Maryland
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26-4273474
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(State of Organization)
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(IRS Employer Identification No.)
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Title Of Each Class
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Trading Symbol(s)
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Name Of Each Exchange On Which Registered
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Common Shares of Beneficial Interest
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OPI
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The Nasdaq Stock Market LLC
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5.875% Senior Notes due 2046
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OPINI
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The Nasdaq Stock Market LLC
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Our sales and acquisitions of properties,
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Our ability to compete for acquisitions and tenancies effectively,
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The likelihood that our tenants will pay rent or be negatively affected by cyclical economic conditions or government budget constraints,
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The likelihood that our tenants will renew or extend their leases and not exercise early termination options pursuant to their leases or that we will obtain replacement tenants,
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The likelihood that our rents will increase when we renew or extend our leases or enter new leases,
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Our ability to pay distributions to our shareholders and to increase the amount of such distributions,
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Our expectations regarding our future financial performance including funds from operations, or FFO, available for common shareholders, normalized funds from operations, or Normalized FFO, available for common shareholders, property net operating income, or NOI, and cash basis NOI,
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Our policies and plans regarding investments, financings and dispositions,
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Our expectations regarding occupancy at our properties,
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The future availability of borrowings under our revolving credit facility,
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Our expectation that there will be opportunities for us to acquire, and that we will acquire, additional properties primarily leased to single tenants and tenants with high credit quality characteristics like government entities,
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Our expectations regarding demand for leased space,
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Our expectations regarding capital expenditures,
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Our ability to raise debt or equity capital,
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Our ability to pay interest on and principal of our debt,
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Our ability to appropriately balance our use of debt and equity capital,
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Our ability to successfully execute our capital recycling program,
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Our credit ratings,
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Our expectation that we benefit from our relationships with The RMR Group Inc., or RMR Inc.,
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The credit qualities of our tenants,
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Our qualification for taxation as a real estate investment trust, or REIT,
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Changes in federal or state tax laws, and
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Other matters.
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The impact of conditions in the economy and the capital markets on us and our tenants,
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Competition within the real estate industry, particularly in those markets in which our properties are located,
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The impact of changes in the real estate needs and financial conditions of our tenants,
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Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
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The impact of any U.S. government shutdown on our ability to collect rents or pay our operating expenses, debt obligations and distributions to shareholders on a timely basis,
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Actual and potential conflicts of interest with our related parties, including our Managing Trustees, The RMR Group LLC, or RMR LLC, RMR Inc., and others affiliated with them,
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Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes, and
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Acts of terrorism, outbreaks of so-called pandemics or other manmade or natural disasters beyond our control.
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Our ability to make future distributions to our shareholders and to make payments of principal and interest on our indebtedness depends upon a number of factors, including our future earnings, the capital costs we incur to lease our properties and our working capital requirements. We may be unable to pay our debt obligations or to maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,
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Our ability to grow our business and increase our distributions depends in large part upon our ability to buy properties and lease them for rents, less their property operating costs, that exceed our capital costs. We may be unable to identify properties that we want to acquire, and we may fail to reach agreement with the sellers and complete the purchases of any properties we want to acquire. In addition, any properties we may acquire may not provide us with rents less property operating costs that exceed our capital costs or achieve our expected returns,
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We may fail to maintain, or we may elect to change, our target payout ratio for distributions to shareholders of 75% of cash available for distribution. Further, our Board of Trustees sets and resets our distribution rate from time to time after considering many factors, including cash available for distribution. Accordingly, future distribution rates may be increased or decreased and there is no assurance as to the rate at which future distributions will be paid,
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We plan to selectively sell certain properties from time to time to fund future acquisitions and to strategically update, rebalance and reposition our investment portfolio, which we refer to as our capital recycling program. We cannot be sure we will sell any of these properties or what the terms of any sales may be nor that we will acquire replacement properties that improve our asset quality or our ability to increase our distributions to shareholders,
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We may not succeed in maintaining our leverage consistent with our current investment grade ratings or levels that the market or credit rating agencies believe are appropriate,
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Some of our tenants may not renew expiring leases, and we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties,
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Some government tenants may exercise their rights to vacate their space before the stated expirations of their leases, and we may be unable to obtain new tenants to maintain the historical occupancy rates of, or rents from, our properties,
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Rents that we can charge at our properties may decline upon renewals or expirations because of changing market conditions or otherwise,
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Leasing for some of our properties depends on a single tenant and we may be adversely affected by the bankruptcy, insolvency, a downturn of business or a lease termination of a single tenant,
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Our belief that there is a likelihood that tenants may renew or extend our leases prior to their expirations whenever they have made significant investments in the leased properties, or because those properties may be of strategic importance to them, may not be realized,
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Our belief that the reduction in government tenant space utilization and the consolidation of government tenants into government owned real estate is substantially complete may prove misplaced if these prior trends continue or do not moderate to the extent we expect,
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Our perception that recent activity suggests that the government has begun to shift its leasing strategy to include longer term leases and that the government is actively exploring 10 to 20 year lease terms at renewal, in some instances, may mistakenly imply that these activities are indicative of a trend or broader change in government leasing strategy or practices. Further, even if they may be indicative of such a trend or change, that trend or change may not be sustained by the government,
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Contingencies in our acquisition and sale agreements may not be satisfied and any expected acquisitions and sales and any related lease arrangements we expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,
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We are substantially complete with our disposition program and are currently marketing four properties for sale. However, we may not succeed in selling any or all of these properties,
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In 2020, we expect to pursue accretively growing our property portfolio. However, we may not succeed in making acquisitions that are accretive and future acquisitions could be dilutive,
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The competitive advantages we believe we have may not in fact exist or provide us with the advantages we expect. We may fail to maintain any of these advantages or our competition may obtain or increase their competitive advantages relative to us,
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We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not succeed in this regard and we may not have reasonable access to capital,
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Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions that we may be unable to satisfy,
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Actual costs under our revolving credit facility will be higher than LIBOR plus a premium because of fees and expenses associated with such debt,
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The interest rates payable under our floating rate debt obligations depend upon our credit ratings. If our credit ratings are downgraded, our borrowing costs will increase,
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Our ability to access debt capital and the cost of our debt capital will depend in part on our credit ratings. If our credit ratings are downgraded, we may not be able to access debt capital or the debt capital we can access may be expensive,
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We may be unable to repay our debt obligations when they become due,
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The maximum borrowing availability under our revolving credit facility may be increased to up to $1.95 billion in certain circumstances; however, increasing the maximum borrowing availability under our revolving credit facility is subject to our obtaining additional commitments from lenders, which may not occur,
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We have the option to extend the maturity date of our revolving credit facility upon payment of a fee and meeting other conditions; however, the applicable conditions may not be met,
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We may incur significant costs to prepare a property for a tenant, particularly for single tenant properties,
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We may spend more for capital expenditures than we currently expect,
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We may fail to obtain development rights or entitlements that we may seek for development and other projects we may wish to conduct at our properties,
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Any joint venture arrangements that we may enter may not be successful,
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The business and property management agreements between us and RMR LLC have continuing 20 year terms. However, those agreements permit early termination in certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms,
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We believe that our relationships with our related parties, including RMR LLC, RMR Inc., and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize, and
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It is difficult to accurately estimate leasing related obligations and costs of development and tenant improvement costs. Our unspent leasing related obligations and development costs may cost more and may take longer to complete than we currently expect, and we may incur increased amounts for these and similar purposes in the future.
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the return on the properties being sold to finance any acquisition compared to the projected returns we may realize by owning the property we would acquire;
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our cost of capital compared to the projected returns we may realize by owning the property;
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the pricing of comparable properties as evidenced by recent arm’s length market sales;
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the strategic fit of the property with the rest of our properties and how it may strategically improve key attributes of our portfolio;
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the ongoing capital requirements for the property;
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the market location of the property and our assessment of rent growth for that market;
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the likelihood of the tenant(s) renewing at lease expiration;
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the type of property (e.g., single tenant or multi-tenant, etc.);
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the growth, tax and regulatory environments of the market in which the property is located;
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the occupancy and demand for similar properties in the same or nearby markets;
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the current or potential market position of the property;
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the historic and projected rents received and likely to be received from the property;
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the historic and expected operating expenses, including real estate taxes, incurred and expected to be incurred at the property;
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the remaining term of the lease(s) at the property and other lease terms;
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the industry(ies) in which the tenant(s) operate;
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the experience and credit quality of the property’s tenant(s);
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the current and expected future space utilization at the property by its tenant(s);
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the construction quality, physical condition, age and design of the property;
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expected capital expenditures that may be needed at the property;
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the use and size of the property;
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the price at which the property may be acquired;
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the estimated replacement cost of the property; and
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the existence of alternative sources, uses or needs for our capital, including our debt leverage.
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the estimated sales price or value we may receive by selling the property;
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the capital required to maintain the property;
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our intended use of the proceeds we may realize from the sale of a property;
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our expectation regarding tenant lease renewals or the likelihood of finding (a) replacement tenant(s) if the property has significant vacancies or is likely to become substantially vacant;
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our evaluation of future rent for the property relative to leasing costs;
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the strategic fit of the property or investment with the rest of our portfolio;
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the remaining length of the current lease(s) and its (their) other terms;
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the potential costs associated with finding replacement tenant(s), including tenant improvements, leasing commissions and concessions, the cost to operate the property while vacant and building improvement capital, as compared to our projected returns from future rents;
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the occupancy of the property;
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the future expected space utilization of the tenant(s) and the potential impact that may have on occupancy at the property;
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whether the property’s tenant(s) is current on its lease obligation(s);
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our evaluation of the property’s tenant(s) ability to pay its contractual rents;
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the tax implications to us and our shareholders of any proposed dispositions;
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our financial position and needs from time to time; and
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the existence of alternative sources, uses or needs for capital, including our debt leverage.
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a bank, insurance company or other financial institution;
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a regulated investment company or REIT;
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a subchapter S corporation;
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a broker, dealer or trader in securities or foreign currencies;
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a person who marks-to-market our shares for U.S. federal income tax purposes;
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a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar;
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a person who acquires or owns our shares in connection with employment or other performance of services;
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a person subject to alternative minimum tax;
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a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction;
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a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares;
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a U.S. expatriate;
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a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States;
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a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year;
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a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC);
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a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds;
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a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC); or
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except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person.
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an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws;
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an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate the income of which is subject to federal income taxation regardless of its source; or
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a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust;
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We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed ordinary income and net capital gains, if any.
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If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate.
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If we have net income from “prohibited transactions”—that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors — we will be subject to tax on this income at a 100% rate.
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If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to tax at a 100% rate on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.
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If we fail to satisfy any of the REIT asset tests described below (other than a de minimis failure of the 5% or 10% asset tests) due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test.
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If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below) due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure.
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If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed.
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If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.
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If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution.
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Our subsidiaries that are C corporations, including our “taxable REIT subsidiaries”, as defined in Section 856(l) of the IRC, or TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms.
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If it is determined that SIR or FPO failed to satisfy one or more of the REIT tests described below before their respective mergers into us, the IRS might allow us, as successor to SIR or FPO, the same opportunity for relief as though we were the remediating REIT. In such case, SIR or FPO, as applicable, would be deemed to have retained its qualification for taxation as a REIT and the relevant penalties or sanctions for remediation would fall upon us in a manner comparable to the above.
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that is managed by one or more trustees or directors;
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the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;
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that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation;
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that is not a financial institution or an insurance company subject to special provisions of the IRC;
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the beneficial ownership of which is held by 100 or more persons;
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that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities); and
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that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below.
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The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.
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Rents generally do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. Our declaration of trust generally disallows transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, we cannot be sure that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, we cannot be sure that we will be able to monitor and enforce these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules.
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There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants.
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In order for rents to qualify, a REIT generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom it derives no income or through one of its TRSs. There is an exception to this rule permitting a REIT to perform customary management and tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income” as defined in Section 512(b)(3) of the IRC, or UBTI. In addition, a de minimis amount of noncustomary services provided to tenants will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property.
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If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as “rents from real property”; if this 15% threshold is exceeded, then the rent attributable to personal property will not so qualify. The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented.
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In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we believe that our revenues from TRS-provided services, whether the charges are separately stated or not, qualify as “rents from real property” because the services satisfy the geographically customary standard, because the services have been provided by a TRS, or for both reasons.
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that is acquired by a REIT as a result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease of such property or on indebtedness that such property secured;
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for which any related loan acquired by the REIT was acquired at a time when the default was not imminent or anticipated; and
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for which the REIT makes a proper election to treat the property as foreclosure property.
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on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure property), or any nonqualified income under the 75% gross income test is received or accrued by the REIT, directly or indirectly, pursuant to a lease entered into on or after such day;
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on which any construction takes place on the property, other than completion of a building or any other improvement where more than 10% of the construction was completed before default became imminent and other than specifically exempted forms of maintenance or deferred maintenance; or
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which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS.
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At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above, cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC, government securities and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but in each case only for the one-year period commencing with our receipt of the new capital).
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Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test.
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Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests.
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Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs.
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Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.
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the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over
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the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.”
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as a successor, we would generally inherit any corporate income tax liabilities of the acquired entity, including penalties and interest;
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we would be subject to tax on the built-in gain on each asset of the acquired entity existing at the time we acquired it if we were to dispose of such an asset during the five-year period following the date that we acquired the entity; and
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we could be required to pay a special distribution and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate any earnings and profits accumulated by the acquired entity for taxable periods that it did not qualify for taxation as a REIT.
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long-term capital gains, if any, recognized on the disposition of our shares;
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(2)
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our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate);
|
(3)
|
our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs;
|
(4)
|
our dividends attributable to earnings and profits that we inherit from C corporations; and
|
(5)
|
our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on foreclosure property income or on built-in gains), net of the corporate income taxes thereon.
|
(1)
|
we will be taxed at regular corporate capital gains tax rates on retained amounts;
|
(2)
|
each of our U.S. shareholders will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend;
|
(3)
|
each of our U.S. shareholders will receive a credit or refund for its designated proportionate share of the tax that we pay;
|
(4)
|
each of our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and
|
(5)
|
both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes.
|
•
|
provides the U.S. shareholder’s correct taxpayer identification number;
|
•
|
certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and
|
•
|
certifies that it is a U.S. citizen or other U.S. person.
|
•
|
their investment in our shares or other securities satisfies the diversification requirements of ERISA;
|
•
|
the investment is prudent in light of possible limitations on the marketability of our shares;
|
•
|
they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and
|
•
|
the investment is otherwise consistent with their fiduciary responsibilities.
|
•
|
any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order;
|
•
|
any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence;
|
•
|
any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and
|
•
|
any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.
|
•
|
competition from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies;
|
•
|
our long term cost of capital;
|
•
|
contingencies in our acquisition agreements; and
|
•
|
the availability and terms of financing.
|
•
|
we do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction;
|
•
|
the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value;
|
•
|
the occupancy of and rents from properties that we acquire may decline during our ownership;
|
•
|
property operating costs for our acquired properties may be higher than anticipated and our acquired properties may not yield expected returns; and
|
•
|
we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the cleanup of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of the properties.
|
•
|
Government tenants occupying approximately 4.0% of our rentable square feet and contributing approximately 3.7% of our annualized rental income as of December 31, 2019 have currently exercisable rights to terminate their leases before the stated term of their leases expire.
|
•
|
In 2020, 2021, 2022, 2023, 2024, 2025, 2026, 2028, 2030 and 2034, early termination rights become exercisable by government tenants who currently occupy an additional approximately 3.0%, 0.7%, 0.8%, 0.9%, 0.3%, 0.2%, 0.4%, 0.4%, 0.1% and 0.1%, of our rentable square feet, respectively, and contribute an additional approximately 3.8%, 0.8%, 0.9%, 1.1%, 0.6%, 0.4%, 0.6%, 0.4%, 0.1% and 0.1% of our annualized rental income, respectively, as of December 31, 2019.
|
•
|
Pursuant to leases with 11 of our government tenants, these tenants have rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 11 tenants represent approximately 4.4% of our rentable square feet and 4.6% of our annualized rental income as of December 31, 2019.
|
•
|
Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our common shares and seek alternative investments that offer higher distribution rates. Sales of our common shares may cause a decline in the value of our common shares.
|
•
|
Amounts outstanding under our revolving credit facility require interest to be paid at a floating interest rate. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our fixed rate debts when they become due and our ability to make or sustain distributions to our shareholders.
|
•
|
Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the value of our securities to decline.
|
•
|
the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions;
|
•
|
the subjectivity of real estate valuations and changes in such valuations over time;
|
•
|
current and future adverse national and local real estate trends, including increasing vacancy rates, declining rental rates and general deterioration of market conditions;
|
•
|
costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and
|
•
|
liabilities and litigations arising from injuries on our properties or otherwise incidental to the ownership of our properties.
|
•
|
we may share approval rights over major decisions affecting the ownership or operation of the joint venture and any property owned by the joint venture;
|
•
|
we may be required to contribute additional capital if our partners fail to fund their share of any required capital contributions;
|
•
|
our joint venture partners may have economic or other business interests or goals that are inconsistent with our business interests or goals and that could affect our ability to lease or release the property, operate the property or maintain our qualification for taxation as a REIT;
|
•
|
our joint venture partners may be subject to different laws or regulations than us, or may be structured differently than us for tax purposes, which could create conflicts of interest and/or affect our ability to maintain our qualification for taxation as a REIT;
|
•
|
our ability to sell the interest on advantageous terms when we so desire may be limited or restricted under the terms of the applicable joint venture agreements; and
|
•
|
disagreements with our joint venture partners could result in litigation or arbitration that could be expensive and distracting to management and could delay important decisions.
|
•
|
the division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change of control of us;
|
•
|
limitations on shareholder voting rights with respect to certain actions that are not approved by our Board of Trustees;
|
•
|
the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;
|
•
|
shareholder voting standards which require a supermajority for approval of certain actions;
|
•
|
the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;
|
•
|
required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees,” as defined in our governing documents;
|
•
|
limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders;
|
•
|
limitations on the ability of our shareholders to remove our Trustees;
|
•
|
the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares;
|
•
|
restrictions on business combinations between us and an interested shareholder that have not first been approved by our Board of Trustees (including a majority of Trustees not related to the interested shareholder); and
|
•
|
the authority of our Board of Trustees, without shareholder approval, to implement certain takeover defenses.
|
•
|
actual receipt of an improper benefit or profit in money, property or services; or
|
•
|
active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.
|
•
|
our ability to make or sustain the rate of distributions will be adversely affected if any of the risks described in this Annual Report on Form 10-K occur;
|
•
|
our making of distributions is subject to compliance with restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur;
|
•
|
our ability to make future distributions is dependent on a number of factors, including our future earnings, the capital costs we incur to lease our properties and our working capital requirements; and
|
•
|
our Board of Trustees sets and resets our distribution rate from time to time after considering many factors, including cash available for distribution. Accordingly, future distribution rates may be increased or decreased and there is no assurance as to the rate at which future distributions will be paid.
|
•
|
the extent of investor interest in our securities;
|
•
|
the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates;
|
•
|
our underlying asset value;
|
•
|
investor confidence in the stock and bond markets, generally;
|
•
|
market interest rates;
|
•
|
economic conditions;
|
•
|
changes in tax laws;
|
•
|
changes in our credit ratings; and
|
•
|
general market conditions.
