Maryland | 04-6558834 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
Two North Riverside Plaza, Suite 2100, Chicago, IL | 60606 | |
(Address of Principal Executive Offices) | (Zip Code) |
(312) 646-2800 |
(Registrant’s Telephone Number, Including Area Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) | Emerging growth company o |
Page | ||
June 30, 2017 | December 31, 2016 | ||||||
(audited) | |||||||
ASSETS | |||||||
Real estate properties: | |||||||
Land | $ | 232,857 | $ | 286,186 | |||
Buildings and improvements | 1,961,445 | 2,570,704 | |||||
2,194,302 | 2,856,890 | ||||||
Accumulated depreciation | (561,003 | ) | (755,255 | ) | |||
1,633,299 | 2,101,635 | ||||||
Assets held for sale | 348,203 | — | |||||
Acquired real estate leases, net | 42,719 | 48,281 | |||||
Cash and cash equivalents | 1,967,549 | 2,094,674 | |||||
Marketable securities | 278,072 | — | |||||
Restricted cash | 6,594 | 6,532 | |||||
Rents receivable, net of allowance for doubtful accounts of $4,352 and $5,105, respectively | 115,371 | 152,031 | |||||
Other assets, net | 99,309 | 122,922 | |||||
Total assets | $ | 4,491,116 | $ | 4,526,075 | |||
LIABILITIES AND EQUITY | |||||||
Senior unsecured debt, net | $ | 1,064,954 | $ | 1,063,950 | |||
Mortgage notes payable, net | 35,401 | 77,717 | |||||
Liabilities related to properties held for sale | 2,019 | — | |||||
Accounts payable and accrued expenses | 75,800 | 95,395 | |||||
Assumed real estate lease obligations, net | 1,429 | 1,946 | |||||
Rent collected in advance | 19,095 | 18,460 | |||||
Security deposits | 5,957 | 8,160 | |||||
Total liabilities | 1,204,655 | 1,265,628 | |||||
Shareholders' equity: | |||||||
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; | |||||||
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880 | 119,263 | 119,263 | |||||
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 124,089,443 and 123,994,465 shares issued and outstanding, respectively | 1,241 | 1,240 | |||||
Additional paid in capital | 4,372,610 | 4,363,177 | |||||
Cumulative net income | 2,584,608 | 2,566,603 | |||||
Cumulative other comprehensive income (loss) | 1,235 | (208 | ) | ||||
Cumulative common distributions | (3,111,868 | ) | (3,111,868 | ) | |||
Cumulative preferred distributions | (681,754 | ) | (677,760 | ) | |||
Total shareholders’ equity | 3,285,335 | 3,260,447 | |||||
Noncontrolling interest | 1,126 | — | |||||
Total equity | 3,286,461 | 3,260,447 | |||||
Total liabilities and equity | $ | 4,491,116 | $ | 4,526,075 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 74,352 | $ | 121,735 | $ | 154,557 | $ | 231,623 | |||||||
Tenant reimbursements and other income | 17,247 | 23,632 | 36,593 | 50,879 | |||||||||||
Total revenues | 91,599 | 145,367 | 191,150 | 282,502 | |||||||||||
Expenses: | |||||||||||||||
Operating expenses | 37,284 | 51,393 | 78,371 | 108,651 | |||||||||||
Depreciation and amortization | 23,922 | 37,331 | 50,837 | 73,582 | |||||||||||
General and administrative | 11,960 | 12,177 | 24,038 | 25,489 | |||||||||||
Loss on asset impairment | 18,428 | 43,736 | 19,714 | 43,736 | |||||||||||
Total expenses | 91,594 | 144,637 | 172,960 | 251,458 | |||||||||||
Operating income | 5 | 730 | 18,190 | 31,044 | |||||||||||
Interest and other income | 6,019 | 2,204 | 10,391 | 4,171 | |||||||||||
Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $849, $949, $1,562 and $1,932, respectively) | (14,863 | ) | (21,300 | ) | (29,877 | ) | (43,647 | ) | |||||||
Loss on early extinguishment of debt | (63 | ) | — | (63 | ) | (118 | ) | ||||||||
Foreign currency exchange loss | — | — | — | (5 | ) | ||||||||||
Gain on sale of properties, net | 3,136 | 106,375 | 19,590 | 143,041 | |||||||||||
(Loss) income before income taxes | (5,766 | ) | 88,009 | 18,231 | 134,486 | ||||||||||
Income tax expense | (45 | ) | (165 | ) | (220 | ) | (240 | ) | |||||||
Net (loss) income | (5,811 | ) | 87,844 | 18,011 | 134,246 | ||||||||||
Net loss (income) attributable to noncontrolling interest | 2 | — | (6 | ) | — | ||||||||||
Net (loss) income attributable to Equity Commonwealth | $ | (5,809 | ) | $ | 87,844 | $ | 18,005 | $ | 134,246 | ||||||
Preferred distributions | (1,997 | ) | (6,981 | ) | (3,994 | ) | (13,962 | ) | |||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | (9,609 | ) | — | (9,609 | ) | |||||||||
Net (loss) income attributable to Equity Commonwealth common shareholders | $ | (7,806 | ) | $ | 71,254 | $ | 14,011 | $ | 110,675 | ||||||
Weighted average common shares outstanding — basic | 124,067 | 125,508 | 124,057 | 125,674 | |||||||||||
Weighted average common shares outstanding — diluted | 124,067 | 126,937 | 125,203 | 127,229 | |||||||||||
Earnings per common share attributable to Equity Commonwealth common shareholders: | |||||||||||||||
Basic | $ | (0.06 | ) | $ | 0.57 | $ | 0.11 | $ | 0.88 | ||||||
Diluted | $ | (0.06 | ) | $ | 0.56 | $ | 0.11 | $ | 0.87 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net (loss) income | $ | (5,811 | ) | $ | 87,844 | $ | 18,011 | $ | 134,246 | ||||||
Other comprehensive (loss) income, net of tax: | |||||||||||||||
Unrealized (loss) gain on derivative instruments | (108 | ) | 780 | (261 | ) | 1,453 | |||||||||
Unrealized gain on marketable securities | 2,345 | — | 1,704 | — | |||||||||||
Total comprehensive (loss) income | (3,574 | ) | 88,624 | 19,454 | 135,699 | ||||||||||
Comprehensive loss (income) attributable to the noncontrolling interest | 2 | — | (6 | ) | — | ||||||||||
Total comprehensive (loss) income attributable to Equity Commonwealth | $ | (3,572 | ) | $ | 88,624 | $ | 19,448 | $ | 135,699 |
Equity Commonwealth Shareholders | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Shares | Common Shares | |||||||||||||||||||||||||||||||||||||||||||||||
Series D | Series E | |||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Preferred Shares | Number of Shares | Preferred Shares | Cumulative Preferred Distributions | Number of Shares | Common Shares | Cumulative Common Distributions | Additional Paid in Capital | Cumulative Net Income | Cumulative Other Comprehensive Income (Loss) | Noncontrolling Interest | Total | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 4,915,196 | $ | 119,263 | 11,000,000 | $ | 265,391 | $ | (650,195 | ) | 126,349,914 | $ | 1,263 | $ | (3,111,868 | ) | $ | 4,414,611 | $ | 2,333,709 | $ | (3,687 | ) | $ | — | $ | 3,368,487 | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | 134,246 | — | — | 134,246 | |||||||||||||||||||||||||||||||||||
Unrealized gain on derivative instruments | — | — | — | — | — | — | — | — | — | — | 1,453 | — | 1,453 | |||||||||||||||||||||||||||||||||||
Purchase of shares | — | — | — | — | — | (983,789 | ) | (10 | ) | — | (25,553 | ) | — | — | — | (25,563 | ) | |||||||||||||||||||||||||||||||
Redemption of shares | — | — | (11,000,000 | ) | (275,000 | ) | — | — | — | — | — | — | — | — | (275,000 | ) | ||||||||||||||||||||||||||||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | — | — | 9,609 | (9,609 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | 167,251 | 2 | — | 8,975 | — | — | — | 8,977 | |||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | (13,962 | ) | — | — | — | — | — | — | — | (13,962 | ) | |||||||||||||||||||||||||||||||||
Balance at June 30, 2016 | 4,915,196 | $ | 119,263 | — | $ | — | $ | (673,766 | ) | 125,533,376 | $ | 1,255 | $ | (3,111,868 | ) | $ | 4,398,033 | $ | 2,467,955 | $ | (2,234 | ) | $ | — | $ | 3,198,638 |
Balance at December 31, 2016 | 4,915,196 | $ | 119,263 | — | $ | — | $ | (677,760 | ) | 123,994,465 | $ | 1,240 | $ | (3,111,868 | ) | $ | 4,363,177 | $ | 2,566,603 | $ | (208 | ) | $ | — | $ | 3,260,447 | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | 18,005 | — | 6 | 18,011 | |||||||||||||||||||||||||||||||||||
Unrealized loss on derivative instruments | — | — | — | — | — | — | — | — | — | — | (261 | ) | — | (261 | ) | |||||||||||||||||||||||||||||||||
Unrealized gain on marketable securities | — | — | — | — | — | — | — | — | — | — | 1,704 | — | 1,704 | |||||||||||||||||||||||||||||||||||
Purchase of shares | — | — | — | — | — | (6,694 | ) | — | — | (209 | ) | — | — | — | (209 | ) | ||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | 101,672 | 1 | — | 10,192 | — | — | 539 | 10,732 | |||||||||||||||||||||||||||||||||||
Contributions | — | — | — | — | — | — | — | — | — | — | — | 31 | 31 | |||||||||||||||||||||||||||||||||||
Distributions | — | — | — | — | (3,994 | ) | — | — | — | — | — | — | — | (3,994 | ) | |||||||||||||||||||||||||||||||||
Adjustment for noncontrolling interest | — | — | — | — | — | — | — | — | (550 | ) | — | — | 550 | — | ||||||||||||||||||||||||||||||||||
Balance at June 30, 2017 | 4,915,196 | $ | 119,263 | — | $ | — | $ | (681,754 | ) | 124,089,443 | $ | 1,241 | $ | (3,111,868 | ) | $ | 4,372,610 | $ | 2,584,608 | $ | 1,235 | $ | 1,126 | $ | 3,286,461 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 18,011 | $ | 134,246 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation | 41,237 | 55,799 | |||||
Net amortization of debt discounts, premiums and deferred financing fees | 1,562 | 1,932 | |||||
Straight line rental income | (8,930 | ) | (9,430 | ) | |||
Amortization of acquired real estate leases | 4,955 | 14,834 | |||||
Other amortization | 5,607 | 7,937 | |||||
Share-based compensation | 10,732 | 8,977 | |||||
Loss on asset impairment | 19,714 | 43,736 | |||||
Loss on early extinguishment of debt | 63 | 118 | |||||
Foreign currency exchange loss | — | 5 | |||||
Net gain on sale of properties | (19,590 | ) | (143,041 | ) | |||
Change in assets and liabilities: | |||||||
Restricted cash | 1,708 | (4,115 | ) | ||||
Rents receivable and other assets | (19,902 | ) | (13,727 | ) | |||
Accounts payable and accrued expenses | (10,506 | ) | (1,970 | ) | |||
Rent collected in advance | 1,166 | (1,651 | ) | ||||
Security deposits | 37 | 224 | |||||
Cash provided by operating activities | 45,864 | 93,874 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Real estate improvements | (37,985 | ) | (60,289 | ) | |||
Insurance proceeds received | 4,000 | — | |||||
Proceeds from sale of properties, net | 185,300 | 388,774 | |||||
Purchase of marketable securities | (276,238 | ) | — | ||||
(Increase) decrease in restricted cash | (1,770 | ) | 2,583 | ||||
Cash (used in) provided by investing activities | (126,693 | ) | 331,068 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Purchase and retirement of common shares | (209 | ) | (25,563 | ) | |||
Redemption of preferred shares | — | (275,000 | ) | ||||
Payments on borrowings | (42,124 | ) | (140,749 | ) | |||
Deferred financing fees | — | (52 | ) | ||||
Contributions from holders of noncontrolling interest | 31 | — | |||||
Distributions to preferred shareholders | (3,994 | ) | (13,962 | ) | |||
Cash used in financing activities | (46,296 | ) | (455,326 | ) | |||
Effect of exchange rate changes on cash | — | (8 | ) | ||||
Decrease in cash and cash equivalents | (127,125 | ) | (30,392 | ) | |||
Cash and cash equivalents at beginning of period | 2,094,674 | 1,802,729 | |||||
Cash and cash equivalents at end of period | $ | 1,967,549 | $ | 1,772,337 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||
Interest paid | $ | 28,416 | $ | 45,021 | |||
Taxes paid | 729 | 103 | |||||
NON-CASH INVESTING ACTIVITIES: | |||||||
Increase in capital expenditures recorded as liabilities | $ | 2,456 | $ | 728 |
Asset | Date Sold | Number of Properties | Number of Buildings | Square Footage | ||||||||
Property | ||||||||||||
1500 Market Street | July 2017 | 1 | 1 | 1,759,193 | ||||||||
Portfolio of properties | ||||||||||||
820 W. Diamond | — | 1 | 1 | 134,933 | ||||||||
