ) | (6,845 | ) | ||||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | (23,717 | ) | (23,717 | ) | ||||||||||
Income (loss) before income tax expense and equity in earnings of an investee | 121,206 | 95,720 | (141,507 | ) | 75,419 | |||||||||||
Income tax expense | — | — | (515 | ) | (515 | ) | ||||||||||
Equity in earnings of an investee | — | — | 20 | 20 | ||||||||||||
Net income (loss) | 121,206 | 95,720 | (142,002 | ) | 74,924 | |||||||||||
Net income allocated to noncontrolling interest | (176 | ) | — | — | (176 | ) | ||||||||||
Net income (loss) attributed to SIR | $ | 121,030 | $ | 95,720 | $ | (142,002 | ) | $ | 74,748 | |||||||
At December 31, 2015 | ||||||||||||||||
SIR | ILPT | Corporate | Consolidated | |||||||||||||
Total assets | $ | 3,188,582 | $ | 1,443,217 | $ | 52,546 | $ | 4,684,345 |
Fair Value | |||||||||||||||||
Notional | of Liability | ||||||||||||||||
Amount as of | Interest | Effective | Maturity | as of | |||||||||||||
Balance Sheet Location | December 31, 2017 | Rate (1) | Date | Date | December 31, 2017 | ||||||||||||
Interest rate swap | Accounts payable and other liabilities | $ | 41,000 | 4.16 | % | 1/29/2015 | 8/3/2020 | $ | 162 |
(1) | The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Amount of gain (loss) recognized in cumulative | |||||||||||
other comprehensive income (effective portion) | $ | 87 | $ | (284 | ) | $ | 61 | ||||
Amount of gain reclassified from cumulative | |||||||||||
other comprehensive income into interest expense (effective portion) | $ | 226 | $ | 377 | $ | 215 |
December 31, | ||||||||
2017 | 2016 | |||||||
Revolving credit facility, due in 2019 | $ | — | $ | 327,000 | ||||
ILPT revolving credit facility, due in 2021 (1) | 750,000 | — | ||||||
Term loan, due in 2020 (2) | 350,000 | 350,000 | ||||||
Senior unsecured notes, 2.85%, due in 2018 (3) | 350,000 | 350,000 | ||||||
Senior unsecured notes, 3.60%, due in 2020 | 400,000 | 400,000 | ||||||
Senior unsecured notes, 4.15%, due in 2022 | 300,000 | 300,000 | ||||||
Senior unsecured notes, 4.25%, due in 2024 | 350,000 | — | ||||||
Senior unsecured notes, 4.50%, due in 2025 | 400,000 | 400,000 | ||||||
Mortgage note payable, 5.95%, due in 2017 (4) (5) | — | 17,498 | ||||||
Mortgage note payable, 4.50%, due in 2019 (4) (6) | — | 1,984 | ||||||
Mortgage note payable, 4.50%, due in 2019 (4) (6) | — | 2,381 | ||||||
Mortgage note payable, 3.87%, due in 2020 (4) (6) | — | 12,360 | ||||||
Mortgage note payable, 4.16%, due in 2020 (4) (7) | 41,000 | 41,000 | ||||||
Mortgage note payable, 3.99%, due in 2020 (4) | 48,750 | 48,750 | ||||||
Mortgage note payable, 3.55%, due in 2023 (4) | 71,000 | 71,000 | ||||||
Mortgage note payable, 3.70%, due in 2023 (4) | 50,000 | 50,000 | ||||||
3,110,750 | 2,371,973 | |||||||
Unamortized debt issuance costs, premiums and discounts | (23,670 | ) | (20,657 | ) | ||||
$ | 3,087,080 | $ | 2,351,316 |
(1) | ILPT repaid certain amounts outstanding under its revolving credit facility on January 17, 2018 with part of the $435,900 of net proceeds from the ILPT IPO. Upon the completion of the ILPT IPO, the maturity date of ILPT's revolving credit facility was extended from March 29, 2018 to December 29, 2021. |
(2) | On January 31, 2018, we repaid this term loan in full without penalty with cash on hand at December 31, 2017 and borrowings under our revolving credit facility. |
(3) | On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes with cash on hand at December 31, 2017. |
(4) | We assumed all of these mortgage notes in connection with our acquisition of certain properties. The stated interest rates for these mortgage debts are the contractually stated rates; we recorded the assumed mortgages at estimated fair value on the date of acquisition, and we amortize the fair value premiums to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the date of acquisition. |
(5) | This mortgage note was repaid on July 3, 2017. |
(6) | These mortgage notes were repaid on December 29, 2017. |
(7) | Interest on this mortgage note is payable at a rate equal to LIBOR plus a premium but has been fixed by a cash flow hedge which sets the rate at approximately 4.16% until August 3, 2020, which is the maturity date of the mortgage note. |
Principal | |||||
Year | Payment | ||||
2018 | $ | 350,228 | |||
2019 | 710 | ||||
2020 | 838,812 | ||||
2021 | 750,000 | ||||
2022 | 300,000 | ||||
Thereafter | 871,000 | ||||
$ | 3,110,750 | (1) |
(1) | Total debt outstanding as of December 31, 2017, including unamortized debt issuance costs, premiums and discounts was $3,087,080. |
Fair Value at Reporting Date Using | ||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||
Active Markets for | Significant Other | Unobservable | ||||||||||||||
Identical Assets | Observable Inputs | Inputs | ||||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Recurring Fair Value Measurements: | ||||||||||||||||
Assets: | ||||||||||||||||
Investment in RMR Inc. (1) | $ | 94,099 | $ | 94,099 | $ | — | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Interest rate swap (2) | $ | (162 | ) | $ | — | $ | (162 | ) | $ | — |
(1) | Our 1,586,836 shares of class A common stock of RMR Inc., which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $42,686. The unrealized gain of $51,413 for these shares as of December 31, 2017 is included in cumulative other comprehensive income in our consolidated balance sheet. |
(2) | As discussed in Note 6, we have an interest rate swap agreement in connection with a $41,000 mortgage note. This interest rate swap agreement is carried at fair value and is included in accounts payable and other liabilities in our consolidated balance sheets and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. |
At December 31, 2017 | At December 31, 2016 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value (1) | Fair Value | Value (1) | Fair Value | |||||||||||||
Senior unsecured notes, due 2018 at 2.85% (2) | $ | 349,896 | $ | 349,731 | $ | 348,667 | $ | 352,074 | ||||||||
Senior unsecured notes, due 2020 at 3.60% | $ | 397,214 | $ | 404,050 | $ | 395,955 | $ | 400,656 | ||||||||
Senior unsecured notes, due 2022 at 4.15% | $ | 296,143 | $ | 304,199 | $ | 295,301 | $ | 297,186 | ||||||||
Senior unsecured notes, due 2024 at 4.25% | $ | 342,797 | $ | 347,877 | $ | — | $ | — | ||||||||
Senior unsecured notes, due 2025 at 4.50% | $ | 391,375 | $ | 403,998 | $ | 390,377 | $ | 387,030 | ||||||||
Mortgage notes payable | $ | 210,785 | $ | 209,200 | $ | 245,643 | $ | 243,845 |
(1) | Includes unamortized debt issuance costs, premiums and discounts. |
(2) | On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes with cash on hand at December 31, 2017. |
Weighted | |||||||
Average | |||||||
Number | Grant Date | ||||||
of Shares | Fair Value | ||||||
Unvested shares at December 31, 2014 | 69,849 | $ | 25.29 | ||||
2015 Activity: | |||||||
Granted | 65,100 | $ | 19.36 | ||||
Vested | (44,929 | ) | $ | 19.94 | |||
Forfeited | (770 | ) | $ | 22.38 | |||
Unvested shares at December 31, 2015 | 89,250 | $ | 22.11 | ||||
2016 Activity: | |||||||
Granted | 65,900 | $ | 25.80 | ||||
Vested | (58,090 | ) | $ | 25.89 | |||
Unvested shares at December 31, 2016 | 97,060 | $ | 23.65 | ||||
2017 Activity: | |||||||
Granted | 72,850 | $ | 23.32 | ||||
Vested | (65,390 | ) | $ | 23.50 | |||
Unvested shares at December 31, 2017 | 104,520 | $ | 23.40 |
Declaration | Record | Paid | Distributions | Total | ||||||||
Date | Date | Date | Per Share | Distributions | ||||||||
1/13/2017 | 1/23/2017 | 2/21/2017 | $ | 0.5100 | $ | 45,608 | ||||||
4/11/2017 | 4/21/2017 | 5/18/2017 | 0.5100 | 45,608 | ||||||||
7/12/2017 | 7/24/2017 | 8/17/2017 | 0.5100 | 45,616 | ||||||||
10/12/2017 | 10/23/2017 | 11/16/2017 | 0.5100 | 45,638 | ||||||||
$ | 2.0400 | $ | 182,470 | |||||||||
1/11/2016 | 1/22/2016 | 2/23/2016 | $ | 0.5000 | $ | 44,709 | ||||||
4/13/2016 | 4/25/2016 | 5/19/2016 | 0.5000 | 44,687 | ||||||||
7/12/2016 | 7/22/2016 | 8/18/2016 | 0.5100 | 45,587 | ||||||||
10/11/2016 | 10/21/2016 | 11/17/2016 | 0.5100 | 45,587 | ||||||||
$ | 2.0200 | $ | 180,570 |
Unrealized Gain (Loss) | Unrealized | Equity in | ||||||||||||||
on Investment in | Gain (Loss) | Unrealized Gain | ||||||||||||||
Available for | on Derivative | (Loss) of an | ||||||||||||||
Sale Securities | Instruments (1) | Investee (2) | Total | |||||||||||||
Balance at December 31, 2014 | $ | — | $ | — | $ | (23 | ) | $ | (23 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (19,820 | ) | 61 | (99 | ) | (19,858 | ) | |||||||||
Amounts reclassified from cumulative other comprehensive income (loss) to net income | — | 215 | 79 | 294 | ||||||||||||
Net current period other comprehensive income (loss) | (19,820 | ) | 276 | (20 | ) | (19,564 | ) | |||||||||
Balance at December 31, 2015 | (19,820 | ) | 276 | (43 | ) | (19,587 | ) | |||||||||
Other comprehensive income (loss) before reclassifications | 39,814 | (284 | ) | 152 | 39,682 | |||||||||||
Amounts reclassified from cumulative other comprehensive income (loss) to net income | — | 377 | — | 377 | ||||||||||||
Net current period other comprehensive income | 39,814 | 93 | 152 | 40,059 | ||||||||||||
Balance at December 31, 2016 | 19,994 | 369 | 109 | 20,472 | ||||||||||||
Other comprehensive income before reclassifications | 31,419 | 87 | 537 | 32,043 | ||||||||||||
Amounts reclassified from cumulative other comprehensive income to net income | — | 226 | (76 | ) | 150 | |||||||||||
Net current period other comprehensive income | 31,419 | 313 | 461 | 32,193 | ||||||||||||
Balance at December 31, 2017 | $ | 51,413 | $ | 682 | $ | 570 | $ | 52,665 |
(1) | Amounts reclassified from cumulative other comprehensive income (loss) is included in interest expense in our consolidated statements of comprehensive income. |
(2) | Amounts reclassified from cumulative other comprehensive income (loss) is included in equity in earnings of an investee in our consolidated statements of comprehensive income. |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Weighted average common shares for basic earnings per share | 89,351 | 89,304 | 86,699 | ||||||
Effect of dilutive securities: unvested share awards | 19 | 20 | 9 | ||||||
Weighted average common shares for diluted earnings per share | 89,370 | 89,324 | 86,708 |
• | Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of: |
◦ | the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, plus (b) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and |
◦ | the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000. |
• | Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows: |
◦ | An amount, subject to a cap, based on the value of our common shares outstanding, equal to 12% of the product of: |
– | our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period (or, for purposes of calculating any incentive fee for 2015, our equity market capitalization on December 31, 2013), and |
– | the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Equity Index, or the benchmark return per share, for the relevant measurement period. |
◦ | For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on the Nasdaq on the last trading day of the year immediately before the first year of the measurement period from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period. |
◦ | The calculation of the incentive management fee (including the determinations of our equity market capitalization and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued during the measurement period. |
◦ | No incentive management fee is payable by us unless our total return per share during the measurement period is positive. |
◦ | The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated. |
◦ | If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the SNL U.S. REIT Equity Index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the SNL U.S. REIT Equity Index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the SNL U.S. REIT Equity Index. |
◦ | The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period. |
◦ | Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements. |
• | Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs. |
• | Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $8,174, $7,533 and $4,391 for property management related expenses for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included in other operating expenses in our consolidated statements of comprehensive income for these periods. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of centralized accounting personnel and our share of RMR LLC’s costs for providing our internal audit function. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. The amounts recognized as expense for internal audit costs were $276, $235 and $252 for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included in general and administrative expenses in our consolidated statements of comprehensive income for these periods. |
• | Term. Our management agreements with RMR LLC have terms that end on December 31, 2037, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension. |
• | Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (1) at any time on 60 days’ written notice for convenience, (2) immediately on written notice for cause, as defined therein, (3) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (4) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein. |
• | Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC. |
• | Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable. |
• | Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter into agreements with RMR LLC and other companies to which RMR LLC provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers. |
• | Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours |
• | We contributed 880,000 of our common shares and $15,880 in cash to RMR Inc. and RMR Inc. issued 3,166,891 shares of its class A common stock to us. |
• | We agreed to distribute approximately half of the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction to our shareholders as a special distribution, |
• | We entered into amended and restated business and property management agreements with RMR LLC which, among other things, amended the term, termination and termination fee provisions of those agreements. See Note 13 for further information regarding our management agreements with RMR LLC. |
• | We entered into a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations. |
• | We entered into a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they agreed not to transfer the 880,000 of our common shares ABP Trust received in the Up-C Transaction for a 10 year period ending on June 5, 2025 and we granted them certain registration rights, subject, in each case, to certain exceptions. |
2017 | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
Total revenues | $ | 116,294 | $ | 115,870 | $ | 118,014 | $ | 117,925 | ||||||||
Net income | $ | 6,728 | $ | 26,661 | $ | 31,442 | $ | 2,075 | ||||||||
Net income attributed to SIR | $ | 6,728 | $ | 26,661 | $ | 31,442 | $ | 2,075 | ||||||||
Net income attributed to SIR per common share - basic and diluted | $ | 0.08 | $ | 0.30 | $ | 0.35 | $ | 0.02 | ||||||||
Common distributions declared | $ | 0.51 | $ | 0.51 | $ | 0.51 | $ | 0.51 |
2016 | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
Total revenues | $ | 117,232 | $ | 114,904 | $ | 115,036 | $ | 114,835 | ||||||||
Net income | $ | 32,812 | $ | 30,752 | $ | 28,568 | $ | 24,222 | ||||||||
Net income attributed to SIR | $ | 32,779 | $ | 30,752 | $ | 28,568 | $ | 24,222 | ||||||||
Net income attributed to SIR per common share - basic and diluted | $ | 0.37 | $ | 0.34 | $ | 0.32 | $ | 0.27 | ||||||||
Common distributions declared | $ | 0.50 | $ | 0.50 | $ | 0.51 | $ | 0.51 |
Balance at | Charged to | Balance | ||||||||||||||
Beginning | Costs and | at End | ||||||||||||||
Description | of Period | Expenses | Deductions | of Period | ||||||||||||
Year ended December 31, 2015: | ||||||||||||||||
Allowance for doubtful accounts | $ | 1,664 | $ | (463 | ) | $ | (737 | ) | $ | 464 | ||||||
Year ended December 31, 2016: | ||||||||||||||||
Allowance for doubtful accounts | $ | 464 | $ | 496 | $ | (87 | ) | $ | 873 | |||||||
Year ended December 31, 2017: | ||||||||||||||||
Allowance for doubtful accounts | $ | 873 | 587 | (64 | ) | $ | 1,396 |
Number of | Initial Cost to | Costs | Gross Amount Carried at | ||||||||||||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | |||||||||||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | |||||||||||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | ||||||||||||||||||||
40 Inverness Center Parkway | Birmingham | AL | 1 | Office | $ | — | $ | 1,427 | $ | 10,634 | $ | 193 | $ | — | $ | 1,427 | $ | 10,827 | $ | 12,254 | $ | 1,898 | 12/9/2010 | 1984 | |||||||||||