|
State
|
|
Number of
Properties |
|
Undepreciated Carrying Value (1)
|
|
Depreciated Carrying Value (1)
|
|
Annualized Rental Income
|
||||||
Alabama
|
|
7
|
|
$
|
88,398
|
|
|
$
|
83,146
|
|
|
$
|
16,631
|
|
Arizona
|
|
5
|
|
29,450
|
|
|
27,779
|
|
|
6,440
|
|
|||
California
|
|
24
|
|
475,992
|
|
|
408,716
|
|
|
71,011
|
|
|||
Colorado
|
|
7
|
|
97,731
|
|
|
77,572
|
|
|
20,123
|
|
|||
District of Columbia
|
|
7
|
|
535,471
|
|
|
474,843
|
|
|
62,317
|
|
|||
Florida
|
|
3
|
|
56,630
|
|
|
46,959
|
|
|
9,846
|
|
|||
Georgia
|
|
10
|
|
203,568
|
|
|
167,007
|
|
|
30,392
|
|
|||
Hawaii (2)
|
|
1
|
|
2,008
|
|
|
2,008
|
|
|
—
|
|
|||
Idaho
|
|
3
|
|
33,351
|
|
|
27,667
|
|
|
4,647
|
|
|||
Illinois
|
|
4
|
|
93,577
|
|
|
88,903
|
|
|
28,513
|
|
|||
Indiana
|
|
5
|
|
98,864
|
|
|
82,711
|
|
|
13,131
|
|
|||
Iowa
|
|
1
|
|
10,646
|
|
|
10,425
|
|
|
3,283
|
|
|||
Kentucky
|
|
2
|
|
17,442
|
|
|
15,288
|
|
|
3,858
|
|
|||
Maryland
|
|
14
|
|
249,873
|
|
|
223,770
|
|
|
39,492
|
|
|||
Massachusetts
|
|
7
|
|
110,264
|
|
|
92,250
|
|
|
17,957
|
|
|||
Michigan
|
|
2
|
|
27,570
|
|
|
23,026
|
|
|
4,235
|
|
|||
Minnesota
|
|
1
|
|
8,243
|
|
|
4,484
|
|
|
1,126
|
|
|||
Mississippi
|
|
1
|
|
26,156
|
|
|
21,396
|
|
|
3,986
|
|
|||
Missouri
|
|
3
|
|
83,761
|
|
|
75,431
|
|
|
23,134
|
|
|||
Nebraska
|
|
2
|
|
19,477
|
|
|
19,131
|
|
|
4,223
|
|
|||
New Jersey
|
|
3
|
|
48,434
|
|
|
47,485
|
|
|
14,433
|
|
|||
New York
|
|
4
|
|
37,418
|
|
|
31,668
|
|
|
9,223
|
|
|||
North Carolina
|
|
2
|
|
21,796
|
|
|
21,209
|
|
|
6,619
|
|
|||
Ohio
|
|
1
|
|
1,034
|
|
|
1,024
|
|
|
765
|
|
|||
Oregon
|
|
1
|
|
31,141
|
|
|
25,237
|
|
|
4,908
|
|
|||
Pennsylvania
|
|
1
|
|
28,259
|
|
|
27,630
|
|
|
6,897
|
|
|||
South Carolina
|
|
1
|
|
3,778
|
|
|
3,696
|
|
|
793
|
|
|||
Tennessee
|
|
1
|
|
14,710
|
|
|
11,714
|
|
|
3,001
|
|
|||
Texas
|
|
16
|
|
252,978
|
|
|
242,415
|
|
|
47,514
|
|
|||
Utah
|
|
3
|
|
64,339
|
|
|
62,762
|
|
|
12,626
|
|
|||
Vermont
|
|
1
|
|
9,256
|
|
|
7,166
|
|
|
1,141
|
|
|||
Virginia
|
|
31
|
|
567,671
|
|
|
528,858
|
|
|
88,769
|
|
|||
Washington
|
|
7
|
|
126,880
|
|
|
111,039
|
|
|
20,078
|
|
|||
Wisconsin
|
|
1
|
|
5,587
|
|
|
4,589
|
|
|
807
|
|
|||
Wyoming
|
|
1
|
|
11,478
|
|
|
6,571
|
|
|
2,003
|
|
|||
Subtotal
|
|
183
|
|
3,493,231
|
|
|
3,105,575
|
|
|
583,922
|
|
|
|
|
|
|
|
|
|
|
||||||
State
|
|
Number of
Properties |
|
Undepreciated Carrying Value (1)
|
|
Depreciated Carrying Value (1)
|
|
Annualized Rental Income
|
||||||
Properties Held for Sale
|
|
|
|
|
|
|
|
|
||||||
Connecticut
|
|
1
|
|
2,016
|
|
|
2,003
|
|
|
1,281
|
|
|||
Illinois
|
|
1
|
|
5,316
|
|
|
5,305
|
|
|
1,693
|
|
|||
New Jersey
|
|
1
|
|
27,917
|
|
|
27,917
|
|
|
6,653
|
|
|||
Virginia
|
|
3
|
|
26,651
|
|
|
23,122
|
|
|
4,264
|
|
|||
Subtotal
|
|
6
|
|
61,900
|
|
|
58,347
|
|
|
13,891
|
|
|||
Grand Total
|
|
189
|
|
$
|
3,555,131
|
|
|
$
|
3,163,922
|
|
|
$
|
597,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Approximate Dollar
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
|
Value of Shares that
|
|
|
Number of
|
|
|
|
|
|
as Part of Publicly
|
|
|
May Yet Be Purchased
|
|
|
Shares
|
|
Average Price
|
|
|
Announced Plans
|
|
|
Under the Plans or
|
|
Calendar Month
|
|
Purchased (1)
|
|
Paid per Share
|
|
or Programs
|
|
Programs
|
|||
December 2019
|
|
131
|
|
$
|
31.54
|
|
|
—
|
|
$
|
—
|
Total
|
|
131
|
|
$
|
31.54
|
|
|
—
|
|
$
|
—
|
(1)
|
These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of certain former employees of RMR LLC in connection with the vesting of awards of our common shares. We withheld and purchased these shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.
|
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income
|
|
$
|
678,404
|
|
|
$
|
426,560
|
|
|
$
|
316,532
|
|
|
$
|
258,180
|
|
|
$
|
248,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate taxes
|
|
73,717
|
|
|
49,708
|
|
|
37,942
|
|
|
30,703
|
|
|
29,906
|
|
|
|||||
Utility expenses
|
|
34,302
|
|
|
26,425
|
|
|
20,998
|
|
|
17,269
|
|
|
17,916
|
|
|
|||||
Other operating expenses
|
|
120,943
|
|
|
89,610
|
|
|
65,349
|
|
|
54,290
|
|
|
50,425
|
|
|
|||||
Depreciation and amortization
|
|
289,885
|
|
|
162,488
|
|
|
109,588
|
|
|
73,153
|
|
|
68,696
|
|
|
|||||
Loss on impairment of real estate
|
|
22,255
|
|
|
8,630
|
|
|
9,490
|
|
|
—
|
|
|
—
|
|
|
|||||
Acquisition and transaction related costs
|
|
682
|
|
|
14,508
|
|
|
—
|
|
|
1,191
|
|
|
811
|
|
|
|||||
General and administrative
|
|
32,728
|
|
|
24,922
|
|
|
18,847
|
|
|
14,897
|
|
|
14,826
|
|
|
|||||
Total expenses
|
|
574,512
|
|
|
376,291
|
|
|
262,214
|
|
|
191,503
|
|
|
182,580
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gain on sale of real estate
|
|
105,131
|
|
|
20,661
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
|||||
Dividend income
|
|
1,960
|
|
|
1,337
|
|
|
1,216
|
|
|
971
|
|
|
811
|
|
|
|||||
Loss on equity securities, net
|
|
(44,007
|
)
|
|
(7,552
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Interest income
|
|
1,045
|
|
|
639
|
|
|
1,962
|
|
|
158
|
|
|
14
|
|
|
|||||
Interest expense
|
|
(134,880
|
)
|
|
(89,865
|
)
|
|
(65,406
|
)
|
|
(45,060
|
)
|
|
(37,008
|
)
|
|
|||||
Gain (loss) on early extinguishment of debt
|
|
(769
|
)
|
|
(709
|
)
|
|
(1,715
|
)
|
|
104
|
|
|
34
|
|
|
|||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,368
|
)
|
|
|||||
Income (loss) from continuing operations before income tax expense and equity in net earnings (losses) of investees
|
|
32,372
|
|
|
(25,220
|
)
|
|
(9,625
|
)
|
|
22,929
|
|
|
17,452
|
|
|
|||||
Income tax expense
|
|
(778
|
)
|
|
(117
|
)
|
|
(101
|
)
|
|
(101
|
)
|
|
(86
|
)
|
|
|||||
Equity in net earnings (losses) of investees
|
|
(1,259
|
)
|
|
(2,269
|
)
|
|
(13
|
)
|
|
137
|
|
|
20
|
|
|
|||||
Income (loss) from continuing operations
|
|
30,335
|
|
|
(27,606
|
)
|
|
(9,739
|
)
|
|
22,965
|
|
|
17,386
|
|
|
|||||
Income (loss) from discontinued operations
|
|
—
|
|
|
5,722
|
|
|
21,829
|
|
|
34,878
|
|
|
(227,347
|
)
|
|
|||||
Net income (loss)
|
|
30,335
|
|
|
(21,884
|
)
|
|
12,090
|
|
|
57,843
|
|
|
(209,961
|
)
|
|
|||||
Preferred units of limited partnership distributions
|
|
—
|
|
|
(371
|
)
|
|
(275
|
)
|
|
—
|
|
|
—
|
|
|
|||||
Net income (loss) available for common shareholders
|
|
$
|
30,335
|
|
|
$
|
(22,255
|
)
|
|
$
|
11,815
|
|
|
$
|
57,843
|
|
|
$
|
(209,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common shares outstanding (basic)
|
|
48,062
|
|
|
24,830
|
|
|
21,158
|
|
|
17,763
|
|
|
17,675
|
|
|
|||||
Weighted average common shares outstanding (diluted)
|
|
48,062
|
|
|
24,830
|
|
|
21,158
|
|
|
17,768
|
|
|
17,675
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per common share amounts (basic and diluted):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
|
$
|
0.63
|
|
|
$
|
(1.13
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
1.29
|
|
|
$
|
0.98
|
|
|
Income (loss) from discontinued operations
|
|
$
|
—
|
|
|
$
|
0.23
|
|
|
$
|
1.03
|
|
|
$
|
1.96
|
|
|
$
|
(12.86
|
)
|
|
Net income (loss) available for common shareholders
|
|
$
|
0.63
|
|
|
$
|
(0.90
|
)
|
|
$
|
0.56
|
|
|
$
|
3.26
|
|
|
$
|
(11.88
|
)
|
|
Common distributions paid
|
|
$
|
2.20
|
|
|
$
|
6.88
|
|
|
$
|
6.88
|
|
|
$
|
6.88
|
|
|
$
|
6.88
|
|
(1)
|
(1)
|
Excludes a non-cash distribution of $0.5136 per share related to the distribution of shares of RMR Inc. class A common stock to our shareholders on December 14, 2015.
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total real estate investments, gross (1)
|
|
$
|
3,493,231
|
|
|
$
|
3,944,636
|
|
|
$
|
2,975,721
|
|
|
$
|
1,888,760
|
|
|
$
|
1,696,132
|
|
Real estate investments, net (1)
|
|
3,105,575
|
|
|
3,569,489
|
|
|
2,633,873
|
|
|
1,591,956
|
|
|
1,440,253
|
|
|||||
Total assets
|
|
4,193,136
|
|
|
5,238,583
|
|
|
3,703,565
|
|
|
2,385,066
|
|
|
2,168,510
|
|
|||||
Debt, net (2)
|
|
2,327,325
|
|
|
3,254,890
|
|
|
2,245,092
|
|
|
1,381,852
|
|
|
1,145,598
|
|
|||||
Shareholders’ equity
|
|
1,705,754
|
|
|
1,778,968
|
|
|
1,330,043
|
|
|
935,004
|
|
|
956,651
|
|
(1)
|
Excludes properties classified as assets held for sale or discontinued operations at the end of each respective period and properties owned by unconsolidated joint ventures.
|
(2)
|
Excludes one mortgage with a carrying value of $13,128 net of unamortized issuance costs totaling $38 that is included in liabilities of properties held for sale in our consolidated balance sheet as of December 31, 2019.
|
|
|
All Properties (1)
|
|
Comparable Properties (2)
|
||||||||
|
|
December 31,
|
|
December 31,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Total properties (3)
|
|
189
|
|
|
247
|
|
|
96
|
|
|
96
|
|
Total rentable square feet (4)
|
|
25,726
|
|
|
31,900
|
|
|
11,515
|
|
|
11,507
|
|
Percent leased (5)
|
|
92.4
|
%
|
|
91.0
|
%
|
|
92.9
|
%
|
|
94.0
|
%
|
(1)
|
Based on properties we owned on December 31, 2019 and 2018, respectively.
|
(2)
|
Based on properties we owned continuously since January 1, 2018; excludes properties classified as held for sale, properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.
|
(3)
|
Includes one leasable land parcel as of December 31, 2019 and two leasable land parcels as of December 31, 2018.
|
(4)
|
Subject to changes when space is remeasured or reconfigured for tenants.
|
(5)
|
Percent leased includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date.
|
|
|
Year Ended December 31,
|
||||||
Average effective rental rate per square foot (1):
|
|
2019
|
|
2018
|
||||
All properties (2)
|
|
$
|
27.02
|
|
|
$
|
29.23
|
|
Comparable properties (3)
|
|
$
|
29.55
|
|
|
$
|
29.71
|
|
(1)
|
Average effective rental rate per square foot represents total rental income during the period specified divided by the average rentable square feet leased during the period specified.
|
(2)
|
Based on properties we owned on December 31, 2019 and 2018, respectively.
|
(3)
|
Based on properties we owned continuously since January 1, 2018; excludes properties classified as held for sale, properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.
|
|
|
Year Ended December 31, 2019
|
|||||||
|
|
Leased
|
|
Available
for Lease
|
|
Total
|
|||
Beginning of year
|
|
29,024
|
|
|
2,876
|
|
|
31,900
|
|
Changes resulting from:
|
|
|
|
|
|
|
|
||
Disposition of properties
|
|
(4,422
|
)
|
|
(1,756
|
)
|
|
(6,178
|
)
|
Lease expirations
|
|
(3,777
|
)
|
|
3,777
|
|
|
—
|
|
Lease renewals (1)
|
|
2,555
|
|
|
(2,555
|
)
|
|
—
|
|
New leases (1)
|
|
379
|
|
|
(379
|
)
|
|
—
|
|
Remeasurements (2)
|
|
2
|
|
|
2
|
|
|
4
|
|
End of year
|
|
23,761
|
|
|
1,965
|
|
|
25,726
|
|
(1)
|
Based on leases entered during the year ended December 31, 2019.
|
(2)
|
Rentable square feet are subject to changes when space is remeasured or reconfigured for tenants.
|
|
|
Year Ended December 31, 2019
|
|||||
|
|
Old Effective
Rent Per
Square Foot (1)
|
|
New Effective
Rent Per
Square Foot (1)
|
|
Rentable
Square Feet
|
|
New leases
|
|
$30.86
|
|
$30.94
|
|
266
|
|
Lease renewals
|
|
$29.90
|
|
$31.30
|
|
2,529
|
|
Total leasing activity
|
|
$29.99
|
|
$31.27
|
|
2,795
|
|
(1)
|
Effective rental rate includes contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and excluding lease value amortization.
|
|
|
Year Ended December 31, 2019
|
||||||||||
|
|
New Leases
|
|
Renewals
|
|
Total
|
||||||
Rentable square feet leased
|
|
379
|
|
|
2,555
|
|
|
2,934
|
|
|||
Tenant leasing costs and concession commitments (1)
|
|
$
|
32,746
|
|
|
$
|
44,795
|
|
|
$
|
77,541
|
|
Tenant leasing costs and concession commitments per rentable square foot (1)
|
|
$
|
86.59
|
|
|
$
|
17.52
|
|
|
$
|
26.43
|
|
Weighted (by square feet) average lease term (years)
|
|
8.3
|
|
|
8.6
|
|
|
8.6
|
|
|||
Total leasing costs and concession commitments per rentable square foot per year (1)
|
|
$
|
10.44
|
|
|
$
|
2.03
|
|
|
$
|
3.08
|
|
(1)
|
Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Tenant improvements (1)
|
|
$
|
25,590
|
|
|
$
|
14,440
|
|
Leasing costs (2)
|
|
26,769
|
|
|
11,078
|
|
||
Building improvements (3)
|
|
33,383
|
|
|
24,712
|
|
||
Recurring capital expenditures
|
|
85,742
|
|
|
50,230
|
|
||
Development, redevelopment and other activities (4)
|
|
5,880
|
|
|
3,962
|
|
||
Total capital expenditures
|
|
$
|
91,622
|
|
|
$
|
54,192
|
|
(1)
|
Tenant improvements include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space.
|
(2)
|
Leasing costs include leasing related costs, such as brokerage commissions and other tenant inducements.
|
(3)
|
Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.
|
(4)
|
Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenue.
|
Year (1)
|
|
Number of Leases Expiring
|
|
Leased Square Feet Expiring (2)
|
|
Percent of Total
|
|
Cumulative Percent of Total
|
|
Annualized Rental Income Expiring
|
|
Percent of Total
|
|
Cumulative Percent of Total
|
|||
2020
|
|
81
|
|
1,896
|
|
|
8.0%
|
|
8.0%
|
|
$
|
55,982
|
|
|
9.4%
|
|
9.4%
|
2021
|
|
56
|
|
1,692
|
|
|
7.1%
|
|
15.1%
|
|
39,660
|
|
|
6.6%
|
|
16.0%
|
|
2022
|
|
82
|
|
2,378
|
|
|
10.0%
|
|
25.1%
|
|
64,085
|
|
|
10.7%
|
|
26.7%
|
|
2023
|
|
62
|
|
2,624
|
|
|
11.1%
|
|
36.2%
|
|
69,639
|
|
|
11.6%
|
|
38.3%
|
|
2024
|
|
54
|
|
3,692
|
|
|
15.5%
|
|
51.7%
|
|
96,072
|
|
|
16.1%
|
|
54.4%
|
|
2025
|
|
42
|
|
2,045
|
|
|
8.6%
|
|
60.3%
|
|
44,264
|
|
|
7.4%
|
|
61.8%
|
|
2026
|
|
30
|
|
1,711
|
|
|
7.2%
|
|
67.5%
|
|
45,754
|
|
|
7.7%
|
|
69.5%
|
|
2027
|
|
29
|
|
1,953
|
|
|
8.2%
|
|
75.7%
|
|
48,872
|
|
|
8.2%
|
|
77.7%
|
|
2028
|
|
12
|
|
872
|
|
|
3.7%
|
|
79.4%
|
|
24,724
|
|
|
4.1%
|
|
81.8%
|
|
2029 and thereafter
|
|
47
|
|
4,897
|
|
|
20.6%
|
|
100.0%
|
|
108,761
|
|
|
18.2%
|
|
100.0%
|
|
Total
|
|
495
|
|
23,760
|
|
|
100.0%
|
|
|
|
$
|
597,813
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average remaining lease term (in years)
|
|
|
|
6.0
|
|
|
|
|
|
|
5.7
|
|
|
|
|
|
(1)
|
The year of lease expiration is pursuant to current contract terms. Some of our leases allow the tenants to vacate the leased premises before the stated expirations of their leases with little or no liability. As of December 31, 2019, tenants occupying approximately 9.4% of our rentable square feet and responsible for approximately 5.5% of our annualized rental income as of December 31, 2019, currently have exercisable rights to terminate their leases before the stated terms of their leases expire. Also, in 2020, 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2030, and 2034 early termination rights become exercisable by other tenants who currently occupy an additional approximately 4.5%, 1.5%, 2.1%, 1.0%, 1.0%, 2.1%, 0.9%, 0.5%, 1.0%, 0.1% and 0.1% of our rentable square feet, respectively, and contribute an additional approximately 6.3%, 1.7%, 2.2%, 1.2%, 1.6%, 3.5%, 1.2%, 0.6%, 1.2%, 0.3% and 0.1% of our annualized rental income, respectively, as of December 31, 2019. In addition, as of December 31, 2019, pursuant to leases with 13 of our tenants, these tenants have rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These 13 tenants occupy approximately 5.0% of our rentable square feet and contribute approximately 5.3% of our annualized rental income as of December 31, 2019.