Danac Stiles Business Park | — | 1 | 3 | 276,637 | ||||||||
411 Farwell Avenue | — | 1 | 1 | 422,727 | ||||||||
2250 Pilot Knob Road | — | 1 | 1 | 87,183 | ||||||||
4700 Belleview Avenue | — | 1 | 1 | 80,615 | ||||||||
Five Property Portfolio | 5 | 7 | 1,002,095 | |||||||||
6 | 8 | 2,761,288 |
June 30, 2017 | |||
Real estate properties | $ | 300,840 | |
Acquired real estate leases | 147 | ||
Rents receivable, net of allowance for doubtful accounts of $66 | 25,907 | ||
Other assets, net | 21,309 | ||
Assets held for sale | $ | 348,203 | |
Accounts payable and accrued expenses | $ | 1,054 | |
Rent collected in advance | 109 | ||
Security deposits | 856 | ||
Liabilities related to properties held for sale | $ | 2,019 |
Asset | Date Sold | Number of Properties | Number of Buildings | Square Footage | Gross Sales Price | Gain (Loss) on Sale | |||||||||||||
Properties | |||||||||||||||||||
111 Market Place | January 2017 | 1 | 1 | 589,380 | $ | 60,100 | $ | (5,968 | ) | ||||||||||
Cabot Business Park Land | March 2017 | — | — | — | 575 | (57 | ) | ||||||||||||
Parkshore Plaza | April 2017 | 1 | 4 | 271,072 | 40,000 | (2,460 | ) | ||||||||||||
25 S. Charles Street | April 2017 | 1 | 1 | 359,254 | 24,500 | (3,483 | ) | ||||||||||||
802 Delaware Avenue | May 2017 | 1 | 1 | 240,780 | 34,000 | 9,079 | |||||||||||||
Portfolios of properties | |||||||||||||||||||
4515 Seton Center Parkway | March 2017 | 1 | 1 | 117,265 | |||||||||||||||
4516 Seton Center Parkway | March 2017 | 1 | 1 | 120,559 | |||||||||||||||
Seton Center | 2 | 2 | 237,824 | $ | 52,450 | $ | 22,479 | ||||||||||||
6 | 9 | 1,698,310 | $ | 211,625 | $ | 19,590 |
June 30, 2017 | ||||||||||||
Cost or Amortized Cost | Unrealized Gains | Estimated Fair Value | ||||||||||
Marketable securities | $ | 276,368 | $ | 1,704 | $ | 278,072 |
Declaration Date | Record Date | Payment Date | Series D Dividend Per Share | |||||
January 12, 2017 | January 30, 2017 | February 15, 2017 | $ | 0.40625 | ||||
April 10, 2017 | April 28, 2017 | May 15, 2017 | $ | 0.40625 | ||||
June 30, 2017 | July 28, 2017 | August 15, 2017 | $ | 0.40625 |
Common Shares | LTIP Units | Total | |||||||
Outstanding at January 1, 2017 | 123,994,465 | — | 123,994,465 | ||||||
Restricted share and time-based LTIP Unit grants, net of forfeitures | 94,978 | 42,520 | 137,498 | ||||||
Outstanding at June 30, 2017 | 124,089,443 | 42,520 | 124,131,963 | ||||||
Noncontrolling ownership interest in the Operating Trust | 0.03 | % |
Unrealized Loss on Derivative Instruments | Unrealized Gain on Marketable Securities | Total | |||||||||
Balance as of April 1, 2017 | $ | (361 | ) | $ | (641 | ) | $ | (1,002 | ) | ||
Other comprehensive (loss) income before reclassifications | (114 | ) | 2,345 | 2,231 | |||||||
Amounts reclassified from cumulative other comprehensive income (loss) to net (loss) income | 6 | — | 6 | ||||||||
Net current period other comprehensive (loss) income | (108 | ) | 2,345 | 2,237 | |||||||
Balance as of June 30, 2017 | $ | (469 | ) | $ | 1,704 | $ | 1,235 |
Unrealized Loss on Derivative Instruments | Unrealized Gain on Marketable Securities | Total | |||||||||
Balance as of January 1, 2017 | $ | (208 | ) | $ | — | $ | (208 | ) | |||
Other comprehensive (loss) income before reclassifications | (268 | ) | 1,704 | 1,436 | |||||||
Amounts reclassified from cumulative other comprehensive income (loss) to net (loss) income | 7 | — | 7 | ||||||||
Net current period other comprehensive (loss) income | (261 | ) | 1,704 | 1,443 | |||||||
Balance as of June 30, 2017 | $ | (469 | ) | $ | 1,704 | $ | 1,235 |
Amounts Reclassified from Cumulative Other Comprehensive Income (Loss) to Net (Loss) Income | ||||||||||
Details about Cumulative Other Comprehensive Income (Loss) Components | Three Months Ended June 30, 2017 | Six Months Ended June 30, 2017 | Affected Line Items in the Statement of Operations | |||||||
Interest rate cap contract | $ | 6 | $ | 7 | Interest expense |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Current: | |||||||||||||||
State | $ | 45 | $ | 165 | $ | 215 | $ | 240 | |||||||
Federal | — | — | 5 | — | |||||||||||
Income tax expense | 45 | 165 | $ | 220 | $ | 240 |
Interest Rate Derivative | Number of Instruments | Notional Amount (in thousands) | |||||
Interest rate cap | 1 | $ | 400,000 |
Fair Value as of | ||||||||||
Interest Rate Derivative Designated as Hedging Instrument | Balance Sheet Location | June 30, 2017 | December 31, 2016 | |||||||
Interest rate cap | Other assets | $ | 46 | $ | 314 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Amount of loss recognized in cumulative other comprehensive income (loss) | $ | (114 | ) | $ | (326 | ) | $ | (268 | ) | $ | (771 | ) | |||
Amount of loss reclassified from cumulative other comprehensive income (loss) into interest expense | 6 | 1,106 | 7 | 2,224 |
2017 | |||
Fair value of RSUs and market-based LTIP units granted | $ | 39.81 | |
Expected term (years) | 4 | ||
Expected volatility | — | ||
Expected dividend yield | 1.59 | % | |
Risk-free rate | 1.49 | % |
Fair Value at June 30, 2017 Using | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||
Description | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Recurring Fair Value Measurements: | ||||||||||||||||
Interest rate cap contract | $ | 46 | $ | — | $ | 46 | $ | — | ||||||||
Marketable securities | $ | 278,072 | $ | 278,072 | $ | — | $ | — |
June 30, 2017 | December 31, 2016 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Senior unsecured debt and mortgage notes payable | $ | 1,109,667 | $ | 1,123,539 | $ | 1,151,634 | $ | 1,167,031 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator for earnings per common share - basic: | |||||||||||||||
Net (loss) income | $ | (5,811 | ) | $ | 87,844 | $ | 18,011 | $ | 134,246 | ||||||
Net loss (income) attributable to noncontrolling interest | 2 | — | (6 | ) | — | ||||||||||
Preferred distributions | (1,997 | ) | (6,981 | ) | (3,994 | ) | (13,962 | ) | |||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | (9,609 | ) | — | (9,609 | ) | |||||||||
Numerator for net (loss) income per share - basic | $ | (7,806 | ) | $ | 71,254 | $ | 14,011 | $ | 110,675 | ||||||
Numerator for earnings per common share - diluted: | |||||||||||||||
Net (loss) income | $ | (5,811 | ) | $ | 87,844 | $ | 18,011 | $ | 134,246 | ||||||
Preferred distributions | (1,997 | ) | (6,981 | ) | (3,994 | ) | (13,962 | ) | |||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | (9,609 | ) | — | (9,609 | ) | |||||||||
Numerator for net (loss) income per share - diluted | $ | (7,808 | ) | $ | 71,254 | $ | 14,017 | $ | 110,675 | ||||||
Denominator for earnings per common share - basic and diluted: | |||||||||||||||
Weighted average number of common shares outstanding - basic | 124,067 | 125,508 | 124,057 | 125,674 | |||||||||||
RSUs | — | 1,429 | 1,043 | 1,555 | |||||||||||
LTIP Units | — | — | 103 | — | |||||||||||
Weighted average number of common shares outstanding - diluted(1) | 124,067 | 126,937 | 125,203 | 127,229 | |||||||||||
Net (loss) income per common share attributable to Equity Commonwealth common shareholders: | |||||||||||||||
Basic | $ | (0.06 | ) | $ | 0.57 | $ | 0.11 | $ | 0.88 | ||||||
Diluted | $ | (0.06 | ) | $ | 0.56 | $ | 0.11 | $ | 0.87 | ||||||
Anti-dilutive securities: | |||||||||||||||
Effect of Series D preferred shares; 6 1/2% cumulative convertible(2) | 2,363 | 2,363 | 2,363 | 2,363 | |||||||||||
Effect of RSUs(1) | 1,063 | — | — | — | |||||||||||
Effect of LTIP Units(1) | 126 | — | — | — |
(1) | As of June 30, 2017, we had granted RSUs and LTIP Units to certain employees, officers, and trustees. The RSUs and LTIP Units contain service and market-based vesting components. None of the RSUs or LTIP Units have vested. If the market-based vesting component of these awards was measured as of June 30, 2017, and 2016, 1,191 and 1,429 common shares would be issued, respectively. Using a weighted average basis, 0 and 1,429 common shares are reflected in diluted earnings per share for the three months ended June 30, 2017 and 2016, respectively and 1,146 and 1,555 common shares are reflected in diluted earnings per share for the six months ended June 30, 2017 and 2016, respectively. The RSUs and LTIP Units are excluded from the diluted earnings per share calculation for the three months ended June 30, 2017 because including them results in anti-dilution for that period. |
(2) | The Series D preferred shares are excluded from the diluted earnings per share calculation because including the Series D preferred shares would also require that the preferred distributions be added back to net income, resulting in anti-dilution during the periods presented. |
All Properties(1) | Comparable Properties(2) | ||||||||||
As of June 30, | As of June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Total properties | 21 | 45 | 21 | 21 | |||||||
Total square feet | 11,651 | 20,675 | 11,651 | 11,571 | |||||||
Percent leased(3) | 88.4 | % | 90.3 | % | 88.4 | % | 90.2 | % |
(1) | Excludes properties sold or classified as held for sale in the period. |
(2) | Based on properties owned continuously from January 1, 2016 through June 30, 2017, and excludes properties sold or classified as held for sale during the period. |
(3) | Percent leased includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased but is not occupied or is being offered for sublease by tenants. |
Year | Number of Tenants Expiring | Leased Square Feet Expiring(1) | % of Leased Square Feet Expiring(1) | Cumulative % of Leased Square Feet Expiring(1) | Annualized Rental Revenue Expiring(2) | % of Annualized Rental Revenue Expiring | Cumulative % of Annualized Rental Revenue Expiring | |||||||||||||||
2017 | 36 | 215 | 2.1 | % | 2.1 | % | $ | 5,704 | 2.0 | % | 2.0 | % | ||||||||||
2018 | 70 | 504 | 4.9 | % | 7.0 | % | 15,976 | 5.7 | % | 7.7 | % | |||||||||||
2019 | 82 | 1,124 | 10.9 | % | 17.9 | % | 29,672 | 10.5 | % | 18.2 | % | |||||||||||
2020 | 67 | 1,280 | 12.4 | % | 30.3 | % | 40,461 | 14.3 | % | 32.5 | % | |||||||||||
2021 | 56 | 853 | 8.3 | % | 38.6 | % | 25,653 | 9.1 | % | 41.6 | % | |||||||||||
2022 | 42 | 647 | 6.3 | % | 44.9 | % | 23,239 | 8.2 | % | 49.8 | % | |||||||||||
2023 | 37 | 1,202 | 11.7 | % | 56.6 | % | 37,812 | 13.4 | % | 63.2 | % | |||||||||||
2024 | 10 | 145 | 1.4 | % | 58.0 | % | 4,687 | 1.7 | % | 64.9 | % | |||||||||||
2025 | 14 | 312 | 3.0 | % | 61.0 | % | 8,106 | 2.9 | % | 67.8 | % | |||||||||||
2026 | 11 | 574 | 5.6 | % | 66.6 | % | 18,721 | 6.6 | % | 74.4 | % | |||||||||||
Thereafter | 58 | 3,440 | 33.4 | % | 100.0 | % | 72,728 | 25.6 | % | 100.0 | % | |||||||||||
483 | 10,296 | 100.0 | % | $ | 282,759 | 100.0 | % | |||||||||||||||
Weighted average remaining lease term (in years): | 7.1 | 6.3 |
(1) | Square footage is pursuant to existing leases as of June 30, 2017, excluding leases related to properties classified as held for sale, and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease. |
(2) | Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of June 30, 2017, plus estimated recurring expense reimbursements; includes triple net lease rents and excludes lease value amortization, straight line rent adjustments, abated (free) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues. Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates. |
Tenant(1) | Square Feet(2) | % of Total Square Feet(2) | % of Annualized Rental Revenue(3) | Weighted Average Remaining Lease Term | ||||||||
1. | Expedia, Inc. | 427 | 4.1 | % | 7.2 | % | 2.5 | |||||
2. | Office Depot, Inc. | 651 | 6.3 | % | 6.1 | % | 6.2 | |||||
3. | Groupon, Inc. (4) | 376 | 3.7 | % | 4.2 | % | 8.6 | |||||
4. | PNC Financial Services Group | 363 | 3.5 | % | 3.9 | % | 9.5 | |||||