42 Inverness Center Parkway | Birmingham | AL | 1 | Office | — | 1,273 | 10,824 | 217 | — | 1,273 | 11,041 | 12,314 | 1,932 | 12/9/2010 | 1985 | ||||||||||||||||||||
44 Inverness Center Parkway | Birmingham | AL | 1 | Office | — | 1,508 | 10,638 | 252 | — | 1,508 | 10,890 | 12,398 | 1,901 | 12/9/2010 | 1985 | ||||||||||||||||||||
46 Inverness Center Parkway | Birmingham | AL | — | Land | — | 2,000 | — | — | — | 2,000 | — | 2,000 | — | 4/17/2015 | — | ||||||||||||||||||||
445 Jan Davis Drive | Huntsville | AL | 1 | Office | — | 1,652 | 8,634 | (6 | ) | — | 1,652 | 8,628 | 10,280 | 306 | 7/22/2016 | 2007 | |||||||||||||||||||
4905 Moores Mill Road | Huntsville | AL | 1 | Industrial | — | 5,628 | 67,373 | — | — | 5,628 | 67,373 | 73,001 | 8,983 | 8/31/2012 | 1979 | ||||||||||||||||||||
4501 Industrial Drive* | Fort Smith | AR | 1 | Industrial | — | 900 | 3,485 | — | — | 900 | 3,485 | 4,385 | 254 | 1/29/2015 | 2013 | ||||||||||||||||||||
16001 North 28th Avenue | Phoenix | AZ | 1 | Office | — | 2,490 | 10,799 | 428 | — | 2,490 | 11,227 | 13,717 | 741 | 4/16/2015 | 1998 | ||||||||||||||||||||
2149 West Dunlap Avenue | Phoenix | AZ | 1 | Office | — | 5,600 | 14,433 | 94 | — | 5,600 | 14,527 | 20,127 | 1,057 | 1/29/2015 | 1983 | ||||||||||||||||||||
1920 and 1930 W University Drive | Tempe | AZ | 2 | Office | — | 1,122 | 10,122 | 2,117 | — | 1,122 | 12,239 | 13,361 | 5,020 | 6/30/1999 | 1988 | ||||||||||||||||||||
2544 and 2548 Campbell Place | Carlsbad | CA | 2 | Office | — | 3,381 | 17,918 | 15 | — | 3,381 | 17,933 | 21,314 | 2,354 | 9/21/2012 | 2007 | ||||||||||||||||||||
2235 Iron Point Road | Folsom | CA | 1 | Office | — | 3,450 | 25,504 | — | — | 3,450 | 25,504 | 28,954 | 4,463 | 12/17/2010 | 2008 | ||||||||||||||||||||
47131 Bayside Parkway | Fremont | CA | 1 | Office | — | 5,200 | 4,860 | 715 | — | 5,200 | 5,575 | 10,775 | 1,126 | 3/19/2009 | 1990 | ||||||||||||||||||||
100 Redwood Shores Parkway | Redwood City | CA | 1 | Office | — | 12,300 | 23,231 | — | — | 12,300 | 23,231 | 35,531 | 1,694 | 1/29/2015 | 1993 | ||||||||||||||||||||
3875 Atherton Road | Rocklin | CA | 1 | Office | — | 200 | 3,980 | — | — | 200 | 3,980 | 4,180 | 290 | 1/29/2015 | 1991 | ||||||||||||||||||||
145 Rio Robles Drive | San Jose | CA | 1 | Office | — | 5,063 | 8,437 | — | — | 5,063 | 8,437 | 13,500 | 844 | 12/23/2013 | 1984 | ||||||||||||||||||||
2090 Fortune Drive | San Jose | CA | 1 | Office | — | 5,700 | 1,998 | — | — | 5,700 | 1,998 | 7,698 | 146 | 1/29/2015 | 1996 | ||||||||||||||||||||
2115 O'Nel Drive | San Jose | CA | 1 | Office | — | 8,000 | 25,098 | 102 | — | 8,000 | 25,200 | 33,200 | 1,831 | 1/29/2015 | 1984 | ||||||||||||||||||||
3939 North First Street | San Jose | CA | 1 | Office | — | 6,160 | 7,961 | 373 | — | 6,160 | 8,334 | 14,494 | 809 | 12/23/2013 | 1984 | ||||||||||||||||||||
51 and 77 Rio Robles Drive | San Jose | CA | 2 | Office | — | 11,545 | 19,879 | 54 | — | 11,545 | 19,933 | 31,478 | 1,990 | 12/23/2013 | 1984 | ||||||||||||||||||||
6448-6450 Via Del Oro | San Jose | CA | 1 | Office | — | 2,700 | 11,549 | 488 | — | 2,700 | 12,037 | 14,737 | 862 | 1/29/2015 | 1983 | ||||||||||||||||||||
2450 and 2500 Walsh Avenue | Santa Clara | CA | 2 | Office | — | 8,200 | 36,597 | 121 | — | 8,200 | 36,718 | 44,918 | 2,670 | 1/29/2015 | 1982 | ||||||||||||||||||||
3250 and 3260 Jay Street | Santa Clara | CA | 2 | Office | — | 11,900 | 52,059 | — | — | 11,900 | 52,059 | 63,959 | 3,796 | 1/29/2015 | 1982 | ||||||||||||||||||||
350 West Java Drive | Sunnyvale | CA | 1 | Office | — | 11,552 | 12,461 | — | — | 11,552 | 12,461 | 24,013 | 1,610 | 11/15/2012 | 1984 | ||||||||||||||||||||
7958 South Chester Street | Centennial | CO | 1 | Office | — | 7,400 | 23,278 | 371 | — | 7,400 | 23,649 | 31,049 | 1,713 | 1/29/2015 | 2000 | ||||||||||||||||||||
350 Spectrum Loop | Colorado Springs | CO | 1 | Office | — | 3,100 | 20,165 | — | — | 3,100 | 20,165 | 23,265 | 1,470 | 1/29/2015 | 2000 | ||||||||||||||||||||
955 Aeroplaza Drive* | Colorado Springs | CO | 1 | Industrial | — | 800 | 7,412 | — | — | 800 | 7,412 | 8,212 | 540 | 1/29/2015 | 2012 | ||||||||||||||||||||
13400 East 39th Avenue and 3800 Wheeling Street* | Denver | CO | 2 | Industrial | — | 3,100 | 12,955 | 46 | — | 3,100 | 13,001 | 16,101 | 964 | 1/29/2015 | 1973 | ||||||||||||||||||||
333 Inverness Drive South | Englewood | CO | 1 | Office | — | 3,230 | 11,801 | 415 | — | 3,230 | 12,216 | 15,446 | 1,690 | 6/15/2012 | 1998 | ||||||||||||||||||||
150 Greenhorn Drive* | Pueblo | CO | 1 | Industrial | — | 200 | 4,177 | — | — | 200 | 4,177 | 4,377 | 305 | 1/29/2015 | 2013 | ||||||||||||||||||||
2 Tower Drive* | Wallingford | CT | 1 | Industrial | — | 1,471 | 2,165 | 8 | — | 1,471 | 2,173 | 3,644 | 615 | 10/24/2006 | 1978 |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
1 Targeting Center | Windsor | CT | 1 | Office | — | 1,850 | 7,226 | — | — | 1,850 | 7,226 | 9,076 | 979 | 7/20/2012 | 1980 | |||||||||||
235 Great Pond Road* | Windsor | CT | 1 | Industrial | — | 2,400 | 9,469 | — | — | 2,400 | 9,469 | 11,869 | 1,282 | 7/20/2012 | 2004 | |||||||||||
10350 NW 112th Avenue | Miami | FL | 1 | Office | — | 3,500 | 19,954 | 398 | — | 3,500 | 20,352 | 23,852 | 1,458 | 1/29/2015 | 2002 | |||||||||||
2100 NW 82nd Avenue* | Miami | FL | 1 | Industrial | — | 144 | 1,297 | 454 | — | 144 | 1,751 | 1,895 | 702 | 3/19/1998 | 1987 | |||||||||||
One Primerica Parkway | Duluth | GA | 1 | Office | — | 6,900 | 50,433 | — | — | 6,900 | 50,433 | 57,333 | 3,677 | 1/29/2015 | 2013 | |||||||||||
1000 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 2,252 | — | — | — | 2,252 | — | 2,252 | — | 12/5/2003 | — | |||||||||||
1001 Ahua Street* | Honolulu | HI | 1 | Land | — | 15,155 | 3,312 | 91 | — | 15,155 | 3,403 | 18,558 | 1,183 | 12/5/2003 | — | |||||||||||
1024 Kikowaena Place* | Honolulu | HI | 1 | Land | — | 1,818 | — | — | — | 1,818 | — | 1,818 | — | 12/5/2003 | — | |||||||||||
1024 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,385 | — | — | — | 1,385 | — | 1,385 | — | 12/5/2003 | — | |||||||||||
1027 Kikowaena Place* | Honolulu | HI | 1 | Land | — | 5,444 | — | — | — | 5,444 | — | 5,444 | — | 12/5/2003 | — | |||||||||||
1030 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 5,655 | — | — | — | 5,655 | — | 5,655 | — | 12/5/2003 | — | |||||||||||
1038 Kikowaena Place* | Honolulu | HI | 1 | Land | — | 2,576 | — | — | — | 2,576 | — | 2,576 | — | 12/5/2003 | — | |||||||||||
1045 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 819 | — | — | — | 819 | — | 819 | — | 12/5/2003 | — | |||||||||||
1050 Kikowaena Place* | Honolulu | HI | 1 | Land | — | 1,404 | 873 | — | — | 1,404 | 873 | 2,277 | 307 | 12/5/2003 | — | |||||||||||
1052 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,703 | — | 240 | — | 1,703 | 240 | 1,943 | 74 | 12/5/2003 | — | |||||||||||
1055 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,216 | — | — | — | 1,216 | — | 1,216 | — | 12/5/2003 | — | |||||||||||
106 Puuhale Road* | Honolulu | HI | 1 | Industrial | — | 1,113 | — | 229 | — | 1,113 | 229 | 1,342 | 43 | 12/5/2003 | 1966 | |||||||||||
1062 Kikowaena Place* | Honolulu | HI | 1 | Land | — | 1,049 | 599 | — | — | 1,049 | 599 | 1,648 | 210 | 12/5/2003 | — | |||||||||||
1122 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 5,782 | — | — | — | 5,782 | — | 5,782 | — | 12/5/2003 | — | |||||||||||
113 Puuhale Road* | Honolulu | HI | 1 | Land | — | 3,729 | — | — | — | 3,729 | — | 3,729 | — | 12/5/2003 | — | |||||||||||
1150 Kikowaena Street* | Honolulu | HI | 1 | Land | — | 2,445 | — | — | — | 2,445 | — | 2,445 | — | 12/5/2003 | — | |||||||||||
120 Mokauea Street* | Honolulu | HI | 1 | Industrial | — | 1,953 | — | 655 | — | 1,953 | 655 | 2,608 | 82 | 12/5/2003 | 1970 | |||||||||||
120 Sand Island Access Road* | Honolulu | HI | 1 | Industrial | — | 1,130 | 11,307 | 1,298 | — | 1,130 | 12,605 | 13,735 | 4,003 | 11/23/2004 | 2004 | |||||||||||
120B Mokauea Street* | Honolulu | HI | 1 | Industrial | — | 1,953 | — | — | — | 1,953 | — | 1,953 | — | 12/5/2003 | 1970 | |||||||||||
125 Puuhale Road* | Honolulu | HI | 1 | Land | — | 1,630 | — | — | — | 1,630 | — | 1,630 | — | 12/5/2003 | — | |||||||||||
125B Puuhale Road* | Honolulu | HI | 1 | Land | — | 2,815 | — | — | — | 2,815 | — | 2,815 | — | 12/5/2003 | — | |||||||||||
1330 Pali Highway* | Honolulu | HI | 1 | Land | — | 1,423 | — | — | — | 1,423 | — | 1,423 | — | 12/5/2003 | — | |||||||||||
1360 Pali Highway* | Honolulu | HI | 1 | Land | — | 9,170 | — | 161 | — | 9,170 | 161 | 9,331 | 92 | 12/5/2003 | — | |||||||||||
140 Puuhale Road* | Honolulu | HI | 1 | Land | — | 1,100 | — | — | — | 1,100 | — | 1,100 | — | 12/5/2003 | — | |||||||||||
142 Mokauea Street* | Honolulu | HI | 1 | Industrial | — | 2,182 | — | 1,455 | — | 2,182 | 1,455 | 3,637 | 318 | 12/5/2003 | 1972 | |||||||||||
148 Mokauea Street* | Honolulu | HI | 1 | Land | — | 3,476 | — | — | — | 3,476 | — | 3,476 | — | 12/5/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | ||||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | |||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | |||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | ||||||||||||
150 Puuhale Road* | Honolulu | HI | 1 | Land | — | 4,887 | — | — | — | 4,887 | — | 4,887 | — | 12/5/2003 | — | ||||||||||||
151 Puuhale Road* | Honolulu | HI | 1 | Land | — | 1,956 | — | — | — | 1,956 | — | 1,956 | — | 12/5/2003 | — | ||||||||||||
158 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 2,488 | — | — | — | 2,488 | — | 2,488 | — | 12/5/2003 | — | ||||||||||||
165 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 758 | — | — | — | 758 | — | 758 | — | 12/5/2003 | — | ||||||||||||
179 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 2,480 | — | — | — | 2,480 | — | 2,480 | — | 12/5/2003 | — | ||||||||||||
180 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 1,655 | — | — | — | 1,655 | — | 1,655 | — | 12/5/2003 | — | ||||||||||||
1926 Auiki Street* | Honolulu | HI | 1 | Industrial | — | 2,872 | — | 1,534 | — | 2,874 | 1,532 | 4,406 | 418 | 12/5/2003 | 1959 | ||||||||||||
1931 Kahai Street* | Honolulu | HI | 1 | Land | — | 3,779 | — | — | — | 3,779 | — | 3,779 | — | 12/5/2003 | — | ||||||||||||
197 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 1,238 | — | — | — | 1,238 | — | 1,238 | — | 12/5/2003 | — | ||||||||||||
2001 Kahai Street* | Honolulu | HI | 1 | Land | — | 1,091 | — | — | — | 1,091 | — | 1,091 | — | 12/5/2003 | — | ||||||||||||
2019 Kahai Street* | Honolulu | HI | 1 | Land | — | 1,377 | — | — | — | 1,377 | — | 1,377 | — | 12/5/2003 | — | ||||||||||||
2020 Auiki Street* | Honolulu | HI | 1 | Land | — | 2,385 | — | — | — | 2,385 | — | 2,385 | — | 12/5/2003 | — | ||||||||||||
204 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 1,689 | — | — | — | 1,689 | — | 1,689 | — | 12/5/2003 | — | ||||||||||||
207 Puuhale Road* | Honolulu | HI | 1 | Land | — | 2,024 | — | — | — | 2,024 | — | 2,024 | — | 12/5/2003 | — | ||||||||||||
2103 Kaliawa Street* | Honolulu | HI | 1 | Land | — | 3,212 | — | — | — | 3,212 | — | 3,212 | — | 12/5/2003 | — | ||||||||||||
2106 Kaliawa Street* | Honolulu | HI | 1 | Land | — | 1,568 | — | 169 | — | 1,568 | 169 | 1,737 | 55 | 12/5/2003 | — | ||||||||||||
2110 Auiki Street* | Honolulu | HI | 1 | Land | — | 837 | — | — | — | 837 | — | 837 | — | 12/5/2003 | — | ||||||||||||
212 Mohonua Place* | Honolulu | HI | 1 | Land | — | 1,067 | — | — | — | 1,067 | — | 1,067 | — | 12/5/2003 | — | ||||||||||||
2122 Kaliawa Street* | Honolulu | HI | 1 | Land | — | 1,365 | — | — | — | 1,365 | — | 1,365 | — | 12/5/2003 | — | ||||||||||||
2127 Auiki Street* | Honolulu | HI | 1 | Land | — | 2,906 | — | 97 | — | 2,906 | 97 | 3,003 | 18 | 12/5/2003 | — | ||||||||||||
2135 Auiki Street* | Honolulu | HI | 1 | Land | — | 825 | — | — | — | 825 | — | 825 | — | 12/5/2003 | — | ||||||||||||
2139 Kaliawa Street* | Honolulu | HI | 1 | Land | — | 885 | — | — | — | 885 | — | 885 | — | 12/5/2003 | — | ||||||||||||
214 Sand Island Access Road* | Honolulu | HI | 1 | Industrial | — | 1,864 | — | 403 | — | 1,864 | 403 | 2,267 | 29 | 12/5/2003 | 1981 | ||||||||||||
2140 Kaliawa Street* | Honolulu | HI | 1 | Land | — | 931 | — | — | — | 931 | — | 931 | — | 12/5/2003 | — | ||||||||||||
2144 Auiki Street* | Honolulu | HI | 1 | Industrial | — | 2,640 | — | 6,857 | — | 2,640 | 6,857 | 9,497 | 1,867 | 12/5/2003 | 1953 | ||||||||||||
215 Puuhale Road* | Honolulu | HI | 1 | Land | — | 2,117 | — | — | — | 2,117 | — | 2,117 | — | 12/5/2003 | — | ||||||||||||
218 Mohonua Place* | Honolulu | HI | 1 | Land | — | 1,741 | — | — | — | 1,741 | — | 1,741 | — | 12/5/2003 | — | ||||||||||||
220 Puuhale Road* | Honolulu | HI | 1 | Land | — | 2,619 | — | — | — | 2,619 | — | 2,619 | — | 12/5/2003 | — | ||||||||||||
2250 Pahounui Drive* | Honolulu | HI | 1 | Land | — | 3,862 | — | — | — | 3,862 | — | 3,862 | — | 12/5/2003 | — | ||||||||||||
2264 Pahounui Drive* | Honolulu | HI | 1 | Land | — | 1,632 | — | — | — | 1,632 | — | 1,632 | — | 12/5/2003 | — | ||||||||||||
2276 Pahounui Drive* | Honolulu | HI | 1 | Land | — | 1,619 | — | — | — | 1,619 | — | 1,619 | — | 12/5/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
228 Mohonua Place* | Honolulu | HI | 1 | Land | — | 1,865 | — | — | — | 1,865 | — | 1,865 | — | 12/5/2003 | — | |||||||||||
2308 Pahounui Drive* | Honolulu | HI | 1 | Land | — | 3,314 | — | — | — | 3,314 | — | 3,314 | — | 12/5/2003 | — | |||||||||||
231 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 752 | — | — | — | 752 | — | 752 | — | 12/5/2003 | — | |||||||||||
231B Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 1,539 | — | — | — | 1,539 | — | 1,539 | — | 12/5/2003 | — | |||||||||||
2344 Pahounui Drive* | Honolulu | HI | 1 | Land | — | 6,709 | — | — | — | 6,709 | — | 6,709 | — | 12/5/2003 | — | |||||||||||
238 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 2,273 | — | — | — | 2,273 | — | 2,273 | — | 12/5/2003 | — | |||||||||||
2635 Waiwai Loop A* | Honolulu | HI | 1 | Land | — | 934 | 350 | — | — | 934 | 350 | 1,284 | 123 | 12/5/2003 | — | |||||||||||
2635 Waiwai Loop B* | Honolulu | HI | 1 | Land | — | 1,177 | 105 | — | — | 1,177 | 105 | 1,282 | 37 | 12/5/2003 | — | |||||||||||
2760 Kam Highway* | Honolulu | HI | 1 | Land | — | 703 | — | — | — | 703 | — | 703 | — | 12/5/2003 | — | |||||||||||
2804 Kilihau Street* | Honolulu | HI | 1 | Land | — | 1,775 | 2 | — | — | 1,775 | 2 | 1,777 | 2 | 12/5/2003 | — | |||||||||||
2806 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
2808 Kam Highway* | Honolulu | HI | 1 | Land | — | 310 | — | — | — | 310 | — | 310 | — | 12/5/2003 | — | |||||||||||
2809 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,837 | — | — | — | 1,837 | — | 1,837 | — | 12/5/2003 | — | |||||||||||
2810 Paa Street* | Honolulu | HI | 1 | Land | — | 3,340 | — | — | — | 3,340 | — | 3,340 | — | 12/5/2003 | — | |||||||||||
2810 Pukoloa Street* | Honolulu | HI | 1 | Land | — | 27,699 | — | — | — | 27,699 | — | 27,699 | — | 12/5/2003 | — | |||||||||||
2812 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 1,801 | 2 | — | — | 1,801 | 2 | 1,803 | 2 | 12/5/2003 | — | |||||||||||
2814 Kilihau Street* | Honolulu | HI | 1 | Land | — | 1,925 | — | — | — | 1,925 | — | 1,925 | — | 12/5/2003 | — | |||||||||||
2815 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,818 | — | 6 | — | 1,818 | 6 | 1,824 | 2 | 12/5/2003 | — | |||||||||||
2815 Kilihau Street* | Honolulu | HI | 1 | Land | — | 287 | — | — | — | 287 | — | 287 | — | 12/5/2003 | — | |||||||||||
2816 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 1,009 | 27 | — | — | 1,009 | 27 | 1,036 | 10 | 12/5/2003 | — | |||||||||||
2819 Mokumoa Street - A* | Honolulu | HI | 1 | Land | — | 1,821 | — | — | — | 1,821 | — | 1,821 | — | 12/5/2003 | — | |||||||||||
2819 Mokumoa Street - B* | Honolulu | HI | 1 | Land | — | 1,816 | — | — | — | 1,816 | — | 1,816 | — | 12/5/2003 | — | |||||||||||
2819 Pukoloa Street* | Honolulu | HI | 1 | Land | — | 2,090 | — | 34 | — | 2,090 | 34 | 2,124 | 8 | 12/5/2003 | — | |||||||||||
2821 Kilihau Street* | Honolulu | HI | 1 | Land | — | 287 | — | — | — | 287 | — | 287 | — | 12/5/2003 | — | |||||||||||
2826 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 3,921 | — | — | — | 3,921 | — | 3,921 | — | 12/5/2003 | — | |||||||||||
2827 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
2828 Paa Street* | Honolulu | HI | 1 | Land | — | 12,448 | — | — | — | 12,448 | — | 12,448 | — | 12/5/2003 | — | |||||||||||
2829 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 1,720 | 3 | — | — | 1,720 | 3 | 1,723 | 2 | 12/5/2003 | — | |||||||||||
2829 Kaihikapu Street - A* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
2829 Kilihau Street* | Honolulu | HI | 1 | Land | — | 287 | — | — | — | 287 | — | 287 | — | 12/5/2003 | — | |||||||||||