|
(2)
|
Leased square feet is pursuant to leases existing as of December 31, 2019, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any. Square feet measurements are subject to changes when space is remeasured or reconfigured for new tenants.
|
|
Tenant
|
|
Credit Rating
|
|
Annualized
Rental Income
|
|
% of Total Annualized Rental Income
|
||||
1
|
|
U.S. Government
|
|
Investment Grade
|
|
$
|
149,491
|
|
|
25.0
|
%
|
2
|
|
State of California
|
|
Investment Grade
|
|
19,092
|
|
3.2
|
%
|
||
3
|
|
Shook, Hardy & Bacon L.L.P.
|
|
Not Rated
|
|
18,854
|
|
3.2
|
%
|
||
4
|
|
Bank of America Corporation
|
|
Investment Grade
|
|
16,604
|
|
2.8
|
%
|
||
5
|
|
F5 Networks, Inc.
|
|
Not Rated
|
|
14,416
|
|
2.4
|
%
|
||
6
|
|
WestRock Company
|
|
Investment Grade
|
|
12,865
|
|
2.2
|
%
|
||
7
|
|
CareFirst Inc.
|
|
Non Investment Grade
|
|
11,619
|
|
1.9
|
%
|
||
8
|
|
Northrop Grumman Corporation
|
|
Investment Grade
|
|
11,346
|
|
1.9
|
%
|
||
9
|
|
Tyson Foods, Inc.
|
|
Investment Grade
|
|
10,253
|
|
1.7
|
%
|
||
10
|
|
Technicolor SA
|
|
Non Investment Grade
|
|
10,034
|
|
1.7
|
%
|
||
11
|
|
Commonwealth of Massachusetts
|
|
Investment Grade
|
|
9,693
|
|
1.6
|
%
|
||
12
|
|
Micro Focus International plc
|
|
Non Investment Grade
|
|
8,710
|
|
1.5
|
%
|
||
13
|
|
CommScope Holding Company Inc
|
|
Non Investment Grade
|
|
7,931
|
|
1.3
|
%
|
||
14
|
|
PNC Bank
|
|
Investment Grade
|
|
6,897
|
|
1.2
|
%
|
||
15
|
|
State of Georgia
|
|
Investment Grade
|
|
6,790
|
|
1.1
|
%
|
||
16
|
|
ServiceNow, Inc.
|
|
Not Rated
|
|
6,335
|
|
1.1
|
%
|
||
17
|
|
Allstate Insurance Co.
|
|
Investment Grade
|
|
6,270
|
|
1.0
|
%
|
||
18
|
|
Compass Group plc
|
|
Investment Grade
|
|
6,264
|
|
1.0
|
%
|
||
19
|
|
Church & Dwight Co., Inc.
|
|
Investment Grade
|
|
6,018
|
|
1.0
|
%
|
||
|
|
|
|
|
$
|
339,482
|
|
|
56.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Non-Comparable
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
Properties Results
|
|
|
||||||||||||||||||||||||||||||||
|
|
Comparable Properties Results (1)
|
|
Year Ended
|
|
Consolidated Results
|
||||||||||||||||||||||||||||||||
|
|
Year Ended December 31,
|
|
December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
Change
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Change
|
|
Change
|
||||||||||||||||||
Rental income
|
|
$
|
311,664
|
|
|
$
|
315,845
|
|
|
$
|
(4,181
|
)
|
|
(1.3
|
%)
|
|
$
|
366,740
|
|
|
$
|
110,715
|
|
|
$
|
678,404
|
|
|
$
|
426,560
|
|
|
$
|
251,844
|
|
|
59.0
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Real estate taxes
|
|
38,517
|
|
|
36,689
|
|
|
1,828
|
|
|
5.0
|
%
|
|
35,200
|
|
|
13,019
|
|
|
73,717
|
|
|
49,708
|
|
|
24,009
|
|
|
48.3
|
%
|
||||||||
Utility expenses
|
|
19,909
|
|
|
20,337
|
|
|
(428
|
)
|
|
(2.1
|
%)
|
|
14,393
|
|
|
6,088
|
|
|
34,302
|
|
|
26,425
|
|
|
7,877
|
|
|
29.8
|
%
|
||||||||
Other operating expenses
|
|
69,055
|
|
|
66,291
|
|
|
2,764
|
|
|
4.2
|
%
|
|
51,888
|
|
|
23,319
|
|
|
120,943
|
|
|
89,610
|
|
|
31,333
|
|
|
35.0
|
%
|
||||||||
Total operating expenses
|
|
127,481
|
|
|
123,317
|
|
|
4,164
|
|
|
3.4
|
%
|
|
101,481
|
|
|
42,426
|
|
|
228,962
|
|
|
165,743
|
|
|
63,219
|
|
|
38.1
|
%
|
||||||||
Property net operating income (2)
|
|
$
|
184,183
|
|
|
$
|
192,528
|
|
|
$
|
(8,345
|
)
|
|
(4.3
|
%)
|
|
$
|
265,259
|
|
|
$
|
68,289
|
|
|
449,442
|
|
|
260,817
|
|
|
188,625
|
|
|
72.3
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Depreciation and amortization
|
|
289,885
|
|
|
162,488
|
|
|
127,397
|
|
|
78.4
|
%
|
||||||||||||||||||||||||||
Loss on impairment of real estate
|
|
22,255
|
|
|
8,630
|
|
|
13,625
|
|
|
157.9
|
%
|
||||||||||||||||||||||||||
Acquisition and transaction related costs
|
|
682
|
|
|
14,508
|
|
|
(13,826
|
)
|
|
(95.3
|
%)
|
||||||||||||||||||||||||||
General and administrative
|
|
32,728
|
|
|
24,922
|
|
|
7,806
|
|
|
31.3
|
%
|
||||||||||||||||||||||||||
Total other expenses
|
|
345,550
|
|
|
210,548
|
|
|
135,002
|
|
|
64.1
|
%
|
||||||||||||||||||||||||||
Gain on sale of real estate
|
|
105,131
|
|
|
20,661
|
|
|
84,470
|
|
|
n/m
|
|
||||||||||||||||||||||||||
Dividend income
|
|
1,960
|
|
|
1,337
|
|
|
623
|
|
|
46.6
|
%
|
||||||||||||||||||||||||||
Loss on equity securities, net
|
|
(44,007
|
)
|
|
(7,552
|
)
|
|
(36,455
|
)
|
|
n/m
|
|
||||||||||||||||||||||||||
Interest income
|
|
1,045
|
|
|
639
|
|
|
406
|
|
|
63.5
|
%
|
||||||||||||||||||||||||||
Interest expense
|
|
(134,880
|
)
|
|
(89,865
|
)
|
|
(45,015
|
)
|
|
50.1
|
%
|
||||||||||||||||||||||||||
Loss on early extinguishment of debt
|
|
(769
|
)
|
|
(709
|
)
|
|
(60
|
)
|
|
8.5
|
%
|
||||||||||||||||||||||||||
Income (loss) from continuing operations before income tax expense and equity in net losses of investees
|
|
32,372
|
|
|
(25,220
|
)
|
|
57,592
|
|
|
n/m
|
|
||||||||||||||||||||||||||
Income tax expense
|
|
(778
|
)
|
|
(117
|
)
|
|
(661
|
)
|
|
n/m
|
|
||||||||||||||||||||||||||
Equity in net losses of investees
|
|
(1,259
|
)
|
|
(2,269
|
)
|
|
1,010
|
|
|
(44.5
|
%)
|
||||||||||||||||||||||||||
Income (loss) from continuing operations
|
|
30,335
|
|
|
(27,606
|
)
|
|
57,941
|
|
|
n/m
|
|
||||||||||||||||||||||||||
Income from discontinued operations
|
|
—
|
|
|
5,722
|
|
|
(5,722
|
)
|
|
n/m
|
|
||||||||||||||||||||||||||
Net income (loss)
|
|
30,335
|
|
|
(21,884
|
)
|
|
52,219
|
|
|
n/m
|
|
||||||||||||||||||||||||||
Preferred units of limited partnership distributions
|
|
—
|
|
|
(371
|
)
|
|
371
|
|
|
n/m
|
|
||||||||||||||||||||||||||
Net income (loss) available for common shareholders
|
|
$
|
30,335
|
|
|
$
|
(22,255
|
)
|
|
$
|
52,590
|
|
|
n/m
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Weighted average common shares outstanding (basic and diluted)
|
|
48,062
|
|
|
24,830
|
|
|
23,232
|
|
|
93.6
|
%
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Per common share amounts (basic and diluted):
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Income (loss) from continuing operations
|
|
$
|
0.63
|
|
|
$
|
(1.13
|
)
|
|
$
|
1.76
|
|
|
(155.8
|
%)
|
|||||||||||||||||||||||
Income from discontinued operations
|
|
$
|
—
|
|
|
$
|
0.23
|
|
|
$
|
(0.23
|
)
|
|
n/m
|
|
|||||||||||||||||||||||
Net income (loss) available for common shareholders
|
|
$
|
0.63
|
|
|
$
|
(0.90
|
)
|
|
$
|
1.53
|
|
|
(170.0
|
%)
|
(1)
|
Comparable properties consists of 96 properties we owned on December 31, 2019 and which we owned continuously since January 1, 2018; excludes properties classified as held for sale, properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.
|
(2)
|
Our definition of Property net operating income, or NOI, and our reconciliation of net income (loss) available for common shareholders to Property NOI are included below under the heading “Non-GAAP Financial Measures.”
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net income (loss) available for common shareholders
|
|
$
|
30,335
|
|
|
$
|
(22,255
|
)
|
Preferred units of limited partnership distributions
|
|
—
|
|
|
371
|
|
||
Net income (loss)
|
|
30,335
|
|
|
(21,884
|
)
|
||
Income from discontinued operations
|
|
—
|
|
|
(5,722
|
)
|
||
Income (loss) from continuing operations
|
|
30,335
|
|
|
(27,606
|
)
|
||
Equity in net losses of investees
|
|
1,259
|
|
|
2,269
|
|
||
Income tax expense
|
|
778
|
|
|
117
|
|
||
Loss on early extinguishment of debt
|
|
769
|
|
|
709
|
|
||
Interest expense
|
|
134,880
|
|
|
89,865
|
|
||
Interest income
|
|
(1,045
|
)
|
|
(639
|
)
|
||
Loss on equity securities, net
|
|
44,007
|
|
|
7,552
|
|
||
Dividend income
|
|
(1,960
|
)
|
|
(1,337
|
)
|
||
Gain on sale of real estate
|
|
(105,131
|
)
|
|
(20,661
|
)
|
||
General and administrative
|
|
32,728
|
|
|
24,922
|
|
||
Acquisition and transaction related costs
|
|
682
|
|
|
14,508
|
|
||
Loss on impairment of real estate
|
|
22,255
|
|
|
8,630
|
|
||
Depreciation and amortization
|
|
289,885
|
|
|
162,488
|
|
||
Property NOI
|
|
$
|
449,442
|
|
|
$
|
260,817
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net income (loss) available for common shareholders
|
|
$
|
30,335
|
|
|
$
|
(22,255
|
)
|
Add (less): Depreciation and amortization:
|
|
|
|
|
||||
Consolidated properties
|
|
289,885
|
|
|
162,488
|
|
||
Unconsolidated joint venture properties
|
|
5,903
|
|
|
8,203
|
|
||
FFO attributable to Select Income REIT
|
|
—
|
|
|
51,773
|
|
||
Loss on impairment of real estate
|
|
22,255
|
|
|
8,630
|
|
||
Equity in earnings from Select Income REIT included in discontinued operations
|
|
—
|
|
|
(24,358
|
)
|
||
Gain on sale of real estate
|
|
(105,131
|
)
|
|
(20,661
|
)
|
||
Loss on equity securities, net
|
|
44,007
|
|
|
7,552
|
|
||
FFO available for common shareholders
|
|
287,254
|
|
|
171,372
|
|
||
Add (less): Acquisition and transaction related costs
|
|
682
|
|
|
14,508
|
|
||
Loss on early extinguishment of debt
|
|
769
|
|
|
709
|
|
||
Normalized FFO attributable to Select Income REIT
|
|
—
|
|
|
44,006
|
|
||
FFO attributable to Select Income REIT
|
|
—
|
|
|
(51,773
|
)
|
||
Net gain on issuance of shares by Select Income REIT included in discontinued operations
|
|
—
|
|
|
(29
|
)
|
||
Loss on sale of Select Income REIT shares included in discontinued operations
|
|
—
|
|
|
18,665
|
|
||
Normalized FFO available for common shareholders
|
|
$
|
288,705
|
|
|
$
|
197,458
|
|
|
|
|
|
|
||||
FFO available for common shareholders per common share (basic and diluted)
|
|
$
|
5.98
|
|
|
$
|
6.90
|
|
Normalized FFO available for common shareholders per common share (basic and diluted)
|
|
$
|
6.01
|
|
|
$
|
7.95
|
|
•
|
our ability to successfully complete our pending property sales and to sell properties that we market for sale; and
|
•
|
our ability to purchase additional properties which produce cash flows from operations in excess of our cost of acquisition capital and property operating expenses and capital expenses.
|
•
|
During the year ended December 31, 2019, we repaid in full our $300,000 term loan, which was scheduled to mature on March 31, 2020, without penalty, using cash on hand, proceeds from property sales and proceeds from the sale of our shares of class A common stock of RMR Inc.
|
•
|
During the year ended December 31, 2019, we repaid the remaining $88,000 outstanding on our $250,000 term loan, which was scheduled to mature on March 31, 2022, without penalty, using proceeds from the sale of a property portfolio.
|
Year
|
|
Debt Maturities
|
||
2020
|
|
$
|
475,707
|
|
2021
|
|
14,420
|
|
|
2022
|
|
625,518
|
|
|
2023
|
|
143,784
|
|
|
2024
|
|
350,000
|
|
|
2025 and thereafter
|
|
776,780
|
|
|
Total
|
|
$
|
2,386,209
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More than
5 Years
|
||||||||||
Long term debt obligations
|
|
$
|
2,386,209
|
|
|
$
|
475,707
|
|
|
$
|
639,938
|
|
|
$
|
493,784
|
|
|
$
|
776,780
|
|
Tenant related obligations (1)
|
|
55,984
|
|
|
28,252
|
|
|
12,858
|
|
|
3,610
|
|
|
11,264
|
|
|||||
Operating lease (2)
|
|
1,766
|
|
|
1,627
|
|
|
139
|
|
|
—
|
|
|
—
|
|
|||||
Projected interest expense (3)
|
|
750,211
|
|
|
88,395
|
|
|
152,850
|
|
|
100,855
|
|
|
408,111
|
|
|||||
Total
|
|
$
|
3,194,170
|
|
|
$
|
593,981
|
|
|
$
|
805,785
|
|
|
$
|
598,249
|
|
|
$
|
1,196,155
|
|
(1)
|
Committed tenant related obligations includes leasing commissions and tenant improvements and are based on leases in effect as of December 31, 2019.
|
(2)
|
Reflects the lease obligation we assumed related to FPO’s former corporate headquarters, net of sublease income.
|
(3)
|
Projected interest expense is attributable to only our debt obligations at existing rates as of December 31, 2019 and is not intended to project future interest costs which may result from debt prepayments, additional borrowings under our revolving credit facility, new debt issuances or changes in interest rates.
|
•
|
allocation of purchase prices between various asset categories, including allocations to above and below market leases and the related impact on the recognition of rental income and depreciation and amortization expenses; and
|
•
|
assessment of the carrying values and impairments of long lived assets.
|
Debt
|
|
Principal Balance (1)
|
|
Annual Interest Rate (1)
|
|
Annual Interest Expense (1)
|
|
Maturity
|
|
Interest Payments Due
|
||||
Senior unsecured notes (2)
|
|
$
|
400,000
|
|
|
3.600%
|
|
$
|
14,400
|
|
|
2020
|
|
Semi-annually
|
Senior unsecured notes
|
|
300,000
|
|
|
4.150%
|
|
12,450
|
|
|
2022
|
|
Semi-annually
|
||
Senior unsecured notes
|
|
300,000
|
|
|
4.000%
|
|
12,000
|
|
|
2022
|
|
Semi-annually
|
||
Senior unsecured notes
|
|
350,000
|
|
|
4.250%
|
|
14,875
|
|
|
2024
|
|
Semi-annually
|
||
Senior unsecured notes
|
|
400,000
|
|
|
4.500%
|
|
18,000
|
|
|
2025
|
|
Semi-annually
|
||
Senior unsecured notes
|
|
310,000
|
|
|
5.875%
|
|
18,213
|
|
|
2046
|
|
Quarterly
|
||
Mortgage note (one property in Washington, D.C.)
|
|
32,888
|
|
|
5.720%
|
|
1,881
|
|
|
2020
|
|
Monthly
|
||
Mortgage note (one property in Philadelphia, PA)
|
|
40,062
|
|
|
3.690%
|
|
1,478
|
|
|
2020
|
|
Monthly
|
||
Mortgage note (one property in Lakewood, CO)
|
|
1,683
|
|
|
8.150%
|
|
137
|
|
|
2021
|
|
Monthly
|
||
Mortgage note (one property in Fairfax, VA) (3)
|
|
13,166
|
|
|
5.877%
|
|
774
|
|
|
2021
|
|
Monthly
|
||
Mortgage note (one property in Washington, DC)
|
|
26,522
|
|
|
4.220%
|
|
1,119
|
|
|
2022
|
|
Monthly
|
||
Mortgage note (three properties in Seattle, WA)
|
|
71,000
|
|
|
3.550%
|
|
2,521
|
|
|
2023
|
|
Monthly
|
||
Mortgage note (one property in Chicago, IL)
|
|
50,000
|
|
|
3.700%
|
|
1,850
|
|
|
2023
|
|
Monthly
|
||
Mortgage note (one property in Washington, D.C.)
|
|
24,108
|
|
|
4.800%
|
|
1,157
|
|
|
2023
|
|
Monthly
|
||
Mortgage note (one property in Washington, D.C.)
|
|
66,780
|
|
|
4.050%
|
|
2,705
|
|
|
2030
|
|
Monthly
|
||
|
|
$
|
2,386,209
|
|
|
|
|
$
|
103,560
|
|
|
|
|
|
(1)
|
The principal balances and interest rates are the amounts stated in the contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we issued or assumed these debts. For more information, see Notes 7 and 8 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
|
(2)
|
In January 2020, we redeemed, at par plus accrued interest, all $400,000 of our 3.60% senior unsecured notes due 2020 using cash on hand, proceeds from property sales and borrowings under our revolving credit facility.
|
(3)
|
This mortgage debt is included in liabilities of properties held for sale in our consolidated balance sheet as of December 31, 2019.
|
Debt
|
|
Our JV Ownership Interest
|
|
Principal Balance (1)(2)
|
|
Annual Interest Rate (1)
|
|
Annual Interest Expense (1)
|
|
Maturity
|
|
Interest Payments Due
|
|||||
Mortgage note (two properties in Fairfax, VA)
|
|
51%
|
|
$
|
50,000
|
|
|
4.090
|
%
|
|
$
|
2,045
|
|
|
2029
|
|
Monthly
|
Mortgage note (one property in Washington, D.C.)
|
|
50%
|
|
32,000
|
|
|
3.690
|
%
|
|
1,181
|
|
|
2024
|
|
Monthly
|
||
|
|
|
|
$
|
82,000
|
|
|
|
|
$
|
3,226
|
|
|
|
|
|
(1)
|
The principal balances, annual interest rates and annual interest expense are the amounts stated in the applicable contracts. In accordance with GAAP, recorded interest expense may differ from these amounts because of market conditions at the time they incurred the debt.
|
(2)
|
Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the part of the joint venture arrangement interests we do not own.
|
|
|
Impact of an Increase in Interest Rates
|
|||||||||||||
|
|
Annual
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
Interest Rate (1)
|
|
Debt
|
|
Expense Per Year
|
|
Per Share Impact (2)
|
|||||||
At December 31, 2019
|
|
2.7
|
%
|
|
$
|
750,000
|
|
|
$
|
20,250
|
|
|
$
|
0.42
|
|
One percentage point increase
|
|
3.7
|
%
|
|
$
|
750,000
|
|
|
$
|
27,750
|
|
|
$
|
0.58
|
|
(1)
|
Based on LIBOR plus a premium, which was 110 basis points per annum, at December 31, 2019.
|
(2)
|
Based on the weighted average shares outstanding (diluted) for the year ended December 31, 2019.
|
Plan Category
|
|
Number of securities to be
issued upon exercise of outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options, warrants and rights
|
|
Number of securities remaining available
for future issuance under equity compensation plans
(excluding securities
reflected in column (a))
|
|
|
(a)
|
|
(b)
|
|
(c)
|
Equity compensation plans approved by securityholders — 2009 Plan
|
|
None.
|
|
None.
|
|
211,334 (1)
|
Equity compensation plans not approved by securityholders
|
|
None.
|
|
None.
|
|
None.
|
Total
|
|
None.
|
|
None.
|
|
211,334 (1)
|
(1)
|
Consists of common shares available for issuance pursuant to the terms of the 2009 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2009 Plan.
|
(a)
|
Index to Financial Statements and Financial Statement Schedules
|
(b)
|
Exhibits
|
Exhibit
Number
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
8.1
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
|
10.9
|
|
|
21.1
|
|
|
23.1
|
|
|
23.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
99.1
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document. (Filed herewith.)