5. | Flextronics International Ltd. | 1,051 | 10.2 | % | 3.7 | % | 12.5 | |||||
6. | Ballard Spahr LLP | 219 | 2.1 | % | 2.9 | % | 12.6 | |||||
7. | RE/MAX Holdings, Inc. | 248 | 2.4 | % | 2.7 | % | 10.8 | |||||
8. | Georgetown University | 240 | 2.3 | % | 2.3 | % | 2.3 | |||||
9. | Echo Global Logistics, Inc. | 226 | 2.2 | % | 2.1 | % | 10.3 | |||||
10. | West Corporation | 336 | 3.3 | % | 2.1 | % | 11.6 | |||||
11. | Wm. Wrigley Jr. Company | 150 | 1.5 | % | 2.0 | % | 4.6 | |||||
12. | ProQuest, LLC | 131 | 1.3 | % | 1.5 | % | 3.8 | |||||
13. | Level 3 Communications, LLC | 95 | 0.9 | % | 1.5 | % | 8.6 | |||||
Total | 4,513 | 43.8 | % | 42.2 | % | 8.8 |
(1) | Tenants located in properties classified as held for sale are excluded. |
(2) | Square footage is pursuant to existing leases as of June 30, 2017, and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease. |
(3) | Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of June 30, 2017, plus estimated recurring expense reimbursements; includes triple net lease rents and excludes lease value amortization, straight line rent adjustments, abated (free) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues. Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates. |
(4) | Groupon, Inc. statistics include 207,536 square feet that are sublet from Bankers Life and Casualty Company. |
Comparable Properties Results(1) | Other Properties Results(2) | Consolidated Results | |||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||
Rental income | $ | 60,125 | $ | 60,140 | $ | (15 | ) | — | % | $ | 14,227 | $ | 61,595 | $ | 74,352 | $ | 121,735 | $ | (47,383 | ) | (38.9 | )% | |||||||||||||||
Tenant reimbursements and other income | 16,614 | 15,283 | 1,331 | 8.7 | % | 633 | 8,349 | 17,247 | 23,632 | (6,385 | ) | (27.0 | )% | ||||||||||||||||||||||||
Operating expenses | (30,261 | ) | (26,248 | ) | (4,013 | ) | 15.3 | % | (7,023 | ) | (25,145 | ) | (37,284 | ) | (51,393 | ) | 14,109 | (27.5 | )% | ||||||||||||||||||
Net operating income(3) | $ | 46,478 | $ | 49,175 | $ | (2,697 | ) | (5.5 | )% | $ | 7,837 | $ | 44,799 | 54,315 | 93,974 | (39,659 | ) | (42.2 | )% | ||||||||||||||||||
Other expenses: | |||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 23,922 | 37,331 | (13,409 | ) | (35.9 | )% | |||||||||||||||||||||||||||||||
General and administrative | 11,960 | 12,177 | (217 | ) | (1.8 | )% | |||||||||||||||||||||||||||||||
Loss on asset impairment | 18,428 | 43,736 | (25,308 | ) | (57.9 | )% | |||||||||||||||||||||||||||||||
Total other expenses | 54,310 | 93,244 | (38,934 | ) | (41.8 | )% | |||||||||||||||||||||||||||||||
Operating income | 5 | 730 | (725 | ) | (99.3 | )% | |||||||||||||||||||||||||||||||
Interest and other income | 6,019 | 2,204 | 3,815 | 173.1 | % | ||||||||||||||||||||||||||||||||
Interest expense | (14,863 | ) | (21,300 | ) | 6,437 | (30.2 | )% | ||||||||||||||||||||||||||||||
Loss on early extinguishment of debt | (63 | ) | — | (63 | ) | (100.0 | )% | ||||||||||||||||||||||||||||||
Gain on sale of properties, net | 3,136 | 106,375 | (103,239 | ) | (97.1 | )% | |||||||||||||||||||||||||||||||
(Loss) income before income taxes | (5,766 | ) | 88,009 | (93,775 | ) | (106.6 | )% | ||||||||||||||||||||||||||||||
Income tax expense | (45 | ) | (165 | ) | 120 | (72.7 | )% | ||||||||||||||||||||||||||||||
Net (loss) income | (5,811 | ) | 87,844 | (93,655 | ) | (106.6 | )% | ||||||||||||||||||||||||||||||
Net loss attributable to noncontrolling interest | 2 | — | 2 | 100.0 | % | ||||||||||||||||||||||||||||||||
Net (loss) income attributable to Equity Commonwealth | (5,809 | ) | 87,844 | (93,653 | ) | (106.6 | )% | ||||||||||||||||||||||||||||||
Preferred distributions | (1,997 | ) | (6,981 | ) | 4,984 | (71.4 | )% | ||||||||||||||||||||||||||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | (9,609 | ) | 9,609 | (100.0 | )% | |||||||||||||||||||||||||||||||
Net (loss) income attributable to Equity Commonwealth common shareholders | $ | (7,806 | ) | $ | 71,254 | $ | (79,060 | ) | (111.0 | )% |
(1) | Comparable properties consist of 21 properties (47 buildings) we owned continuously from April 1, 2016 to June 30, 2017. |
(2) | Other properties consist of properties sold or classified as held for sale as of the end of the period. |
(3) | We define net operating income, or NOI, as shown above, as income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions. We consider NOI to be an appropriate supplemental measure to net (loss) income because it may help both investors and management to understand the operations of our properties. We use NOI internally to evaluate property level performance, and we believe that NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net (loss) income, net (loss) income attributable to Equity Commonwealth common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP, or as an indicator of our financial performance or liquidity, nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs. This measure should be considered in conjunction with net (loss) income, net (loss) income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating activities as presented in our consolidated statements of operations, consolidated statements of comprehensive (loss) income and consolidated statements of cash flows. Other REITs and real estate companies may calculate NOI differently than we do. |
Comparable Properties Results(1) | Other Properties Results(2) | Consolidated Results | |||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
2017 | 2016 | $ Change | % Change | 2017 | 2016 | 2017 | 2016 | $ Change | % Change | ||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||
Rental income | $ | 119,735 | $ | 118,027 | $ | 1,708 | 1.4 | % | $ | 34,822 | $ | 113,596 | $ | 154,557 | $ | 231,623 | $ | (77,066 | ) | (33.3 | )% | ||||||||||||||||
Tenant reimbursements and other income | 33,823 | 31,785 | 2,038 | 6.4 | % | 2,770 | 19,094 | 36,593 | 50,879 | (14,286 | ) | (28.1 | )% | ||||||||||||||||||||||||
Operating expenses | (61,127 | ) | (55,631 | ) | (5,496 | ) | 9.9 | % | (17,244 | ) | (53,020 | ) | (78,371 | ) | (108,651 | ) | 30,280 | (27.9 | )% | ||||||||||||||||||
Net operating income(3) | $ | 92,431 | $ | 94,181 | $ | (1,750 | ) | (1.9 | )% | $ | 20,348 | $ | 79,670 | 112,779 | 173,851 | (61,072 | ) | (35.1 | )% | ||||||||||||||||||
Other expenses: | |||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 50,837 | 73,582 | (22,745 | ) | (30.9 | )% | |||||||||||||||||||||||||||||||
General and administrative | 24,038 | 25,489 | (1,451 | ) | (5.7 | )% | |||||||||||||||||||||||||||||||
Loss on asset impairment | 19,714 | 43,736 | (24,022 | ) | (54.9 | )% | |||||||||||||||||||||||||||||||
Total other expenses | 94,589 | 142,807 | (48,218 | ) | (33.8 | )% | |||||||||||||||||||||||||||||||
Operating income | 18,190 | 31,044 | (12,854 | ) | (41.4 | )% | |||||||||||||||||||||||||||||||
Interest and other income | 10,391 | 4,171 | 6,220 | 149.1 | % | ||||||||||||||||||||||||||||||||
Interest expense | (29,877 | ) | (43,647 | ) | 13,770 | (31.5 | )% | ||||||||||||||||||||||||||||||
Loss on early extinguishment of debt | (63 | ) | (118 | ) | 55 | (46.6 | )% | ||||||||||||||||||||||||||||||
Foreign currency exchange loss | — | (5 | ) | 5 | (100.0 | )% | |||||||||||||||||||||||||||||||
Gain on sale of properties, net | 19,590 | 143,041 | (123,451 | ) | (86.3 | )% | |||||||||||||||||||||||||||||||
Income before income taxes | 18,231 | 134,486 | (116,255 | ) | (86.4 | )% | |||||||||||||||||||||||||||||||
Income tax expense | (220 | ) | (240 | ) | 20 | (8.3 | )% | ||||||||||||||||||||||||||||||
Net income | 18,011 | 134,246 | (116,235 | ) | (86.6 | )% | |||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | (6 | ) | — | (6 | ) | (100.0 | )% | ||||||||||||||||||||||||||||||
Net income attributable to Equity Commonwealth | 18,005 | 134,246 | (116,241 | ) | (86.6 | )% | |||||||||||||||||||||||||||||||
Preferred distributions | (3,994 | ) | (13,962 | ) | 9,968 | (71.4 | )% | ||||||||||||||||||||||||||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | (9,609 | ) | 9,609 | (100.0 | )% | |||||||||||||||||||||||||||||||
Net income attributable to Equity Commonwealth common shareholders | $ | 14,011 | $ | 110,675 | $ | (96,664 | ) | (87.3 | )% |
(1) | Comparable properties consist of 21 properties (47 buildings) we owned continuously from January 1, 2016 to June 30, 2017. |
(2) | Other properties consist of properties sold and classified as held for sale. |
(3) | See Note 3 on page 25 for further information regarding NOI. |
• | ability to purchase additional properties, consistent with our office repositioning strategy, which produce rents, less property operating expenses, in excess of our costs of acquisition capital. |
Scheduled Principal Payments During Period | |||||||||||||||||||
Year | Unsecured Floating Rate Debt | Unsecured Fixed Rate Debt | Secured Fixed Rate Debt | Total(1) | Weighted Average Interest Rate(2) | ||||||||||||||
2017 | $ | — | $ | — | $ | 709 | $ | 709 | 6.0 | % | |||||||||
2018 | — | 250,000 | (3) | 1,487 | 251,487 | 6.6 | % | ||||||||||||
2019 | — | — | 1,580 | 1,580 | 6.0 | % | |||||||||||||
2020 | 200,000 | 250,000 | 1,674 | 451,674 | 4.4 | % | |||||||||||||
2021 | — | — | 25,982 | 25,982 | 5.7 | % | |||||||||||||
2022 | 200,000 | — | 799 | 200,799 | 3.0 | % | |||||||||||||
2023 | — | — | 702 | 702 | 5.7 | % | |||||||||||||
2024 | — | — | 743 | 743 | 5.7 | % | |||||||||||||
2025 | — | — | 787 | 787 | 5.7 | % | |||||||||||||
2026 | — | — | 204 | 204 | 5.7 | % | |||||||||||||
Thereafter | — | 175,000 | (4) | — | 175,000 | 5.8 | % | ||||||||||||
$ | 400,000 | $ | 675,000 | $ | 34,667 | $ | 1,109,667 | 4.9 | % |
(1) | Total debt outstanding as of June 30, 2017, including net unamortized premiums and discounts and net unamortized deferred financing costs, equals $1,100,355. |
(2) | Weighted based on current contractual interest rates. |
(3) | On July 15, 2017, we redeemed at par $250.0 million of our 6.65% senior unsecured notes due 2018. |
(4) | The 5.75% senior unsecured notes due 2042 are callable at par on or after August 1, 2017. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Tenant improvements(1) | $ | 10,309 | $ | 19,537 | $ | 19,736 | $ | 44,928 | |||||||
Leasing costs(2) | 4,978 | 10,609 | 9,595 | 20,374 | |||||||||||
Building improvements(3) | 7,315 | 7,713 | 12,100 | 14,254 |
(1) | Tenant improvements include capital expenditures to improve tenants’ spaces. |
(2) | Leasing costs primarily include brokerage commissions and legal expenses. |
(3) | Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. Tenant-funded capital expenditures are excluded. |
New Leases | Renewals | Total | |||||||||
Rentable square feet leased during the period | 196 | 252 | 448 | ||||||||
Tenant improvements and leasing commissions | $ | 7,212 | $ | 7,951 | $ | 15,163 | |||||
Tenant improvements and leasing commissions per rentable square foot | $ | 36.76 | $ | 31.56 | $ | 33.84 | |||||
Weighted average lease term by square foot (years) | 5.7 | 7.7 | 6.8 | ||||||||
Total tenant improvements and leasing commissions per rentable square foot per year | $ | 6.39 | $ | 4.10 | $ | 4.94 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Reconciliation to FFO: | |||||||||||||||
Net (loss) income | $ | (5,811 | ) | $ | 87,844 | $ | 18,011 | $ | 134,246 | ||||||
Real estate depreciation and amortization | 23,619 | 37,064 | 50,235 | 73,108 | |||||||||||
Loss on asset impairment | 18,428 | 43,736 | 19,714 | 43,736 | |||||||||||
Gain on sale of properties, net | (3,136 | ) | (106,375 | ) | (19,590 | ) | (143,041 | ) | |||||||
