Real Estate Properties (Tables)

9 Months Ended

Sep. 30, 2019

Real Estate [Abstract]

Schedule of disposed assets

The sales of these properties, as presented in the table below, do not represent significant dispositions individually or in the aggregate nor do they represent a strategic shift in our business. As a result, the results of operations of these properties are included in continuing operations through the date of sale in our condensed consolidated statements of comprehensive income (loss).

Date of Sale	Number of Properties	Location	Rentable Square Feet	Gross  Sales Price (1)
Feb 2019 (2)	34	Northern Virginia and Maryland	1,635,868	$	198,500
Mar 2019 (3)	1	Washington, D.C.	129,035	70,000
May 2019 (4)	1	Buffalo, NY	121,711	16,900
May 2019	1	Maynard, MA	287,037	5,000
June 2019	1	Kapolei, HI	416,956	7,100
July 2019	1	San Jose, CA	71,750	14,000
July 2019 (5)	1	Nashua, NH	321,800	25,000
August 2019	1	Arlington, TX	182,630	14,900
August 2019	1	Rochester, NY	94,800	4,765
August 2019	1	Hanover, PA	502,300	5,500
August 2019	1	San Antonio, TX	618,017	198,000
September 2019	1	Topeka, KS	143,934	15,600
September 2019 (6)	1	Falling Waters, WV	40,348	650
September 2019 (7)	1	San Diego, CA	43,918	8,950
	47		4,610,104	$	584,865

(1) Gross sales price includes purchase price adjustments, if any, and excludes closing costs.

(2) We recorded a $447 loss on impairment of real estate during 2019 as a result of this sale.

(3) We recorded a $22,075 gain on sale of real estate during 2019 as a result of this sale.

(4) We recorded a $5,137 loss on impairment of real estate during 2019 as a result of this sale.

(5) We recorded a $8,401 gain on sale of real estate during 2019 as a result of this sale.

(6) We recorded a $2,179 loss on impairment of real estate during 2019 as a result of this sale.

(7)

We recorded a $3,062 gain on sale of real estate during 2019 as a result of this sale.

The following table presents a summarized income statement of SIR as reported in SIR’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, or the SIR Quarterly Report. References in our condensed consolidated financial statements to the SIR Quarterly Report are included as references to the source of the data only, and the information in the SIR Quarterly Report is not incorporated by reference into our condensed consolidated financial statements.

	Three Months Ended			Nine Months Ended
	September 30, 2018			September 30, 2018
Rental income	$	101,833		$	298,003
Tenant reimbursements and other income	20,048			60,514
Total revenues	121,881			358,517
Real estate taxes	12,518			36,748
Other operating expenses	14,814			43,714
Depreciation and amortization	35,371			105,326
Acquisition and transaction related costs	3,796			3,796
General and administrative	15,331			47,353
Write-off of straight line rent receivable, net	—			10,626
Loss on impairment of real estate assets	9,706			9,706
Total expenses	91,536			257,269
Gain on sale of real estate	4,075			4,075
Dividend income	397			1,190
Unrealized gain on equity securities	22,771			53,159
Interest income	133			753
Interest expense	(23,287		)	(69,446		)
Loss on early extinguishment of debt	—			(1,192		)
Income before income tax expense and equity in earnings of an investee	34,434			89,787
Income tax expense	(185		)	(446		)
Equity in earnings of an investee	831			882
Net income	35,080			90,223
Net income allocated to noncontrolling interest	(5,597		)	(15,841		)
Net income attributed to SIR	$	29,483		$	74,382
Weighted average common shares outstanding (basic)	89,410			89,395
Weighted average common shares outstanding (diluted)	89,437			89,411
Net income attributed to SIR per common share (basic and diluted)	$	0.33		$	0.83

Disclosure of Assets held-for-sale

As of October 31, 2019, three of the 15 properties held for sale were sold and 10 of the 15 properties held for sale were under contract to be sold as summarized in the table below:

Location	Number of Properties	Square Feet	Gross Sales Price (1)
San Jose, CA	1	75,621	$	13,000
Windsor, CT	1	97,256	7,000
Kansas City, KS (2)	1	170,817	11,700
DC Metro - MD (3)	4	457,279	66,600
Columbia, SC (4)	3	180,703	10,750
Fairfax, VA	1	83,130	23,000
Stafford, VA	2	64,656	14,563
	13	1,129,462	$	146,613

(1) Gross sales price includes purchase price adjustments, if any, and excludes closing costs.

(2) We recorded a $2,408 loss on impairment of real estate to adjust the carrying value of this property to its estimated fair value less costs to sell.

(3) We recorded a $688 loss on impairment of real estate to adjust the carrying value of these four properties to their estimated fair value less costs to sell.

(4)

We recorded a $3,246 loss on impairment of real estate to adjust the carrying value of these three properties to their estimated fair value less costs to sell. The sale of these properties was completed in October 2019.

Schedule of Pro Forma Information

The following table presents our pro forma results of operations for the nine months ended September 30, 2018 as if the Merger, the Secondary Sale and the ILPT Distribution had occurred on January 1, 2018. The SIR results of operations included in this pro forma financial information have been adjusted to remove ILPT's results of operations for the nine months ended September 30, 2018. The effect of the adjustments to remove ILPT's results of operations was to decrease pro forma rental income by $120,456 for the nine months ended September 30, 2018 and to decrease net income by $38,818 for the nine months ended September 30, 2018 from the amounts that would have otherwise been included in the pro forma results.

This unaudited pro forma financial information is not necessarily indicative of what our actual results of operations would have been for the period 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 pursuant to our existing leases or leases we may enter into, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in this unaudited pro forma financial information and such differences could be significant.

	Nine Months Ended September 30, 2018
Rental income	$	563,213
Net income	$	37,531
Net income per common share	$	0.78

Schedule of Joint Ventures

As of September 30, 2019 and December 31, 2018, our investments in unconsolidated joint ventures consisted of the following:

		OPI Carrying Value of Investment at
Joint Venture	OPI Ownership	September 30, 2019		December 31, 2018		Number of Properties	Location	Square Feet
Prosperity Metro Plaza	51%	$	22,857	$	23,969	2	Fairfax, VA	328,456
1750 H Street, NW	50%	17,645		19,696		1	Washington, D.C.	115,411
Total		$	40,502	$	43,665	3		443,867

The following table provides a summary of the mortgage debt of our unconsolidated joint ventures:

Joint Venture	Interest Rate (1)	Maturity Date	Principal Balance at September 30, 2019 (2)
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.

(2)

Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the interests in the joint venture we do not own. None of the debt is recourse to us.