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
|
104
|
|
Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)
|
|
|
Impairment of Real Estate Properties
|
Description of the Matter
|
|
The Company’s net real estate properties totaled $3.1 billion as of December 31, 2019. As discussed in Note 2 to the consolidated financial statements, the Company evaluates their properties for impairment quarterly, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.
Auditing management’s property impairment analysis was complex and involved a high degree of subjectivity due to the significant estimation required in determining the future undiscounted net cash flows expected to be generated from those assets with indicators of impairment. The future net undiscounted cash flows are sensitive to significant assumptions, such as hold periods, market rents, and terminal capitalization rates, which are forward-looking and could be affected by future economic and market conditions.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for assessing impairment of real estate properties. For example, we tested controls over management’s review of the future net undiscounted cash flows calculations, including the significant assumptions and data inputs used to develop the undiscounted cash flows.
Our testing of the Company’s impairment assessment included, among other procedures, evaluating the assumptions used to develop the estimated undiscounted cash flows used to assess the recoverability of real estate properties. Specifically, we evaluated the significant assumptions used to estimate the property cash flows, including market rents and terminal capitalization rates through comparison to current industry and economic trends and tested the completeness and accuracy of the underlying data supporting the significant assumptions. We compared the projected forecasted amounts to past performance of the properties and the Company’s history related to similar properties and other forecasted financial information prepared by the Company. We also held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the hold period and other cash flow assumptions for the properties. We searched for and evaluated information that corroborated or contradicted the Company’s assumptions.
|
/s/ Ernst & Young LLP
|
|
|
|
We have served as the Company’s auditor since 2008.
|
|
|
|
Boston, Massachusetts
|
|
February 20, 2020
|
|
/s/ Ernst & Young LLP
|
|
|
|
Boston, Massachusetts
|
|
February 20, 2020
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Real estate properties:
|
|
|
|
||||
Land
|
$
|
840,550
|
|
|
$
|
924,164
|
|
Buildings and improvements
|
2,652,681
|
|
|
3,020,472
|
|
||
Total real estate properties, gross
|
3,493,231
|
|
|
3,944,636
|
|
||
Accumulated depreciation
|
(387,656
|
)
|
|
(375,147
|
)
|
||
Total real estate properties, net
|
3,105,575
|
|
|
3,569,489
|
|
||
Assets of properties held for sale
|
70,877
|
|
|
253,501
|
|
||
Investments in unconsolidated joint ventures
|
39,756
|
|
|
43,665
|
|
||
Acquired real estate leases, net
|
732,382
|
|
|
1,056,558
|
|
||
Cash and cash equivalents
|
93,744
|
|
|
35,349
|
|
||
Restricted cash
|
6,952
|
|
|
3,594
|
|
||
Rents receivable
|
83,556
|
|
|
72,051
|
|
||
Deferred leasing costs, net
|
40,107
|
|
|
25,672
|
|
||
Other assets, net
|
20,187
|
|
|
178,704
|
|
||
Total assets
|
$
|
4,193,136
|
|
|
$
|
5,238,583
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Unsecured revolving credit facility
|
$
|
—
|
|
|
$
|
175,000
|
|
Unsecured term loans, net
|
—
|
|
|
387,152
|
|
||
Senior unsecured notes, net
|
2,017,379
|
|
|
2,357,497
|
|
||
Mortgage notes payable, net
|
309,946
|
|
|
335,241
|
|
||
Liabilities of properties held for sale
|
14,693
|
|
|
4,271
|
|
||
Accounts payable and other liabilities
|
125,048
|
|
|
145,536
|
|
||
Due to related persons
|
7,141
|
|
|
34,887
|
|
||
Assumed real estate lease obligations, net
|
13,175
|
|
|
20,031
|
|
||
Total liabilities
|
2,487,382
|
|
|
3,459,615
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,201,941 and 48,082,903 shares issued and outstanding, respectively
|
482
|
|
|
481
|
|
||
Additional paid in capital
|
2,612,425
|
|
|
2,609,801
|
|
||
Cumulative net income
|
177,217
|
|
|
146,882
|
|
||
Cumulative other comprehensive income (loss)
|
(200
|
)
|
|
106
|
|
||
Cumulative common distributions
|
(1,084,170
|
)
|
|
(978,302
|
)
|
||
Total shareholders’ equity
|
1,705,754
|
|
|
1,778,968
|
|
||
Total liabilities and shareholders’ equity
|
$
|
4,193,136
|
|
|
$
|
5,238,583
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Rental income
|
$
|
678,404
|
|
|
$
|
426,560
|
|
|
$
|
316,532
|
|
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
||||||
Real estate taxes
|
73,717
|
|
|
49,708
|
|
|
37,942
|
|
|||
Utility expenses
|
34,302
|
|
|
26,425
|
|
|
20,998
|
|
|||
Other operating expenses
|
120,943
|
|
|
89,610
|
|
|
65,349
|
|
|||
Depreciation and amortization
|
289,885
|
|
|
162,488
|
|
|
109,588
|
|
|||
Loss on impairment of real estate
|
22,255
|
|
|
8,630
|
|
|
9,490
|
|
|||
Acquisition and transaction related costs
|
682
|
|
|
14,508
|
|
|
—
|
|
|||
General and administrative
|
32,728
|
|
|
24,922
|
|
|
18,847
|
|
|||
Total expenses
|
574,512
|
|
|
376,291
|
|
|
262,214
|
|
|||
|
|
|
|
|
|
||||||
Gain on sale of real estate
|
105,131
|
|
|
20,661
|
|
|
—
|
|
|||
Dividend income
|
1,960
|
|
|
1,337
|
|
|
1,216
|
|
|||
Loss on equity securities, net
|
(44,007
|
)
|
|
(7,552
|
)
|
|
—
|
|
|||
Interest income
|
1,045
|
|
|
639
|
|
|
1,962
|
|
|||
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $10,740, $3,626 and $3,420, respectively)
|
(134,880
|
)
|
|
(89,865
|
)
|
|
(65,406
|
)
|
|||
Loss on early extinguishment of debt
|
(769
|
)
|
|
(709
|
)
|
|
(1,715
|
)
|
|||
Income (loss) from continuing operations before income tax expense and equity in net losses of investees
|
32,372
|
|
|
(25,220
|
)
|
|
(9,625
|
)
|
|||
Income tax expense
|
(778
|
)
|
|
(117
|
)
|
|
(101
|
)
|
|||
Equity in net losses of investees
|
(1,259
|
)
|
|
(2,269
|
)
|
|
(13
|
)
|
|||
Income (loss) from continuing operations
|
30,335
|
|
|
(27,606
|
)
|
|
(9,739
|
)
|
|||
Income from discontinued operations
|
—
|
|
|
5,722
|
|
|
21,829
|
|
|||
Net income (loss)
|
30,335
|
|
|
(21,884
|
)
|
|
12,090
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain on equity securities
|
—
|
|
|
—
|
|
|
24,042
|
|
|||
Unrealized loss on financial instrument
|
(200
|
)
|
|
—
|
|
|
—
|
|
|||
Equity in unrealized gain (loss) of investees
|
(106
|
)
|
|
(40
|
)
|
|
9,428
|
|
|||
Other comprehensive income (loss)
|
(306
|
)
|
|
(40
|
)
|
|
33,470
|
|
|||
Comprehensive income (loss)
|
$
|
30,029
|
|
|
$
|
(21,924
|
)
|
|
$
|
45,560
|
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
30,335
|
|
|
$
|
(21,884
|
)
|
|
$
|
12,090
|
|
Preferred units of limited partnership distributions
|
—
|
|
|
(371
|
)
|
|
(275
|
)
|
|||
Net income (loss) available for common shareholders
|
$
|
30,335
|
|
|
$
|
(22,255
|
)
|
|
$
|
11,815
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (basic and diluted)
|
48,062
|
|
|
24,830
|
|
|
21,158
|
|
|||
|
|
|
|
|
|
||||||
Per common share amounts (basic and diluted):
|
|
|
|
|
|
||||||
Income (loss) from continuing operations
|
$
|
0.63
|
|
|
$
|
(1.13
|
)
|
|
$
|
(0.47
|
)
|
Income from discontinued operations
|
$
|
—
|
|
|
$
|
0.23
|
|
|
$
|
1.03
|
|
Net income (loss) available for common shareholders
|
$
|
0.63
|
|
|
$
|
(0.90
|
)
|
|
$
|
0.56
|
|
|
Number of Shares
|
|
Common Shares
|
|
Additional Paid In Capital
|
|
Cumulative
Net
Income
|
|
Cumulative
Other
Comprehensive
Income (Loss)
|
|
Cumulative
Common
Distributions
|
|
Total
|
|||||||||||||
Balance at December 31, 2016
|
17,794,477
|
|
|
$
|
178
|
|
|
$
|
1,474,067
|
|
|
$
|
96,329
|
|
|
$
|
26,957
|
|
|
$
|
(662,527
|
)
|
|
$
|
935,004
|
|
Issuance of shares, net
|
6,976,757
|
|
|
70
|
|
|
493,796
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
493,866
|
|
||||||
Share grants
|
18,836
|
|
|
—
|
|
|
1,361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,361
|
|
||||||
Share repurchases
|
(3,591
|
)
|
|
—
|
|
|
(264
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(264
|
)
|
||||||
Equity in unrealized gain of investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,428
|
|
|
—
|
|
|
9,428
|
|
||||||
Unrealized gain on equity securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,042
|
|
|
—
|
|
|
24,042
|
|
||||||
Net income available for common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
11,815
|
|
|
—
|
|
|
—
|
|
|
11,815
|
|
||||||
Distributions to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(145,209
|
)
|
|
(145,209
|
)
|
||||||
Balance at December 31, 2017
|
24,786,479
|
|
|
248
|
|
|
1,968,960
|
|
|
108,144
|
|
|
60,427
|
|
|
(807,736
|
)
|
|
1,330,043
|
|
||||||
Cumulative adjustment upon adoption of ASU No. 2016-01
|
—
|
|
|
—
|
|
|
—
|
|
|
60,281
|
|
|
(60,281
|
)
|
|
—
|
|
|
—
|
|
||||||
Adjustment upon adoption of ASU No. 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
712
|
|
|
—
|
|
|
—
|
|
|
712
|
|
||||||
Balance at January 1, 2018
|
24,786,479
|
|
|
248
|
|
|
1,968,960
|
|
|
169,137
|
|
|
146
|
|
|
(807,736
|
)
|
|
1,330,755
|
|
||||||
Issuance of shares, net
|
23,281,738
|
|
|
233
|
|
|
639,550
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
639,783
|
|
||||||
Share grants
|
19,925
|
|
|
—
|
|
|
1,523
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,523
|
|
||||||
Share forfeitures or repurchases
|
(5,239
|
)
|
|
—
|
|
|
(232
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
||||||
Equity in unrealized loss of investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||||
Net loss available for common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,255
|
)
|
|
—
|
|
|
—
|
|
|
(22,255
|
)
|
||||||
Distributions to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(170,566
|
)
|
|
(170,566
|
)
|
||||||
Balance at December 31, 2018
|
48,082,903
|
|
|
481
|
|
|
2,609,801
|
|
|
146,882
|
|
|
106
|
|
|
(978,302
|
)
|
|
1,778,968
|
|
||||||
Share grants
|
136,100
|
|
|
1
|
|
|
3,097
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,098
|
|
||||||
Share forfeitures or repurchases
|
(17,062
|
)
|
|
—
|
|
|
(473
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(473
|
)
|
||||||
Amounts reclassified from cumulative other comprehensive income to net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(196
|
)
|
|
—
|
|
|
(196
|
)
|
||||||
Equity in unrealized gain of investees
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
90
|
|
||||||
Unrealized loss on financial instrument
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(200
|
)
|
|
—
|
|
|
(200
|
)
|
||||||
Net income available for common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
30,335
|
|
|
—
|
|
|
—
|
|
|
30,335
|
|
||||||
Distributions to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105,868
|
)
|
|
(105,868
|
)
|
||||||
Balance at December 31, 2019
|
48,201,941
|
|
|
$
|
482
|
|
|
$
|
2,612,425
|
|
|
$
|
177,217
|
|
|
$
|
(200
|
)
|
|
$
|
(1,084,170
|
)
|
|
$
|
1,705,754
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
30,335
|
|
|
$
|
(21,884
|
)
|
|
$
|
12,090
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
89,400
|
|
|
66,685
|
|
|
52,427
|
|
|||
Net amortization of debt premiums, discounts and issuance costs
|
10,740
|
|
|
3,626
|
|
|
3,420
|
|
|||
Amortization of acquired real estate leases
|
197,978
|
|
|
94,375
|
|
|
56,174
|
|
|||
Amortization of deferred leasing costs
|
5,973
|
|
|
4,833
|
|
|
3,802
|
|
|||
Gain on sale of real estate
|
(105,131
|
)
|
|
(20,661
|
)
|
|
—
|
|
|||
Loss on impairment of real estate
|
22,255
|
|
|
8,630
|
|
|
9,490
|
|
|||
Loss on early extinguishment of debt
|
769
|
|
|
709
|
|
|
1,715
|
|
|||
Straight line rental income
|
(27,507
|
)
|
|
(10,164
|
)
|
|
(5,582
|
)
|
|||
Other non-cash expenses, net
|
2,011
|
|
|
250
|
|
|
300
|
|
|||
Loss on equity securities, net
|
44,007
|
|
|
7,552
|
|
|
—
|
|
|||
Increase in carrying value of property included in discontinued operations
|
—
|
|
|
—
|
|
|
(619
|
)
|
|||
Equity in net losses of investees
|
1,259
|
|
|
2,269
|
|
|
13
|
|
|||
Distribution of earnings from Affiliates Insurance Company
|
2,438
|
|
|
—
|
|
|
—
|
|
|||
Equity in earnings of Select Income REIT included in discontinued operations
|
—
|
|
|
(20,873
|
)
|
|
(21,584
|
)
|
|||
Net gain on issuance of shares by Select Income REIT included in discontinued operations
|
—
|
|
|
(29
|
)
|
|
(72
|
)
|
|||
Loss on sale of Select Income REIT shares included in discontinued operations
|
—
|
|
|
15,180
|
|
|
—
|
|
|||
Distributions of earnings from Select Income REIT
|
—
|
|
|
20,873
|
|
|
21,584
|
|
|||
Change in assets and liabilities:
|
|
|
|
|
|
||||||
Rents receivable
|
12,586
|
|
|
5,021
|
|
|
(4,990
|
)
|
|||
Deferred leasing costs
|
(27,971
|
)
|
|
(9,203
|
)
|
|
(5,017
|
)
|
|||
Other assets
|
3,266
|
|
|
1,127
|
|
|
1,368
|
|
|||
Accounts payable and other liabilities
|
(19,333
|
)
|
|
(3,303
|
)
|
|
11,696
|
|
|||
Due to related persons
|
(27,746
|
)
|
|
(97
|
)
|
|
1,339
|
|
|||
Net cash provided by operating activities
|
215,329
|
|
|
144,916
|
|
|
137,554
|
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Real estate acquisitions
|
(2,905
|
)
|
|
25,221
|
|
|
(1,187,012
|
)
|
|||
Real estate improvements
|
(62,676
|
)
|
|
(47,500
|
)
|
|
(45,940
|
)
|
|||
Distributions in excess of earnings from Select Income REIT
|
—
|
|
|
17,251
|
|
|
29,248
|
|
|||
Distributions in excess of earnings from unconsolidated joint ventures
|
2,370
|
|
|
3,751
|
|
|
482
|
|
|||
Distributions in excess of earnings from Affiliates Insurance Company
|
6,562
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of properties, net
|
829,794
|
|
|
304,808
|
|
|
15,083
|
|
|||
Proceeds from sale of Select Income REIT shares
|
—
|
|
|
435,125
|
|
|
—
|
|
|||
Proceeds from sale of The RMR Group Inc. common shares, net
|
104,674
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
877,819
|
|
|
738,656
|
|
|
(1,188,139
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Repayment of mortgage notes payable
|
(12,054
|
)
|
|
(3,708
|
)
|
|
(11,909
|
)
|
|||
Repayment of unsecured term loans
|
(388,000
|
)
|
|
(162,000
|
)
|
|
—
|
|
|||
Repayment of senior unsecured notes
|
(350,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of senior notes, after discounts
|
—
|
|
|
—
|
|
|
297,954
|
|
|||
Proceeds from issuance of common shares, net
|
—
|
|
|
—
|
|
|
493,866
|
|
|||
Borrowings on unsecured revolving credit facility
|
430,000
|
|
|
238,000
|
|
|
645,000
|
|
|||
Repayments on unsecured revolving credit facility
|
(605,000
|
)
|
|
(741,000
|
)
|
|
(235,000
|
)
|
|||
Payment of debt issuance costs
|
—
|
|
|
(3,936
|
)
|
|
(4,644
|
)
|
|||
Repurchase of common shares
|
(473
|
)
|
|
(232
|
)
|
|
(264
|
)
|
|||
Redemption of preferred units of limited partnership
|
—
|
|
|
(20,221
|
)
|
|
—
|
|
|||
Preferred units of limited partnership distributions
|
—
|
|
|
(646
|
)
|
|
—
|
|
|||
Distributions to common shareholders
|
(105,868
|
)
|
|
(170,566
|
)
|
|
(145,209
|
)
|
|||
Net cash (used in) provided by financing activities
|
(1,031,395
|
)
|
|
(864,309
|
)
|
|
1,039,794
|
|
|||
Increase (decrease) in cash, cash equivalents and restricted cash
|
61,753
|
|
|
19,263
|
|
|
(10,791
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
38,943
|
|
|
19,680
|
|
|
30,471
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
100,696
|
|
|
$
|
38,943
|
|
|
$
|
19,680
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
||||
Interest paid
|
$
|
131,735
|
|
|
$
|
65,188
|
|
|
$
|
55,048
|
|
Income taxes paid
|
$
|
491
|
|
|
$
|
68
|
|
|
$
|
117
|
|
|
|
|
|
|
|
||||||
NON-CASH INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Working capital assumed
|
$
|
—
|
|
|
$
|
25,170
|
|
|
$
|
(1,596
|
)
|
Real estate and investment acquired by issuance of common shares
|
$
|
—
|
|
|
$
|
(639,809
|
)
|
|
$
|
—
|
|
Real estate and investment acquired by assumption of debt
|
$
|
—
|
|
|
$
|
(1,719,772
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
NON-CASH FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Select Income REIT unsecured revolving credit facility
|
$
|
—
|
|
|
$
|
108,000
|
|
|
$
|
—
|
|
Assumption of mortgage notes payable
|
$
|
—
|
|
|
$
|
161,772
|
|
|
$
|
167,548
|
|
Assumption of senior unsecured notes
|
$
|
—
|
|
|
$
|
1,450,000
|
|
|
$
|
—
|
|
Preferred units of limited partnership issued
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,221
|
|
Issuance of common shares
|
$
|
—
|
|
|
$
|
639,809
|
|
|
$
|
—
|
|
|
|
As of December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash and cash equivalents
|
|
$
|
93,744
|
|
|
$
|
35,349
|
|
|
$
|
16,569
|
|
Restricted cash
|
|
6,952
|
|
|
3,594
|
|
|
3,111
|
|
|||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows
|
|
$
|
100,696
|
|
|
$
|
38,943
|
|
|
$
|
19,680
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Acquired real estate leases:
|
|
|
|
||||
Capitalized above market lease values
|
$
|
61,971
|
|
|
$
|
62,260
|
|
Less: accumulated amortization
|
(29,927
|
)
|
|
(20,956
|
)
|
||
Capitalized above market lease values, net
|
32,044
|
|
|
41,304
|
|
||
|
|
|
|
||||
Lease origination value
|
1,032,769
|
|
|
1,168,979
|
|
||
Less: accumulated amortization
|
(332,431
|
)
|
|
(153,725
|
)
|
||
Lease origination value, net
|
700,338
|
|
|
1,015,254
|
|
||
Acquired real estate leases, net
|
$
|
732,382
|
|
|
$
|
1,056,558
|
|
|
|
|
|
||||
Assumed real estate lease obligations:
|
|
|
|
||||
Capitalized below market lease values
|
$
|
28,118
|
|
|
$
|
31,091
|
|
Less: accumulated amortization
|
(14,943
|
)
|
|
(11,060
|
)
|
||
Assumed real estate lease obligations, net
|
$
|
13,175
|
|
|
$
|
20,031
|
|
Year
|
|
Amount
|
||
2020
|
|
$
|
489,420
|
|
2021
|
|
466,210
|
|
|
2022
|
|
428,149
|
|
|
2023
|
|
381,164
|
|
|
2024
|
|
313,456
|
|
|
Thereafter
|
|
1,052,669
|
|
|
Total
|
|
$
|
3,131,068
|
|
Year
|
|
Contractual Minimum Rent Payments
|
||
2020
|
|
$
|
2,049
|
|
2021
|
|
175
|
|
|
Total lease payments
|
|
2,224
|
|
|
Less: imputed interest
|
|
(45
|
)
|
|
Present value of lease liabilities
|
|
$
|
2,179
|
|
Total Purchase Price (excluding acquisition costs):
|
|
|||
|
OPI common shares issued
|
23,282,704
|
|
|
|
Closing price of OPI common shares on December 31, 2018
|
$
|
27.48
|
|
|
Value of consideration transferred
|
$
|
639,809
|
|
|
Cash consideration for fractional shares
|
8
|
|
|
|
Equity issuance costs
|
(239
|
)
|
|
|
Value of consideration transferred
|
639,578
|
|
|
|
|
|
||
|
Assumed working capital
|
50,390
|
|
|
|
Assumed senior unsecured notes, principal balance
|
1,450,000
|
|
|
|
Assumed mortgage notes payable, principal balance
|
161,772
|
|
|
|
Select Income REIT unsecured revolving credit facility repaid at closing
|
108,000
|
|
|
|
Non-cash portion of purchase price
|
1,770,162
|
|
|
|
Total consideration transferred and liabilities assumed
|
$
|
2,409,740
|
|
Purchase Price Allocation:
|
|
|||
|
Land
|
$
|
477,977
|
|
|
Buildings and improvements
|
956,801
|
|
|
|
Assets of properties held for sale
|
6,846
|
|
|
|
Acquired real estate leases
|
854,431
|
|
|
|
Cash
|
24,744
|
|
|
|
Restricted cash
|
476
|
|
|
|
Rents receivable
|
11,370
|
|
|
|
Other assets (1)
|
88,658
|
|
|
|
Total assets
|
2,421,303
|
|
|
|
Unsecured revolving credit facility (2)
|
(108,000
|
)
|
|
|
Senior unsecured notes (3)
|
(1,410,947
|
)
|
|
|
Mortgage notes payable (4)
|
(159,490
|
)
|
|
|
Accounts payable and other liabilities
|
(61,289
|
)
|
|
|
Assumed real estate lease obligations
|
(11,879
|
)
|
|
|
Due to related persons
|
(30,120
|
)
|
|
|
Net assets acquired
|
639,578
|
|
|
|
Assumed working capital
|
50,390
|
|
|
|
Select Income REIT unsecured revolving credit facility repaid at closing (2)
|
108,000
|
|
|
|
Assumed senior unsecured notes, principal balance
|
1,450,000
|
|
|
|
Assumed mortgage notes payable, principal balance
|
161,772
|
|
|
|
Consideration transferred and liabilities assumed (5)
|
$
|
2,409,740
|
|
(1)
|
Other assets include $84,229 for SIR’s investment in shares of class A common stock of RMR Inc. which was recorded at fair value as of December 31, 2018.