FFO attributable to Equity Commonwealth | 33,100 | 62,269 | 68,370 | 108,049 | |||||||||||
Preferred distributions | (1,997 | ) | (6,981 | ) | (3,994 | ) | (13,962 | ) | |||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | (9,609 | ) | — | (9,609 | ) | |||||||||
FFO attributable to Equity Commonwealth common shareholders and unitholders | $ | 31,103 | $ | 45,679 | $ | 64,376 | $ | 84,478 | |||||||
Reconciliation to Normalized FFO: | |||||||||||||||
FFO attributable to Equity Commonwealth common shareholders and unitholders | $ | 31,103 | $ | 45,679 | $ | 64,376 | $ | 84,478 | |||||||
Lease value amortization | 518 | 3,867 | 1,091 | 4,988 | |||||||||||
Straight line rent adjustments | (4,543 | ) | (5,599 | ) | (8,930 | ) | (9,430 | ) | |||||||
Loss on early extinguishment of debt | 63 | — | 63 | 118 | |||||||||||
Transition-related expenses | — | 35 | — | 1,137 | |||||||||||
Foreign currency exchange loss | — | — | — | 5 | |||||||||||
Excess fair value of consideration paid over carrying value of preferred shares | — | 9,609 | — | 9,609 | |||||||||||
Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders | $ | 27,141 | $ | 53,591 | $ | 56,600 | $ | 90,905 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Rental income | $ | 74,352 | $ | 121,735 | $ | 154,557 | $ | 231,623 | |||||||
Tenant reimbursements and other income | 17,247 | 23,632 | 36,593 | 50,879 | |||||||||||
Operating expenses | (37,284 | ) | (51,393 | ) | (78,371 | ) | (108,651 | ) | |||||||
NOI | $ | 54,315 | $ | 93,974 | $ | 112,779 | $ | 173,851 | |||||||
NOI | $ | 54,315 | $ | 93,974 | $ | 112,779 | $ | 173,851 | |||||||
Depreciation and amortization | (23,922 | ) | (37,331 | ) | (50,837 | ) | (73,582 | ) | |||||||
General and administrative | (11,960 | ) | (12,177 | ) | (24,038 | ) | (25,489 | ) | |||||||
Loss on asset impairment | (18,428 | ) | (43,736 | ) | (19,714 | ) | (43,736 | ) | |||||||
Operating income | 5 | 730 | 18,190 | 31,044 | |||||||||||
Interest and other income | 6,019 | 2,204 | 10,391 | 4,171 | |||||||||||
Interest expense | (14,863 | ) | (21,300 | ) | (29,877 | ) | (43,647 | ) | |||||||
Loss on early extinguishment of debt | (63 | ) | — | (63 | ) | (118 | ) | ||||||||
Foreign currency exchange loss | — | — | — | (5 | ) | ||||||||||
Gain on sale of properties, net | 3,136 | 106,375 | 19,590 | 143,041 | |||||||||||
(Loss) income from continuing operations before income taxes | (5,766 | ) | 88,009 | 18,231 | 134,486 | ||||||||||
Income tax expense | (45 | ) | (165 | ) | (220 | ) | (240 | ) | |||||||
Net (loss) income | $ | (5,811 | ) | $ | 87,844 | $ | 18,011 | $ | 134,246 |
Debt | Principal Balance(1) | Annual Interest Rate(1) | Annual Interest Expense(1) | Maturity | Open at Par Date | ||||||||||
6.650% senior unsecured notes due 2018(2) | $ | 250,000 | 6.65 | % | $ | 16,625 | 1/15/2018 | 7/15/2017 | |||||||
5.875% senior unsecured notes due 2020 | 250,000 | 5.88 | % | 14,688 | 9/15/2020 | 3/15/2020 | |||||||||
5.750% senior unsecured notes due 2042 | 175,000 | 5.75 | % | 10,063 | 8/1/2042 | 8/1/2017 | |||||||||
$ | 675,000 | $ | 41,376 |
(1) | The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions and issuance costs at the time we issued these debts. For more information, see Note 5 to the notes to our condensed consolidated financial statements included in Part I, Item I of this Quarterly Report. |
(2) | On July 15, 2017, we redeemed at par $250.0 million of our 6.65% senior unsecured notes due 2018. |
Debt | Principal Balance(1) | Annual Interest Rate(1) | Annual Interest Expense(1) | Maturity | Open at Par Date | ||||||||||
206 East 9th Street | $ | 26,790 | 5.69 | % | $ | 1,601 | 1/5/2021 | 7/5/2020 | |||||||
33 Stiles Lane | 2,220 | 6.75 | % | 201 | 3/1/2022 | 12/1/2021 | |||||||||
97 Newberry Road | 5,657 | 5.71 | % | 378 | 3/1/2026 | None | |||||||||
$ | 34,667 | $ | 2,180 |
(1) | The principal balance, annual interest rate and annual interest expense are the amounts stated in the applicable contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions and issuance costs at the time we assumed or issued these debts. For more information, see Note 5 to the notes to our condensed consolidated financial statements included in Part I, Item I of this Quarterly Report. |
Impact of Changes in Interest Rates | |||||||||
Total Interest | |||||||||
Interest Rate Per Year(1) | Outstanding Debt | Expense Per Year | |||||||
Term loans at June 30, 2017 | 2.62%/3.02% | $ | 400,000 | $ | 11,296 | ||||
100 basis point increase | 3.62%/4.02% | $ | 400,000 | $ | 15,296 |
(1) | Based on the interest rates and outstanding borrowings of our floating rate debt as of June 30, 2017. |
Exhibit Number | Description |
3.1 | Articles of Amendment and Restatement of Declaration of Trust of the Company, dated July 1, 1994, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K filed August 1, 2014.) |
3.2 | Articles Supplementary, dated October 10, 2006. (Incorporated by reference to the Company’s Current Report on Form 8-K filed October 11, 2006.) |
3.3 | Articles Supplementary, dated May 31, 2011. (Incorporated by reference to the Company’s Current Report on Form 8-K filed May 31, 2011.) |
3.4 | Third Amended and Restated Bylaws of the Company, adopted March 15, 2017. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.) |
4.1 | Form of Common Share Certificate. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.) |
4.2 | Form of 61/2% Series D Cumulative Convertible Preferred Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.) |
4.3 | Indenture, dated as of July 9, 1997, between the Company and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-09317.) |
4.4 | Supplemental Indenture No. 18, dated as of September 18, 2007, between the Company and U.S. Bank, relating to the Company’s 6.65% Senior Notes due 2018, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File Number 001-09317.) |
4.5 | Supplemental Indenture No. 20, dated as of September 17, 2010, between the Company and U.S. Bank, relating to the Company’s 5.875% Senior Notes due 2020, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010.) |
4.6 | Supplemental Indenture No. 21, dated as of July 25, 2012, between the Company and U.S. Bank, relating to the Company’s 5.75% Senior Notes due 2042, including form thereof. (Incorporated by reference to the Company’s Registration Statement on Form 8-A dated July 25, 2012.) |
10.1 | Form of Time-Based LTIP Unit Agreement for Trustees under Equity Commonwealth 2015 Omnibus Incentive Plan. (Incorporated by reference to the Company's Current Report on Form 8-K filed June 21, 2017.) |
31.1 | Rule 13a-14(a) Certification. (Filed herewith.) |
31.2 | Rule 13a-14(a) Certification. (Filed herewith.) |
32.1 | Section 1350 Certification. (Furnished herewith.) |
101.1 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) the Condensed Consolidated Statements of Cash Flows and (v) related notes to these condensed consolidated financial statements, tagged as blocks of text and in detail. (Filed herewith.) |
EQUITY COMMONWEALTH | ||
By: | /s/ David A. Helfand | |
David A. Helfand | ||
President and Chief Executive Officer | ||
Dated: July 25, 2017 | ||
By: | /s/ Adam S. Markman | |
Adam S. Markman | ||
Executive Vice President, Chief Financial Officer and Treasurer | ||
Dated: July 25, 2017 |
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 |
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: | July 25, 2017 | /s/ David A. Helfand | |
David A. Helfand | |||
President and Chief Executive Officer | |||
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 |
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: | July 25, 2017 | /s/Adam S. Markman | |
Adam S. Markman | |||
Executive Vice President, Chief | |||
Financial Officer and Treasurer | |||
Certification Pursuant to 18 U.S.C. Sec. 1350 |
1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David A. Helfand | /s/ Adam S. Markman | |
David A. Helfand | Adam S. Markman | |
President and Chief Executive Officer | Executive Vice President, Chief Financial Officer | |
and Treasurer | ||
Date: July 25, 2017 | ||
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2017 |
Jul. 20, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | Equity Commonwealth | |
Entity Central Index Key | 0000803649 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 124,089,443 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Statement [Abstract] | ||||
Amortization of debt discounts, premiums and deferred financing fees | $ 849 | $ 949 | $ 1,562 | $ 1,932 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (5,811) | $ 87,844 | $ 18,011 | $ 134,246 |
Other comprehensive (loss) income, net of tax: | ||||
Unrealized (loss) gain on derivative instruments | (108) | 780 | (261) | 1,453 |
Unrealized gain on marketable securities | 2,345 | 0 | 1,704 | 0 |
Total comprehensive (loss) income | (3,574) | 88,624 | 19,454 | 135,699 |
Comprehensive loss (income) attributable to the noncontrolling interest | 2 | 0 | (6) | 0 |
Total comprehensive (loss) income attributable to Equity Commonwealth | $ (3,572) | $ 88,624 | $ 19,448 | $ 135,699 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Cumulative Preferred Distributions |
Common Shares |
Cumulative Common Distributions |
Additional Paid in Capital |
Cumulative Net Income |
Cumulative Other Comprehensive Income (Loss) |
Noncontrolling Interest |
Series D |
Series E |
---|---|---|---|---|---|---|---|---|---|---|
Balance (in shares) at Dec. 31, 2015 | 126,349,914 | 4,915,196 | 11,000,000 | |||||||
Balance at Dec. 31, 2015 | $ 3,368,487 | $ (650,195) | $ 1,263 | $ (3,111,868) | $ 4,414,611 | $ 2,333,709 | $ (3,687) | $ 0 | $ 119,263 | $ 265,391 |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net (loss) income | 134,246 | 134,246 | 0 | |||||||
Unrealized gain (loss) on derivative instrument | 1,453 | 1,453 | ||||||||
Unrealized gain on marketable securities | 0 | |||||||||
Purchase of shares (in shares) | (983,789) | |||||||||
Purchase of shares | (25,563) | $ (10) | (25,553) | |||||||
Redemption of shares (in shares) | (11,000,000) | |||||||||
Redemption of shares | (275,000) | $ (275,000) | ||||||||
Excess fair value of consideration paid over carrying value of preferred shares | (9,609) | (9,609) | $ 9,609 | |||||||
Share-based compensation (in shares) | 167,251 | |||||||||
Share-based compensation | 8,977 | $ 2 | 8,975 | 0 | ||||||
Distributions | (13,962) | (13,962) | ||||||||
Balance (in shares) at Jun. 30, 2016 | 125,533,376 | 4,915,196 | 0 | |||||||
Balance at Jun. 30, 2016 | $ 3,198,638 | (673,766) | $ 1,255 | (3,111,868) | 4,398,033 | 2,467,955 | (2,234) | 0 | $ 119,263 | $ 0 |
Balance (in shares) at Dec. 31, 2016 | 123,994,465 | 123,994,465 | 4,915,196 | 0 | ||||||
Balance at Dec. 31, 2016 | $ 3,260,447 | (677,760) | $ 1,240 | (3,111,868) | 4,363,177 | 2,566,603 | (208) | 0 | $ 119,263 | $ 0 |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net (loss) income | 18,011 | 18,005 | 6 | |||||||
Unrealized gain (loss) on derivative instrument | (261) | (261) | ||||||||
Unrealized gain on marketable securities | 1,704 | 1,704 | ||||||||
Purchase of shares (in shares) | (6,694) | |||||||||
Purchase of shares | (209) | $ 0 | (209) | |||||||
Excess fair value of consideration paid over carrying value of preferred shares | 0 | |||||||||
Share-based compensation (in shares) | 101,672 | |||||||||
Share-based compensation | 10,732 | $ 1 | 10,192 | 539 | ||||||
Contributions | 31 | 31 | ||||||||
Distributions | $ (3,994) | (3,994) | ||||||||
Adjustment for noncontrolling interest | (550) | 550 | ||||||||
Balance (in shares) at Jun. 30, 2017 | 124,089,443 | 124,089,443 | 4,915,196 | 0 | ||||||