2829 Pukoloa Street* | Honolulu | HI | 1 | Land | — | 2,088 | — | — | — | 2,088 | — | 2,088 | — | 12/5/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
2830 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 2,146 | — | — | — | 2,146 | — | 2,146 | — | 12/5/2003 | — | |||||||||||
2831 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 860 | — | — | — | 860 | — | 860 | — | 12/5/2003 | — | |||||||||||
2831 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,272 | 529 | 55 | — | 1,272 | 584 | 1,856 | 204 | 12/5/2003 | — | |||||||||||
2833 Kilihau Street* | Honolulu | HI | 1 | Land | — | 601 | — | — | — | 601 | — | 601 | — | 12/5/2003 | — | |||||||||||
2833 Paa Street* | Honolulu | HI | 1 | Land | — | 1,701 | — | — | — | 1,701 | — | 1,701 | — | 12/5/2003 | — | |||||||||||
2833 Paa Street #2* | Honolulu | HI | 1 | Land | — | 1,675 | — | — | — | 1,675 | — | 1,675 | — | 12/5/2003 | — | |||||||||||
2836 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 1,353 | — | — | — | 1,353 | — | 1,353 | — | 12/5/2003 | — | |||||||||||
2838 Kilihau Street* | Honolulu | HI | 1 | Land | — | 4,262 | — | — | — | 4,262 | — | 4,262 | — | 12/5/2003 | — | |||||||||||
2839 Kilihau Street* | Honolulu | HI | 1 | Land | — | 627 | — | — | — | 627 | — | 627 | — | 12/5/2003 | — | |||||||||||
2839 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,942 | — | — | — | 1,942 | — | 1,942 | — | 12/5/2003 | — | |||||||||||
2840 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 2,149 | — | — | — | 2,149 | — | 2,149 | — | 12/5/2003 | — | |||||||||||
2841 Pukoloa Street* | Honolulu | HI | 1 | Land | — | 2,088 | — | — | — | 2,088 | — | 2,088 | — | 12/5/2003 | — | |||||||||||
2844 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,960 | 14 | — | — | 1,960 | 14 | 1,974 | 11 | 12/5/2003 | — | |||||||||||
2846-A Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 2,181 | 954 | — | — | 2,181 | 954 | 3,135 | 335 | 12/5/2003 | — | |||||||||||
2847 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 582 | 303 | — | — | 582 | 303 | 885 | 106 | 12/5/2003 | — | |||||||||||
2849 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 860 | — | — | — | 860 | — | 860 | — | 12/5/2003 | — | |||||||||||
2850 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 286 | 172 | — | — | 286 | 172 | 458 | 61 | 12/5/2003 | — | |||||||||||
2850 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 2,143 | — | — | — | 2,143 | — | 2,143 | — | 12/5/2003 | — | |||||||||||
2850 Paa Street* | Honolulu | HI | 1 | Land | — | 22,827 | — | — | — | 22,827 | — | 22,827 | — | 12/5/2003 | — | |||||||||||
2855 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,807 | — | — | — | 1,807 | — | 1,807 | — | 12/5/2003 | — | |||||||||||
2855 Pukoloa Street* | Honolulu | HI | 1 | Land | — | 1,934 | — | — | — | 1,934 | — | 1,934 | — | 12/5/2003 | — | |||||||||||
2857 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 983 | — | — | — | 983 | — | 983 | — | 12/5/2003 | — | |||||||||||
2858 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
2861 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 3,867 | — | — | — | 3,867 | — | 3,867 | — | 12/5/2003 | — | |||||||||||
2864 Awaawaloa Street* | Honolulu | HI | 1 | Land | — | 1,836 | — | 7 | — | 1,836 | 7 | 1,843 | 3 | 12/5/2003 | — | |||||||||||
2864 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 2,092 | — | — | — | 2,092 | — | 2,092 | — | 12/5/2003 | — | |||||||||||
2865 Pukoloa Street* | Honolulu | HI | 1 | Land | — | 1,934 | — | — | — | 1,934 | — | 1,934 | — | 12/5/2003 | — | |||||||||||
2868 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
2869 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,794 | — | — | — | 1,794 | — | 1,794 | — | 12/5/2003 | — | |||||||||||
2875 Paa Street* | Honolulu | HI | 1 | Land | — | 1,330 | — | — | — | 1,330 | — | 1,330 | — | 12/5/2003 | — | |||||||||||
2879 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,789 | — | — | — | 1,789 | — | 1,789 | — | 12/5/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
2879 Paa Street* | Honolulu | HI | 1 | Land | — | 1,691 | — | 45 | — | 1,691 | 45 | 1,736 | 10 | 12/5/2003 | — | |||||||||||
2886 Paa Street* | Honolulu | HI | 1 | Land | — | 2,205 | — | — | — | 2,205 | — | 2,205 | — | 12/5/2003 | — | |||||||||||
2889 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,783 | — | — | — | 1,783 | — | 1,783 | — | 12/5/2003 | — | |||||||||||
2906 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,814 | 2 | — | — | 1,814 | 2 | 1,816 | 1 | 12/5/2003 | — | |||||||||||
2908 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 1,798 | 12 | — | — | 1,798 | 12 | 1,810 | 1 | 12/5/2003 | — | |||||||||||
2915 Kaihikapu Street* | Honolulu | HI | 1 | Land | — | 2,579 | — | — | — | 2,579 | — | 2,579 | — | 12/5/2003 | — | |||||||||||
2927 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,778 | — | — | — | 1,778 | — | 1,778 | — | 12/5/2003 | — | |||||||||||
2928 Kaihikapu Street - B* | Honolulu | HI | 1 | Land | — | 1,948 | — | — | — | 1,948 | — | 1,948 | — | 12/5/2003 | — | |||||||||||
2960 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,977 | — | — | — | 1,977 | — | 1,977 | — | 12/5/2003 | — | |||||||||||
2965 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 2,140 | — | — | — | 2,140 | — | 2,140 | — | 12/5/2003 | — | |||||||||||
2969 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 4,038 | 15 | — | — | 4,038 | 15 | 4,053 | 8 | 12/5/2003 | — | |||||||||||
2970 Mokumoa Street* | Honolulu | HI | 1 | Land | — | 1,722 | — | — | — | 1,722 | — | 1,722 | — | 12/5/2003 | — | |||||||||||
33 S. Vineyard Boulevard* | Honolulu | HI | 1 | Land | — | 844 | — | 6 | — | 844 | 6 | 850 | 5 | 12/5/2003 | — | |||||||||||
525 N. King Street* | Honolulu | HI | 1 | Land | — | 1,342 | — | — | — | 1,342 | — | 1,342 | — | 12/5/2003 | — | |||||||||||
609 Ahua Street* | Honolulu | HI | 1 | Land | — | 616 | — | 8 | — | 616 | 8 | 624 | 4 | 12/5/2003 | — | |||||||||||
619 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,401 | 2 | 12 | — | 1,401 | 14 | 1,415 | — | 12/5/2003 | — | |||||||||||
645 Ahua Street* | Honolulu | HI | 1 | Land | — | 882 | — | — | — | 882 | — | 882 | — | 12/5/2003 | — | |||||||||||
659 Ahua Street* | Honolulu | HI | 1 | Land | — | 860 | 20 | — | — | 860 | 20 | 880 | 15 | 12/5/2003 | — | |||||||||||
659 Puuloa Road* | Honolulu | HI | 1 | Land | — | 1,807 | — | — | — | 1,807 | — | 1,807 | — | 12/5/2003 | — | |||||||||||
660 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,783 | 3 | — | — | 1,783 | 3 | 1,786 | 2 | 12/5/2003 | — | |||||||||||
667 Puuloa Road* | Honolulu | HI | 1 | Land | — | 860 | 2 | — | — | 860 | 2 | 862 | 2 | 12/5/2003 | — | |||||||||||
669 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,801 | 14 | 83 | — | 1,801 | 97 | 1,898 | 37 | 12/5/2003 | — | |||||||||||
673 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
675 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,081 | — | — | — | 1,081 | — | 1,081 | — | 12/5/2003 | — | |||||||||||
679 Puuloa Road* | Honolulu | HI | 1 | Land | — | 1,807 | 3 | — | — | 1,807 | 3 | 1,810 | 2 | 12/5/2003 | — | |||||||||||
685 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
689 Puuloa Road* | Honolulu | HI | 1 | Land | — | 1,801 | 20 | — | — | 1,801 | 20 | 1,821 | 15 | 12/5/2003 | — | |||||||||||
692 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,798 | — | — | — | 1,798 | — | 1,798 | — | 12/5/2003 | — | |||||||||||
697 Ahua Street* | Honolulu | HI | 1 | Land | — | 994 | 811 | — | — | 994 | 811 | 1,805 | 286 | 12/5/2003 | — | |||||||||||
702 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,783 | 4 | — | — | 1,783 | 4 | 1,787 | 3 | 12/5/2003 | — | |||||||||||
704 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 2,390 | 685 | — | — | 2,390 | 685 | 3,075 | 241 | 12/5/2003 | — | |||||||||||
709 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
719 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,960 | — | — | — | 1,960 | — | 1,960 | — | 12/5/2003 | — | |||||||||||
729 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
733 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 3,403 | — | — | — | 3,403 | — | 3,403 | — | 12/5/2003 | — | |||||||||||
739 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
759 Puuloa Road* | Honolulu | HI | 1 | Land | — | 1,766 | 3 | — | — | 1,766 | 3 | 1,769 | 2 | 12/5/2003 | — | |||||||||||
761 Ahua Street* | Honolulu | HI | 1 | Land | — | 3,757 | 1 | — | — | 3,757 | 1 | 3,758 | 1 | 12/5/2003 | — | |||||||||||
766 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
770 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
789 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 2,608 | 3 | — | — | 2,608 | 3 | 2,611 | 2 | 12/5/2003 | — | |||||||||||
80 Sand Island Access Road* | Honolulu | HI | 1 | Land | — | 7,972 | — | — | — | 7,972 | — | 7,972 | — | 12/5/2003 | — | |||||||||||
803 Ahua Street* | Honolulu | HI | 1 | Land | — | 3,804 | — | — | — | 3,804 | — | 3,804 | — | 12/5/2003 | — | |||||||||||
808 Ahua Street* | Honolulu | HI | 1 | Land | — | 3,279 | — | — | — | 3,279 | — | 3,279 | — | 12/5/2003 | — | |||||||||||
812 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,960 | 25 | 628 | — | 2,613 | — | 2,613 | — | 12/5/2003 | — | |||||||||||
819 Ahua Street* | Honolulu | HI | 1 | Land | — | 4,821 | 583 | 30 | — | 4,821 | 613 | 5,434 | 215 | 12/5/2003 | — | |||||||||||
822 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,795 | 15 | — | — | 1,795 | 15 | 1,810 | 12 | 12/5/2003 | — | |||||||||||
830 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,801 | 25 | — | — | 1,801 | 25 | 1,826 | 18 | 12/5/2003 | — | |||||||||||
842 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,795 | 14 | — | — | 1,795 | 14 | 1,809 | 10 | 12/5/2003 | — | |||||||||||
846 Ala Lilikoi Boulevard B* | Honolulu | HI | 1 | Land | — | 234 | — | — | — | 234 | — | 234 | — | 12/5/2003 | — | |||||||||||
848 Ala Lilikoi Boulevard A* | Honolulu | HI | 1 | Land | — | 9,426 | — | — | — | 9,426 | — | 9,426 | — | 12/5/2003 | — | |||||||||||
850 Ahua Street* | Honolulu | HI | 1 | Land | — | 2,682 | 2 | — | — | 2,682 | 2 | 2,684 | 2 | 12/5/2003 | — | |||||||||||
852 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,801 | — | — | — | 1,801 | — | 1,801 | — | 12/5/2003 | — | |||||||||||
855 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,834 | — | — | — | 1,834 | — | 1,834 | — | 12/5/2003 | — | |||||||||||
855 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 3,265 | — | — | — | 3,265 | — | 3,265 | — | 12/5/2003 | — | |||||||||||
865 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,846 | — | — | — | 1,846 | — | 1,846 | — | 12/5/2003 | — | |||||||||||
889 Ahua Street* | Honolulu | HI | 1 | Land | — | 5,888 | 315 | — | — | 5,888 | 315 | 6,203 | 40 | 11/21/2012 | — | |||||||||||
905 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,148 | — | — | — | 1,148 | — | 1,148 | — | 12/5/2003 | — | |||||||||||
918 Ahua Street* | Honolulu | HI | 1 | Land | — | 3,820 | — | — | — | 3,820 | — | 3,820 | — | 12/5/2003 | — | |||||||||||
930 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 3,654 | — | — | — | 3,654 | — | 3,654 | — | 12/5/2003 | — | |||||||||||
944 Ahua Street* | Honolulu | HI | 1 | Land | — | 1,219 | — | — | — | 1,219 | — | 1,219 | — | 12/5/2003 | — | |||||||||||
949 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 11,568 | — | — | — | 11,568 | — | 11,568 | — | 12/5/2003 | — | |||||||||||
950 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,724 | — | — | — | 1,724 | — | 1,724 | — | 12/5/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
960 Ahua Street* | Honolulu | HI | 1 | Land | — | 614 | — | — | — | 614 | — | 614 | — | 12/5/2003 | — | |||||||||||
960 Mapunapuna Street* | Honolulu | HI | 1 | Land | — | 1,933 | — | — | — | 1,933 | — | 1,933 | — | 12/5/2003 | — | |||||||||||
970 Ahua Street* | Honolulu | HI | 1 | Land | — | 817 | — | — | — | 817 | — | 817 | — | 12/5/2003 | — | |||||||||||
91-008 Hanua | Kapolei | HI | 1 | Land | — | 3,541 | — | 15 | — | 3,541 | 15 | 3,556 | 2 | 6/15/2005 | — | |||||||||||
91-027 Kaomi Loop* | Kapolei | HI | 1 | Land | — | 2,667 | — | — | — | 2,667 | — | 2,667 | — | 6/15/2005 | — | |||||||||||
91-064 Kaomi Loop* | Kapolei | HI | 1 | Land | — | 1,826 | — | — | — | 1,826 | — | 1,826 | — | 6/15/2005 | — | |||||||||||
91-080 Hanua* | Kapolei | HI | 1 | Land | — | 2,187 | — | — | — | 2,187 | — | 2,187 | — | 6/15/2005 | — | |||||||||||
91-083 Hanua* | Kapolei | HI | 1 | Land | — | 716 | — | — | — | 716 | — | 716 | — | 6/15/2005 | — | |||||||||||
91-086 Kaomi Loop* | Kapolei | HI | 1 | Land | — | 13,884 | — | — | — | 13,884 | — | 13,884 | — | 6/15/2005 | — | |||||||||||
91-087 Hanua* | Kapolei | HI | 1 | Land | — | 381 | — | — | — | 381 | — | 381 | — | 6/15/2005 | — | |||||||||||
91-091 Hanua* | Kapolei | HI | 1 | Land | — | 552 | — | — | — | 552 | — | 552 | — | 6/15/2005 | — | |||||||||||
91-102 Kaomi Loop* | Kapolei | HI | 1 | Land | — | 1,599 | — | — | — | 1,599 | — | 1,599 | — | 6/15/2005 | — | |||||||||||
91-110 Kaomi Loop* | Kapolei | HI | 1 | Land | — | 1,293 | — | — | — | 1,293 | — | 1,293 | — | 6/15/2005 | — | |||||||||||
91-119 Olai* | Kapolei | HI | 1 | Land | — | 1,981 | — | — | — | 1,981 | — | 1,981 | — | 6/15/2005 | — | |||||||||||
91-120 Kauhi* | Kapolei | HI | 1 | Land | — | 567 | — | — | — | 567 | — | 567 | — | 6/15/2005 | — | |||||||||||
91-141 Kalaeloa* | Kapolei | HI | 1 | Land | — | 11,624 | — | — | — | 11,624 | — | 11,624 | — | 6/15/2005 | — | |||||||||||
91-150 Kaomi Loop* | Kapolei | HI | 1 | Land | — | 3,159 | — | — | — | 3,159 | — | 3,159 | — | 6/15/2005 | — | |||||||||||
91-171 Olai* | Kapolei | HI | 1 | Land | — | 218 | — | 12 | — | 218 | 12 | 230 | — | 6/15/2005 | — | |||||||||||
91-174 Olai* | Kapolei | HI | 1 | Land | — | 962 | — | 47 | — | 962 | 47 | 1,009 | 13 | 6/15/2005 | — | |||||||||||
91-175 Olai* | Kapolei | HI | 1 | Land | — | 1,243 | — | 43 | — | 1,243 | 43 | 1,286 | 15 | 6/15/2005 | — | |||||||||||
91-185 Kalaeloa* | Kapolei | HI | 1 | Land | — | 1,761 | — | — | — | 1,761 | — | 1,761 | — | 6/15/2005 | — | |||||||||||
91-202 Kalaeloa* | Kapolei | HI | 1 | Industrial | — | 1,722 | — | 326 | — | 1,722 | 326 | 2,048 | 37 | 6/15/2005 | 1964 | |||||||||||
91-209 Kuhela | Kapolei | HI | 1 | Land | — | 1,352 | — | 26 | — | 1,352 | 26 | 1,378 | — | 6/15/2005 | — | |||||||||||
91-210 Olai* | Kapolei | HI | 1 | Land | — | 706 | — | — | — | 706 | — | 706 | — | 6/15/2005 | — | |||||||||||
91-218 Olai* | Kapolei | HI | 1 | Land | — | 1,622 | — | 62 | — | 1,622 | 62 | 1,684 | 14 | 6/15/2005 | — | |||||||||||
91-220 Kalaeloa* | Kapolei | HI | 1 | Industrial | — | 242 | 1,457 | 172 | — | 242 | 1,629 | 1,871 | 492 | 6/15/2005 | 1991 | |||||||||||
91-222 Olai* | Kapolei | HI | 1 | Land | — | 2,035 | — | — | — | 2,035 | — | 2,035 | — | 6/15/2005 | — | |||||||||||
91-238 Kauhi* | Kapolei | HI | 1 | Industrial | — | 1,390 | — | 9,209 | — | 1,390 | 9,209 | 10,599 | 2,374 | 6/15/2005 | 1981 | |||||||||||
91-241 Kalaeloa* | Kapolei | HI | 1 | Industrial | — | 426 | 3,983 | 828 | — | 426 | 4,811 | 5,237 | 1,434 | 6/15/2005 | 1990 | |||||||||||
91-250 Komohana* | Kapolei | HI | 1 | Land | — | 1,506 | — | — | — | 1,506 | — | 1,506 | — | 6/15/2005 | — | |||||||||||
91-252 Kauhi* | Kapolei | HI | 1 | Land | — | 536 | — | — | — | 536 | — | 536 | — | 6/15/2005 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
91-255 Hanua* | Kapolei | HI | 1 | Land | — | 1,230 | — | 44 | — | 1,230 | 44 | 1,274 | 25 | 6/15/2005 | — | |||||||||||
91-259 Olai* | Kapolei | HI | 1 | Land | — | 2,944 | — | — | — | 2,944 | — | 2,944 | — | 6/15/2005 | — | |||||||||||
91-265 Hanua* | Kapolei | HI | 1 | Land | — | 1,569 | — | — | — | 1,569 | — | 1,569 | — | 6/15/2005 | — | |||||||||||
91-300 Hanua* | Kapolei | HI | 1 | Land | — | 1,381 | — | — | — | 1,381 | — | 1,381 | — | 6/15/2005 | — | |||||||||||
91-329 Kauhi* | Kapolei | HI | 1 | Industrial | — | 294 | 2,297 | 2,236 | — | 294 | 4,533 | 4,827 | 1,181 | 6/15/2005 | 1980 | |||||||||||
91-349 Kauhi* | Kapolei | HI | 1 | Land | — | 649 | — | — | — | 649 | — | 649 | — | 6/15/2005 | — | |||||||||||
91-399 Kauhi* | Kapolei | HI | 1 | Land | — | 27,405 | — | — | — | 27,405 | — | 27,405 | — | 6/15/2005 | — | |||||||||||
91-400 Komohana* | Kapolei | HI | 1 | Land | — | 1,494 | — | — | — | 1,494 | — | 1,494 | — | 6/15/2005 | — | |||||||||||
91-410 Komohana* | Kapolei | HI | 1 | Land | — | 418 | — | 11 | — | 418 | 11 | 429 | — | 6/15/2005 | — | |||||||||||
91-416 Komohana* | Kapolei | HI | 1 | Land | — | 713 | — | 11 | — | 713 | 11 | 724 | — | 6/15/2005 | — | |||||||||||
AES HI Easement* | Kapolei | HI | 1 | Land | — | 1,250 | — | — | — | 1,250 | — | 1,250 | — | 6/15/2005 | — | |||||||||||
Other Easements & Lots* | Kapolei | HI | 1 | Land | — | 358 | — | 1,246 | — | 358 | 1,246 | 1,604 | 285 | 6/15/2005 | — | |||||||||||