|
(2)
|
We repaid the outstanding balance under SIR’s revolving credit facility at the closing of the SIR Merger with borrowings under our revolving credit facility.
|
(3)
|
The aggregate principal balance of the senior unsecured notes was $1,450,000 as of December 31, 2018.
|
(4)
|
The aggregate principal balance of the mortgage notes payable was $161,772 as of December 31, 2018.
|
(5)
|
Purchase price excludes acquisition related costs.
|
Total Purchase Price:
|
|
|
|||
|
Cash consideration
|
|
$
|
1,175,140
|
|
|
Acquisition related costs
|
|
9,575
|
|
|
|
Total cash consideration
|
|
1,184,715
|
|
|
|
Preferred units of limited partnership issued (1)
|
|
20,221
|
|
|
|
Acquired net working capital
|
|
(1,596
|
)
|
|
|
Assumed mortgage notes
|
|
167,548
|
|
|
|
Non-cash portion of purchase price
|
|
186,173
|
|
|
|
Gross purchase price
|
|
$
|
1,370,888
|
|
|
|
|
|
||
Purchase Price Allocation:
|
|
|
|||
|
Land
|
|
$
|
360,909
|
|
|
Buildings and improvements
|
|
681,340
|
|
|
|
Acquired real estate leases (2)
|
|
283,498
|
|
|
|
Investment in unconsolidated joint ventures
|
|
51,305
|
|
|
|
Cash
|
|
11,191
|
|
|
|
Restricted cash
|
|
1,018
|
|
|
|
Rents receivable
|
|
2,672
|
|
|
|
Other assets
|
|
3,640
|
|
|
|
Total assets
|
|
1,395,573
|
|
|
|
|
|
|
||
|
Mortgage notes payable (3)
|
|
(167,936
|
)
|
|
|
Assumed real estate lease obligations (2)
|
|
(5,776
|
)
|
|
|
Accounts payable and accrued expenses
|
|
(10,640
|
)
|
|
|
Rents collected in advance
|
|
(1,436
|
)
|
|
|
Security deposits
|
|
(4,849
|
)
|
|
|
Net assets acquired
|
|
1,204,936
|
|
|
|
|
|
|
||
|
Assumed working capital
|
|
(1,596
|
)
|
|
|
Assumed principal balance of debt
|
|
167,548
|
|
|
|
Gross purchase price
|
|
$
|
1,370,888
|
|
(1)
|
Pursuant to the terms of the FPO Transaction, each unit of limited partnership interest in FPO’s operating partnership that was not liquidated on the closing date was exchanged on a one-for-one basis for 5.5% Series A Cumulative Preferred Units of the surviving subsidiary. As of December 31,
|
(2)
|
As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 3.2 years, 3.1 years and 3.8 years, respectively.
|
(3)
|
Includes fair value adjustments totaling $388 on $167,936 principal amount of mortgage notes we assumed in connection with the FPO Transaction.
|
|
Year Ended December 31,
|
||
|
2018
|
||
Rental income
|
$
|
758,596
|
|
Net loss
|
$
|
(87,240
|
)
|
Net loss per common share
|
$
|
(1.82
|
)
|
|
|
OPI Ownership
|
|
OPI Carrying Value of Investment at December 31,
|
|
Number of Properties
|
|
Location
|
|
Square Feet
|
||||||
Joint Venture
|
|
|
2019
|
|
2018
|
|
|
|
||||||||
Prosperity Metro Plaza
|
|
51%
|
|
$
|
22,483
|
|
|
$
|
23,969
|
|
|
2
|
|
Fairfax, VA
|
|
328,456
|
1750 H Street, NW
|
|
50%
|
|
17,273
|
|
|
19,696
|
|
|
1
|
|
Washington, D.C.
|
115,411
|
|||
Total
|
|
|
|
$
|
39,756
|
|
|
$
|
43,665
|
|
|
3
|
|
|
|
443,867
|
Joint Venture
|
|
Interest Rate (1)
|
|
Maturity Date
|
|
Principal Balance
at December 31,
2019 and 2018
|
||
Prosperity Metro Plaza
|
|
4.09%
|
|
12/1/2029
|
|
$
|
50,000
|
|
1750 H Street, NW
|
|
3.69%
|
|
8/1/2024
|
|
32,000
|
|
|
Weighted Average/Total
|
|
3.93%
|
|
|
|
$
|
82,000
|
|
(1)
|
Includes the effect of mark to market purchase accounting.
|
Date of Sale
|
|
Number of Properties
|
|
Location
|
|
Square
Feet
|
|
Gross
Sale Price (1)
|
|
Gain (Loss) on Sale of Real Estate
|
|
Loss on Impairment of Real Estate
|
|||||||
February 2019
|
|
34
|
|
Northern Virginia and Maryland
|
|
1,635,868
|
|
|
$
|
198,500
|
|
|
$
|
—
|
|
|
$
|
732
|
|
March 2019
|
|
1
|
|
Washington, D.C.
|
|
129,035
|
|
|
70,000
|
|
|
22,075
|
|
|
—
|
|
|||
May 2019
|
|
1
|
|
Buffalo, NY
|
|
121,711
|
|
|
16,900
|
|
|
—
|
|
|
5,137
|
|
|||
May 2019
|
|
1
|
|
Maynard, MA
|
|
287,037
|
|
|
5,000
|
|
|
(227
|
)
|
|
—
|
|
|||
June 2019
|
|
1
|
|
Kapolei, HI
|
|
416,956
|
|
|
7,100
|
|
|
—
|
|
|
—
|
|
|||
July 2019
|
|
1
|
|
San Jose, CA
|
|
71,750
|
|
|
14,000
|
|
|
(270
|
)
|
|
—
|
|
|||
July 2019
|
|
1
|
|
Nashua, NH
|
|
321,800
|
|
|
25,000
|
|
|
8,401
|
|
|
—
|
|
|||
August 2019
|
|
1
|
|
Arlington, TX
|
|
182,630
|
|
|
14,900
|
|
|
187
|
|
|
—
|
|
|||
August 2019
|
|
1
|
|
Rochester, NY
|
|
94,800
|
|
|
4,765
|
|
|
(104
|
)
|
|
—
|
|
|||
August 2019
|
|
1
|
|
Hanover, PA
|
|
502,300
|
|
|
5,500
|
|
|
(417
|
)
|
|
—
|
|
|||
August 2019
|
|
1
|
|
San Antonio, TX
|
|
618,017
|
|
|
198,000
|
|
|
3,869
|
|
|
—
|
|
|||
September 2019
|
|
1
|
|
Topeka, KS
|
|
143,934
|
|
|
15,600
|
|
|
36
|
|
|
—
|
|
|||
September 2019
|
|
1
|
|
Falling Waters, WV
|
|
40,348
|
|
|
650
|
|
|
—
|
|
|
2,179
|
|
|||
September 2019
|
|
1
|
|
San Diego, CA
|
|
43,918
|
|
|
8,950
|
|
|
3,062
|
|
|
—
|
|
|||
October 2019
|
|
3
|
|
Columbia, SC
|
|
180,703
|
|
|
10,750
|
|
|
—
|
|
|
3,581
|
|
|||
November 2019
|
|
3
|
|
Metro DC - MD
|
|
372,605
|
|
|
61,938
|
|
|
1,177
|
|
|
—
|
|
|||
December 2019
|
|
1
|
|
San Diego, CA
|
|
148,488
|
|
|
23,750
|
|
|
6,823
|
|
|
—
|
|
|||
December 2019
|
|
1
|
|
Phoenix, AZ
|
|
122,646
|
|
|
12,850
|
|
|
860
|
|
|
—
|
|
|||
December 2019
|
|
1
|
|
Houston, TX
|
|
497,477
|
|
|
130,000
|
|
|
59,992
|
|
|
—
|
|
|||
December 2019
|
|
1
|
|
Kansas City, KS
|
|
170,817
|
|
|
11,700
|
|
|
—
|
|
|
1,172
|
|
|||
December 2019
|
|
1
|
|
San Jose, CA
|
|
75,621
|
|
|
13,000
|
|
|
(333
|
)
|
|
—
|
|
|||
|
|
58
|
|
|
|
6,178,461
|
|
|
$
|
848,853
|
|
|
$
|
105,131
|
|
|
$
|
12,801
|
|
(1)
|
Gross sale price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
|
Date of Sale Agreement
|
|
Number of Properties
|
|
Location
|
|
Square
Feet
|
|
Gross
Sale Price (1)
|
|||
October 2019 (2)
|
|
2
|
|
Stafford, VA
|
|
64,656
|
|
|
$
|
14,063
|
|
October 2019
|
|
1
|
|
Fairfax, VA
|
|
83,130
|
|
|
22,200
|
|
|
October 2019 (2)
|
|
1
|
|
Windsor, CT
|
|
97,256
|
|
|
7,000
|
|
|
November 2019 (3)
|
|
1
|
|
Trenton, NJ
|
|
267,025
|
|
|
30,100
|
|
|
November 2019
|
|
1
|
|
Lincolnshire, IL
|
|
222,717
|
|
|
12,000
|
|
|
|
|
6
|
|
|
|
734,784
|
|
|
$
|
85,363
|
|
(1)
|
Gross sale price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
|
(2)
|
The sale of these properties was completed in January 2020.
|
(3)
|
We recorded a $9,454 loss on impairment of real estate during the year ended December 31, 2019 to adjust the carrying value of this property to its estimated fair value less costs to sell.
|
Date of Sale
|
|
Number of Properties
|
|
Location
|
|
Square
Feet
|
|
Gross
Sale Price (1)
|
|
Gain on Sale of Real Estate
|
|
Loss on Impairment of Real Estate
|
|||||||
March 2018
|
|
1
|
|
Minneapolis, MN
|
|
193,594
|
|
|
$
|
20,000
|
|
|
$
|
—
|
|
|
$
|
640
|
|
May 2018
|
|
1
|
|
New York, NY
|
|
187,060
|
|
|
118,500
|
|
|
17,249
|
|
|
—
|
|
|||
May 2018
|
|
1
|
|
Sacramento, CA
|
|
110,500
|
|
|
10,755
|
|
|
—
|
|
|
3,029
|
|
|||
November 2018
|
|
1
|
|
Golden, CO
|
|
43,231
|
|
|
4,000
|
|
|
54
|
|
|
—
|
|
|||
December 2018
|
|
15
|
|
Southern Virginia
|
|
1,640,252
|
|
|
167,000
|
|
|
3,358
|
|
|
—
|
|
|||
|
|
19
|
|
|
|
2,174,637
|
|
|
$
|
320,255
|
|
|
$
|
20,661
|
|
|
$
|
3,669
|
|
(1)
|
Gross sale price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
|
|
|
Year Ended
|
||
|
|
December 31, 2017
|
||
Rental income
|
|
$
|
17
|
|
Real estate taxes
|
|
(88
|
)
|
|
Utility expenses
|
|
(97
|
)
|
|
Other operating expenses
|
|
(202
|
)
|
|
General and administrative
|
|
(76
|
)
|
|
Increase in carrying value of property included in discontinued operations
|
|
619
|
|
|
Income from discontinued operations
|
|
$
|
173
|
|
Acquisition
Date
|
|
Location
|
|
Number of Properties
|
|
Square Feet
|
|
Purchase Price
|
|
Land
|
|
Building and Improvements
|
|
Other Assumed Assets
|
|||||||||
Jan 2017
|
|
Manassas, VA
|
|
1
|
|
69,374
|
|
|
$
|
12,657
|
|
|
$
|
1,562
|
|
|
$
|
8,253
|
|
|
$
|
2,842
|
|
•
|
Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:
|
•
|
the sum of (a) 0.5% of the average aggregate historical cost of the real estate assets acquired from a REIT to which RMR LLC provided business management or property management services, or the Transferred Assets, plus (b) 0.7% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets up to $250,000, plus (c) 0.5% of the average aggregate historical cost of our real estate investments excluding the Transferred Assets exceeding $250,000; and
|
•
|
the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000.
|
•
|
Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows:
|
•
|
An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of:
|
•
|
our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and
|
•
|
the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable index, or the benchmark return per share, for the relevant measurement period. Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S. Office REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S. REIT Equity Index for periods ending on or prior to December 31, 2018.
|
•
|
The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued or if we repurchase our common shares during the measurement period.
|
•
|
No incentive management fee is payable by us unless our total return per share during the measurement period is positive.
|
•
|
The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.
|
•
|
If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable index.
|
•
|
The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.
|
•
|
Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.
|
•
|
Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs.
|
•
|
Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC’s employees assigned to work exclusively or partly at our properties, our share of the wages, benefits and other related costs of RMR LLC’s centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function and as otherwise agreed. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $26,442, $21,279 and $15,321 for these expenses and costs for each of the years ended December 31, 2019, 2018 and 2017, respectively. We included these amounts in other operating expenses and general and administrative expense, as applicable, for these periods. We assumed the obligation to reimburse RMR LLC for similar expenses and costs that RMR LLC had incurred on behalf of SIR in the ordinary course but which SIR had not paid as of December 31, 2018. We reimbursed RMR LLC $462 in January 2019 for these SIR expenses and costs.
|
•
|
Term. Our management agreements with RMR LLC have terms that end on December 31, 2039, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.
|
•
|
Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR LLC, as defined therein. RMR LLC has the right to terminate the management agreements for good reason, as defined therein.
|
•
|
Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination, would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.
|
•
|
Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.
|
•
|
Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provide management services for the purpose of obtaining more favorable terms from such vendors and suppliers.
|
•
|
Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Revolving credit facility, due in 2023
|
|
$
|
—
|
|
|
$
|
175,000
|
|
Unsecured term loan, due in 2020
|
|
—
|
|
|
300,000
|
|
||
Unsecured term loan, due in 2022
|
|
—
|
|
|
88,000
|
|
||
Senior unsecured notes, 3.750% interest rate, due in 2019
|
|
—
|
|
|
350,000
|
|
||
Senior unsecured notes, 3.600% interest rate, due in 2020 (1)(2)
|
|
400,000
|
|
|
400,000
|
|
||
Senior unsecured notes, 4.000% interest rate, due in 2022
|
|
300,000
|
|
|
300,000
|
|
||
Senior unsecured notes, 4.150% interest rate, due in 2022 (1)
|
|
300,000
|
|
|
300,000
|
|
||
Senior unsecured notes, 4.250% interest rate, due in 2024 (1)
|
|
350,000
|
|
|
350,000
|
|
||
Senior unsecured notes, 4.500% interest rate, due in 2025 (1)
|
|
400,000
|
|
|
400,000
|
|
||
Senior unsecured notes, 5.875% interest rate, due in 2046
|
|
310,000
|
|
|
310,000
|
|
||
Mortgage note payable, 7.000% interest rate, due in 2019
|
|
—
|
|
|
7,939
|
|
||
Mortgage note payable, 5.720% interest rate, due in 2020
|
|
32,888
|
|
|
33,703
|
|
||
Mortgage note payable, 4.160% interest rate, due in 2020 (1)
|
|
40,062
|
|
|
40,772
|
|
||
Mortgage note payable, 8.150% interest rate, due in 2021
|
|
1,683
|
|
|
2,912
|
|
||
Mortgage note payable, 5.877% interest rate, due in 2021 (3)
|
|
13,166
|
|
|
13,437
|
|
||
Mortgage note payable, 4.220% interest rate, due in 2022
|
|
26,522
|
|
|
27,210
|
|
||
Mortgage note payable, 3.550% interest rate, due in 2023 (1)
|
|
71,000
|
|
|
71,000
|
|
||
Mortgage note payable, 3.700% interest rate, due in 2023 (1)
|
|
50,000
|
|
|
50,000
|
|
||
Mortgage note payable, 4.800% interest rate, due in 2023
|
|
24,108
|
|
|
24,509
|
|
||
Mortgage note payable, 4.050% interest rate, due in 2030
|
|
66,780
|
|
|
66,780
|
|
||
|
|
2,386,209
|
|
|
3,311,262
|
|
||
Unamortized debt premiums, discounts and issuance costs
|
|
(45,756
|
)
|
|
(56,372
|
)
|
||
|
|
$
|
2,340,453
|
|
|
$
|
3,254,890
|
|
(1)
|
We assumed these senior unsecured notes and mortgage notes in connection with the SIR Merger.
|
(2)
|
In January 2020, we redeemed, at par plus accrued interest, all $400,000 of our 3.60% senior unsecured notes due 2020 using cash on hand, proceeds from property sales and borrowings under our revolving credit facility.
|
(3)
|
The carrying value of this mortgage note of $13,128 is net of unamortized issuance costs of $38 and is included in liabilities of properties held for sale in our consolidated balance sheet as of December 31, 2019.
|
Year
|
|
Principal Payment
|
|
|
|
2020
|
|
$
|
475,707
|
|
|
2021
|
|
14,420
|
|
|
|
2022
|
|
625,518
|
|
|
|
2023
|
|
143,784
|
|
|
|
2024
|
|
350,000
|
|
|
|
Thereafter
|
|
776,780
|
|
|
|
|
|
$
|
2,386,209
|
|
(1)
|
(1)
|
Total consolidated debt outstanding as of December 31, 2019, net of unamortized premiums, discounts and issuance costs totaling $45,756, was $2,340,453.