Balance at Jun. 30, 2017 | $ 3,286,461 | $ (681,754) | $ 1,241 | $ (3,111,868) | $ 4,372,610 | $ 2,584,608 | $ 1,235 | $ 1,126 | $ 119,263 | $ 0 |
Business |
6 Months Ended |
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Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business Equity Commonwealth (the Company) is a real estate investment trust, or REIT, formed in 1986 under the laws of the State of Maryland. Our business is the ownership and operation of real estate, primarily office buildings, throughout the United States. On November 10, 2016, the Company converted to what is commonly referred to as an umbrella partnership real estate investment trust, or UPREIT, structure. In connection with this conversion, the Company contributed substantially all of its assets to EQC Operating Trust, a Maryland real estate investment trust (the Operating Trust), and the Operating Trust assumed substantially all of the Company’s liabilities pursuant to a contribution and assignment agreement between the Company and the Operating Trust. The Company now conducts and intends to continue to conduct substantially all of its activities through the Operating Trust. The Company beneficially owned 99.97% of the outstanding shares of beneficial interest, designated as units, in the Operating Trust (OP Units) as of June 30, 2017, and the Company is the sole trustee of the Operating Trust. As the sole trustee, the Company generally has the exclusive power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units. At June 30, 2017, our portfolio, excluding properties held for sale, included 21 properties (47 buildings), and one land parcel, with a combined 11.7 million square feet. As of June 30, 2017, we had $2.2 billion of cash and cash equivalents and marketable securities. |
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements of EQC have been prepared without audit. Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K (Annual Report) for the year ended December 31, 2016. Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years’ financial statements to conform to the current year’s presentation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets. Share amounts are presented in whole numbers, except where noted. Recent Accounting Pronouncements In February 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-01, Clarifying the Definition of a Business, that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. This update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. We early adopted this ASU effective January 1, 2017, and the adoption of this ASU did not have a material impact on our consolidated financial statements. In February 2017, the FASB issued ASU 2017-05 Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 is designed to provide guidance on how to recognize gain and losses on sales, including partial sales, of nonfinancial assets to noncustomers. ASU 2017-05 is effective beginning January 1, 2018. Early adoption is permitted but the standard is required to be adopted concurrently with ASU 2014-09. We are evaluating the impact ASU 2017-05 will have on our financial position and results of operations. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which amends FASB Accounting Standards Codification (ASC) Topic 230, Statements of Cash Flows, to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires more timely recognition of credit losses associated with financial assets. This update is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently in the process of evaluating the impact, if any, the adoption of this ASU will have on our consolidated financial statements. In February 2016, the FASB issued ASU 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 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. ASU 2016-02 supersedes previous leasing standards. ASU 2016-02 is effective for us for reporting periods beginning after December 15, 2018, with early adoption permitted. We are still assessing the impact of adopting ASU 2016-02. For leases where we are the lessor, we expect to account for these leases using an approach that is substantially equivalent to current guidance. However, we expect that certain executory and non-lease components (such as common area maintenance), will need to be accounted for separately from the lease component of the lease with the lease component continuing to be recognized on a straight-line basis over the lease term. We intend to account for the executory and non-lease components under the new revenue recognition guidance in ASU 2014-09, upon our adoption of ASU 2016-02. When the revenue for such activities is not separately stipulated in the lease, we will need to separate the lease components of revenue due under leases from the non-lease components. Additionally, under ASU 2016-02 lessors may only capitalize incremental direct leasing costs. For leases in which we are the lessee, we expect to recognize a right-of-use asset and a lease liability equal to the present value of the minimum lease payments with rent expense being recognized on a straight-line basis and the right of use asset being reduced when lease payments are made. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will require entities to measure their equity investments at fair value and recognize any changes in fair value in net income, with certain exceptions, rather than other comprehensive income. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact that the adoption of the new standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The objective of ASU 2014-09, as amended, is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that an entity should recognize 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. In applying ASU 2014-09, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB’s ASC, and more particularly lease contracts with customers, which are a scope exception. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017, with early adoption permitted. While our consideration of this matter is ongoing, we are not planning to early adopt ASU 2014-09, as amended, and we expect to use the modified retrospective method of adoption that will result in a cumulative effect adjustment as of the date of adoption. We developed a project plan and have begun the execution of this plan, which consists of gathering and evaluating the inventory of our revenue streams. We believe the effects on our existing accounting policies will be associated with our non-leasing revenue components. We continue to evaluate the potential impact to our consolidated financial statements as a result of this ASU. |
Real Estate Properties |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Properties | Real Estate Properties During the six months ended June 30, 2017 and 2016, we made improvements, excluding tenant-funded improvements, to our properties totaling $31.8 million and $59.2 million, respectively. Properties Held For Sale: We classify all properties that meet the criteria outlined in the Property, Plant and Equipment Topic of the FASB ASC as held for sale on our condensed consolidated balance sheets. As of December 31, 2016, we had no properties classified as held for sale. As of June 30, 2017, we classified the following properties as held for sale (dollars in thousands):
Summarized balance sheet information for the properties classified as held for sale is as follows (in thousands):
Property Dispositions: During the six months ended June 30, 2017, we sold the following properties (dollars in thousands):
During the year ended December 31, 2016, we sold 30 properties (62 buildings) with a combined 8.0 million square feet for an aggregate gross sales price of $1.3 billion, excluding closing costs. |
Marketable Securities |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | Marketable Securities All of our marketable securities are classified as available-for-sale and consist of United States Treasury notes, which mature in 2019, and common stock. Available-for-sale securities are presented on our condensed consolidated balance sheets at fair value. Changes in values of these securities are recognized in accumulated other comprehensive income (loss). Realized gains and losses are recognized in earnings only upon the sale of the securities. We evaluate our marketable securities for impairment each reporting period. For securities with unrealized losses, we review the underlying cause of the decline in value and the estimated recovery period, as well as the severity and duration of the decline. In our evaluation, we consider our ability and intent to hold these investments for a reasonable period of time sufficient for us to recover our cost basis. To the extent an other-than-temporary impairment is deemed to have occurred, an impairment charge is recorded and a new cost basis is established. Below is a summary of our marketable securities as of June 30, 2017 (in thousands):
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Indebtedness |
6 Months Ended |
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Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Unsecured Revolving Credit Facility and Term Loan: We are party to a credit agreement pursuant to which the lenders agreed to provide a $750.0 million unsecured revolving credit facility, a $200.0 million 5-year term loan facility, and a $200.0 million 7-year term loan facility. The revolving credit facility has a scheduled maturity date of January 28, 2019, which maturity date may be extended for up to two additional periods of six months at our option subject to satisfaction of certain conditions and the payment of an extension fee of 7.5 basis points of the aggregate amount available under the revolving credit facility. The 5-year term loan and the 7-year term loan have scheduled maturity dates of January 28, 2020 and January 28, 2022, respectively. The credit agreement permits us to utilize up to $100.0 million of the revolving credit facility for the issuance of letters of credit. Amounts outstanding under the credit agreement generally may be prepaid at any time without premium or penalty, subject to certain exceptions. We have the right to request increases in the aggregate maximum amount of borrowings available under the revolving credit facility and term loans up to an additional $1.15 billion, subject to certain conditions. Borrowings under the 5-year term loan and 7-year term loan will, subject to certain exceptions, bear interest at a LIBOR rate plus a margin of 90 to 180 basis points for the 5-year term loan and 140 to 235 basis points for the 7-year term loan, in each case depending on our credit rating. Borrowings under the revolving credit facility will, subject to certain exceptions, bear interest at a rate equal to, at our option, either a LIBOR rate or a base rate plus a margin of 87.5 to 155 basis points for LIBOR rate advances and 0 to 55 basis points for base rate advances, in each case depending on our credit rating. In addition, we are required to pay a facility fee of 12.5 to 30 basis points, depending on our credit rating, on the borrowings available under the revolving credit facility, whether or not utilized. Borrowings under our revolving credit facility currently bear interest at LIBOR plus a spread, which was 125 basis points as of June 30, 2017. As of June 30, 2017, the interest rate payable on borrowings under our revolving credit facility was 2.47%. As of June 30, 2017, we had no balance outstanding and $750.0 million available under our revolving credit facility and the facility fee as of June 30, 2017 was 25 basis points. Our term loans currently bear interest at a rate of LIBOR