Tesaro 967 Easement* | Kapolei | HI | 1 | Land | — | 6,593 | — | — | — | 6,593 | — | 6,593 | — | 6/15/2005 | — | |||||||||||
Texaco Easement* | Kapolei | HI | 1 | Land | — | 2,653 | — | — | — | 2,653 | — | 2,653 | — | 6/15/2005 | — | |||||||||||
94-240 Pupuole Street* | Waipahu | HI | 1 | Land | — | 717 | — | — | — | 717 | — | 717 | — | 12/5/2003 | — | |||||||||||
5500 SE Delaware Avenue* | Ankeny | IA | 1 | Industrial | — | 2,200 | 16,994 | — | — | 2,200 | 16,994 | 19,194 | 1,239 | 1/29/2015 | 2012 | |||||||||||
951 Trails Road* | Eldridge | IA | 1 | Industrial | — | 470 | 7,480 | 745 | — | 470 | 8,225 | 8,695 | 2,109 | 4/2/2007 | 1994 | |||||||||||
8305 NW 62nd Avenue | Johnston | IA | 1 | Office | — | 2,500 | 31,508 | — | — | 2,500 | 31,508 | 34,008 | 2,297 | 1/29/2015 | 2011 | |||||||||||
2300 N 33rd Avenue* | Newton | IA | 1 | Industrial | — | 500 | 13,236 | 404 | — | 500 | 13,640 | 14,140 | 3,098 | 9/29/2008 | 2008 | |||||||||||
7121 South Fifth Avenue* | Pocatello | ID | 1 | Industrial | — | 400 | 4,201 | 145 | — | 400 | 4,346 | 4,746 | 310 | 1/29/2015 | 2007 | |||||||||||
400 South Jefferson Street | Chicago | IL | 1 | Office | 50,120 | 17,200 | 73,279 | — | — | 17,200 | 73,279 | 90,479 | 5,343 | 1/29/2015 | 1947 | |||||||||||
1230 West 171st Street* | Harvey | IL | 1 | Industrial | — | 800 | 1,673 | — | — | 800 | 1,673 | 2,473 | 122 | 1/29/2015 | 2004 | |||||||||||
475 Bond Street | Lincolnshire | IL | 1 | Industrial | — | 4,900 | 16,058 | — | — | 4,900 | 16,058 | 20,958 | 1,171 | 1/29/2015 | 2000 | |||||||||||
1415 West Diehl Road | Naperville | IL | 1 | Office | — | 13,757 | 174,718 | — | — | 13,757 | 174,718 | 188,475 | 16,380 | 4/1/2014 | 2001 | |||||||||||
5156 American Road* | Rockford | IL | 1 | Industrial | — | 400 | 1,529 | — | — | 400 | 1,529 | 1,929 | 111 | 1/29/2015 | 1996 | |||||||||||
440 North Fairway Drive | Vernon Hills | IL | 1 | Office | — | 4,095 | 9,882 | — | — | 4,095 | 9,882 | 13,977 | 1,050 | 10/15/2013 | 1992 | |||||||||||
7601 Genesys Way | Indianapolis | IN | 1 | Office | — | 1,421 | 10,832 | — | — | 1,421 | 10,832 | 12,253 | 113 | 7/19/2017 | 2003 | |||||||||||
7635 Genesys Way | Indianapolis | IN | 1 | Office | — | 1,858 | 14,368 | — | — | 1,858 | 14,368 | 16,226 | 150 | 7/19/2017 | 2008 | |||||||||||
400 SW 8th Avenue | Topeka | KS | 1 | Office | — | 1,300 | 15,918 | 456 | — | 1,300 | 16,374 | 17,674 | 2,201 | 7/30/2012 | 1983 | |||||||||||
1101 Pacific Avenue | Erlanger | KY | 1 | Office | — | 1,288 | 9,545 | 1,467 | — | 1,288 | 11,012 | 12,300 | 4,140 | 6/30/2003 | 1999 | |||||||||||
1061 Pacific Avenue | Erlanger | KY | — | Land | — | 732 | — | — | — | 732 | — | 732 | — | 6/30/2003 | — |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
17200 Manchac Park Lane* | Baton Rouge | LA | 1 | Industrial | — | 1,700 | 8,860 | — | — | 1,700 | 8,860 | 10,560 | 646 | 1/29/2015 | 2014 | |||||||||||
209 South Bud Street* | Lafayette | LA | 1 | Industrial | — | 700 | 4,549 | 9 | — | 700 | 4,558 | 5,258 | 332 | 1/29/2015 | 2010 | |||||||||||
300 Billerica Road | Chelmsford | MA | 1 | Office | — | 2,009 | 6,727 | 20 | — | 2,009 | 6,747 | 8,756 | 883 | 9/27/2012 | 1984 | |||||||||||
330 Billerica Road | Chelmsford | MA | 1 | Office | — | 1,410 | 7,322 | 1,187 | — | 1,410 | 8,509 | 9,919 | 1,356 | 1/18/2011 | 1984 | |||||||||||
111 Powdermill Road | Maynard | MA | 1 | Office | — | 3,603 | 26,180 | 128 | (12,651 | ) | 2,909 | 14,351 | 17,260 | 161 | 3/30/2007 | 1990 | ||||||||||
314 Littleton Road | Westford | MA | 1 | Office | — | 3,500 | 30,444 | — | — | 3,500 | 30,444 | 33,944 | 2,220 | 1/29/2015 | 2007 | |||||||||||
7001 Columbia Gateway Drive | Columbia | MD | 1 | Office | — | 3,700 | 24,592 | — | — | 3,700 | 24,592 | 28,292 | 3,074 | 12/21/2012 | 2008 | |||||||||||
4000 Principio Parkway* | North East | MD | 1 | Industrial | — | 4,200 | 71,518 | 610 | — | 4,200 | 72,128 | 76,328 | 5,216 | 1/29/2015 | 2012 | |||||||||||
3550 Green Court | Ann Arbor | MI | 1 | Office | — | 2,877 | 9,081 | 1,060 | — | 2,877 | 10,141 | 13,018 | 1,354 | 12/21/2012 | 1998 | |||||||||||
3800 Midlink Drive* | Kalamazoo | MI | 1 | Industrial | — | 2,630 | 40,599 | — | — | 2,630 | 40,599 | 43,229 | 2,960 | 1/29/2015 | 2014 | |||||||||||
2401 Cram Avenue SE* | Bemidji | MN | 1 | Industrial | — | 100 | 2,137 | — | — | 100 | 2,137 | 2,237 | 156 | 1/29/2015 | 2013 | |||||||||||
110 Stanbury Industrial Drive* | Brookfield | MO | 1 | Industrial | — | 200 | 1,859 | — | — | 200 | 1,859 | 2,059 | 136 | 1/29/2015 | 2012 | |||||||||||
2555 Grand Boulevard | Kansas City | MO | 1 | Office | — | 4,263 | 73,891 | 915 | — | 4,263 | 74,806 | 79,069 | 4,487 | 7/31/2015 | 2003 | |||||||||||
628 Patton Avenue* | Asheville | NC | 1 | Industrial | — | 500 | 1,514 | — | — | 500 | 1,514 | 2,014 | 110 | 1/29/2015 | 1994 | |||||||||||
2300 Yorkmont Road | Charlotte | NC | 1 | Office | — | 637 | 22,351 | 2,600 | — | 637 | 24,951 | 25,588 | 1,738 | 1/29/2015 | 1995 | |||||||||||
2400 Yorkmont Road | Charlotte | NC | 1 | Office | — | 563 | 19,722 | 2,550 | — | 563 | 22,272 | 22,835 | 1,549 | 1/29/2015 | 1995 | |||||||||||
3900 NE 6th Street* | Minot | ND | 1 | Industrial | — | 700 | 3,223 | — | — | 700 | 3,223 | 3,923 | 235 | 1/29/2015 | 2013 | |||||||||||
1415 West Commerce Way* | Lincoln | NE | 1 | Industrial | — | 2,200 | 8,518 | — | — | 2,200 | 8,518 | 10,718 | 621 | 1/29/2015 | 1971 | |||||||||||
18010 and 18020 Burt Street | Omaha | NE | 2 | Office | — | 2,600 | 47,226 | 16 | — | 2,600 | 47,242 | 49,842 | 3,444 | 1/29/2015 | 2012 | |||||||||||
309 Dulty's Lane* | Burlington | NJ | 1 | Industrial | — | 1,600 | 51,400 | — | — | 1,600 | 51,400 | 53,000 | 3,747 | 1/29/2015 | 2001 | |||||||||||
500 Charles Ewing Boulevard | Ewing | NJ | 1 | Office | — | 5,300 | 69,074 | — | — | 5,300 | 69,074 | 74,374 | 5,037 | 1/29/2015 | 2012 | |||||||||||
725 Darlington Avenue* | Mahwah | NJ | 1 | Industrial | — | 8,492 | 9,451 | 694 | — | 8,492 | 10,145 | 18,637 | 901 | 4/9/2014 | 1999 | |||||||||||
299 Jefferson Road | Parsippany | NJ | 1 | Office | — | 4,900 | 25,987 | 177 | — | 4,900 | 26,164 | 31,064 | 1,903 | 1/29/2015 | 2011 | |||||||||||
One Jefferson Road | Parsippany | NJ | 1 | Office | — | 4,188 | 14,919 | 50 | — | 4,188 | 14,969 | 19,157 | 808 | 11/13/2015 | 2009 | |||||||||||
2375 East Newlands Road* | Fernley | NV | 1 | Industrial | — | 1,100 | 17,314 | 286 | — | 1,100 | 17,600 | 18,700 | 1,285 | 1/29/2015 | 2007 | |||||||||||
55 Commerce Avenue* | Albany | NY | 1 | Industrial | — | 1,000 | 10,105 | 179 | — | 1,000 | 10,284 | 11,284 | 750 | 1/29/2015 | 2013 | |||||||||||
8687 Carling Road | Liverpool | NY | 1 | Office | — | 375 | 3,265 | 1,924 | — | 375 | 5,189 | 5,564 | 1,509 | 1/6/2006 | 1997 | |||||||||||
1212 Pittsford - Victor Road | Pittsford | NY | 1 | Office | — | 528 | 3,755 | 1,248 | — | 528 | 5,003 | 5,531 | 1,469 | 11/30/2004 | 1965 | |||||||||||
500 Canal View Boulevard | Rochester | NY | 1 | Office | — | 1,462 | 12,482 | 259 | — | 1,462 | 12,741 | 14,203 | 3,752 | 1/6/2006 | 1996 | |||||||||||
32150 Just Imagine Drive* | Avon | OH | 1 | Industrial | — | 2,200 | 23,280 | — | — | 2,200 | 23,280 | 25,480 | 4,995 | 5/29/2009 | 1996 | |||||||||||
1415 Industrial Drive* | Chillicothe | OH | 1 | Industrial | — | 1,200 | 3,265 | — | — | 1,200 | 3,265 | 4,465 | 238 | 1/29/2015 | 2012 |
Number of | Initial Cost to | Costs | Gross Amount Carried at | |||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | ||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | ||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | |||||||||||
2231 Schrock Road | Columbus | OH | 1 | Office | — | 700 | 4,472 | 461 | — | 700 | 4,933 | 5,633 | 341 | 1/29/2015 | 1999 | |||||||||||
5300 Centerpoint Parkway* | Groveport | OH | 1 | Industrial | — | 2,700 | 29,863 | — | — | 2,700 | 29,863 | 32,563 | 2,178 | 1/29/2015 | 2014 | |||||||||||
200 Orange Point Drive* | Lewis Center | OH | 1 | Industrial | — | 1,300 | 8,613 | — | — | 1,300 | 8,613 | 9,913 | 628 | 1/29/2015 | 2013 | |||||||||||
301 Commerce Drive* | South Point | OH | 1 | Industrial | — | 600 | 4,530 | — | — | 600 | 4,530 | 5,130 | 330 | 1/29/2015 | 2013 | |||||||||||
2820 State Highway 31* | McAlester | OK | 1 | Industrial | — | 581 | 2,237 | 4,094 | — | 581 | 6,331 | 6,912 | 196 | 1/29/2015 | 2012 | |||||||||||
501 Ridge Avenue | Hanover | PA | 1 | Industrial | — | 4,800 | 22,200 | 30 | — | 4,800 | 22,230 | 27,030 | 5,163 | 9/24/2008 | 1948 | |||||||||||
8800 Tinicum Boulevard | Philadelphia | PA | 1 | Office | 41,000 | 3,900 | 67,116 | 304 | — | 3,900 | 67,420 | 71,320 | 4,899 | 1/29/2015 | 2000 | |||||||||||
9680 Old Bailes Road | Fort Mill | SC | 1 | Office | — | 800 | 8,057 | — | — | 800 | 8,057 | 8,857 | 587 | 1/29/2015 | 2007 | |||||||||||
996 Paragon Way* | Rock Hill | SC | 1 | Industrial | — | 2,600 | 35,920 | — | — | 2,600 | 35,920 | 38,520 | 2,619 | 1/29/2015 | 2014 | |||||||||||
510 John Dodd Road* | Spartanburg | SC | 1 | Industrial | — | 3,300 | 57,998 | — | — | 3,300 | 57,998 | 61,298 | 4,228 | 1/29/2015 | 2012 | |||||||||||
4836 Hickory Hill Road* | Memphis | TN | 1 | Industrial | — | 1,402 | 10,769 | 527 | — | 1,402 | 11,296 | 12,698 | 829 | 12/23/2014 | 1984 | |||||||||||
2020 Joe B. Jackson Parkway* | Murfreesboro | TN | 1 | Industrial | — | 7,500 | 55,259 | — | — | 7,500 | 55,259 | 62,759 | 4,028 | 1/29/2015 | 2012 | |||||||||||
16001 North Dallas Parkway | Addison | TX | 2 | Office | — | 10,107 | 95,124 | 1,081 | — | 10,107 | 96,205 | 106,312 | 11,767 | 1/16/2013 | 1987 | |||||||||||
2115-2116 East Randol Mill Road | Arlington | TX | 1 | Office | — | 2,100 | 9,769 | 1,373 | — | 2,100 | 11,142 | 13,242 | 1,142 | 1/29/2015 | 1989 | |||||||||||
Research Park-Cisco Building 3 | Austin | TX | 1 | Industrial | — | 539 | 4,849 | 578 | — | 539 | 5,427 | 5,966 | 2,389 | 6/16/1999 | 1999 | |||||||||||
Research Park-Cisco Building 4 | Austin | TX | 1 | Industrial | — | 902 | 8,158 | 947 | — | 902 | 9,105 | 10,007 | 4,066 | 6/16/1999 | 1999 | |||||||||||
1001 Noble Energy Way | Houston | TX | 1 | Office | — | 3,500 | 118,128 | 566 | — | 3,500 | 118,694 | 122,194 | 8,631 | 1/29/2015 | 1998 | |||||||||||
10451 Clay Road | Houston | TX | 1 | Office | — | 5,200 | 21,812 | — | — | 5,200 | 21,812 | 27,012 | 1,590 | 1/29/2015 | 2013 | |||||||||||
202 North Castlegory Road | Houston | TX | 1 | Office | — | 887 | 12,594 | — | — | 887 | 12,594 | 13,481 | 210 | 5/12/2017 | 2016 | |||||||||||
6380 Rogerdale Road | Houston | TX | 1 | Office | — | 13,600 | 33,228 | 104 | — | 13,600 | 33,332 | 46,932 | 2,426 | 1/29/2015 | 2006 | |||||||||||
4221 W. John Carpenter Freeway | Irving | TX | 1 | Office | — | 542 | 4,879 | 257 | — | 542 | 5,136 | 5,678 | 2,601 | 3/19/1998 | 1995 | |||||||||||
8675,8701-8711 Freeport Pkwy and 8901 Esters Blvd | Irving | TX | 3 | Office | — | 12,300 | 69,310 | — | — | 12,300 | 69,310 | 81,610 | 5,054 | 1/29/2015 | 1990 | |||||||||||
1511 East Common Street | New Braunfels | TX | 1 | Office | — | 2,700 | 11,712 | — | — | 2,700 | 11,712 | 14,412 | 854 | 1/29/2015 | 2005 | |||||||||||
2900 West Plano Parkway | Plano | TX | 1 | Office | — | 5,200 | 22,291 | — | — | 5,200 | 22,291 | 27,491 | 1,625 | 1/29/2015 | 1998 | |||||||||||
3400 West Plano Parkway | Plano | TX | 1 | Office | — | 3,000 | 31,392 | 56 | — | 3,000 | 31,448 | 34,448 | 2,289 | 1/29/2015 | 1994 | |||||||||||
19100 Ridgewood Parkway | San Antonio | TX | 1 | Office | — | 4,600 | 187,539 | 399 | — | 4,600 | 187,938 | 192,538 | 13,704 | 1/29/2015 | 2008 | |||||||||||
3600 Wiseman Boulevard | San Antonio | TX | 1 | Office | — | 3,197 | 12,175 | 86 | — | 3,197 | 12,261 | 15,458 | 1,455 | 3/19/2013 | 2004 | |||||||||||
1800 Novell Place | Provo | UT | 1 | Office | — | 6,700 | 78,940 | — | — | 6,700 | 78,940 | 85,640 | 11,019 | 6/1/2012 | 2000 | |||||||||||
4885-4931 North 300 West | Provo | UT | 2 | Office | — | 3,400 | 25,938 | — | — | 3,400 | 25,938 | 29,338 | 3,134 | 2/28/2013 | 2009 | |||||||||||
1095 South 4800 West* | Salt Lake City | UT | 1 | Industrial | — | 1,500 | 6,913 | — | — | 1,500 | 6,913 | 8,413 | 504 | 1/29/2015 | 2012 |
Number of | Initial Cost to | Costs | Gross Amount Carried at | ||||||||||||||||||||||||||||||||
Buildings, | Company | Capitalized | Close of Period(4) | Original | |||||||||||||||||||||||||||||||
Land Parcels | Buildings and | Subsequent to | Buildings and | Accumulated | Date | Construction | |||||||||||||||||||||||||||||
Property | Location | State | and Easements | Property Type | Encumbrances(1) | Land | Equipment | Acquisition | Impairment | Land | Equipment | Total(2) | Depreciation(3) | Acquired | Date | ||||||||||||||||||||
1901 Meadowville Technology Parkway* | Chester | VA | 1 | Industrial | 49,427 | 4,000 | 67,511 | — | — | 4,000 | 67,511 | 71,511 | 4,922 | 1/29/2015 | 2012 | ||||||||||||||||||||
Two Commercial Place | Norfolk | VA | 1 | Office | — | 4,497 | 32,505 | — | — | 4,497 | 32,505 | 37,002 | 542 | 4/28/2017 | 1974 | ||||||||||||||||||||
1910 East Parham Road | Richmond | VA | 1 | Office | — | 778 | 2,362 | 12 | — | 778 | 2,374 | 3,152 | 143 | 7/20/2015 | 1989 | ||||||||||||||||||||
1920 East Parham Road | Richmond | VA | 1 | Office | — | 916 | 2,780 | 174 | — | 916 | 2,954 | 3,870 | 173 | 7/20/2015 | 1989 | ||||||||||||||||||||
1950 East Parham Road | Richmond | VA | 1 | Office | — | 708 | 2,148 | — | — | 708 | 2,148 | 2,856 | 130 | 7/20/2015 | 2012 | ||||||||||||||||||||
501 South 5th Street | Richmond | VA | 1 | Office | — | 13,849 | 109,823 | 250 | — | 13,849 | 110,073 | 123,922 | 12,358 | 7/2/2013 | 2009 | ||||||||||||||||||||
9201 Forest Hill Avenue | Richmond | VA | 1 | Office | — | 1,270 | 4,824 | — | — | 1,270 | 4,824 | 6,094 | 151 | 10/12/2016 | 1985 | ||||||||||||||||||||
1751 Blue Hills Drive | Roanoke | VA | 1 | Industrial | — | 4,300 | 19,236 | 224 | — | 4,300 | 19,460 | 23,760 | 1,472 | 1/29/2015 | 2003 | ||||||||||||||||||||
45101 Warp Drive | Sterling | VA | 1 | Office | — | 4,336 | 29,910 | 52 | — | 4,336 | 29,962 | 34,298 | 3,805 | 11/29/2012 | 2001 | ||||||||||||||||||||
45201 Warp Drive | Sterling | VA | 1 | Office | — | 2,735 | 16,198 | — | — | 2,735 | 16,198 | 18,933 | 2,058 | 11/29/2012 | 2000 | ||||||||||||||||||||
45301 Warp Drive | Sterling | VA | 1 | Office | — | 2,803 | 16,130 | — | — | 2,803 | 16,130 | 18,933 | 2,050 | 11/29/2012 | 2000 | ||||||||||||||||||||
181 Battaile Drive* | Winchester | VA | 1 | Industrial | — | 1,487 | 12,854 | — | — | 1,487 | 12,854 | 14,341 | 3,764 | 4/20/2006 | 1987 | ||||||||||||||||||||
351, 401, 501 Elliott Ave West | Seattle | WA | 3 | Office | 70,238 | 34,999 | 94,407 | 782 | — | 34,999 | 95,189 | 130,188 | 6,906 | 1/29/2015 | 2000 | ||||||||||||||||||||
365 | $ | 210,785 | $ | 1,041,806 | $ | 3,125,978 | $ | 64,732 | $ | (12,651 | ) | $ | 1,041,767 | $ | 3,178,098 | $ | 4,219,865 | $ | 314,249 | ||||||||||||||||
Properties Held For Sale | |||||||||||||||||||||||||||||||||||
91-150 Hanua | Kapolei | HI | 1 | Land | $ | — | $ | 5,829 | $ | — | $ | — | $ | — | $ | 5,829 | $ | — | $ | 5,829 | $ | — | 6/15/2005 | — | |||||||||||
366 | $ | 210,785 | $ | 1,047,635 | $ | 3,125,978 | $ | 64,732 | $ | (12,651 | ) | $ | 1,047,596 | $ | 3,178,098 | $ | 4,225,694 | $ | 314,249 |
(1) | Represents mortgage debt and includes the unamortized balance of the fair value adjustments and debt issuance costs totaling $35. |
(2) | Excludes value of real estate intangibles. |
(3) | Depreciation on buildings and improvements is provided for periods ranging up to 40 years and on equipment up to 12 years. |
(4) | The total aggregate cost for U.S. federal income tax purposes is approximately $4,600,064. |
Real Estate | Accumulated | |||||||
Properties | Depreciation | |||||||
Balance at December 31, 2014 | $ | 1,866,843 | $ | (94,333 | ) | |||
Additions | 2,254,827 | (72,448 | ) | |||||
Disposals | (2,002 | ) | 2,002 | |||||
Balance at December 31, 2015 | 4,119,668 | (164,779 | ) | |||||
Additions | 28,538 | (78,151 | ) | |||||
Asset impairment | (5,484 | ) | — | |||||
Disposals | (302 | ) | 302 | |||||
Balance at December 31, 2016 | 4,142,420 | (242,628 | ) | |||||
Additions | 92,029 | (80,239 | ) | |||||
Asset impairment | (229 | ) | — | |||||
Disposals | (1,680 | ) | 1,680 | |||||
Cost basis adjustment (1) | (6,846 | ) | 6,938 | |||||
Reclassification of property held for sale | (5,829 | ) | — | |||||
Balance at December 31, 2017 | $ | 4,219,865 | $ | (314,249 | ) |
(1) | Represents the reclassification between accumulated depreciation and building made to a property at fair value, that was previously classified as held for sale, in accordance with GAAP. |
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Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 23, 2018 |
Jun. 30, 2017 |
|
Document and Entity Information | |||
Entity Registrant Name | Government Properties Income Trust | ||