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
|
|
|
Quoted Prices in
Active Markets for Identical Assets
|
|
Significant Other
Observable Inputs
|
|
Significant
Unobservable Inputs
|
||||||||
Description
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Non-Recurring Fair Value Measurements Assets:
|
|
|
|
|
|
|
|
|
||||||||
Assets of properties held for sale (1)
|
|
$
|
30,100
|
|
|
$
|
—
|
|
|
$
|
30,100
|
|
|
$
|
—
|
|
(1)
|
We recorded impairment charges of $9,454 to reduce the carrying value of one property that is classified as held for sale in our consolidated balance sheet to its estimated fair value, less costs to sell of $682, based upon a negotiated sale price with a third party buyer (a Level 2 input as defined in the fair value hierarchy under GAAP). See Note 3 for more information.
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
Financial Instrument
|
|
Carrying Value (1)
|
|
Fair Value
|
|
Carrying Value (1)
|
|
Fair Value
|
||||||||
Senior unsecured notes, 3.750% interest rate, due in 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
349,239
|
|
|
$
|
348,903
|
|
Senior unsecured notes, 3.60% interest rate, due in 2020 (2)
|
|
399,934
|
|
|
400,048
|
|
|
399,146
|
|
|
399,146
|
|
||||
Senior unsecured notes, 4.00% interest rate, due in 2022
|
|
297,657
|
|
|
306,096
|
|
|
296,735
|
|
|
295,047
|
|
||||
Senior unsecured notes, 4.15% interest rate, due in 2022
|
|
297,795
|
|
|
307,221
|
|
|
296,736
|
|
|
296,736
|
|
||||
Senior unsecured notes, 4.25% interest rate, due in 2024
|
|
340,018
|
|
|
364,602
|
|
|
337,736
|
|
|
337,736
|
|
||||
Senior unsecured notes, 4.50% interest rate, due in 2025
|
|
381,055
|
|
|
419,578
|
|
|
377,329
|
|
|
377,329
|
|
||||
Senior unsecured notes, 5.875% interest rate, due in 2046
|
|
300,920
|
|
|
322,028
|
|
|
300,576
|
|
|
274,288
|
|
||||
Mortgage notes payable (3)
|
|
323,074
|
|
|
331,675
|
|
|
335,241
|
|
|
336,365
|
|
||||
Total
|
|
$
|
2,340,453
|
|
|
$
|
2,451,248
|
|
|
$
|
2,692,738
|
|
|
$
|
2,665,550
|
|
(1)
|
Includes unamortized debt premiums, discounts and issuance costs totaling $45,756 and $55,524 as of December 31, 2019 and 2018, respectively.
|
(2)
|
In January 2020, we redeemed, at par plus accrued interest, all $400,000 of our 3.60% senior unsecured notes due 2020 using cash on hand, proceeds from property sales and borrowings under our revolving credit facility.
|
(3)
|
Includes one mortgage note with a carrying value of $13,128 net of unamortized issuance costs totaling $38 which is classified in liabilities of properties held for sale in our consolidated balance sheet as of December 31, 2019.
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Unvested at beginning of year
|
|
55,321
|
|
|
$
|
73.25
|
|
|
26,062
|
|
|
$
|
78.24
|
|
|
24,743
|
|
|
$
|
82.36
|
|
Granted
|
|
136,100
|
|
|
$
|
28.84
|
|
|
19,925
|
|
|
$
|
64.73
|
|
|
18,837
|
|
|
$
|
77.44
|
|
Forfeited
|
|
(1,474
|
)
|
|
$
|
49.10
|
|
|
(255
|
)
|
|
$
|
52.96
|
|
|
—
|
|
|
$
|
—
|
|
Vested
|
|
(83,267
|
)
|
|
$
|
27.78
|
|
|
(18,634
|
)
|
|
$
|
63.80
|
|
|
(17,518
|
)
|
|
$
|
83.20
|
|
Unvested acquired in the SIR Merger (1)
|
|
—
|
|
|
$
|
—
|
|
|
28,223
|
|
|
$
|
27.48
|
|
|
—
|
|
|
$
|
—
|
|
Unvested at end of year
|
|
106,680
|
|
|
$
|
40.16
|
|
|
55,321
|
|
|
$
|
73.25
|
|
|
26,062
|
|
|
$
|
78.24
|
|
(1)
|
Represents unvested shares granted under SIR’s equity compensation plan that were converted into shares under the 2009 Plan, and which will have similar vesting requirements as shares granted under the 2009 Plan.
|
|
|
Annual Per Share Distribution
|
|
Total Distribution
|
|
Characterization of Distribution
|
||||||||
Year
|
|
|
|
Return of Capital
|
|
Ordinary Income
|
|
Qualified Dividend
|
||||||
2019
|
|
$
|
2.20
|
|
|
$
|
105,868
|
|
|
—%
|
|
100.00%
|
|
—%
|
2018
|
|
$
|
6.88
|
|
|
$
|
170,566
|
|
|
68.60%
|
|
31.40%
|
|
—%
|
2017
|
|
$
|
6.88
|
|
|
$
|
145,209
|
|
|
49.35%
|
|
50.65%
|
|
—%
|
|
Unrealized Gain on
Investment in
Equity Securities
|
|
Equity in
Unrealized Gains
(Losses) of
Investees (1)
|
|
Unrealized Loss on Financial Instrument (2)
|
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
21,074
|
|
|
$
|
5,883
|
|
|
$
|
—
|
|
|
$
|
26,957
|
|
Other comprehensive income before reclassifications
|
24,042
|
|
|
9,462
|
|
|
—
|
|
|
33,504
|
|
||||
Amounts reclassified from cumulative other comprehensive income to net income
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
||||
Net current period other comprehensive income
|
24,042
|
|
|
9,428
|
|
|
—
|
|
|
33,470
|
|
||||
Balance at December 31, 2017
|
45,116
|
|
|
15,311
|
|
|
—
|
|
|
60,427
|
|
||||
Amounts reclassified from cumulative other comprehensive income to retained earnings
|
(45,116
|
)
|
|
(15,165
|
)
|
|
—
|
|
|
(60,281
|
)
|
||||
Balance at January 1, 2018
|
—
|
|
|
146
|
|
|
—
|
|
|
146
|
|
||||
Other comprehensive loss before reclassifications
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Amounts reclassified from cumulative other comprehensive income to net loss
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
(37
|
)
|
||||
Net current period other comprehensive loss
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||
Balance at December 31, 2018
|
—
|
|
|
106
|
|
|
—
|
|
|
106
|
|
||||
Other comprehensive loss before reclassifications
|
—
|
|
|
90
|
|
|
(200
|
)
|
|
(110
|
)
|
||||
Amounts reclassified from cumulative other comprehensive income to net income
|
—
|
|
|
(196
|
)
|
|
—
|
|
|
(196
|
)
|
||||
Net current period other comprehensive loss
|
—
|
|
|
(106
|
)
|
|
(200
|
)
|
|
(306
|
)
|
||||
Balance at December 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(200
|
)
|
|
$
|
(200
|
)
|
(1)
|
Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in equity in net losses of investees in our consolidated statements of comprehensive income (loss).
|
(2)
|
Amounts reclassified from cumulative other comprehensive income (loss) to net income (loss) is included in interest expense in our consolidated statements of comprehensive income (loss).
|
|
|
Nine Months Ended September 30, 2018
|
|
Year Ended December 31, 2017
|
||||
Revenues:
|
|
|
|
|
||||
Rental income
|
|
$
|
298,003
|
|
|
$
|
392,285
|
|
Tenant reimbursements and other income
|
|
60,514
|
|
|
75,818
|
|
||
Total revenues
|
|
358,517
|
|
|
468,103
|
|
||
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
||||
Real estate taxes
|
|
36,748
|
|
|
44,131
|
|
||
Other operating expenses
|
|
43,714
|
|
|
55,567
|
|
||
Depreciation and amortization
|
|
105,326
|
|
|
137,672
|
|
||
Acquisition and transaction related costs
|
|
3,796
|
|
|
1,075
|
|
||
General and administrative
|
|
47,353
|
|
|
54,909
|
|
||
Write-off of straight line rent receivable, net
|
|
10,626
|
|
|
12,517
|
|
||
Loss on asset impairment
|
|
—
|
|
|
4,047
|
|
||
Loss on impairment of real estate assets
|
|
9,706
|
|
|
229
|
|
||
Total expenses
|
|
257,269
|
|
|
310,147
|
|
||
|
|
|
|
|
||||
Gain on sale of real estate
|
|
4,075
|
|
|
—
|
|
||
Dividend income
|
|
1,190
|
|
|
1,587
|
|
||
Unrealized gain on equity securities
|
|
53,159
|
|
|
—
|
|
||
Interest income
|
|
753
|
|
|
91
|
|
||
Interest expense
|
|
(69,446
|
)
|
|
(92,870
|
)
|
||
Loss on early extinguishment of debt
|
|
(1,192
|
)
|
|
—
|
|
||
Income before income tax expense and equity in earnings of an investee
|
|
89,787
|
|
|
66,764
|
|
||
Income tax expense
|
|
(446
|
)
|
|
(466
|
)
|
||
Equity in earnings of an investee
|
|
882
|
|
|
608
|
|
||
Net income
|
|
90,223
|
|
|
66,906
|
|
||
Net income allocated to noncontrolling interest
|
|
(15,841
|
)
|
|
—
|
|
||
Net income attributed to SIR
|
|
$
|
74,382
|
|
|
$
|
66,906
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding (basic)
|
|
89,395
|
|
|
89,351
|
|
||
Weighted average common shares outstanding (diluted)
|
|
89,411
|
|
|
89,370
|
|
||
Net income attributed to SIR per common share (basic and diluted)
|
|
$
|
0.83
|
|
|
$
|
0.75
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Equity in earnings of Select Income REIT
|
|
$
|
—
|
|
|
$
|
24,358
|
|
|
$
|
21,584
|
|
Net gain on issuance of shares by Select Income REIT
|
|
—
|
|
|
29
|
|
|
72
|
|
|||
Loss on sale of Select Income REIT shares
|
|
—
|
|
|
(18,665
|
)
|
|
—
|
|
|||
Income from property discontinued operations
|
|
—
|
|
|
—
|
|
|
173
|
|
|||
Income from discontinued operations
|
|
$
|
—
|
|
|
$
|
5,722
|
|
|
$
|
21,829
|
|
|
2019
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Rental income
|
$
|
174,777
|
|
|
$
|
176,032
|
|
|
$
|
167,411
|
|
|
$
|
160,184
|
|
Net income (loss) available for common shareholders
|
$
|
34,019
|
|
|
$
|
(64,774
|
)
|
|
$
|
(3,939
|
)
|
|
$
|
65,029
|
|
Net income (loss) available for common shareholders per common share (basic and diluted)
|
$
|
0.71
|
|
|
$
|
(1.35
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
1.35
|
|
Common distributions declared
|
$
|
0.55
|
|
|
$
|
0.55
|
|
|
$
|
0.55
|
|
|
$
|
0.55
|
|
|
2018
|
||||||||||||||
|
First
Quarter |
|
Second
Quarter |
|
Third
Quarter |
|
Fourth
Quarter |
||||||||
Rental income
|
$
|
108,717
|
|
|
$
|
108,085
|
|
|
$
|
106,102
|
|
|
$
|
103,656
|
|
Net income (loss) available for common shareholders
|
$
|
6,287
|
|
|
$
|
29,602
|
|
|
$
|
(449
|
)
|
|
$
|
(57,695
|
)
|
Net income (loss) available for common shareholders per common share (basic and diluted)
|
$
|
0.25
|
|
|
$
|
1.20
|
|
|
$
|
(0.02
|
)
|
|
$
|
(2.31
|
)
|
Common distributions declared
|
$
|
1.72
|
|
|
$
|
1.72
|
|
|
$
|
1.72
|
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
Costs Capitalized Subsequent to Acquisition
|
|
|
|
Cost amount carried at Close of Period
|
|
|
|
|
|
|
||||||||||||||||||||||||
Property
|
|
Location
|
|
Number of Properties
|
|
Encumbrances (1)
|
|
Land
|
|
Buildings
and Equipment |
|
|
Impairments/
Writedowns |
|
Land
|
|
Buildings
and Equipment |
|
Total (2)
|
|
Accumulated
Depreciation (3) |
|
Date(s)
Acquired |
|
Original
Construction Date(s) |
|||||||||||||||||||
Inverness Center
|
|
Birmingham, AL
|
|
3
|
|
$
|
—
|
|
|
$
|
5,907
|
|
|
$
|
12,098
|
|
|
$
|
1,372
|
|
|
$
|
—
|
|
|
$
|
5,907
|
|
|
$
|
13,470
|
|
|
$
|
19,377
|
|
|
$
|
(425
|
)
|
|
12/31/2018
|
|
1984
|
445 Jan Davis Drive
|
|
Huntsville, AL
|
|
1
|
|
—
|
|
|
1,501
|
|
|
1,492
|
|
|
—
|
|
|
—
|
|
|
1,501
|
|
|
1,492
|
|
|
2,993
|
|
|
(40
|
)
|
|
12/31/2018
|
|
2007
|
|||||||||
4905 Moores Mill Road
|
|
Huntsville, AL
|
|
1
|
|
—
|
|
|
4,592
|
|
|
36,324
|
|
|
1,627
|
|
|
—
|
|
|
4,592
|
|
|
37,951
|
|
|
42,543
|
|
|
(1,093
|
)
|
|
12/31/2018
|
|
1979
|
|||||||||
131 Clayton Street
|
|
Montgomery, AL
|
|
1
|
|
—
|
|
|
920
|
|
|
9,084
|
|
|
216
|
|
|
—
|
|
|
920
|
|
|
9,300
|
|
|
10,220
|
|
|
(1,942
|
)
|
|
6/22/2011
|
|
2007
|
|||||||||
4344 Carmichael Road
|
|
Montgomery, AL
|
|
1
|
|
—
|
|
|
1,374
|
|
|
11,658
|
|
|
233
|
|
|
—
|
|
|
1,374
|
|
|
11,891
|
|
|
13,265
|
|
|
(1,752
|
)
|
|
12/17/2013
|
|
2009
|
|||||||||
15451 North 28th Avenue
|
|
Phoenix, AZ
|
|
1
|
|
—
|
|
|
1,917
|
|
|
7,416
|
|
|
625
|
|
|
—
|
|
|
1,917
|
|
|
8,041
|
|
|
9,958
|
|
|
(1,054
|
)
|
|
9/10/2014
|
|
1996
|
|||||||||
16001 North 28th Avenue
|
|
Phoenix, AZ
|
|
1
|
|
—
|
|
|
3,355
|
|
|
412
|
|
|
44
|
|
|
—
|
|
|
3,355
|
|
|
456
|
|
|
3,811
|
|
|
(14
|
)
|
|
12/31/2018
|
|
1998
|
|||||||||
711 S 14th Avenue
|
|
Safford, AZ
|
|
1
|
|
—
|
|
|
460
|
|
|
11,708
|
|
|
790
|
|
|
(4,440
|
)
|
|
364
|
|
|
8,154
|
|
|
8,518
|
|
|
(454
|
)
|
|
6/16/2010
|
|
1992
|
|||||||||
Regents Center
|
|
Tempe, AZ
|
|
2
|
|
—
|
|
|
4,121
|
|
|
3,042
|
|
|
—
|
|
|
—
|
|
|
4,121
|
|
|
3,042
|
|
|
7,163
|
|
|
(149
|
)
|
|
12/31/2018
|
|
1988
|
|||||||||
Campbell Place
|
|