plus a spread, which was 140 and 180 basis points for the 5-year and 7-year term loan, respectively, as of June 30, 2017. As of June 30, 2017, the interest rates for the amounts outstanding under our 5-year term loan and 7-year term loan were 2.62% and 3.02%, respectively. As of June 30, 2017, we had $200.0 million outstanding under each of our 5-year and 7-year term loans. Debt Covenants: Our public debt indenture and related supplements and our credit agreement contain a number of financial and other covenants, including covenants that restrict our ability to incur indebtedness or to make distributions under certain circumstances and require us to maintain financial ratios and a minimum net worth. At June 30, 2017, we believe we were in compliance with all of our respective covenants under our public debt indenture and related supplements and our credit agreement. Senior Unsecured Notes: At June 30, 2017, we had senior unsecured notes of $675.0 million (excluding net discounts and unamortized deferred financing fees) maturing from 2018 through 2042. On June 1, 2017, we announced the redemption at par of $250.0 million of our 6.65% senior unsecured notes due 2018. The notes were redeemed on July 15, 2017 (see Note 16). Mortgage Notes Payable: At June 30, 2017, three of our properties with an aggregate net book value of $63.3 million had secured mortgage notes totaling $35.4 million (including net premiums and unamortized deferred financing fees) maturing from 2021 through 2026. In April 2017, we repaid at par $41.3 million of mortgage debt at Parkshore Plaza and recognized a loss on early extinguishment of debt of $0.1 million from prepayment fees and the write off of unamortized deferred financing fees, net of the write off of an unamortized premium. |
Shareholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity Common Share Issuances: See Note 11 for information regarding equity issuances related to share-based compensation. Common Share Repurchases: On March 17, 2016, our Board of Trustees authorized the repurchase of up to $150.0 million of our outstanding common shares over the twelve month period following the date of authorization. In March 2017, this share repurchase authorization, of which $106.6 million was not utilized, expired. On March 15, 2017, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares over the twelve month period following the date of authorization. During the six months ended June 30, 2017, we did not purchase any common shares. During the six months ended June 30, 2017, certain of our employees surrendered 6,694 common shares owned by them to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares under the Equity Commonwealth 2015 Omnibus Incentive Plan, as amended (the 2015 Incentive Plan). Preferred Share Redemption: On May 15, 2016, we redeemed all of our 11,000,000 outstanding series E preferred shares at a price of $25.00 per share, for a total of $275.0 million, plus any accrued and unpaid dividends. The redemption payment occurred on May 16, 2016 (the first business day following the redemption date). We recorded $9.6 million related to the excess fair value of consideration paid over the carrying value of the preferred shares as a reduction to net income attributable to common shareholders for the three and six months ended June 30, 2016. Preferred Share Distributions: In 2017, our Board of Trustees declared distributions on our series D preferred shares to date as follows:
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Noncontrolling Interest |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest | Noncontrolling Interest Noncontrolling interest represents the portion of the units in the Operating Trust not beneficially owned by the Company. An operating partnership unit (OP Unit) and a share of our common stock have essentially the same economic characteristics. Distributions with respect to OP Units will generally mirror distributions with respect to the Company’s common shares. Unitholders (other than the Company) generally have the right, commencing six months from the date of issuance of such OP Units, to cause the Operating Trust to redeem their OP Units in exchange for cash or, at the option of the Company, common shares of the Company on a one-for-one basis. As sole trustee, the Company will have the sole discretion to elect whether the redemption right will be satisfied by the Company in cash or the Company’s common shares. As a result, the Noncontrolling interest is classified as permanent equity. As of June 30, 2017, the portion of the Operating Trust not beneficially owned by the Company is in the form of LTIP Units (see Note 11 for a description of LTIP Units). LTIP Units may be subject to additional vesting requirements. The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the six months ended June 30, 2017:
The carrying value of the Noncontrolling interest is allocated based on the number of LTIP Units in proportion to the number of LTIP Units plus the number of common shares. We adjust the noncontrolling interest balance at the end of each period to reflect the noncontrolling partners’ interest in the net assets of the Operating Trust. Net income is allocated to the Noncontrolling interest in the Operating Trust based on the weighted average ownership percentage during the period. Equity Commonwealth’s weighted average ownership interest in the Operating Trust was 99.97% and 99.97% for the three and six months ended June 30, 2017. |
Cumulative Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative Other Comprehensive Income (Loss) | Cumulative Other Comprehensive Income (Loss) The following table presents the amounts recognized in cumulative other comprehensive income (loss) for the three and six months ended June 30, 2017 (in thousands):
The following table presents reclassifications out of cumulative other comprehensive income (loss) for the three and six months ended June 30, 2017 (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and are generally not subject to federal and state income taxes provided we distribute a sufficient amount of our taxable income to our shareholders and meet other requirements for qualifying as a REIT. We are also subject to certain state and local taxes without regard to our REIT status. We have a net operating loss carryforward from prior years and we have fully reserved the associated deferred tax assets due to the uncertainty of our ability to utilize the net operating losses in the future. Our provision for income taxes consists of the following (in thousands):
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Risk Management Objective of Using Derivatives We are exposed to certain risks relating to our ongoing business operations, including the effect of changes in interest rates. The only risk we currently manage by using derivative instruments is related to our interest rate risk. We may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions. We do not intend to utilize derivatives for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, we only enter into derivative financial instruments with counterparties with high credit ratings or with major financial institutions with which we and our affiliates may also have other financial relationships. We do not anticipate that any of the counterparties will fail to meet their obligations. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we use interest rate caps, as part of our interest rate risk management strategy. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in cumulative other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2017, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in cumulative other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $0.2 million will be reclassified from cumulative other comprehensive income (loss) as an increase to interest expense. On March 4, 2016, we purchased an interest rate cap with a LIBOR strike price of 2.50%. The interest rate cap, effective April 1, 2016, has a notional amount of $400.0 million and a maturity date of March 1, 2019. As of June 30, 2017, we had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk:
The table below presents the fair value of our derivative financial instrument as well as its classification on the condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016 (amounts in thousands):
The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and six months ended June 30, 2017 and 2016 (amounts in thousands):
Credit-risk-related Contingent Features As of June 30, 2017, we did not have any derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Equity Commonwealth 2015 Omnibus Incentive Plan Recipients of the Company’s restricted shares have the same voting rights as any other common shareholder. During the period of restriction, the Company’s unvested restricted shareholders are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder. The restricted shares are service based awards and vest over a four-year period. Recipients of the Company’s restricted stock units (RSUs) are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect of the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market based awards with a service condition and recipients may earn RSUs based on the Company’s total shareholder return (TSR) relative to the TSRs of the companies that comprise the NAREIT Office Index over a three year performance period. Following the end of the performance period, the number of earned awards will be determined. The earned awards vest in two tranches with 50% of the earned award vesting at the end of the performance period and the remaining 50% of the earned award vesting one year after the end of the performance period, subject to the grant recipient’s continued employment. Compensation expense for the RSUs is determined using a Monte Carlo simulation model and is recognized ratably from the grant date to the vesting date of each tranche. LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers, or trustees of the Operating Trust, the Company or their subsidiaries (LTIP Units). Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time. 2017 Equity Award Activity On June 20, 2017, in accordance with the Company’s compensation plan for independent Trustees, the Compensation Committee of our Board of Trustees (the Committee) awarded each of the nine independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2017-2018 year of service on the Board of Trustees. These awards equated to 3,156 shares or time-based LTIP Units per Trustee, for a total of 25,248 shares and 3,156 time-based LTIP Units, valued at $31.69 per share and unit, the closing price of our common shares on the NYSE on that day. These shares and time-based LTIP Units vest one year after the date of the award. On January 24, 2017, the Committee approved a grant of 119,288 LTIP Units (which includes time-based LTIP Units and market-based LTIP Units), 76,424 restricted shares and 155,168 RSUs at target (386,756 RSUs at maximum) to the Company’s officers, certain employees and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2016. The LTIP Unit grant includes 39,364 time-based LTIP Units and 79,924 market-based LTIP Units at target (199,211 market-based LTIP Units at maximum). The restricted shares and time-based LTIP Units were granted on January 24, 2017 and were valued at $31.47 per share, the closing price of our common shares on the NYSE on that day. The assumptions and fair values for the RSUs and market-based LTIP Units granted for the six months ended June 30, 2017 are included in the following table on a per share and unit basis.