Entity Central Index Key | 0001456772 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 99,145,304 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 1.3 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares of beneficial interest, shares authorized | 150,000,000 | 100,000,000 |
Common shares of beneficial interest, shares issued | 99,145,921 | 71,177,906 |
Common shares of beneficial interest, shares outstanding | 99,145,921 | 71,177,906 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Statement [Abstract] | |||
Net amortization of debt premiums and discounts and debt issuance costs | $ 3,420 | $ 2,832 | $ 1,376 |
Organization |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Government Properties Income Trust, or the Company, we or us, is a real estate investment trust, or REIT, formed in 2009 under Maryland law. As of December 31, 2017, we wholly owned 108 properties (167 buildings), or our consolidated properties, located in 30 states and the District of Columbia containing approximately 17.5 million rentable square feet and had a noncontrolling ownership interest in two unconsolidated joint ventures that own properties (three buildings) totaling an additional 0.4 million rentable square feet. As of December 31, 2017, we also owned 24,918,421 common shares of beneficial interest, par value $0.01 per share, or approximately 27.8%, of the then outstanding common shares of Select Income REIT, or SIR. |
Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Real Estate Properties. We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate the purchase prices of our properties to land, building and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We amortize capitalized above market lease values (included in acquired in place real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net decreases to rental income of $2,764, $1,457 and $1,157 during the years ended December 31, 2017, 2016 and 2015, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $53,410, $27,546, and $27,467 during the years ended December 31, 2017, 2016 and 2015, respectively. When a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease. Capitalized above market lease values were $46,096 and $39,261 as of December 31, 2017 and 2016, respectively, net of accumulated amortization of $27,259 and $22,753, respectively. Capitalized below market lease values were $25,973 and $20,603 as of December 31, 2017 and 2016, respectively, net of accumulated amortization of $12,338 and $9,977, respectively. The value of acquired in place leases, exclusive of the value of above market and below market acquired in place leases, was $472,928 and $203,368 as of December 31, 2017 and 2016, respectively, net of accumulated amortization of $139,893 and $95,028, respectively. As of December 31, 2017, the weighted average amortization periods for capitalized above market leases, lease origination value and capitalized below market lease values were 4.0 years, 5.6 years and 5.7 years, respectively. Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2017 are estimated to be $97,114 in 2018, $70,790 in 2019, $49,230 in 2020, $36,321 in 2021, $27,313 in 2022 and $58,263 thereafter. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives. Equity Method Investments. We account for our investments in Affiliates Insurance Company, or AIC, and SIR using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us, AIC and SIR and our significant ownership interest in SIR. Our Managing Trustee is also the managing trustee of SIR. Our Managing Trustee as the current sole trustee of ABP Trust is the controlling shareholder of The RMR Group Inc., or RMR Inc. He is also a director and officer of RMR Inc. Substantially all of the business of RMR Inc. is conducted by its majority owned subsidiary, The RMR Group LLC, or RMR LLC, which is our manager and the manager of AIC and SIR. Each of our Trustees is a director of AIC and one of our Independent Trustees is also an independent trustee of SIR. See Notes 7 and 12 for a further discussion of our investments in AIC and SIR. In connection with the FPO Transaction, we acquired 50% and 51% interests in two unconsolidated joint ventures which own two properties (three buildings). The properties owned by these joint ventures are encumbered by an aggregate $82,000 of mortgage indebtedness. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting. See Note 5 for a further discussion of our unconsolidated joint ventures. We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value. We recorded a $203,297 loss on impairment of our SIR investment in 2015. See Note 12 for more information on this impairment. Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Restricted Cash. Restricted cash consists of amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our mortgage debts. Revenue Recognition. We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. We increased rental income by $5,582, $2,691 and $3,978 to record revenue on a straight line basis during the years ended December 31, 2017, 2016 and 2015, respectively. Rents receivable include $27,267 and $21,686 of straight line rent receivables at December 31, 2017 and 2016, respectively. Certain of our leases with government tenants provide the tenant the right to terminate its lease if its respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of termination to be a remote contingency based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis. Deferred Leasing Costs. Deferred leasing costs include brokerage, legal and other fees associated with our entering leases and we amortize those costs, which are included in depreciation and amortization expense, on a straight line basis over the terms of the respective leases. Deferred leasing costs totaled $32,990 and $28,039 at December 31, 2017 and 2016, respectively, and accumulated amortization of deferred leasing costs totaled $10,013 and $6,960 at December 31, 2017 and 2016, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2017 are estimated to be $4,282 in 2018, $4,091 in 2019, $3,275 in 2020, $2,670 in 2021, $2,186 in 2022 and $6,473 thereafter. Available for Sale Securities. As of December 31, 2017, we owned 1,214,225 common shares of class A common stock of RMR Inc. Our investment in RMR Inc. is classified as an available for sale security. Available for sale securities are recorded at fair value based on their quoted market price at the end of each reporting period. Unrealized gains and losses on available for sale securities are recorded as a component of cumulative other comprehensive income (loss) in shareholders’ equity. As further described in Note 7, we initially acquired 1,541,201 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $17,462. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $39,833 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under U.S. generally accepted accounting principles, or GAAP. As a result, we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $1,087, $1,087 and $618 of this liability during the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included in the net business management and property management fee amounts for such periods. As of December 31, 2017, the remaining unamortized amount of this liability was $19,580. Future amortization of this liability as of December 31, 2017 is estimated to be $1,087 in 2018, $1,087 in 2019, $1,087 in 2020, $1,087 in 2021, $1,087 in 2022 and $14,145 thereafter. We evaluate our investments in available for sale securities to determine if a decline in the fair value below our carrying value is other than temporary. We consider the severity and the duration of the decline, and our ability and intent to hold the investment until recovery when making this assessment. If a decline in fair value is determined to be other than temporary, an impairment loss equal to the difference between the investment’s carrying value and its fair value is recognized in earnings. Debt Issuance Costs. Debt issuance costs include capitalized issuance or assumption costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets in our consolidated balance sheets. As of December 31, 2017 and 2016, debt issuance costs for our revolving credit facility were $5,234 and accumulated amortization of debt issuance costs for our revolving credit facility were $3,849 and $2,617, respectively. Debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2017 and 2016, debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes, and mortgage notes payable totaled $15,750 and $14,725, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, unsecured term loans, senior unsecured notes and mortgage notes as of December 31, 2017 are estimated to be $3,469 in 2018, $2,217 in 2019, $1,357 in 2020, $1,217 in 2021, $826 in 2022 and $8,049 thereafter. Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify as a REIT. We are, however, subject to certain state and local taxes. Cumulative Other Comprehensive Income. Cumulative other comprehensive income represents the unrealized gain on the RMR Inc. shares we own and our share of the cumulative comprehensive income of our equity method investees, SIR and AIC. See Notes 2, 7 and 12 for further information regarding these investments. Reclassifications. Certain reclassifications have been made to the prior years’ financial statements to conform to the current year’s presentation. Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. Per Common Share Amounts. We calculate basic earnings per common share by dividing net income (loss) available for common shareholders by the weighted average number of our common shares of beneficial ownership, $.01 par value, or our common shares, outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings, are considered when calculating diluted earnings per share. Segment Reporting. We operate in two business segments: direct ownership of real estate properties and our equity method investment in SIR. |
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Weighted Average Common Shares | Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):
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New Accounting Pronouncements |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | Accounting Pronouncements On January 1, 2017, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-01, Clarifying the Definition of a Business. This update provides additional guidance on evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or of a business. This update defines three requirements for a set of assets and activities (collectively referred to as a “set”) to be considered a business: inputs, processes and outputs. As a result of the implementation of this update, certain property acquisitions, which under previous guidance were accounted for as business combinations, are now accounted for as acquisitions of assets. In an asset acquisition, certain acquisition costs are capitalized as opposed to expensed under previous guidance. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In August 2015, the FASB provided for a one-year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have evaluated ASU No. 2014-09 (and related clarifying guidance issued by the FASB) and the adoption will not have a material impact on the amount or timing of our revenue recognition in our consolidated financial statements with the exception of profit recognition on real estate sales. We currently have recorded a deferred gain on sale of real estate of $712 that under current guidance would be recognized upon repayment of a promissory note we received in connection with the sale but will be recognized in its entirety upon adoption of ASU No. 2014-09. We currently expect to adopt the standard using the modified retrospective approach. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for all prospective interim and annual periods beginning after December 15, 2017. We expect to record an adjustment of $45,117 on January 1, 2018 to reclassify historical changes in the fair value of our available for sale equity investments from other comprehensive income to retained earnings. Future changes in the fair value of our equity investments will be recorded through earnings in accordance with ASU No. 2016-01. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We expect this guidance will impact the classification of distributions from our equity method investments. Upon adoption, we expect to reclassify $2,945 and $2,956 from cash flow from investing activities to cash flow from operating activities for 2017 and 2016, respectively. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and requires the usage of a retrospective transition method. Upon the adoption of ASU No. 2016-18, we will present the changes in the total cash, cash equivalents and restricted cash in our consolidated statements of cash flows, whereas under the current guidance we present the changes during the period for cash and cash equivalents only. |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Properties | Real Estate Properties As of December 31, 2017, we wholly owned 108 properties (167 buildings), with an undepreciated carrying value of $2,975,721 and had a noncontrolling ownership interest in two unconsolidated joint ventures that own two properties (three buildings). We generally lease space at our properties on a gross lease or modified gross lease basis pursuant to fixed term contracts expiring between 2018 and 2034. Our leases generally require us to pay all or some property operating expenses and to provide all or most property management services. During the year ended December 31, 2017, we entered 75 leases for 1,604,783 rentable square feet for a weighted (by rentable square feet) average lease term of 7.6 years and we made commitments for approximately $18,249 of leasing related costs. As of December 31, 2017, we have estimated unspent leasing related obligations of $31,310. During the year ended December 31, 2017, we capitalized $511 of interest expense related to the redevelopment and expansion of an existing property. FPO Transaction On October 2, 2017, we completed our acquisition of First Potomac Realty Trust, or FPO, pursuant to merger transactions, as a result of which we acquired 35 office properties (72 buildings) with 6,028,072 rentable square feet, and FPO's 50% and 51% interests in two joint ventures that own two properties (three buildings) with 443,867 rentable square feet, or collectively, the FPO Transaction. The aggregate value we paid for FPO was $1,370,888, including $651,696 in cash to FPO's shareholders, the repayment of $483,000 of FPO corporate debt, the assumption of $167,548 of mortgage debt; this amount excludes the $82,000 of mortgage debt that encumber the two properties owned by the two joint ventures and the payment of certain transaction fees and expenses, net of FPO cash on hand. We financed the cash payments for the FPO Transaction with borrowings under our revolving credit facility and with cash on hand, including net proceeds from our public offerings of common shares and senior unsecured notes, as described further in Notes 9 and 11. We accounted for the FPO Transaction as an asset acquisition Our allocation of the purchase price was based on estimates of the relative fair value of the acquired assets and assumed liabilities. The following table summarizes the total consideration paid and the estimated fair values of the assets acquired and liabilities assumed in the FPO Transaction:
Pro Forma Information (Unaudited): The following table presents our pro forma results of operations for the years ended December 31, 2017 and 2016 as if the FPO Transaction and related financing activities had occurred on January 1, 2016. The historical FPO results of operations included in this pro forma financial information have been adjusted to remove the results of operations of properties and joint venture interests FPO sold from January 1, 2016 to October 2, 2017, the closing date of the FPO Transaction. The effect of these adjustments was to decrease pro forma rental income $804 and $17,810 for the years ended December 31, 2017 and 2016, respectively, and to decrease net income (loss) $47,019 and $5,403 for the years ended December 31, 2017 and 2016, respectively. This pro forma financial information is not necessarily indicative of what our actual financial position or results of operations would have been for the periods presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received on our existing leases or leases we may enter during and after 2018, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this pro forma financial information and such differences could be significant.