Carlsbad, CA
|
|
2
|
|
—
|
|
|
5,769
|
|
|
3,871
|
|
|
549
|
|
|
—
|
|
|
5,769
|
|
|
4,420
|
|
|
10,189
|
|
|
(115
|
)
|
|
12/31/2018
|
|
2007
|
|||||||||
Folsom Corporate Center
|
|
Folsom, CA
|
|
1
|
|
—
|
|
|
2,904
|
|
|
5,583
|
|
|
—
|
|
|
—
|
|
|
2,904
|
|
|
5,583
|
|
|
8,487
|
|
|
(174
|
)
|
|
12/31/2018
|
|
2008
|
|||||||||
Bayside Technology Park
|
|
Fremont, CA
|
|
1
|
|
—
|
|
|
10,784
|
|
|
648
|
|
|
(1
|
)
|
|
—
|
|
|
10,784
|
|
|
647
|
|
|
11,431
|
|
|
(21
|
)
|
|
12/31/2018
|
|
1990
|
|||||||||
5045 East Butler Street
|
|
Fresno, CA
|
|
1
|
|
—
|
|
|
7,276
|
|
|
61,118
|
|
|
139
|
|
|
—
|
|
|
7,276
|
|
|
61,257
|
|
|
68,533
|
|
|
(26,566
|
)
|
|
8/29/2002
|
|
1971
|
|||||||||
10949 N. Mather Boulevard
|
|
Rancho Cordova, CA
|
|
1
|
|
—
|
|
|
562
|
|
|
16,923
|
|
|
916
|
|
|
—
|
|
|
562
|
|
|
17,839
|
|
|
18,401
|
|
|
(2,655
|
)
|
|
10/30/2013
|
|
2012
|
|||||||||
11020 Sun Center Drive
|
|
Rancho Cordova, CA
|
|
1
|
|
—
|
|
|
1,466
|
|
|
8,797
|
|
|
1,401
|
|
|
—
|
|
|
1,466
|
|
|
10,198
|
|
|
11,664
|
|
|
(808
|
)
|
|
12/20/2016
|
|
1983
|
|||||||||
100 Redwood Shores Parkway
|
|
Redwood City, CA
|
|
1
|
|
—
|
|
|
14,454
|
|
|
7,721
|
|
|
—
|
|
|
—
|
|
|
14,454
|
|
|
7,721
|
|
|
22,175
|
|
|
(214
|
)
|
|
12/31/2018
|
|
1993
|
|||||||||
3875 Atherton Road
|
|
Rocklin, CA
|
|
1
|
|
—
|
|
|
177
|
|
|
853
|
|
|
—
|
|
|
—
|
|
|
177
|
|
|
853
|
|
|
1,030
|
|
|
(23
|
)
|
|
12/31/2018
|
|
1991
|
|||||||||
801 K Street
|
|
Sacramento, CA
|
|
1
|
|
—
|
|
|
4,688
|
|
|
61,994
|
|
|
7,087
|
|
|
—
|
|
|
4,688
|
|
|
69,081
|
|
|
73,769
|
|
|
(8,306
|
)
|
|
1/29/2016
|
|
1989
|
|||||||||
9815 Goethe Road
|
|
Sacramento, CA
|
|
1
|
|
—
|
|
|
1,450
|
|
|
9,465
|
|
|
1,523
|
|
|
—
|
|
|
1,450
|
|
|
10,988
|
|
|
12,438
|
|
|
(2,307
|
)
|
|
9/14/2011
|
|
1992
|
|||||||||
Capitol Place
|
|
Sacramento, CA
|
|
1
|
|
—
|
|
|
2,290
|
|
|
35,891
|
|
|
9,822
|
|
|
—
|
|
|
2,290
|
|
|
45,713
|
|
|
48,003
|
|
|
(12,081
|
)
|
|
12/17/2009
|
|
1988
|
|||||||||
4560 Viewridge Road
|
|
San Diego, CA
|
|
1
|
|
—
|
|
|
4,269
|
|
|
18,316
|
|
|
4,319
|
|
|
—
|
|
|
4,347
|
|
|
22,557
|
|
|
26,904
|
|
|
(11,467
|
)
|
|
3/31/1997
|
|
1996
|
|||||||||
2115 O’Nel Drive
|
|
San Jose, CA
|
|
1
|
|
—
|
|
|
12,305
|
|
|
5,062
|
|
|
—
|
|
|
—
|
|
|
12,305
|
|
|
5,062
|
|
|
17,367
|
|
|
(140
|
)
|
|
12/31/2018
|
|
1984
|
|||||||||
North First Street
|
|
San Jose, CA
|
|
1
|
|
—
|
|
|
8,311
|
|
|
4,003
|
|
|
188
|
|
|
—
|
|
|
8,311
|
|
|
4,191
|
|
|
12,502
|
|
|
(116
|
)
|
|
12/31/2018
|
|
1984
|
|||||||||
Rio Robles Drive
|
|
San Jose, CA
|
|
3
|
|
—
|
|
|
23,687
|
|
|
13,698
|
|
|
614
|
|
|
—
|
|
|
23,687
|
|
|
14,312
|
|
|
37,999
|
|
|
(403
|
)
|
|
12/31/2018
|
|
1984
|
|||||||||
2450 and 2500 Walsh Avenue
|
|
Santa Clara, CA
|
|
2
|
|
—
|
|
|
13,374
|
|
|
16,651
|
|
|
—
|
|
|
—
|
|
|
13,374
|
|
|
16,651
|
|
|
30,025
|
|
|
(461
|
)
|
|
12/31/2018
|
|
1982
|
|||||||||
3250 and 3260 Jay Street
|
|
Santa Clara, CA
|
|
2
|
|
—
|
|
|
19,899
|
|
|
14,051
|
|
|
—
|
|
|
—
|
|
|
19,899
|
|
|
14,051
|
|
|
33,950
|
|
|
(390
|
)
|
|
12/31/2018
|
|
1982
|
|||||||||
603 San Juan Avenue
|
|
Stockton, CA
|
|
1
|
|
—
|
|
|
563
|
|
|
5,470
|
|
|
—
|
|
|
—
|
|
|
563
|
|
|
5,470
|
|
|
6,033
|
|
|
(1,015
|
)
|
|
7/20/2012
|
|
2012
|
|||||||||
350 West Java Drive
|
|
Sunnyvale, CA
|
|
1
|
|
—
|
|
|
24,609
|
|
|
462
|
|
|
21
|
|
|
—
|
|
|
24,609
|
|
|
483
|
|
|
25,092
|
|
|
(14
|
)
|
|
12/31/2018
|
|
1984
|
|||||||||
7958 South Chester Street
|
|
Centennial, CO
|
|
1
|
|
—
|
|
|
6,682
|
|
|
7,153
|
|
|
105
|
|
|
—
|
|
|
6,682
|
|
|
7,258
|
|
|
13,940
|
|
|
(200
|
)
|
|
12/31/2018
|
|
2000
|
|||||||||
350 Spectrum Loop
|
|
Colorado Springs, CO
|
|
1
|
|
—
|
|
|
3,650
|
|
|
7,732
|
|
|
86
|
|
|
—
|
|
|
3,650
|
|
|
7,818
|
|
|
11,468
|
|
|
(219
|
)
|
|
12/31/2018
|
|
2000
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
Costs Capitalized Subsequent to Acquisition
|
|
|
|
Cost amount carried at Close of Period
|
|
|
|
|
|
|
||||||||||||||||||||||||
Property
|
|
Location
|
|
Number of Properties
|
|
Encumbrances (1)
|
|
Land
|
|
Buildings
and Equipment |
|
|
Impairments/
Writedowns |
|
Land
|
|
Buildings
and Equipment |
|
Total (2)
|
|
Accumulated
Depreciation (3) |
|
Date(s)
Acquired |
|
Original
Construction Date(s) |
|||||||||||||||||||
333 Inverness Drive South
|
|
Englewood, CO
|
|
1
|
|
—
|
|
|
5,711
|
|
|
4,543
|
|
|
—
|
|
|
—
|
|
|
5,711
|
|
|
4,543
|
|
|
10,254
|
|
|
(136
|
)
|
|
12/31/2018
|
|
1998
|
|||||||||
12795 West Alameda Parkway
|
|
Lakewood, CO
|
|
1
|
|
1,687
|
|
|
2,640
|
|
|
23,777
|
|
|
1,339
|
|
|
—
|
|
|
2,640
|
|
|
25,116
|
|
|
27,756
|
|
|
(6,195
|
)
|
|
1/15/2010
|
|
1988
|
|||||||||
Corporate Center
|
|
Lakewood, CO
|
|
3
|
|
—
|
|
|
2,887
|
|
|
27,537
|
|
|
3,889
|
|
|
—
|
|
|
2,887
|
|
|
31,426
|
|
|
34,313
|
|
|
(13,409
|
)
|
|
10/11/2002
|
|
1980
|
|||||||||
11 Dupont Circle, NW
|
|
Washington, DC
|
|
1
|
|
64,686
|
|
|
28,255
|
|
|
44,743
|
|
|
5,095
|
|
|
—
|
|
|
28,255
|
|
|
49,838
|
|
|
78,093
|
|
|
(3,366
|
)
|
|
10/2/2017
|
|
1974
|
|||||||||
1211 Connecticut Avenue, NW
|
|
Washington, DC
|
|
1
|
|
26,542
|
|
|
30,388
|
|
|
24,667
|
|
|
2,168
|
|
|
—
|
|
|
30,388
|
|
|
26,835
|
|
|
57,223
|
|
|
(1,793
|
)
|
|
10/2/2017
|
|
1967
|
|||||||||
1401 K Street, NW
|
|
Washington, DC
|
|
1
|
|
24,502
|
|
|
29,215
|
|
|
34,656
|
|
|
4,461
|
|
|
—
|
|
|
29,215
|
|
|
39,117
|
|
|
68,332
|
|
|
(2,910
|
)
|
|
10/2/2017
|
|
1929
|
|||||||||
20 Massachusetts Avenue
|
|
Washington, DC
|
|
1
|
|
—
|
|
|
12,009
|
|
|
51,527
|
|
|
21,755
|
|
|
—
|
|
|
12,223
|
|
|
73,068
|
|
|
85,291
|
|
|
(37,223
|
)
|
|
3/31/1997
|
|
1996
|
|||||||||
440 First Street, NW
|
|
Washington, DC
|
|
1
|
|
—
|
|
|
27,903
|
|
|
38,624
|
|
|
1,332
|
|
|
—
|
|
|
27,903
|
|
|
39,956
|
|
|
67,859
|
|
|
(2,339
|
)
|
|
10/2/2017
|
|
1982
|
|||||||||
625 Indiana Avenue
|
|
Washington, DC
|
|
1
|
|
—
|
|
|
26,000
|
|
|
25,955
|
|
|
8,491
|
|
|
—
|
|
|
26,000
|
|
|
34,446
|
|
|
60,446
|
|
|
(8,694
|
)
|
|
8/17/2010
|
|
1989
|
|||||||||
840 First Street, NE
|
|
Washington, DC
|
|
1
|
|
33,219
|
|
|
42,727
|
|
|
73,278
|
|
|
2,222
|
|
|
—
|
|
|
42,727
|
|
|
75,500
|
|
|
118,227
|
|
|
(4,303
|
)
|
|
10/2/2017
|
|
2003
|
|||||||||
10350 NW 112th Avenue
|
|
Miami, FL
|
|
1
|
|
—
|
|
|
4,798
|
|
|
2,757
|
|
|
—
|
|
|
—
|
|
|
4,798
|
|
|
2,757
|
|
|
7,555
|
|
|
(76
|
)
|
|
12/31/2018
|
|
2002
|
|||||||||
7850 Southwest 6th Court
|
|
Plantation, FL
|
|
1
|
|
—
|
|
|
4,800
|
|
|
30,592
|
|
|
383
|
|
|
—
|
|
|
4,800
|
|
|
30,975
|
|
|
35,775
|
|
|
(6,808
|
)
|
|
5/12/2011
|
|
1999
|
|||||||||
8900 Grand Oak Circle
|
|
Tampa, FL
|
|
1
|
|
—
|
|
|
1,100
|
|
|
11,773
|
|
|
427
|
|
|
—
|
|
|
1,100
|
|
|
12,200
|
|
|
13,300
|
|
|
(2,787
|
)
|
|
10/15/2010
|
|
1994
|
|||||||||
180 Ted Turner Drive SW
|
|
Atlanta, GA
|
|
1
|
|
—
|
|
|
5,717
|
|
|
20,017
|
|
|
295
|
|
|
—
|
|
|
5,717
|
|
|
20,312
|
|
|
26,029
|
|
|
(3,747
|
)
|
|
7/25/2012
|
|
2007
|
|||||||||
Corporate Square
|
|
Atlanta, GA
|
|
5
|
|
—
|
|
|
3,996
|
|
|
29,762
|
|
|
27,962
|
|
|
—
|
|
|
3,996
|
|
|
57,724
|
|
|
61,720
|
|
|
(15,442
|
)
|
|
7/16/2004
|
|
1967
|
|||||||||
Executive Park
|
|
Atlanta, GA
|
|
1
|
|
—
|
|
|
1,521
|
|
|
11,826
|
|
|
4,041
|
|
|
—
|
|
|
1,521
|
|
|
15,867
|
|
|
17,388
|
|
|
(6,437
|
)
|
|
7/16/2004
|
|
1972
|
|||||||||
One Georgia Center
|
|
Atlanta, GA
|
|
1
|
|
—
|
|
|
10,250
|
|
|
27,933
|
|
|
9,227
|
|
|
—
|
|
|
10,250
|
|
|
37,160
|
|
|
47,410
|
|
|
(6,646
|
)
|
|
9/30/2011
|
|
1968
|
|||||||||
One Primerica Parkway
|
|
Duluth, GA
|
|
1
|
|
—
|
|
|
6,927
|
|
|
22,951
|
|
|
—
|
|
|
—
|
|
|
6,927
|
|
|
22,951
|
|
|
29,878
|
|
|
(636
|
)
|
|
12/31/2018
|
|
2013
|
|||||||||
4712 Southpark Boulevard
|
|
Ellenwood, GA
|
|
1
|
|
—
|
|
|
1,390
|
|
|
19,635
|
|
|
118
|
|
|
—
|
|
|
1,390
|
|
|
19,753
|
|
|
21,143
|
|
|
(3,653
|
)
|
|
7/25/2012
|
|
2005
|
|||||||||
91-209 Kuhela Street
|
|
Kapolei, HI
|
|
1
|
|
—
|
|
|
1,998
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
1,998
|
|
|
10
|
|
|
2,008
|
|
|
—
|
|
|
12/31/2018
|
|
Land
|
|||||||||
8305 NW 62nd Avenue
|
|
Johnston, IA
|
|
1
|
|
—
|
|
|
2,649
|
|
|
7,997
|
|
|
—
|
|
|
—
|
|
|
2,649
|
|
|
7,997
|
|
|
10,646
|
|
|
(221
|
)
|
|
12/31/2018
|
|
2011
|
|||||||||
1185, 1249 & 1387 S. Vinnell Way
|
|
Boise, ID
|
|
3
|
|
—
|
|
|
3,390
|
|
|
29,026
|
|
|
935
|
|
|
—
|
|
|
3,390
|
|
|
29,961
|
|
|
33,351
|
|
|
(5,684
|
)
|
|
9/11/2012
|
|
1996; 1997; 2002
|
|||||||||
2020 S. Arlington Heights
|
|
Arlington Heights, IL
|
|
1
|
|
—
|
|
|
1,450
|
|
|
13,588
|
|
|
444
|
|
|
—
|
|
|
1,450
|
|
|
14,032
|
|
|
15,482
|
|
|
(3,467
|
)
|
|
12/29/2009
|
|
1988
|
|||||||||
400 South Jefferson Street
|
|
Chicago, IL
|
|
1
|
|
49,299
|
|
|
19,379
|
|
|
20,115
|
|
|
—
|
|
|
—
|
|
|
19,379
|
|
|
20,115
|
|
|
39,494
|
|
|
(558
|
)
|
|
12/31/2018
|
|
1947
|
|||||||||
1415 West Diehl Road
|
|
Naperville, IL
|
|
1
|
|
—
|
|
|
12,333
|
|
|
20,586
|
|
|
776
|
|
|
—
|
|
|
12,333
|
|
|
21,362
|
|
|
33,695
|
|
|
(636
|
)
|
|
12/31/2018
|
|
2001
|
|||||||||
440 North Fairway Drive
|
|
Vernon Hills, IL
|
|
1
|
|
—
|
|
|
4,465
|
|
|
441
|
|
|
—
|
|
|
—
|
|
|
4,465
|
|
|
441
|
|
|
4,906
|
|
|
(13
|
)
|
|
12/31/2018
|
|
1,992
|
|||||||||
7601 and 7635 Interactive Way
|
|
Indianapolis, IN
|
|
2
|
|
—
|
|
|
3,337
|
|
|
14,522
|
|
|
26
|
|
|
—
|
|
|
3,337
|
|
|
14,548
|
|
|
17,885
|
|
|
(376
|
)
|
|
12/31/2018
|
|
2003
|
|||||||||
Intech Park
|
|
Indianapolis, IN
|
|
3
|
|
—
|
|
|
4,170
|
|
|
69,759
|
|
|
7,050
|
|
|
—
|
|
|
4,170
|
|
|
76,809
|
|
|
80,979
|
|
|
(15,777
|
)
|
|
10/14/2011
|
|
2000; 2001; 2008
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
Costs Capitalized Subsequent to Acquisition
|
|
|
|
Cost amount carried at Close of Period
|
|
|
|
|
|
|
||||||||||||||||||||||||
Property
|
|
Location
|
|
Number of Properties
|
|
Encumbrances (1)
|
|
Land
|
|
Buildings
and Equipment |
|
|
Impairments/
Writedowns |
|
Land
|
|
Buildings
and Equipment |
|
Total (2)
|
|
Accumulated
Depreciation (3) |
|
Date(s)
Acquired |
|
Original
Construction Date(s) |
|||||||||||||||||||
The Atrium at Circleport II
|
|
Erlanger, KY
|
|
1
|
|
—
|
|
|
1,796
|
|
|
1,933
|
|
|
—
|
|
|
—
|
|
|
1,796
|
|
|
1,933
|
|
|
3,729
|
|
|
(80
|
)
|
|
12/31/2018
|
|
1999
|
|||||||||
7125 Industrial Road
|
|
Florence, KY
|
|
1
|
|
—
|
|
|
1,698
|
|
|
11,722
|
|
|
293
|
|
|
—
|
|
|
1,698
|
|
|
12,015
|
|
|
13,713
|
|
|
(2,074
|
)
|
|
12/31/2012
|
|
1980
|
|||||||||
251 Causeway Street
|
|
Boston, MA
|
|
1
|
|
—
|
|
|
8,130
|
|
|
17,293
|
|
|
3,296
|
|
|
—
|
|
|
8,130
|
|
|
20,589
|
|
|
28,719
|
|
|
(4,708
|
)
|
|
8/17/2010
|
|
1987
|
|||||||||
300 and 330 Billerica Road
|
|
Chelmsford, MA
|
|
2
|
|
—
|
|
|
4,700
|
|
|
—
|
|
|
458
|
|
|
—
|
|
|
4,700
|
|
|
458
|
|
|
5,158
|
|
|
(3
|
)
|
|
12/31/2018
|
|
1984
|
|||||||||
75 Pleasant Street
|
|
Malden, MA
|
|
1
|
|
—
|
|
|
1,050
|
|
|
31,086
|
|
|
856
|
|
|
—
|
|
|
1,050
|
|
|
31,942
|
|
|
32,992
|
|
|
(7,500
|
)
|
|
5/24/2010
|
|
2008
|
|||||||||
25 Newport Avenue
|
|
Quincy, MA
|
|
1
|
|
—
|
|
|
2,700
|
|
|
9,199
|
|
|
1,879
|
|
|
—
|
|
|
2,700
|
|
|
11,078
|
|
|
13,778
|
|
|
(2,464
|
)
|
|
2/16/2011
|
|
1985
|
|||||||||
One Montvale Avenue
|
|
Stoneham, MA
|
|
1
|
|
—
|
|
|
1,670
|
|
|
11,035
|
|
|
2,693
|
|
|
—
|
|
|
1,670
|
|
|
13,728
|
|
|
15,398
|
|
|
(3,101
|
)
|
|
6/16/2010
|
|
1945
|
|||||||||
314 Littleton Road
|
|
Westford, MA
|
|
1
|
|
—
|
|
|
5,691
|
|
|
8,487
|
|
|
41
|
|
|
—
|
|
|
5,691
|
|
|
8,528
|
|
|
14,219
|
|
|
(238
|
)
|
|
12/31/2018
|
|
2007
|
|||||||||
Annapolis Commerce Center
|
|
Annapolis, MD
|
|
2
|
|
—
|
|
|
4,057
|
|
|
7,665
|
|
|
370
|
|
|
—
|
|
|
4,057
|
|
|
8,035
|
|
|
12,092
|
|
|
(523
|
)
|
|