2016 Equity Award Activity On June 15, 2016, in accordance with the Company’s compensation plan for independent Trustees, the Committee awarded each of the nine independent Trustees $0.1 million in restricted shares as part of their compensation for the 2016-2017 year of service on the Board of Trustees. These awards equated to 3,463 shares per Trustee, for a total of 31,167 shares, valued at $28.88 per share, the closing price of our common shares on the NYSE on that day. These shares vest one year after the date of the award. On January 26, 2016, the Committee approved a grant of 136,623 restricted shares and 277,386 RSUs at target (691,385 RSUs at maximum) to the Company’s officers, certain employees and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2015. Outstanding Equity Awards As of June 30, 2017, the estimated future compensation expense for all unvested restricted shares and time-based LTIP Units was $13.2 million. Compensation expense for the restricted share and time-based LTIP Unit awards is being recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The weighted average period over which the future compensation expense will be recorded for the restricted shares and time-based LTIP units is approximately 2.1 years. As of June 30, 2017, the estimated future compensation expense for all unvested RSUs and market-based LTIP Units was $21.6 million. The weighted average period over which the future compensation expense will be recorded for the RSUs and market-based LTIP Units is approximately 2.2 years. During the three months ended June 30, 2017 and 2016, we recorded $5.5 million and $4.6 million, respectively, and during the six months ended June 30, 2017 and 2016, we recorded $10.7 million and $9.0 million, respectively, of compensation expense, net of forfeitures, in general and administrative expense for grants to our Trustees and employees related to our 2015 Incentive Plan. At June 30, 2017, 1,628,305 shares/units remain available for issuance under the 2015 Incentive Plan. |
Fair Value of Assets and Liabilities |
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Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents assets measured at fair value during 2017, categorized by the level of inputs used in the valuation of the assets (dollars in thousands):
Interest Rate Cap Contract The fair value of our interest rate cap contract is determined using the net discounted cash flows of the derivative based on the market based interest rate curve (level 2 inputs) and adjusted for our credit spread and the actual and estimated credit spreads of the counterparties (level 3 inputs). Although we have determined that the majority of the inputs used to value our derivative fall within level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivative utilize level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and the counterparties. As of June 30, 2017, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative position and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivative. As a result, we have determined that our derivative valuation in its entirety is classified as level 2 inputs in the fair value hierarchy. Properties Held and Used and Properties Held for Sale As part of our office repositioning strategy, and pursuant to our accounting policy, in 2017, we evaluated the recoverability of the carrying values of each of the real estate assets that comprised our portfolio and determined that due to the shortening of the expected periods of ownership as a result of the office repositioning strategy and current estimates of market value less estimated costs to sell, it was necessary to reduce the net book value of a portion of the real estate assets in our portfolio to their estimated fair values. We anticipate the potential disposition of certain properties prior to the end of their remaining useful lives. As a result, in the first quarter of 2017, we recorded an impairment charge related to 25 S. Charles Street of $1.3 million in accordance with our impairment analysis procedures. We determined this impairment based on third party offer prices, which are level 2 inputs according to the fair value hierarchy established in ASC 820. We reduced the aggregate carrying value of this property from $24.6 million to its estimated fair value less estimated costs to sell of $23.3 million. This property was sold in April 2017 (see Note 3 for additional information). In the second quarter of 2017, we recorded an impairment charge related to the Five Property Portfolio held for sale as of June 30, 2017 of $18.4 million in accordance with our impairment analysis procedures. We determined this impairment based on third party offer prices, which are level 2 inputs according to the fair value hierarchy established in ASC 820. We reduced the aggregate carrying value of these properties from $99.0 million to their estimated fair value less estimated costs to sell of $80.6 million. We evaluated each of our properties and determined there were no additional valuation adjustments necessary at June 30, 2017. Financial Instruments In addition to the assets and liabilities described in the above table, our financial instruments include our cash and cash equivalents, real estate mortgages receivable, restricted cash, marketable securities, senior unsecured debt and mortgage notes payable. At June 30, 2017 and December 31, 2016, the fair value of these additional financial instruments were not materially different from their carrying values, except as follows (in thousands):
The fair values of our senior notes and mortgage notes payable are based on estimates using discounted cash flow analyses and currently prevailing interest rates adjusted by credit risk spreads (level 3 inputs). Other financial instruments that potentially subject us to concentrations of credit risk consist principally of rents receivable; however, as of June 30, 2017, no single tenant of ours is responsible for more than 7.5% of our total annualized rents. Our derivative financial instruments, including interest rate swaps and cap, are entered with major financial institutions and we monitor the amount of credit exposure to any one counterparty. |
Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Earnings Per Common Share The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):
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Segment Information |
6 Months Ended |
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Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Our primary business is the ownership and operation of office properties, and we currently have one reportable segment. More than 95% of our revenues for the six months ended June 30, 2017 are from office properties. |
Related Person Transactions |
6 Months Ended |
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Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions The following discussion includes a description of our related person transactions for the six months ended June 30, 2017 and 2016. Two North Riverside Plaza Joint Venture Limited Partnership: We have a lease with Two North Riverside Plaza Joint Venture Limited Partnership, an entity associated with Mr. Zell, our Chairman, to occupy office space on the twentieth and twenty-first floors of Two North Riverside Plaza in Chicago, Illinois (20th/21st Floor Office Lease). The initial term of the lease is approximately five years, with one 5-year renewal option. We have completed improvements to the office space utilizing the $0.7 million tenant improvement allowance pursuant to the lease. In connection with the 20th/21st Floor Office Lease, we also have a lease with Two North Riverside Plaza Joint Venture Limited Partnership for storage space in the basement of Two North Riverside Plaza. The lease expires December 31, 2020; however, each party has the right to terminate on 30 days' prior written notice. During the three months ended June 30, 2017 and 2016, we recognized expense of $0.2 million and $0.2 million, respectively, and during the six months ended June 30, 2017 and 2016, we recognized expense of $0.4 million and $0.4 million, respectively, pursuant to the 20th/21st Floor Office Lease and the related storage space. Related/Corvex: On July 31, 2014, at our 2014 annual meeting of shareholders, our shareholders voted to approve the reimbursement of approximately $33.5 million of verified expenses incurred by Related Fund Management, LLC and Corvex Management LP (Related/Corvex) beginning February 2013 in connection with their consent solicitations to remove our former Trustees, elect the new Board of Trustees and to engage in related litigation. We paid approximately $16.7 million during the year ended December 31, 2014. Approximately $8.4 million was to be reimbursed only if the average closing price of our common shares was at least $26.00 (as adjusted for any share splits or share dividends) during the one year period after the date on which the reimbursement was approved by shareholders, and up to $8.4 million was to be reimbursed only if the average closing price of our common shares was at least $26.00 (as adjusted for any share splits or share dividends) during the one year period between the first and second anniversaries of the date on which the reimbursement was approved by shareholders. The average closing price of our common shares was at least $26.00 during both the first and second one year periods after the date on which the reimbursement was approved by shareholders, and as a result, in August 2016 and 2015 we paid an $8.2 million final payment and $8.4 million, respectively, to Related/Corvex. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 15, 2017, we redeemed at par $250.0 million of our 6.65% senior unsecured notes due 2018 (see Note 5). In July 2017, we sold 1500 Market Street, with 1,759,193 square feet for $328.0 million, excluding closing costs. This property was classified as held for sale as of June 30, 2017 (see Note 3). |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of EQC have been prepared without audit. Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K (Annual Report) for the year ended December 31, 2016. Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances with or among our subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years’ financial statements to conform to the current year’s presentation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets. Share amounts are presented in whole numbers, except where noted. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-01, Clarifying the Definition of a Business, that changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. This update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. We early adopted this ASU effective January 1, 2017, and the adoption of this ASU did not have a material impact on our consolidated financial statements. In February 2017, the FASB issued ASU 2017-05 Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. ASU 2017-05 is designed to provide guidance on how to recognize gain and losses on sales, including partial sales, of nonfinancial assets to noncustomers. ASU 2017-05 is effective beginning January 1, 2018. Early adoption is permitted but the standard is required to be adopted concurrently with ASU 2014-09. We are evaluating the impact ASU 2017-05 will have on our financial position and results of operations. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which amends FASB Accounting Standards Codification (ASC) Topic 230, Statements of Cash Flows, to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We do not expect that the adoption of this ASU will have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires more timely recognition of credit losses associated with financial assets. This update is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. We are currently in the process of evaluating the impact, if any, the adoption of this ASU will have on our consolidated financial statements. In February 2016, the FASB issued ASU 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 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. ASU 2016-02 supersedes previous leasing standards. ASU 2016-02 is effective for us for reporting periods beginning after December 15, 2018, with early adoption permitted. We are still assessing the impact of adopting ASU 2016-02. For leases where we are the lessor, we expect to account for these leases using an approach that is substantially equivalent to current guidance. However, we expect that certain executory and non-lease components (such as common area maintenance), will need to be accounted for separately from the lease component of the lease with the lease component continuing to be recognized on a straight-line basis over the lease term. We intend to account for the executory and non-lease components under the new revenue recognition guidance in ASU 2014-09, upon our adoption of ASU 2016-02. When the revenue for such activities is not separately stipulated in the lease, we will need to separate the lease components of revenue due under leases from the non-lease components. Additionally, under ASU 2016-02 lessors may only capitalize incremental direct leasing costs. For leases in which we are the lessee, we expect to recognize a right-of-use asset and a lease liability equal to the present value of the minimum lease payments with rent expense being recognized on a straight-line basis and the right of use asset being reduced when lease payments are made. In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will require entities to measure their equity investments at fair value and recognize any changes in fair value in net income, with certain exceptions, rather than other comprehensive income. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact that the adoption of the new standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The objective of ASU 2014-09, as amended, is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that an entity should recognize 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. In applying ASU 2014-09, companies will perform a five-step analysis of transactions to determine when and how revenue is recognized. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB’s ASC, and more particularly lease contracts with customers, which are a scope exception. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017, with early adoption permitted. While our consideration of this matter is ongoing, we are not planning to early adopt ASU 2014-09, as amended, and we expect to use the modified retrospective method of adoption that will result in a cumulative effect adjustment as of the date of adoption. We developed a project plan and have begun the execution of this plan, which consists of gathering and evaluating the inventory of our revenue streams. We believe the effects on our existing accounting policies will be associated with our non-leasing revenue components. We continue to evaluate the potential impact to our consolidated financial statements as a result of this ASU. |
Marketable Securities | All of our marketable securities are classified as available-for-sale and consist of United States Treasury notes, which mature in 2019, and common stock. Available-for-sale securities are presented on our condensed consolidated balance sheets at fair value. Changes in values of these securities are recognized in accumulated other comprehensive income (loss). Realized gains and losses are recognized in earnings only upon the sale of the securities. We evaluate our marketable securities for impairment each reporting period. For securities with unrealized losses, we review the underlying cause of the decline in value and the estimated recovery period, as well as the severity and duration of the decline. In our evaluation, we consider our ability and intent to hold these investments for a reasonable period of time sufficient for us to recover our cost basis. To the extent an other-than-temporary impairment is deemed to have occurred, an impairment charge is recorded and a new cost basis is established. |
Real Estate Properties (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Properties Held for Sale and Balance Sheet Information for all Properties Classified as Held for sale | As of June 30, 2017, we classified the following properties as held for sale (dollars in thousands):
Summarized balance sheet information for the properties classified as held for sale is as follows (in thousands):
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Summary of Properties Sold and Income Statement Information for Properties Disposed of | During the six months ended June 30, 2017, we sold the following properties (dollars in thousands):
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Marketable Securities (Tables) |
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Marketable Securities | Below is a summary of our marketable securities as of June 30, 2017 (in thousands):
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Shareholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Declared Distributions | In 2017, our Board of Trustees declared distributions on our series D preferred shares to date as follows:
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Noncontrolling Interest (Tables) |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Issued and Outstanding Common Shares | The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the six months ended June 30, 2017:
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Schedule of Issued and Outstanding Units | The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the six months ended June 30, 2017:
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Cumulative Other Comprehensive Income (Loss) (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amounts Recognized in Cumulative Other Comprehensive Income (Loss) | The following table presents the amounts recognized in cumulative other comprehensive income (loss) for the three and six months ended June 30, 2017 (in thousands):
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Schedule of Reclassifications Out of Cumulative Other Comprehensive Income (Loss) | The following table presents reclassifications out of cumulative other comprehensive income (loss) for the three and six months ended June 30, 2017 (in thousands):
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Provision for Income Taxes | Our provision for income taxes consists of the following (in thousands):
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Derivative Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Interest Rate Derivatives Designated as Cash Flow Hedges of Interest Rate Risk | As of June 30, 2017, we had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk:
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Schedule of Fair Value of Derivative Financial Instruments | The table below presents the fair value of our derivative financial instrument as well as its classification on the condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016 (amounts in thousands):
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Schedule of Gain or Loss Recognized on Interest Rate Derivatives Designated as Cash Flow Hedges | The table below details the location in the financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and six months ended June 30, 2017 and 2016 (amounts in thousands):
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Share-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||
Summary of Assumptions and Fair Values for RSUs and LTIP Units Granted in the Period | The assumptions and fair values for the RSUs and market-based LTIP Units granted for the six months ended June 30, 2017 are included in the following table on a per share and unit basis.