During the year ended December 31, 2017, we recognized revenues of $36,722 and operating income of $3,230 from the consolidated properties acquired in the FPO Transaction and ($621) in equity in losses from our unconsolidated joint ventures acquired in the FPO Transaction. Unconsolidated Joint Ventures We own interests in two joint ventures that own two properties (three buildings). We account for these investments under the equity method of accounting. As of December 31, 2017, our investment in unconsolidated joint ventures consisted of the following:
The following table provides a summary of the mortgage debt of our unconsolidated joint ventures:
At December 31, 2017, the aggregate unamortized basis difference of our unconsolidated joint ventures of $8,933 is primarily attributable to the difference between the amount for which we purchased our interest in the joint ventures, including transaction costs, and the historical carrying value of the net assets of the joint ventures. This difference will be amortized over the remaining useful life of the related properties and included in the reported amount of equity in earnings of investees. Other 2017 Acquisition Activities During the year ended December 31, 2017, we acquired one property (one building) located in Manassas, VA with 69,374 rentable square feet. This property was 100% leased to Prince William County on the date of acquisition. This transaction was accounted for as an asset acquisition. The purchase price was $12,657, including capitalized acquisition costs of $37. Our allocation of the purchase price of this acquisition is based on the relative estimated fair value of the acquired assets and assumed liabilities is presented in the table below.
In September 2017, we acquired transferable development rights that will allow us to expand a property we own in Washington, D.C. for a purchase price of $2,030, excluding acquisition costs. 2016 Acquisition Activities During the year ended December 31, 2016, we acquired three properties (five buildings) with a combined 830,185 rentable square feet and a land parcel adjacent to one of our existing properties for an aggregate purchase price of $199,304, excluding acquisition costs. Our allocation of the purchase price of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.
2018 Disposition Activities In January 2018, we entered an agreement to sell an office property (one building) located in Minneapolis, MN with 193,594 rentable square feet for $20,000, excluding closing costs. During the year ended December 31, 2017, we recorded a $9,260 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value. This sale is expected to occur in the first quarter of 2018. In February 2018, we entered an agreement to sell an office property (one building) located in Safford, AZ with 36,139 rentable square feet for $8,250, excluding closing costs. This sale is expected to occur in the second quarter of 2018. In February 2018, we entered an agreement to sell an office property (one building) located in Sacramento, CA with 110,500 rentable square feet for $10,755, excluding closing costs. This sale is expected to occur in the second quarter of 2018. Our pending dispositions are subject to conditions; accordingly, we cannot be sure that we will complete these transactions or that these transactions will not be delayed or the terms of these transactions will not change. As part of our long term financing plans for the FPO Transaction and to reduce our financial leverage, we expect to dispose of certain additional properties. We are marketing or plan to market for sale 28 properties (61 buildings) including properties acquired as part of the FPO Transaction, with a carrying value of $658,190 as of December 31, 2017. We cannot be sure we will sell any properties or sell them for prices in excess of our carrying values. 2017 Disposition Activities - Continuing Operations In October 2017, we sold one vacant office property (one building) located in Albuquerque, NM with 29,045 rentable square feet and a net book value of $1,885 as of the date of sale for $2,000, excluding closing costs. During the year ended December 31, 2017, we recorded a $230 loss on impairment of real estate to reduce the carrying value of this property to its estimated fair value. 2017 Disposition Activities – Discontinued Operations In August 2017, we sold one vacant office property (one building) in Falls Church, VA with 164,746 rentable square feet and a net book value of $12,901 as of the date of sale for $13,523, excluding closing costs. Results of operations for this property, which qualified as held for sale prior to our adoption in 2014 of ASU No. 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, are classified as discontinued operations in our consolidated financial statements. During the year ended December 31, 2017, we recorded an adjustment of $619 to increase the carrying value of this property to its estimated fair value less costs to sell. Summarized balance sheet and income statement information for this property is as follows: Balance Sheets
Statements of Operations
2016 Disposition Activities In July 2016, we sold an office property (one building ) in Savannah, GA with 35,228 rentable square feet that had a net book value of $2,986 for $4,000, excluding closing costs. In connection with this sale, we provided $3,600 of mortgage financing to the buyer. The mortgage note requires interest to be paid at an annual rate of LIBOR plus 4.0%, subject to a minimum annual interest rate of 5.0%, and requires monthly payments of interest only until maturity on June 30, 2021. This sales transaction did not qualify for full gain recognition under GAAP and is being accounted for under the installment method. Accordingly, we recognized a gain on sale of real estate of $79 during the year ended December 31, 2016 and recorded a deferred gain of $712, which we currently expect to recognize when the mortgage note is repaid. The mortgage note receivable of $3,600, net of the $712 deferred gain, is included in other assets in our consolidated balance sheets at December 31, 2017 and 2016. Operating leases Our future minimum lease payments related to our consolidated properties and estimated real estate tax and other expense reimbursements scheduled to be received during the current terms of the existing leases as of December 31, 2017 are as follows:
Certain of our government tenants have the right to terminate their leases before the lease term expires. As of December 31, 2017, government tenants who currently represent approximately 4.5% of our total future minimum lease payments have currently exercisable rights to terminate their leases before the stated terms of their leases expire. In 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026 and 2027, early termination rights become exercisable by other government tenants who currently represent an additional approximately 0.8%, 5.6%, 10.3%, 2.3%, 5.5%, 1.0%, 0.5%, 0.6%, 2.3% and 1.8% of our total future minimum lease payments, respectively. In addition, as of December 31, 2017, 26 of our government tenants have the currently exercisable right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its obligation. These 26 tenants represent approximately 11.7% of our total future minimum lease payments as of December 31, 2017. As part of the FPO Transaction, we assumed the lease for FPO's former corporate headquarters, which expires on January 31, 2021. We sublease a portion of the space, which sublease expires on January 31, 2021. Rent expense incurred under the lease, net of sublease revenue, was $374 for the year ended December 31, 2017. Future minimum rental payments due under the lease, net of subleased revenue, as of December 31, 2017 are summarized as follows:
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Business and Property Management Agreements with RMR LLC |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business and Property Management Agreements with RMR LLC | Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations. See Note 7 for further information regarding our relationship, agreements and transactions with RMR LLC. Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:
The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves; provided, however, we do not include our ownership of SIR common shares as part of our real estate investments for purposes of calculating our base management fee due to RMR LLC since SIR pays separate business management fees to RMR LLC.
For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the last trading day of the year immediately before the first year of the measurement period from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.
Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $12,464, $10,222 and $9,934 for the years ended December 31, 2017, 2016 and 2015, respectively. The net business management fees we recognized are included in general and administrative expenses for these periods. The net business management fees we recognized for the years ended December 31, 2017, 2016 and 2015 reflect a reduction of $603, $603 and $372, respectively, for the amortization of the liability we recorded in connection with the our investment in RMR Inc., as further described in Note 7. In accordance with the then applicable terms of our business management agreement, we issued 19,339 of our common shares to RMR LLC for the period from January 1, 2015 to May 31, 2015 as payment for a part of the base management fee we recognized for the applicable period. Beginning June 1, 2015, all management fees under our business management agreement are paid in cash. No incentive management fee was payable to RMR LLC under our business management agreement for the years ended December 31, 2017, 2016 or 2015. Pursuant to our property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $11,566, $8,949 and $7,977 for the years ended December 31, 2017, 2016 and 2015. The net property management and construction supervision fees we recognized for the years ended December 31, 2017, 2016 and 2015 reflect a reduction of $484, $484 and $246, respectively, for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2. These amounts are included in other operating expenses or have been capitalized, as appropriate, in our consolidated financial statements.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||
Related Party Transactions | Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc. and others related to them. RMR LLC is a subsidiary of RMR Inc. Our Managing Trustee, Adam Portnoy, as the current sole trustee of ABP Trust is the controlling shareholder of RMR Inc. and as the current sole trustee of ABP Trust beneficially owns all the class A membership units of RMR LLC not owned by RMR Inc. Adam Portnoy is the managing director, president and chief executive officer of RMR Inc. and an officer of RMR LLC. Barry Portnoy was our other Managing Trustee and a director and an officer of RMR Inc. until his death on February 25, 2018. Each of our executive officers is also an officer of RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as a managing director or managing trustee of almost all of the public companies to which RMR LLC or its subsidiaries provide management services. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services. Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations. See Note 6 for further information regarding our management agreements with RMR LLC. Leases with RMR LLC. We lease office space to RMR LLC in certain of our properties for RMR LLC’s property management offices. Pursuant to our lease agreements with RMR LLC, we recognized rental income from RMR LLC for leased office space of $303, $366 and $341 for the years ended December 31, 2017, 2016 and 2015, respectively. Our office space leases with RMR LLC are terminable by RMR LLC if our management agreements with RMR LLC are terminated. Share Awards to RMR LLC Employees. We have historically granted share awards to certain RMR LLC employees under our equity compensation plan. During the years ended December 31, 2017, 2016 and 2015, we granted annual share awards of 57,350, 53,400 and 53,100 of our common shares, respectively, to our officers and to other employees of RMR LLC, valued at $1,067, $1,183 and $841, respectively, based upon the closing price of our common shares on the applicable stock exchange on which our common shares were listed on the dates of grant. One fifth of these awards vested on the grant date and one fifth vests on each of the next four anniversaries of the grant date. These awards to RMR LLC employees are in addition to the share awards granted to Adam Portnoy and Barry Portnoy, as our then Managing Trustees, and the fees we paid to RMR LLC. During these periods, we purchased some of our common shares from our trustees and officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. See Note 11 for further information regarding these purchases. Acquisition of Interest in RMR LLC, Our Manager. On June 5, 2015, we and three other RMR managed REITs - Hospitality Properties Trust, SIR and Senior Housing Properties Trust, or collectively, the Other REITs - participated in a transaction, or the Up-C Transaction, by which we and the Other REITs each acquired shares of class A common stock of RMR Inc. The Up-C Transaction was completed pursuant to a transaction agreement among us, RMR LLC, ABP Trust (RMR LLC’s then sole member) and RMR Inc. and similar transaction agreements that each Other REIT entered into with RMR LLC, ABP Trust and RMR Inc. As part of the Up-C Transaction and concurrently with entering into the transaction agreements, on June 5, 2015, among other things:
Each Other REIT participated in the Up-C Transaction in a similar manner. After giving effect to the Up-C Transaction, RMR LLC became a subsidiary of RMR Inc. and RMR Inc. became the managing member of RMR LLC. Pursuant to the transaction agreements for the Up-C Transaction, on December 14, 2015, we distributed 768,032 shares of class A common stock of RMR Inc. to our shareholders as a special distribution, which represented approximately half of the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction; each Other REIT also distributed approximately half of the shares of class A common stock of RMR Inc. issued to it in the Up-C Transaction to its respective shareholders. As a shareholder of SIR we received 441,056 class A common shares of RMR Inc. included in such shares that SIR distributed to its shareholders. RMR Inc. facilitated these distributions by filing a registration statement with the SEC to register the shares of class A common stock of RMR Inc. being distributed and by listing those shares on Nasdaq. In connection with this distribution, we recognized a non-cash loss of $12,368 in the fourth quarter of 2015 as a result of the closing price of the class A common stock of RMR Inc. being lower than our carrying amount per share on the distribution date. See Notes 2 and 10 for information regarding the fair value of our investment in RMR Inc. as of December 31, 2017. Through their ownership of class A common stock of RMR Inc., class B-1 common stock of RMR Inc., class B-2 common stock of RMR Inc. and class A membership units of RMR LLC, as of December 31, 2017, our then Managing Trustees, Adam Portnoy and Barry Portnoy, in aggregate held, directly and indirectly (including as trustees of ABP Trust), a 51.9% economic interest in RMR LLC and control 91.4% of the voting power of outstanding capital stock of RMR Inc. We currently hold 1,214,225 shares of class A common stock of RMR Inc., including 441,056 shares of class A common stock of RMR Inc. that SIR distributed to us as a result of our ownership of SIR common shares. SIR. We are SIR’s largest shareholder, owning approximately 27.8% of the outstanding SIR common shares as of December 31, 2017. RMR LLC provides management services to both us and SIR. Our Managing Trustee, Adam Portnoy, is also the managing trustee of SIR. One of our Independent Trustees also serves as an independent trustee of SIR and our President and Chief Operating Officer also serves as the president and chief operating officer of SIR. On February 28, 2015, we entered into a share purchase agreement, or the SIR Purchase Agreement, with Lakewood Capital Partners, LP, or Lakewood, and certain other related persons, or the Lakewood Parties, and, for the purpose of specified sections, SIR, pursuant to which, on March 4, 2015, we acquired from Lakewood 3,418,421 SIR common shares, representing approximately 3.9% of the then outstanding SIR common shares, for $95,203. On February 28, 2015, our then Managing Trustees, Adam Portnoy and Barry Portnoy, entered into similar separate share purchase agreements with the Lakewood Parties pursuant to which, on March 4, 2015, Adam Portnoy and Barry Portnoy acquired 87,606 and 107,606 SIR common shares, respectively, from Lakewood and, on March 5, 2015, Adam Portnoy and Barry Portnoy each acquired 2,429 SIR common shares from William H. Lenehan, one of the Lakewood Parties. AIC. We, ABP Trust, SIR and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts and are parties to a shareholders agreement regarding AIC. All of our Trustees and all of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays to RMR LLC a service fee equal to 3.0% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC’s business. We and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of $757, $1,032 and $1,277 in connection with this insurance program for the policy years ending June 30, 2018, 2017 and 2016, respectively, which amount for the current policy year ending June 30, 2018 may be adjusted from time to time as we acquire or dispose of properties that are included in this insurance program. As of December 31, 2017, 2016 and 2015, our investment in AIC had a carrying value of $8,304, $7,235 and $6,946, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $608, $137 and $20 related to our investment in AIC for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are presented as equity in earnings of an investee in our consolidated statements of comprehensive income. Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC of $461, $152 and ($20) related to our investment in AIC for the years ended December 31, 2017, 2016 and 2015, respectively. Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including SIR, participate in a combined directors’ and officers’ liability insurance policy. This combined policy expires in September 2019. We paid aggregate premiums of $91, $106 and $316 in 2017, 2016 and 2015, respectively, for these policies. |
Concentration |
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Risks and Uncertainties [Abstract] | |
Concentration | Concentration Tenant and Credit Concentration We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. The U.S. Government, 13 state governments, and five other government tenants combined were responsible for approximately 62.6%, 87.9% and 92.8% of our annualized rental income as of December 31, 2017, 2016 and 2015, respectively. The U.S. Government is our largest tenant by annualized rental income and was responsible for approximately 43.5%, 60.6% and 67.0% of our annualized rental income as of December 31, 2017, 2016 and 2015, respectively. Geographic Concentration At December 31, 2017, our 108 wholly owned properties (167 buildings) were located in 30 states and the District of Columbia. Consolidated properties located in Virginia, the District of Columbia, Maryland, California, Georgia, New York, and Massachusetts were responsible for approximately 23.2%, 17.7%, 14.9%, 9.6%, 5.6%, 4.4% and 3.2% of our annualized rental income as of December 31, 2017, respectively. Consolidated properties located in the metropolitan Washington, D.C. market area were responsible for approximately 43.3% of our annualized rental income as of December 31, 2017. |
Indebtedness |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness | Indebtedness Our principal debt obligations at December 31, 2017 were: (1) $570,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) $550,000 aggregate outstanding principal amount of term loans; (3) an aggregate outstanding principal amount of $960,000 of public issuances of senior unsecured notes; and (4) $183,147 aggregate principal amount of mortgage notes. Our $750,000 revolving credit facility, our $300,000 term loan and our $250,000 term loan are governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a number of features common to all of these credit arrangements. Our credit agreement also includes a feature under which the maximum aggregate borrowing availability may be increased to up to $2,500,000 on a combined basis in certain circumstances. Our $750,000 revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is January 31, 2019 and, subject to the payment of an extension fee and meeting other conditions, we have an option to extend the stated maturity date of our revolving credit facility by one year to January 31, 2020. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity. We are required to pay interest at a rate of LIBOR plus a premium, which was 125 basis points per annum at December 31, 2017, on borrowings under our revolving credit facility. We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at December 31, 2017. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of December 31, 2017, the annual interest rate payable on borrowings under our revolving credit facility was 2.7% and the weighted average annual interest rate for borrowings under our revolving credit facility was 2.4%, 1.7% and 1.5%, for the years ended December 31, 2017, 2016 and 2015. As of December 31, 2017 and February 23, 2018, we had $570,000 and $595,000 outstanding under our revolving credit facility. Our $300,000 term loan, which matures on March 31, 2020, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 140 basis points per annum at December 31, 2017, on the amount outstanding under our $300,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2017, the annual interest rate for the amount outstanding under our $300,000 term loan was 3.0%. The weighted average annual interest rate under our $300,000 term loan was 2.5%, 1.9% and 1.6%, for the years ended December 31, 2017, 2016 and 2015, respectively. Our $250,000 term loan, which matures on March 31, 2022, is prepayable without penalty at any time. We are required to pay interest at a rate of LIBOR plus a premium, which was 180 basis points per annum as of December 31, 2017, on the amount outstanding under our $250,000 term loan. The interest rate premium is subject to adjustment based upon changes to our credit ratings. As of December 31, 2017, the annual interest rate for the amount outstanding under our $250,000 term loan was 3.4%. The weighted average annual interest rate under our $250,000 term loan was 2.9%, 2.3% and 2.0%, for the years ended December 31, 2017, 2016 and 2015, respectively. Our credit agreement and senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR LLC ceasing to act as our business and property manager. Our credit agreement and our senior unsecured notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts, require us to maintain certain financial ratios and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances. We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at December 31, 2017. On July 20, 2017, we issued $300,000 of 4.000% senior unsecured notes due 2022 in an underwritten public offering. The net proceeds from this offering of $295,399, after payment of the underwriters' discount and other offering expenses, were used to finance, in part, the FPO Transaction. In May 2016, we issued $300,000 of 5.875% senior unsecured notes due 2046 in an underwritten public offering. In June 2016, the underwriters exercised an option to purchase an additional $10,000 of these notes. The net proceeds from this offering of $299,691, after offering expenses, were used to repay all amounts then outstanding under our revolving credit facility and for general business purposes As described in Note 5, in connection with the FPO Transaction we assumed five mortgage notes with an aggregate principal balance of $167,548. We recorded these mortgage notes at their estimated fair value aggregating $167,936 on the date of acquisition. These mortgage notes are secured by five properties (five buildings). In November 2017, we repaid $10,000 of principal of one of these mortgage notes as part of our assumption agreement with the lender. In connection with the FPO Transaction, we acquired FPO's 50% and 51% interests in two unconsolidated joint ventures with two mortgage notes with an aggregate principal balance of $82,000, which are encumbered by two properties (three buildings) owned by such joint ventures. Concurrently with our entering into the FPO merger agreement, we entered a commitment letter with a group of institutional lenders for a 364-day senior unsecured bridge loan facility in an initial aggregate principal amount of up to $750,000. In July 2017, we and the lenders terminated this commitment letter and bridge loan facility as a result of our issuance of the senior unsecured notes described above and the proceeds from the sale of our common shares in July 2017 (see Note 11 for more information regarding this sale), and we recognized a loss on extinguishment of debt of $1,715. In February 2016, we repaid, at par, a $23,473 mortgage note requiring annual interest of 6.21% which was secured by one office property (one building) located in Landover, MD. This mortgage note was scheduled to mature in August 2016. We recorded a loss on extinguishment of debt of $21 for the year ended December 31, 2017, which represented unamortized debt issuance costs related to this note. In March 2016, we repaid, at par, an $83,000 mortgage note requiring annual interest of 5.55% which was secured by one office property (two buildings) located in Reston, VA. This mortgage note was scheduled to mature in April 2016. We recorded a gain on extinguishment of debt of $125 for the year ended December 31, 2017, which represented the net unamortized debt premium and debt issuance costs related to this note. At December 31, 2017, eight of our consolidated properties (eight buildings) with an aggregate net book value of $432,562 are encumbered by eight mortgages for an aggregate principal amount of $183,147. Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants. None of our unsecured debt obligations require sinking fund payments prior to their maturity dates. The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2017 are as follows:
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Fair Value of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets measured at fair value at December 31, 2017, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
In addition to the assets described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, mortgage note receivable, accounts payable, a revolving credit facility, term loans, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits. At December 31, 2017 and December 31, 2016, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements due to their short term nature or variable interest rates, except as follows:
We estimated the fair value of our senior unsecured notes due in 2019 and 2022 using an average of the bid and ask price of the notes as of the measurement date (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair value of our senior unsecured notes due in 2046 based on the closing price on Nasdaq (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date. We estimated the fair values of our mortgage notes payable by using discounted cash flow analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. |
Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Note 11. Shareholders’ Equity Share Awards: We have common shares available for issuance under the terms of our 2009 Incentive Share Award Plan, or the 2009 Plan. As described in Note 7, we granted common share awards to our officers and certain other employees of RMR LLC in 2017, 2016 and 2015. We also granted each of our then six Trustees 3,000 common shares in 2017 with an aggregate value of $392 ($65 per Trustee), each of our then five Trustees 2,500 common shares in 2016 with an aggregate value of $244 ($49 per Trustee) and each of our then five Trustees 2,500 common shares in 2015 with an aggregate value of $247 ($49 per Trustee) as part of their annual compensation. The values of the share grants were based upon the closing price of our common shares trading on Nasdaq or the New York Stock Exchange, as applicable, on the date of grant. The common shares awarded to our Trustees vested immediately. The common shares granted to our officers and certain other employees of RMR LLC vest in five equal annual installments beginning on the date of grant. A summary of shares granted, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2017, 2016 and 2015, is as follows:
The 104,250 unvested shares as of December 31, 2017 are scheduled to vest as follows: 40,120 shares in 2018, 31,230 shares in 2019, 21,630 shares in 2020 and 11,270 shares in 2021. These unvested shares are re-measured at fair value on a recurring basis using quoted market prices of the underlying shares. As of December 31, 2017, the estimated future compensation expense for the unvested shares was $1,933 based on the closing share price of our common shares on Nasdaq on December 31, 2017 of $18.54. The weighted average period over which the compensation expense will be recorded is approximately 21 months. During the years ended December 31, 2017, 2016 and 2015, we recorded $1,377, $1,371 and $932, respectively, of compensation expense related to the 2009 Plan. At December 31, 2017, 1,493,119 of our common shares remained available for issuance under the 2009 Plan. Distributions: Cash distributions paid or payable by us to our common shareholders for the years ended December 31, 2017, 2016 and 2015 were $1.72 per share or $145,209, $122,366 and $121,660, respectively. As described in Note 7, on December 14, 2015, we distributed 768,032, or 0.0108 of a share for each of our common shares, of RMR Inc. shares of class A common stock we owed to our common shareholders as a special distribution. This distribution resulted in a taxable in-kind distribution of $0.1284 for each of our common shares. The characterization of our distributions paid in 2017 was 50.65% ordinary income and 49.35% return of capital. The characterization of our distributions paid in 2016 was 62.74% ordinary income, 36.21% return of capital and 1.05% qualified dividend. The characterization of our distributions paid in 2015 was 47.44% ordinary income, 37.12% return of capital, 12.90% capital gain, 1.61% IRC Section 1250 gain and 0.93% qualified dividend. On January 19, 2018, we declared a dividend payable to common shareholders of record on January 29, 2018 in the amount of $0.43 per share, or $42,633. We expect to pay this distribution on or about February 26, 2018 using cash on hand and borrowings under our revolving credit facility. Sale of Shares: On July 5, 2017, we sold 25,000,000 of our common shares at a price of $18.50 per share in an underwritten public offering. On August 3, 2017, we sold 2,907,029 of our common shares at a price of $18.50 per share pursuant to an overallotment option granted to the underwriters for the July offering. The aggregate net proceeds from these sales of $493,866, after payment of the underwriters' discount and other offering expenses, were used to finance, in part, the FPO Transaction. 2017 and 2018 Share Purchases: On May 17, 2017, we withheld 450 of our common shares awarded to one of our Trustees to fund that Trustee's resulting minimum required tax withholding obligation. The aggregate value of the withheld shares was $10, which is reflected as a decrease to shareholders' equity in our consolidated balance sheets. During 2017, we purchased 13,914 of our common shares valued at a weighted average price per share of $18.30, based on the closing price of our common shares on Nasdaq, on the date of purchase, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. In January 2018, we purchased 617 of our common shares valued at a price per share of $18.54, based on the closing price of our common shares on Nasdaq, on the date of purchase, from a former officer of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. 2016 Share Purchases: In September 2016, we purchased an aggregate of 14,302 of our common shares valued at an average price per common share of $23.54 per common share, based on the closing price of our common shares on Nasdaq on the dates of purchase, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss) represents the unrealized gain (loss) on the RMR Inc. shares we own and our share of the comprehensive income (loss) of our equity method investees, SIR and AIC. The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2017, 2016 and 2015:
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Equity Investment in Select Income REIT |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Investment in Select Income REIT | Equity Investment in Select Income REIT As described in Note 7, as of December 31, 2017, we owned 24,918,421, or approximately 27.8%, of the then outstanding SIR common shares. SIR is a REIT which primarily owns single tenant, net leased properties. We account for our investment in SIR under the equity method. Under the equity method, we record our proportionate share of SIR’s net income as equity in earnings of an investee in our consolidated statements of comprehensive income (loss). During the years ended December 31, 2017, 2016 and 2015, we recorded $21,584, $35,381 and $21,882 of equity in earnings of SIR, respectively. Our other comprehensive income (loss) includes our proportionate share of SIR’s unrealized gains (losses) of $8,967, $11,207 and ($5,493) for the years ended December 31, 2017, 2016 and 2015, respectively. The cost of our investments in SIR exceeded our proportionate share of SIR’s total shareholders’ equity book value on their dates of acquisition by an aggregate of $166,272. As required under GAAP, we were amortizing this difference to equity in earnings of investees over the average remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR as of the respective dates of our acquisitions. This amortization decreased our equity in the earnings of SIR by $4,742 for the year ended December 31, 2015. We recorded a loss on impairment of $203,297 of our SIR investment during the second quarter of 2015 resulting in the carrying value of our SIR investment being less than our proportionate share of SIR’s total shareholders’ equity book value as of June 30, 2015. As a result, the previous basis difference was eliminated and as of December 31, 2017, we are accreting a basis difference of ($87,137) to earnings over the estimated remaining useful lives of the real estate assets and intangible assets and liabilities owned by SIR as of June 30, 2015. This accretion increased our equity in the earnings of SIR by $2,944 and $2,956 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, our investment in SIR had a carrying value of $467,499 and a market value, based on the closing price of SIR common shares on Nasdaq on December 29, 2017, of $626,200. We periodically evaluate our equity investment in SIR for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time the market value of our investment is below our cost basis, the financial condition of SIR, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we may record an impairment charge to adjust the basis of the investment to its fair value. During years ended December 31, 2017, 2016 and 2015, we received cash distributions from SIR totaling $50,832, $50,335 and $47,030, respectively. In addition, during the year ended December 31, 2015, we received from SIR a non-cash distribution of 441,056 shares of RMR Inc. class A common stock valued at $5,244. During years ended December 31, 2017, 2016 and 2015, SIR issued 59,502, 65,900 and 29,414,279 common shares, respectively. We recognized a gain (loss) on issuance of shares by SIR of $72, $86 and ($42,145), respectively, during the years ended December 31, 2017, 2016 and 2015 as a result of the per share issuance price of these SIR common shares being above (below) the then average per share carrying value of our SIR common shares. The following presents summarized financial data of SIR as reported in SIR’s Annual Report on Form 10-K for the year ended December 31, 2017, or the SIR Annual Report. References in our consolidated financial statements to the SIR Annual Report are included as references to the source of the data only, and the information in the SIR Annual Report is not incorporated by reference into our consolidated financial statements. Consolidated Balance Sheets
Consolidated Statements of Income
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Segment Information |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We operate in two separate reportable business segments: direct ownership of real estate properties and our equity method investment in SIR:
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Selected Quarterly Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) The following is a summary of our unaudited quarterly results of operations for 2017 and 2016.
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SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION |
____________________ (1) Represents mortgage debt, net of the unamortized balance of the fair value adjustments and debt issuance costs totaling $47. (2) Excludes value of real estate intangibles. Aggregate cost for federal income tax purposes is approximately $3,911,604. (3) Depreciation on building and improvements is provided for periods ranging up to 40 years and on equipment up to 12 years. Analysis of the carrying amount of real estate properties and accumulated depreciation:
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Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. |
Real Estate Properties | Real Estate Properties. We record our properties at cost and provide depreciation on real estate investments on a straight line basis over estimated useful lives generally ranging from 7 to 40 years. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives. We allocate the purchase prices of our properties to land, building and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant. We determine the fair value of each property using methods similar to those used by independent appraisers. We allocate a portion of the purchase price of our properties to above market and below market leases based on the present value (using an interest rate which reflects the risks associated with acquired in place leases at the time each property was acquired by us) of the difference, if any, between (i) the contractual amounts to be paid pursuant to the acquired in place leases and (ii) our estimates of fair market lease rates for the corresponding leases, measured over a period equal to the terms of the respective leases. We allocate a portion of the purchase price to acquired in place leases and tenant relationships based upon market estimates to lease up the property based on the leases in place at the time of purchase. We allocate this aggregate value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant’s lease. However, we have not separated the value of tenant relationships from the value of acquired in place leases because such value and related amortization expense is immaterial to the accompanying consolidated financial statements. In making these allocations, we consider factors such as estimated carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs, such as leasing commissions, legal and other related expenses, to execute similar leases in current market conditions at the time a property was acquired by us. If the value of tenant relationships becomes material in the future, we may separately allocate those amounts and amortize the allocated amounts over the estimated life of the relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We amortize capitalized above market lease values (included in acquired in place real estate leases in our consolidated balance sheets) and below market lease values (presented as assumed real estate lease obligations in our consolidated balance sheets) as a reduction or increase, respectively, to rental income over the terms of the associated leases. Such amortization resulted in net decreases to rental income of $2,764, $1,457 and $1,157 during the years ended December 31, 2017, 2016 and 2015, respectively. We amortize the value of acquired in place leases (included in acquired real estate leases in our consolidated balance sheets), exclusive of the value of above market and below market acquired in place leases, over the terms of the associated leases. Such amortization, which is included in depreciation and amortization expense, amounted to $53,410, $27,546, and $27,467 during the years ended December 31, 2017, 2016 and 2015, respectively. When a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease. Capitalized above market lease values were $46,096 and $39,261 as of December 31, 2017 and 2016, respectively, net of accumulated amortization of $27,259 and $22,753, respectively. Capitalized below market lease values were $25,973 and $20,603 as of December 31, 2017 and 2016, respectively, net of accumulated amortization of $12,338 and $9,977, respectively. The value of acquired in place leases, exclusive of the value of above market and below market acquired in place leases, was $472,928 and $203,368 as of December 31, 2017 and 2016, respectively, net of accumulated amortization of $139,893 and $95,028, respectively. As of December 31, 2017, the weighted average amortization periods for capitalized above market leases, lease origination value and capitalized below market lease values were 4.0 years, 5.6 years and 5.7 years, respectively. Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2017 are estimated to be $97,114 in 2018, $70,790 in 2019, $49,230 in 2020, $36,321 in 2021, $27,313 in 2022 and $58,263 thereafter. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets. If there is an indication that the carrying value of an asset is not recoverable, we estimate the projected undiscounted cash flows to determine if an impairment loss should be recognized. We determine the amount of any impairment loss by comparing the historical carrying value to estimated fair value. We estimate fair value through an evaluation of recent financial performance and projected discounted cash flows using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our long lived assets. If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives. |
Equity Method Investments | Equity Method Investments. We account for our investments in Affiliates Insurance Company, or AIC, and SIR using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us, AIC and SIR and our significant ownership interest in SIR. Our Managing Trustee is also the managing trustee of SIR. Our Managing Trustee as the current sole trustee of ABP Trust is the controlling shareholder of The RMR Group Inc., or RMR Inc. He is also a director and officer of RMR Inc. Substantially all of the business of RMR Inc. is conducted by its majority owned subsidiary, The RMR Group LLC, or RMR LLC, which is our manager and the manager of AIC and SIR. Each of our Trustees is a director of AIC and one of our Independent Trustees is also an independent trustee of SIR. See Notes 7 and 12 for a further discussion of our investments in AIC and SIR. In connection with the FPO Transaction, we acquired 50% and 51% interests in two unconsolidated joint ventures which own two properties (three buildings). The properties owned by these joint ventures are encumbered by an aggregate $82,000 of mortgage indebtedness. We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting. See Note 5 for a further discussion of our unconsolidated joint ventures. We periodically evaluate our equity method investments for possible indicators of other than temporary impairment whenever events or changes in circumstances indicate the carrying amount of the investment might not be recoverable. These indicators may include the length of time and the extent to which the market value of our investment is below our carrying value, the financial condition of our investees, our intent and ability to be a long term holder of the investment and other considerations. If the decline in fair value is judged to be other than temporary, we record an impairment charge to adjust the basis of the investment to its estimated fair value. We recorded a $203,297 loss on impairment of our SIR investment in 2015. See Note 12 for more information on this impairment. |
Cash and Cash Equivalents | Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. |
Restricted Cash | Restricted Cash. Restricted cash consists of amounts escrowed for future real estate taxes, insurance, leasing costs, capital expenditures and debt service, as required by certain of our mortgage debts. |
Revenue Recognition | Revenue Recognition. We recognize rental income from operating leases that contain fixed contractual rent changes on a straight line basis over the term of the lease agreements. We increased rental income by $5,582, $2,691 and $3,978 to record revenue on a straight line basis during the years ended December 31, 2017, 2016 and 2015, respectively. Rents receivable include $27,267 and $21,686 of straight line rent receivables at December 31, 2017 and 2016, respectively. Certain of our leases with government tenants provide the tenant the right to terminate its lease if its respective legislature or other funding authority does not appropriate the funding necessary for the government tenant to meet its lease obligations; we have determined the fixed non-cancelable lease term of these leases to be the fully executed term of the lease because we believe the occurrence of termination to be a remote contingency based on both our historical experience and our assessment of the likelihood of lease cancellation on a separate lease basis. |