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Fair Value of Assets and Liabilities (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value | The table below presents assets measured at fair value during 2017, categorized by the level of inputs used in the valuation of the assets (dollars in thousands):
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Schedule of Fair Value and Carrying Value of Financial Instruments | At June 30, 2017 and December 31, 2016, the fair value of these additional financial instruments were not materially different from their carrying values, except as follows (in thousands):
|
Earnings Per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):
|
Business (Details) ft² in Millions, $ in Billions |
Jun. 30, 2017
USD ($)
ft²
property
building
parcel
|
---|---|
Noncontrolling Interest [Line Items] | |
Number of land parcels | parcel | 1 |
Cash, cash equivalents, and short-term investments | $ | $ 2.2 |
Consolidated Properties | |
Noncontrolling Interest [Line Items] | |
Number of real estate properties | property | 21 |
Number of buildings | building | 47 |
Square footage | ft² | 11.7 |
Operating Trust | |
Noncontrolling Interest [Line Items] | |
Noncontrolling interest, ownership percentage by parent | 99.97% |
Real Estate Properties - Narrative (Details) $ in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2017
USD ($)
ft²
building
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
ft²
property
building
|
|
Real Estate [Abstract] | |||
Real estate improvements | $ | $ 31,800 | $ 59,200 | |
Number of properties held for sale | property | 0 | ||
Disposed of by Sale | |||
Real Estate Properties [Line Items] | |||
Number of properties sold | property | 30 | ||
Number of buildings sold | building | 9 | 62 | |
Square footage (in sqft) | ft² | 1,698,310 | 8,000,000 | |
Gross sales price | $ | $ 211,625 | $ 1,300,000 |
Real Estate Properties - Summary of Balance Sheet Information for all Properties Classified as Held for sale (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Liabilities related to properties held for sale | $ 2,019 | $ 0 |
Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Real estate properties | 300,840 | |
Acquired real estate leases | 147 | |
Rents receivable, net of allowance for doubtful accounts of $66 | 25,907 | |
Other assets, net | 21,309 | |
Assets held for sale | 348,203 | |
Accounts payable and accrued expenses | 1,054 | |
Rent collected in advance | 109 | |
Security deposits | 856 | |
Liabilities related to properties held for sale | 2,019 | |
Rents receivable, allowance for doubtful accounts | $ 66 |
Marketable Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Estimated Fair Value | $ 278,072 | $ 0 |
Marketable securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost or Amortized Cost | 276,368 | |
Unrealized Gains | 1,704 | |
Estimated Fair Value | $ 278,072 |
Shareholders' Equity - Schedule of Declared Distributions (Details) - Series D - $ / shares |
Aug. 15, 2017 |
Jun. 30, 2017 |
May 15, 2017 |
Apr. 10, 2017 |
Feb. 15, 2017 |
Jan. 12, 2017 |
---|---|---|---|---|---|---|
Class of Stock [Line Items] | ||||||
Dividend declared (in dollars per share) | $ 0.40625 | $ 0.40625 | $ 0.40625 | |||
Dividend paid (in dollars per share) | $ 0.40625 | $ 0.40625 | ||||
Scenario, Forecast | ||||||
Class of Stock [Line Items] | ||||||
Dividend paid (in dollars per share) | $ 0.40625 |
Noncontrolling Interest (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017
shares
| |
Noncontrolling Interest [Abstract] | |
Common stock, conversion term | 6 months |
Common stock, conversion basis (in shares) | 1 |
Operating Trust | |
Noncontrolling Interest [Line Items] | |
Noncontrolling interest, ownership percentage by parent | 99.97% |
Noncontrolling Interest - Common Shares and Units Activity (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017
shares
| |
Increase (Decrease) in Stockholders' Equity | |
Ownership percentage by noncontrolling owners | 0.03% |
Common Shares | |
Increase (Decrease) in Stockholders' Equity | |
Outstanding, beginning balance (in shares) | 123,994,465 |
Restricted share and time-based LTIP Unit grants, net of forfeitures (in shares) | 94,978 |
Outstanding, ending balance (in shares) | 124,089,443 |
Common Shares and LTIP Units | |
Increase (Decrease) in Stockholders' Equity | |
Outstanding, beginning balance (in shares) | 123,994,465 |
Restricted share and time-based LTIP Unit grants, net of forfeitures (in shares) | 137,498 |
Outstanding, ending balance (in shares) | 124,131,963 |
Noncontrolling Interest | LTIP Units | |
Increase (Decrease) in Stockholders' Equity | |
Outstanding, beginning balance (in shares) | 0 |
Restricted share and time-based LTIP Unit grants, net of forfeitures (in shares) | 42,520 |
Outstanding, ending balance (in shares) | 42,520 |
Cumulative Other Comprehensive Income (Loss) - Schedule of Reclassifications Out of Cumulative Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Reclassifications out of cumulative other comprehensive income (loss) | ||||
Interest expense | $ 14,863 | $ 21,300 | $ 29,877 | $ 43,647 |
Amounts Reclassified from Cumulative Other Comprehensive Income (Loss) to Net (Loss) Income | Interest rate cap contract | ||||
Reclassifications out of cumulative other comprehensive income (loss) | ||||
Interest expense | $ 6 | $ 7 |
Income Taxes - Schedule of Provision for Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Current: | ||||
State | $ 45 | $ 165 | $ 215 | $ 240 |
Federal | 0 | 0 | 5 | 0 |
Current income tax expense (benefit) | $ 45 | $ 165 | $ 220 | $ 240 |
Derivative Instruments - Narrative (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Apr. 01, 2017 |
Mar. 04, 2016 |
|
LIBOR | Interest rate cap | |||
Derivative [Line Items] | |||
Derivative, cap interest rate, percent | 2.50% | ||
Notional amount | $ 400,000,000 | ||
Cash flow hedging | Designated as hedging instrument | |||
Derivative [Line Items] | |||
Estimated gain (loss) reclassification from OCI to income | $ (200,000) | ||
Cash flow hedging | Designated as hedging instrument | Interest rate cap | |||
Derivative [Line Items] | |||
Notional amount | $ 400,000,000 |
Derivative Instruments - Schedule of Outstanding Interest Rate Derivatives Designated as Cash Flow Hedges of Interest Rate Risk (Details) - Interest rate cap - Cash flow hedging - Designated as hedging instrument |
Jun. 30, 2017
USD ($)
financial_instrument
|
---|---|
Derivative [Line Items] | |
Number of Instruments | financial_instrument | 1 |
Notional Amount | $ | $ 400,000,000 |
Derivative Instruments - Schedule of Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Interest rate cap | Cash flow hedging | Designated as hedging instrument | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Interest Rate Derivative Designated as Hedging Instrument | $ 46 | $ 314 |
Derivative Instruments - Schedule of Gain or Loss Recognized on Interest Rate Derivatives Designated as Cash Flow Hedges (Details) - Cash flow hedging - Designated as hedging instrument - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of loss recognized in cumulative other comprehensive income (loss) | $ (114) | $ (326) | $ (268) | $ (771) |
Amount of loss reclassified from cumulative other comprehensive income (loss) into interest expense | $ 6 | $ 1,106 | $ 7 | $ 2,224 |
Share-Based Compensation - Summary of Assumptions and Fair Values for Restricted Stock Units Granted in the Period (Details) - RSUs and LTIP Units |
6 Months Ended |
---|---|
Jun. 30, 2017
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
Fair value of RSUs and market-based LTIP units granted (in dollars per share) | $ 39.81 |
Expected term | 4 years |
Expected volatility | 0.00% |
Expected dividend yield | 1.59% |
Risk-free rate | 1.49% |
Fair Value of Assets and Liabilities - Schedule of Assets and Liabilities Measure at Fair Value (Details) - Recurring $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Marketable securities | |
Recurring Fair Value Measurements: | |
Assets, fair value | $ 278,072 |
Level 1 | Marketable securities | |
Recurring Fair Value Measurements: | |
Assets, fair value | 278,072 |
Level 2 | Marketable securities | |
Recurring Fair Value Measurements: | |
Assets, fair value | 0 |
Level 3 | Marketable securities | |
Recurring Fair Value Measurements: | |
Assets, fair value | 0 |
Interest rate cap | |
Recurring Fair Value Measurements: | |
Assets, fair value | 46 |
Interest rate cap | Level 1 | |
Recurring Fair Value Measurements: | |
Assets, fair value | 0 |
Interest rate cap | Level 2 | |
Recurring Fair Value Measurements: | |
Assets, fair value | 46 |
Interest rate cap | Level 3 | |
Recurring Fair Value Measurements: | |
Assets, fair value | $ 0 |
Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Fair value of assets and liabilities | ||||||
Loss on asset impairment | $ 18,428 | $ 1,300 | $ 43,736 | $ 19,714 | $ 43,736 | |
Real estate properties, net | 1,633,299 | $ 1,633,299 | $ 2,101,635 | |||
Total rents | Credit concentration | ||||||
Fair value of assets and liabilities | ||||||
Concentration risk, percent | 7.50% | |||||
Real Estate Held-for-sale | ||||||
Fair value of assets and liabilities | ||||||
Loss on asset impairment | 18,400 | |||||
Real Estate Held-for-sale | Level 2 | Market Approach Valuation Technique | ||||||
Fair value of assets and liabilities | ||||||
Assets, fair value | 80,600 | 23,300 | $ 80,600 | |||
Fair Value, Measurements, Nonrecurring | Disposition Plan | Carrying Amount | ||||||
Fair value of assets and liabilities | ||||||
Real estate properties, net | $ 99,000 | $ 24,600 | $ 99,000 |
Fair Value of Assets and Liabilities - Schedule of Fair Value and Carrying Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Carrying Amount | ||
Fair value of financial instruments | ||
Senior unsecured debt and mortgage notes payable | $ 1,109,667 | $ 1,151,634 |
Fair Value | ||
Fair value of financial instruments | ||
Senior unsecured debt and mortgage notes payable | $ 1,123,539 | $ 1,167,031 |
Earnings Per Common Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Footnote) (Details) - RSUs and LTIP Units - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
RSUs vested (in shares) | 0 | |||
Common shares issued (in shares) | 1,191,000 | 1,429,000 | 1,191,000 | 1,429,000 |
Weighted average common shares outstanding — diluted (in shares) | 0 | 1,429,000 | 1,146,000 | 1,555,000 |
Segment Information - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Percentage of revenue from office properties (more than) | 95.00% |
Subsequent Events - Narrative (Details) - Subsequent event $ in Millions |
1 Months Ended | |
---|---|---|
Jul. 15, 2017
USD ($)
|
Jul. 31, 2017
USD ($)
ft²
|
|
Held-for-sale | 1500 Market Street | ||
Subsequent Event [Line Items] | ||
Square footage (in sqft) | ft² | 1,759,193 | |
Gross sales price | $ 328.0 | |
6.65% Senior Unsecured Notes Due 2018 | ||
Subsequent Event [Line Items] | ||
Debt redeemed at par | $ 250.0 | |
Debt instrument, interest rate | 6.65% |
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