Deferred Leasing Costs | Deferred Leasing Costs. Deferred leasing costs include brokerage, legal and other fees associated with our entering leases and we amortize those costs, which are included in depreciation and amortization expense, on a straight line basis over the terms of the respective leases. Deferred leasing costs totaled $32,990 and $28,039 at December 31, 2017 and 2016, respectively, and accumulated amortization of deferred leasing costs totaled $10,013 and $6,960 at December 31, 2017 and 2016, respectively. Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2017 are estimated to be $4,282 in 2018, $4,091 in 2019, $3,275 in 2020, $2,670 in 2021, $2,186 in 2022 and $6,473 thereafter. |
Available for Sale Securities | Available for Sale Securities. As of December 31, 2017, we owned 1,214,225 common shares of class A common stock of RMR Inc. Our investment in RMR Inc. is classified as an available for sale security. Available for sale securities are recorded at fair value based on their quoted market price at the end of each reporting period. Unrealized gains and losses on available for sale securities are recorded as a component of cumulative other comprehensive income (loss) in shareholders’ equity. As further described in Note 7, we initially acquired 1,541,201 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $17,462. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $39,833 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under U.S. generally accepted accounting principles, or GAAP. As a result, we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our consolidated balance sheets. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management and property management fee expense. We amortized $1,087, $1,087 and $618 of this liability during the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included in the net business management and property management fee amounts for such periods. As of December 31, 2017, the remaining unamortized amount of this liability was $19,580. Future amortization of this liability as of December 31, 2017 is estimated to be $1,087 in 2018, $1,087 in 2019, $1,087 in 2020, $1,087 in 2021, $1,087 in 2022 and $14,145 thereafter. We evaluate our investments in available for sale securities to determine if a decline in the fair value below our carrying value is other than temporary. We consider the severity and the duration of the decline, and our ability and intent to hold the investment until recovery when making this assessment. If a decline in fair value is determined to be other than temporary, an impairment loss equal to the difference between the investment’s carrying value and its fair value is recognized in earnings. |
Deferred Issuance Costs | Debt Issuance Costs. Debt issuance costs include capitalized issuance or assumption costs related to borrowings, which are amortized to interest expense over the terms of the respective loans. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets in our consolidated balance sheets. As of December 31, 2017 and 2016, debt issuance costs for our revolving credit facility were $5,234 and accumulated amortization of debt issuance costs for our revolving credit facility were $3,849 and $2,617, respectively. Debt issuance costs, net of accumulated amortization, for our unsecured term loans, senior unsecured notes and mortgage notes payable are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. |
Income Taxes | Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, accordingly, we generally will not be subject to federal income taxes provided we distribute our taxable income and meet certain other requirements to qualify as a REIT. We are, however, subject to certain state and local taxes. |
Cumulative Other Comprehensive Income (Loss) | Cumulative Other Comprehensive Income. Cumulative other comprehensive income represents the unrealized gain on the RMR Inc. shares we own and our share of the cumulative comprehensive income of our equity method investees, SIR and AIC. See Notes 2, 7 and 12 for further information regarding these investments. |
Reclassifications | Reclassifications. Certain reclassifications have been made to the prior years’ financial statements to conform to the current year’s presentation. |
Use of Estimates | Use of Estimates. Preparation of these financial statements in conformity with GAAP requires us to make estimates and assumptions that may affect the amounts reported in these consolidated financial statements and related notes. The actual results could differ from these estimates. |
Per Common Share Amounts | Per Common Share Amounts. We calculate basic earnings per common share by dividing net income (loss) available for common shareholders by the weighted average number of our common shares of beneficial ownership, $.01 par value, or our common shares, outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares and the related impact on earnings, are considered when calculating diluted earnings per share. |
Segment Reporting | Segment Reporting. We operate in two business segments: direct ownership of real estate properties and our equity method investment in SIR. |
Recent Accounting Pronouncements | Accounting Pronouncements On January 1, 2017, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2017-01, Clarifying the Definition of a Business. This update provides additional guidance on evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or of a business. This update defines three requirements for a set of assets and activities (collectively referred to as a “set”) to be considered a business: inputs, processes and outputs. As a result of the implementation of this update, certain property acquisitions, which under previous guidance were accounted for as business combinations, are now accounted for as acquisitions of assets. In an asset acquisition, certain acquisition costs are capitalized as opposed to expensed under previous guidance. In May 2014, the FASB issued ASU No. 2014-09, Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In August 2015, the FASB provided for a one-year deferral of the effective date for ASU No. 2014-09, which is now effective for us beginning January 1, 2018. A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have evaluated ASU No. 2014-09 (and related clarifying guidance issued by the FASB) and the adoption will not have a material impact on the amount or timing of our revenue recognition in our consolidated financial statements with the exception of profit recognition on real estate sales. We currently have recorded a deferred gain on sale of real estate of $712 that under current guidance would be recognized upon repayment of a promissory note we received in connection with the sale but will be recognized in its entirety upon adoption of ASU No. 2014-09. We currently expect to adopt the standard using the modified retrospective approach. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for all prospective interim and annual periods beginning after December 15, 2017. We expect to record an adjustment of $45,117 on January 1, 2018 to reclassify historical changes in the fair value of our available for sale equity investments from other comprehensive income to retained earnings. Future changes in the fair value of our equity investments will be recorded through earnings in accordance with ASU No. 2016-01. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We expect this guidance will impact the classification of distributions from our equity method investments. Upon adoption, we expect to reclassify $2,945 and $2,956 from cash flow from investing activities to cash flow from operating activities for 2017 and 2016, respectively. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new standard also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and requires the usage of a retrospective transition method. Upon the adoption of ASU No. 2016-18, we will present the changes in the total cash, cash equivalents and restricted cash in our consolidated statements of cash flows, whereas under the current guidance we present the changes during the period for cash and cash equivalents only. |
Weighted Average Common Shares (Tables) |
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Weighted Average Common Share Amounts | The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands):
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Real Estate Properties (Tables) |
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Schedule of allocation of purchase price |
Our allocation of the purchase price of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.
Our allocation of the purchase price of this acquisition is based on the relative estimated fair value of the acquired assets and assumed liabilities is presented in the table below.
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Schedule of Joint Ventures | As of December 31, 2017, our investment in unconsolidated joint ventures consisted of the following:
The following table provides a summary of the mortgage debt of our unconsolidated joint ventures:
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Schedule of Pro Forma Information | The following table presents our pro forma results of operations for the years ended December 31, 2017 and 2016 as if the FPO Transaction and related financing activities had occurred on January 1, 2016. The historical FPO results of operations included in this pro forma financial information have been adjusted to remove the results of operations of properties and joint venture interests FPO sold from January 1, 2016 to October 2, 2017, the closing date of the FPO Transaction. The effect of these adjustments was to decrease pro forma rental income $804 and $17,810 for the years ended December 31, 2017 and 2016, respectively, and to decrease net income (loss) $47,019 and $5,403 for the years ended December 31, 2017 and 2016, respectively. This pro forma financial information is not necessarily indicative of what our actual financial position or results of operations would have been for the periods presented or for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, capital structure, property level operating expenses and revenues, including rents expected to be received on our existing leases or leases we may enter during and after 2018, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this pro forma financial information and such differences could be significant.
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Summarized balance sheet and income statement information for properties classified as discontinued operations | Summarized balance sheet and income statement information for this property is as follows: Balance Sheets
Statements of Operations
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Schedule of future minimum lease payments related properties (excluding real estate tax and other expense reimbursements) | Our future minimum lease payments related to our consolidated properties and estimated real estate tax and other expense reimbursements scheduled to be received during the current terms of the existing leases as of December 31, 2017 are as follows:
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Schedule of minimum rental payments | Future minimum rental payments due under the lease, net of subleased revenue, as of December 31, 2017 are summarized as follows:
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Indebtedness (Tables) |
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Schedule of required principal payments | The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2017 are as follows:
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Fair Value of Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets measured on a non-recurring basis at fair value, categorized by the level of inputs used in the valuation assets | The table below presents certain of our assets measured at fair value at December 31, 2017, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
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Schedule of fair value and carrying value of financial instruments | At December 31, 2017 and December 31, 2016, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements due to their short term nature or variable interest rates, except as follows:
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Shareholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of shares granted and vested under the terms of the entity's 2009 Plan | A summary of shares granted, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2017, 2016 and 2015, is as follows:
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Schedule of changes in each component of cumulative other comprehensive income (loss) | The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the years ended December 31, 2017, 2016 and 2015:
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Equity Investment in Select Income REIT (Tables) |
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Summarized Financial Data of Select Income Realty (SIR) | Consolidated Balance Sheets
Consolidated Statements of Income
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of ownership of properties that are primarily leased to government tenants and our equity method investment in SIR | We operate in two separate reportable business segments: direct ownership of real estate properties and our equity method investment in SIR:
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Selected Quarterly Financial Data (Unaudited) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The following is a summary of our unaudited quarterly results of operations for 2017 and 2016.
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Weighted Average Common Share Amounts (Details) - shares shares in Thousands |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Earnings Per Share, Basic and Diluted [Abstract] | |||
Weighted average common shares for basic earnings per share (in shares) | 84,633 | 71,050 | 70,700 |
Effect of dilutive securities: unvested share awards (in shares) | 20 | 21 | 0 |
Weighted average common shares for diluted earnings per share (in shares) | 84,653 | 71,071 | 70,700 |
New Accounting Pronouncements (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred gain on sale of real estate | $ 712 | ||
Unrealized gain on investment in available for sale securities | 24,042 | $ 30,465 | $ (9,391) |
Decrease in cash from investing activities | 1,186,213 | 215,157 | 66,602 |
Increase in cash from operating activities | 133,047 | 124,258 | $ 115,357 |
Cumulative Other Comprehensive Income (Loss) | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Unrealized gain on investment in available for sale securities | 45,117 | ||
ASU 2016-15 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Decrease in cash from investing activities | 2,945 | 2,956 | |
Increase in cash from operating activities | $ 2,945 | $ 2,956 |
Real Estate Properties - Additional Information (Details) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2017
USD ($)
ft²
lease
building
joint_venture
property
|
Dec. 31, 2016
USD ($)
|
|
Real Estate Properties [Line Items] | ||
Number of joint ventures | joint_venture | 2 | |
Number of properties, noncontrolling interest | property | 2 | |
Number of buildings, noncontrolling interest | building | 3 | |
Carry value of properties | $ 2,975,721 | $ 1,888,760 |
Number of leases entered | lease | 75 | |
Rentable square feet (in sqft) | ft² | 1,604,783 | |
Weighted average lease term | 7 years 7 months 6 days | |
Expenditures committed on leases | $ 18,249 | |
Committed but unspent tenant related obligations estimated | 31,310 | |
Interest capitalized | $ 511 | |
Continuing operations | ||
Real Estate Properties [Line Items] | ||
Number of properties owned | property | 108 | |
Number of buildings | building | 167 | |
Carry value of properties | $ 2,975,721 |
Real Estate Properties - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||
Rental income | $ 437,101 | $ 412,245 | |
Net income (loss) | $ (25,898) | $ 11,630 | |
Net income (loss) per share (in dollars per share) | $ (0.26) | $ 0.12 | |
Revenue since acquisition | $ 36,722 | ||
Operating income since acquisition | 3,230 | ||
Equity in losses from our unconsolidated joint ventures | 21,571 | $ 35,518 | $ 18,640 |
Acquisition-related costs | |||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||
Decrease revenues | 804 | 17,810 | |
Decrease (increase) net income (loss) | 47,019 | $ 5,403 | |
Operating Segments | Investment in Real Estate | |||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||
Equity in losses from our unconsolidated joint ventures | $ (621) |
Real Estate Properties - Balance Sheet Information for Disposal of Property (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Assets of discontinued operations | $ 0 | $ 12,541 |
Liabilities of discontinued operations | $ 0 | 45 |
Discontinued operations | Discontinued Operations, Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Real estate properties, net | 12,260 | |
Other assets | 281 | |
Assets of discontinued operations | 12,541 | |
Other liabilities | 45 | |
Liabilities of discontinued operations | $ 45 |
Real Estate Properties - Income Statement Information for Disposal of Property (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Income (loss) from discontinued operations | $ 173 | $ (589) | $ (525) |
Discontinued Operations, Held-for-sale | Discontinued operations | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Rental income | 17 | 68 | 114 |
Real estate taxes | (88) | (97) | (92) |
Utility expenses | (97) | (146) | (161) |
Other operating expenses | (202) | (300) | (272) |
General and administrative | (76) | (114) | (114) |
Increase in carrying value of property included in discontinued operations | 619 | 0 | 0 |
Income (loss) from discontinued operations | $ 173 | $ (589) | $ (525) |
Real Estate Properties - Future Minimum Lease Payments (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Real Estate [Abstract] | |
2018 | $ 367,883 |
2019 | 330,792 |
2020 | 258,847 |
2021 | 220,758 |
2022 | 180,558 |
Thereafter | 564,621 |
Total | $ 1,923,459 |
Real Estate Properties - Operating Leases (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
tenant
| |
Concentration Risk [Line Items] | |
Number of government tenants | tenant | 26 |
Rent expense, net of subleased revenue | $ | $ 374 |
Tenant concentration | |
Concentration Risk [Line Items] | |
Percentage termination right, 2018 | 0.80% |
Percentage termination right, 2019 | 5.60% |
Percentage termination right, 2020 | 10.30% |
Percentage termination right, 2021 | 2.30% |
Percentage termination right, 2022 | 5.50% |
Percentage termination right, 2023 | 1.00% |
Percentage termination right, 2024 | 0.50% |
Percentage termination right, 2025 | 0.60% |
Percentage termination right, 2026 | 2.30% |
Percentage termination right, 2027 | 1.80% |
Government Tenants, All Other | Tenant concentration | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 4.50% |
15 Government Tenants | Tenant concentration | |
Concentration Risk [Line Items] | |
Concentration risk, percentage | 11.70% |
Real Estate Properties - Future Minimum Rental Payments (Details) |
Dec. 31, 2017
USD ($)
|
---|---|
Real Estate [Abstract] | |
2018 | $ 1,543 |
2019 | 1,584 |
2020 | 1,627 |
2021 | 139 |
Total | $ 4,893 |
Indebtedness - Future Principal Payments (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2018 | $ 3,672 |
2019 | 931,541 |
2020 | 338,433 |
2021 | 14,420 |
2022 | 575,518 |
Thereafter | 399,563 |
Total | 2,263,147 |
Unamortized premiums, discounts and certain issuance costs | 18,055 |
Total debt outstanding | $ 2,245,092 |
Fair Value of Assets and Liabilities - Additional Information (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Oct. 02, 2017
USD ($)
mortgage_note
loan
|
Dec. 31, 2017
loan
|
|
Debt Instrument [Line Items] | ||
Number of loans assumed | loan | 8 | |
First Potomac Realty Trust | ||
Debt Instrument [Line Items] | ||
Number of loans assumed | loan | 5 | |
Long term debt acquired | $ 167,936 | |
FPO Mortgage | Mortgages | First Potomac Realty Trust | ||
Debt Instrument [Line Items] | ||
Number of loans assumed | mortgage_note | 5 | |
Long term debt acquired | $ 167,548 | |
Fair value of debt | $ 167,936 |
Shareholders' Equity - Unvested Shares Activity (Details) - 2009 Award Plan - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Number of Shares | |||
Unvested shares at the beginning of the period | 98,970 | 96,725 | 90,338 |
Shares granted (in shares) | 75,350 | 65,900 | 65,600 |
Shared forfeited (in shares) | (1,020) | ||
Shares Vested (in shares) | (70,070) | (63,655) | (58,193) |
Unvested shares at the end of the period | 104,250 | 98,970 | 96,725 |
Weighted Average Grant Date Fair Value | |||
Unvested shares at the beginning of the period (in dollars per share) | $ 20.59 | $ 20.11 | $ 23.40 |
Granted (in dollars per share) | 19.36 | 21.66 | 16.59 |
Shared forfeited (in dollars per share) | 23.41 | ||
Vested (in dollars per share) | 20.80 | 20.97 | 21.20 |
Unvested shares at the end of the period (in dollars per share) | $ 19.56 | $ 20.59 | $ 20.11 |
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Quarterly Financial Data [Abstract] | |||||||||||
Rental income | $ 107,170 | $ 70,179 | $ 69,887 | $ 69,296 | $ 66,030 | $ 64,478 | $ 64,061 | $ 63,611 | $ 316,532 | $ 258,180 | $ 248,549 |
Net income (loss) available for common shareholders per common share | $ (18,266) | $ 10,989 | $ 11,677 | $ 7,415 | $ 12,065 | $ 11,578 | $ 16,813 | $ 17,387 | $ 11,815 | $ 57,843 | $ (209,961) |
Net income (loss) available for common shareholders per common share (basic and diluted) (in dollars per share) | $ (0.18) | $ 0.11 | $ 0.16 | $ 0.10 | $ 0.17 | $ 0.16 | $ 0.24 | $ 0.24 | $ 0.14 | $ 0.81 | $ (2.97) |
Common distributions declared (in dollars per share) | $ 0.43 | $ 0.43 | $ 0.43 | $ 0.43 | $ 0.43 | $ 0.43 | $ 0.43 | $ 0.43 | $ 1.72 | $ 1.72 | $ 1.72 |
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Additional Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |
Mortgage debt, net | $ 47,000 |
Aggregate cost for federal income tax purposes | $ 3,911,604 |
Useful life of buildings and improvements | 40 years |
Useful life of equipment | 12 years |
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION - Carrying Amount and Accumulated Depreciation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Real Estate Properties | |||
Balance at the beginning of the period | $ 1,888,760 | $ 1,696,132 | $ 1,682,480 |
Additions | 1,100,138 | 194,107 | 19,622 |
Loss on asset impairment | (9,490) | ||
Disposals | (3,687) | (1,479) | (2,624) |
Reclassification of assets held for sale | (3,346) | ||
Balance at the end of the period | 2,975,721 | 1,888,760 | 1,696,132 |
Accumulated Depreciation | |||
Balance at the beginning of the period | 296,804 | 255,879 | 219,791 |
Additions | 45,315 | 42,404 | 38,987 |
Loss on asset impairment | 0 | ||
Disposals | (271) | (1,479) | (2,624) |
Reclassification of assets held for sale | (275) | ||
Balance at the end of the period | $ 341,848 | $ 296,804 | $ 255,879 |
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