10/2/2017
|
|
1989
|
|||||||||
4201 Patterson Avenue
|
|
Baltimore, MD
|
|
1
|
|
—
|
|
|
901
|
|
|
8,097
|
|
|
4,099
|
|
|
(85
|
)
|
|
892
|
|
|
12,120
|
|
|
13,012
|
|
|
(5,401
|
)
|
|
10/15/1998
|
|
1989
|
|||||||||
7001 Columbia Gateway Drive
|
|
Columbia, MD
|
|
1
|
|
—
|
|
|
5,642
|
|
|
10,352
|
|
|
—
|
|
|
—
|
|
|
5,642
|
|
|
10,352
|
|
|
15,994
|
|
|
(305
|
)
|
|
12/31/2018
|
|
2008
|
|||||||||
Hillside Center
|
|
Columbia, MD
|
|
2
|
|
—
|
|
|
3,437
|
|
|
4,228
|
|
|
576
|
|
|
—
|
|
|
3,437
|
|
|
4,804
|
|
|
8,241
|
|
|
(277
|
)
|
|
10/2/2017
|
|
2001
|
|||||||||
TenThreeTwenty
|
|
Columbia, MD
|
|
1
|
|
—
|
|
|
3,126
|
|
|
16,361
|
|
|
1,537
|
|
|
—
|
|
|
3,126
|
|
|
17,898
|
|
|
21,024
|
|
|
(1,177
|
)
|
|
10/2/2017
|
|
1982
|
|||||||||
3300 75th Avenue
|
|
Landover, MD
|
|
1
|
|
—
|
|
|
4,110
|
|
|
36,371
|
|
|
1,513
|
|
|
—
|
|
|
4,110
|
|
|
37,884
|
|
|
41,994
|
|
|
(9,310
|
)
|
|
2/26/2010
|
|
1985
|
|||||||||
2115 East Jefferson Street
|
|
Rockville, MD
|
|
1
|
|
—
|
|
|
3,349
|
|
|
11,152
|
|
|
436
|
|
|
—
|
|
|
3,349
|
|
|
11,588
|
|
|
14,937
|
|
|
(1,815
|
)
|
|
8/27/2013
|
|
1981
|
|||||||||
Redland 520/530
|
|
Rockville, MD
|
|
3
|
|
—
|
|
|
12,714
|
|
|
61,377
|
|
|
1,744
|
|
|
—
|
|
|
12,714
|
|
|
63,121
|
|
|
75,835
|
|
|
(3,541
|
)
|
|
10/2/2017
|
|
2008
|
|||||||||
Redland 540
|
|
Rockville, MD
|
|
1
|
|
—
|
|
|
10,740
|
|
|
17,714
|
|
|
6,001
|
|
|
—
|
|
|
10,740
|
|
|
23,715
|
|
|
34,455
|
|
|
(1,909
|
)
|
|
10/2/2017
|
|
2003
|
|||||||||
Rutherford Business Park
|
|
Windsor Mill, MD
|
|
1
|
|
—
|
|
|
1,598
|
|
|
10,219
|
|
|
472
|
|
|
—
|
|
|
1,598
|
|
|
10,691
|
|
|
12,289
|
|
|
(1,845
|
)
|
|
11/16/2012
|
|
1972
|
|||||||||
3550 Green Court
|
|
Ann Arbor, MI
|
|
1
|
|
—
|
|
|
3,630
|
|
|
4,857
|
|
|
—
|
|
|
—
|
|
|
3,630
|
|
|
4,857
|
|
|
8,487
|
|
|
(142
|
)
|
|
12/31/2018
|
|
1998
|
|||||||||
11411 E. Jefferson Avenue
|
|
Detroit, MI
|
|
1
|
|
—
|
|
|
630
|
|
|
18,002
|
|
|
451
|
|
|
—
|
|
|
630
|
|
|
18,453
|
|
|
19,083
|
|
|
(4,402
|
)
|
|
4/23/2010
|
|
2009
|
|||||||||
Rosedale Corporate Plaza
|
|
Roseville, MN
|
|
1
|
|
—
|
|
|
672
|
|
|
6,045
|
|
|
1,526
|
|
|
—
|
|
|
672
|
|
|
7,571
|
|
|
8,243
|
|
|
(3,759
|
)
|
|
12/1/1999
|
|
1987
|
|||||||||
1300 Summit Street
|
|
Kansas City, MO
|
|
1
|
|
—
|
|
|
2,776
|
|
|
12,070
|
|
|
1,143
|
|
|
—
|
|
|
2,776
|
|
|
13,213
|
|
|
15,989
|
|
|
(2,399
|
)
|
|
9/27/2012
|
|
1998
|
|||||||||
2555 Grand Boulevard
|
|
Kansas City, MO
|
|
1
|
|
—
|
|
|
4,085
|
|
|
51,399
|
|
|
472
|
|
|
—
|
|
|
4,085
|
|
|
51,871
|
|
|
55,956
|
|
|
(1,408
|
)
|
|
12/31/2018
|
|
2003
|
|||||||||
4241-4300 NE 34th Street
|
|
Kansas City, MO
|
|
1
|
|
—
|
|
|
1,443
|
|
|
6,193
|
|
|
4,180
|
|
|
—
|
|
|
1,780
|
|
|
10,036
|
|
|
11,816
|
|
|
(4,523
|
)
|
|
3/31/1997
|
|
1995
|
|||||||||
1220 Echelon Parkway
|
|
Jackson, MS
|
|
1
|
|
—
|
|
|
440
|
|
|
25,458
|
|
|
258
|
|
|
—
|
|
|
440
|
|
|
25,716
|
|
|
26,156
|
|
|
(4,760
|
)
|
|
7/25/2012
|
|
2009
|
|||||||||
2300 and 2400 Yorkmont Road
|
|
Charlotte, NC
|
|
2
|
|
—
|
|
|
1,334
|
|
|
19,075
|
|
|
1,387
|
|
|
—
|
|
|
1,334
|
|
|
20,462
|
|
|
21,796
|
|
|
(587
|
)
|
|
12/31/2018
|
|
1995
|
|||||||||
18010 and 18020 Burt Street
|
|
Omaha, NE
|
|
2
|
|
—
|
|
|
6,977
|
|
|
12,500
|
|
|
—
|
|
|
—
|
|
|
6,977
|
|
|
12,500
|
|
|
19,477
|
|
|
(346
|
)
|
|
12/31/2018
|
|
2012
|
|||||||||
500 Charles Ewing Boulevard
|
|
Ewing, NJ
|
|
1
|
|
—
|
|
|
4,808
|
|
|
26,002
|
|
|
—
|
|
|
—
|
|
|
4,808
|
|
|
26,002
|
|
|
30,810
|
|
|
(721
|
)
|
|
12/31/2018
|
|
2012
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
Costs Capitalized Subsequent to Acquisition
|
|
|
|
Cost amount carried at Close of Period
|
|
|
|
|
|
|
||||||||||||||||||||||||
Property
|
|
Location
|
|
Number of Properties
|
|
Encumbrances (1)
|
|
Land
|
|
Buildings
and Equipment |
|
|
Impairments/
Writedowns |
|
Land
|
|
Buildings
and Equipment |
|
Total (2)
|
|
Accumulated
Depreciation (3) |
|
Date(s)
Acquired |
|
Original
Construction Date(s) |
|||||||||||||||||||
299 Jefferson Road
|
|
Parsippany, NJ
|
|
1
|
|
—
|
|
|
4,543
|
|
|
2,914
|
|
|
493
|
|
|
—
|
|
|
4,543
|
|
|
3,407
|
|
|
7,950
|
|
|
(85
|
)
|
|
12/31/2018
|
|
2011
|
|||||||||
One Jefferson Road
|
|
Parsippany, NJ
|
|
1
|
|
—
|
|
|
4,415
|
|
|
5,249
|
|
|
10
|
|
|
—
|
|
|
4,415
|
|
|
5,259
|
|
|
9,674
|
|
|
(143
|
)
|
|
12/31/2018
|
|
2009
|
|||||||||
Airline Corporate Center
|
|
Colonie, NY
|
|
1
|
|
—
|
|
|
790
|
|
|
6,400
|
|
|
406
|
|
|
—
|
|
|
790
|
|
|
6,806
|
|
|
7,596
|
|
|
(1,253
|
)
|
|
6/22/2012
|
|
2004
|
|||||||||
5000 Corporate Court
|
|
Holtsville, NY
|
|
1
|
|
—
|
|
|
6,530
|
|
|
17,711
|
|
|
3,799
|
|
|
—
|
|
|
6,530
|
|
|
21,510
|
|
|
28,040
|
|
|
(4,492
|
)
|
|
8/31/2011
|
|
2000
|
|||||||||
8687 Carling Road
|
|
Liverpool, NY
|
|
1
|
|
—
|
|
|
566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
566
|
|
|
—
|
|
|
566
|
|
|
—
|
|
|
12/31/2018
|
|
1997
|
|||||||||
1212 Pittsford - Victor Road
|
|
Pittsford, NY
|
|
1
|
|
—
|
|
|
608
|
|
|
78
|
|
|
530
|
|
|
—
|
|
|
608
|
|
|
608
|
|
|
1,216
|
|
|
(5
|
)
|
|
12/31/2018
|
|
1965
|
|||||||||
2231 Schrock Road
|
|
Columbus, OH
|
|
1
|
|
—
|
|
|
716
|
|
|
217
|
|
|
101
|
|
|
—
|
|
|
716
|
|
|
318
|
|
|
1,034
|
|
|
(10
|
)
|
|
12/31/2018
|
|
1999
|
|||||||||
4600 25th Avenue
|
|
Salem, OR
|
|
1
|
|
—
|
|
|
6,510
|
|
|
17,973
|
|
|
6,658
|
|
|
—
|
|
|
6,510
|
|
|
24,631
|
|
|
31,141
|
|
|
(5,904
|
)
|
|
12/20/2011
|
|
1957
|
|||||||||
8800 Tinicum Boulevard
|
|
Philadelphia, PA
|
|
1
|
|
40,310
|
|
|
5,573
|
|
|
22,686
|
|
|
—
|
|
|
—
|
|
|
5,573
|
|
|
22,686
|
|
|
28,259
|
|
|
(629
|
)
|
|
12/31/2018
|
|
2000
|
|||||||||
9680 Old Bailes Road
|
|
Fort Mill, SC
|
|
1
|
|
—
|
|
|
834
|
|
|
2,944
|
|
|
—
|
|
|
—
|
|
|
834
|
|
|
2,944
|
|
|
3,778
|
|
|
(82
|
)
|
|
12/31/2018
|
|
2007
|
|||||||||
One Memphis Place
|
|
Memphis, TN
|
|
1
|
|
—
|
|
|
1,630
|
|
|
5,645
|
|
|
7,435
|
|
|
—
|
|
|
1,630
|
|
|
13,080
|
|
|
14,710
|
|
|
(2,996
|
)
|
|
9/17/2010
|
|
1985
|
|||||||||
16001 North Dallas Parkway
|
|
Addison, TX
|
|
2
|
|
—
|
|
|
10,158
|
|
|
63,036
|
|
|
331
|
|
|
—
|
|
|
10,158
|
|
|
63,367
|
|
|
73,525
|
|
|
(1,870
|
)
|
|
12/31/2018
|
|
1987
|
|||||||||
Research Park
|
|
Austin, TX
|
|
2
|
|
—
|
|
|
4,258
|
|
|
13,747
|
|
|
536
|
|
|
—
|
|
|
4,258
|
|
|
14,283
|
|
|
18,541
|
|
|
(835
|
)
|
|
12/31/2018
|
|
1999
|
|||||||||
10451 Clay Road
|
|
Houston, TX
|
|
1
|
|
—
|
|
|
5,495
|
|
|
10,253
|
|
|
—
|
|
|
—
|
|
|
5,495
|
|
|
10,253
|
|
|
15,748
|
|
|
(284
|
)
|
|
12/31/2018
|
|
2013
|
|||||||||
202 North Castlegory Road
|
|
Houston, TX
|
|
1
|
|
—
|
|
|
863
|
|
|
5,024
|
|
|
—
|
|
|
—
|
|
|
863
|
|
|
5,024
|
|
|
5,887
|
|
|
(131
|
)
|
|
12/31/2018
|
|
2016
|
|||||||||
6380 Rogerdale Road
|
|
Houston, TX
|
|
1
|
|
—
|
|
|
12,628
|
|
|
6,113
|
|
|
14
|
|
|
—
|
|
|
12,628
|
|
|
6,127
|
|
|
18,755
|
|
|
(170
|
)
|
|
12/31/2018
|
|
2006
|
|||||||||
4221 W. John Carpenter Freeway
|
|
Irving, TX
|
|
1
|
|
—
|
|
|
1,413
|
|
|
2,365
|
|
|
1,737
|
|
|
—
|
|
|
1,413
|
|
|
4,102
|
|
|
5,515
|
|
|
(123
|
)
|
|
12/31/2018
|
|
1995
|
|||||||||
8675,8701-8711 Freeport Pkwy and 8901 Esters Boulevard
|
|
Irving, TX
|
|
3
|
|
—
|
|
|
10,185
|
|
|
31,566
|
|
|
—
|
|
|
—
|
|
|
10,185
|
|
|
31,566
|
|
|
41,751
|
|
|
(875
|
)
|
|
12/31/2018
|
|
1990
|
|||||||||
1511 East Common Street
|
|
New Braunfels, TX
|
|
1
|
|
—
|
|
|
4,965
|
|
|
1,266
|
|
|
67
|
|
|
—
|
|
|
4,965
|
|
|
1,333
|
|
|
6,298
|
|
|
(35
|
)
|
|
12/31/2018
|
|
2005
|
|||||||||
2900 West Plano Parkway
|
|
Plano, TX
|
|
1
|
|
—
|
|
|
6,819
|
|
|
8,831
|
|
|
—
|
|
|
—
|
|
|
6,819
|
|
|
8,831
|
|
|
15,650
|
|
|
(244
|
)
|
|
12/31/2018
|
|
1998
|
|||||||||
3400 West Plano Parkway
|
|
Plano, TX
|
|
1
|
|
—
|
|
|
4,543
|
|
|
15,964
|
|
|
321
|
|
|
—
|
|
|
4,543
|
|
|
16,285
|
|
|
20,828
|
|
|
(451
|
)
|
|
12/31/2018
|
|
1994
|
|||||||||
3600 Wiseman Boulevard
|
|
San Antonio, TX
|
|
1
|
|
—
|
|
|
3,493
|
|
|
6,662
|
|
|
137
|
|
|
—
|
|
|
3,493
|
|
|
6,799
|
|
|
10,292
|
|
|
(194
|
)
|
|
12/31/2018
|
|
2004
|
|||||||||
701 Clay Road
|
|
Waco, TX
|
|
1
|
|
—
|
|
|
2,030
|
|
|
8,708
|
|
|
9,450
|
|
|
—
|
|
|
2,060
|
|
|
18,128
|
|
|
20,188
|
|
|
(5,351
|
)
|
|
12/23/1997
|
|
1997
|
|||||||||
1800 Novell Place
|
|
Provo, UT
|
|
1
|
|
—
|
|
|
7,487
|
|
|
43,487
|
|
|
—
|
|
|
—
|
|
|
7,487
|
|
|
43,487
|
|
|
50,974
|
|
|
(1,301
|
)
|
|
12/31/2018
|
|
2000
|
|||||||||
4885-4931 North 300 West
|
|
Provo, UT
|
|
2
|
|
—
|
|
|
3,915
|
|
|
9,429
|
|
|
21
|
|
|
—
|
|
|
3,915
|
|
|
9,450
|
|
|
13,365
|
|
|
(276
|
)
|
|
12/31/2018
|
|
2009
|
|||||||||
14660, 14672 & 14668 Lee Road
|
|
Chantilly, VA
|
|
3
|
|
—
|
|
|
6,966
|
|
|
74,214
|
|
|
2,278
|
|
|
—
|
|
|
6,966
|
|
|
76,492
|
|
|
83,458
|
|
|
(5,879
|
)
|
|
12/22/2016
|
|
1998; 2002; 2006
|
|||||||||
1434 Crossways
|
|
Chesapeake, VA
|
|
2
|
|
—
|
|
|
3,617
|
|
|
19,527
|
|
|
2,010
|
|
|
—
|
|
|
3,617
|
|
|
21,537
|
|
|
25,154
|
|
|
(1,749
|
)
|
|
10/2/2017
|
|
1998
|
|||||||||
Greenbrier Towers
|
|
Chesapeake, VA
|
|
2
|
|
—
|
|
|
3,437
|
|
|
11,241
|
|
|
1,457
|
|
|
—
|
|
|
3,437
|
|
|
12,698
|
|
|
16,135
|
|
|
(1,080
|
)
|
|
10/2/2017
|
|
1985
|
|||||||||
Enterchange at Meadowville
|
|
Chester, VA
|
|
1
|
|
—
|
|
|
1,478
|
|
|
9,594
|
|
|
283
|
|
|
—
|
|
|
1,478
|
|
|
9,877
|
|
|
11,355
|
|
|
(1,558
|
)
|
|
8/28/2013
|
|
1999
|
|||||||||
Pender Business Park
|
|
Fairfax, VA
|
|
4
|
|
—
|
|
|
2,487
|
|
|
21,386
|
|
|
1,127
|
|
|
—
|
|
|
2,487
|
|
|
22,513
|
|
|
25,000
|
|
|
(3,530
|
)
|
|
11/4/2013
|
|
2000
|
|
|
|
|
|
|
|
|
Initial Cost to Company
|
|
Costs Capitalized Subsequent to Acquisition
|
|
|
|
Cost amount carried at Close of Period
|
|
|
|
|
|
|
||||||||||||||||||||||||
Property
|
|
Location
|
|
Number of Properties
|
|
Encumbrances (1)
|
|
Land
|
|
Buildings
and Equipment |
|
|
Impairments/
Writedowns |
|
Land
|
|
Buildings
and Equipment |
|
Total (2)
|
|
Accumulated
Depreciation (3) |
|
Date(s)
Acquired |
|
Original
Construction Date(s) |
|||||||||||||||||||
Three Flint Hill
|
|
Fairfax, VA
|
|
1
|
|
—
|
|
|
5,991
|
|
|
25,536
|
|
|
2,897
|
|
|
—
|
|
|
5,991
|
|
|
28,433
|
|
|
34,424
|
|
|
(2,058
|
)
|
|
10/2/2017
|
|
1984
|
|||||||||
7987 Ashton Avenue
|
|
Manassas, VA
|
|
1
|
|
—
|
|
|
1,562
|
|
|
8,253
|
|
|
694
|
|
|
—
|
|
|
1,562
|
|
|
8,947
|
|
|
10,509
|
|
|
(717
|
)
|
|
1/3/2017
|
|
1989
|
|||||||||
Two Commercial Place
|
|
Norfolk, VA
|
|
1
|
|
—
|
|
|
4,494
|
|
|
21,508
|
|
|
389
|
|
|
—
|
|
|
4,494
|
|
|
21,897
|
|
|
26,391
|
|
|
(563
|
)
|
|
12/31/2018
|
|
1974
|
|||||||||
1759 & 1760 Business Center Drive
|
|
Reston, VA
|
|
2
|
|
—
|
|
|
9,066
|
|
|
78,658
|
|
|
4,093
|
|
|
—
|
|
|
9,066
|
|
|
82,751
|
|
|
91,817
|
|
|
(11,392
|
)
|
|
5/28/2014
|
|
1987
|
|||||||||
1775 Wiehle Avenue
|
|
Reston, VA
|
|
1
|
|
—
|
|
|
4,138
|
|
|
26,120
|
|
|
1,446
|
|
|
—
|
|
|
4,138
|
|
|
27,566
|
|
|
31,704
|
|
|
(1,583
|
)
|
|
10/2/2017
|
|
2001
|
|||||||||
501 South 5th Street
|
|
Richmond, VA
|
|
1
|
|
—
|
|
|
14,767
|
|
|
39,101
|
|
|
230
|
|
|
—
|
|
|
14,767
|
|
|
39,331
|
|
|
54,098
|
|
|
(1,134
|
)
|
|
12/31/2018
|
|
2009
|
|||||||||
9201 Forest Hill Avenue
|
|
Richmond, VA
|
|
1
|
|
—
|
|
|
1,344
|
|
|
375
|
|
|
150
|
|
|
—
|
|
|
1,344
|
|
|
525
|
|
|
1,869
|
|
|
(12
|
)
|
|
12/31/2018
|
|
1985
|
|||||||||
9960 Mayland Drive
|
|
Richmond, VA
|
|
1
|
|
—
|
|
|
2,614
|
|
|
15,930
|
|
|
2,440
|
|
|
—
|
|
|
2,614
|
|
|
18,370
|
|
|
20,984
|
|
|
(2,559
|
)
|
|
5/20/2014
|
|
1994
|
|||||||||
Parham Place
|
|
Richmond, VA
|
|
3
|
|
—
|
|
|
913
|
|
|
1,099
|
|
|
15
|
|
|
—
|
|
|
913
|
|
|
1,114
|
|
|
2,027
|
|
|
(31
|
)
|
|
12/31/2018
|
|
1989; 2012
|
|||||||||
1751 Blue Hills Drive
|
|
Roanoke, VA
|
|
1
|
|
—
|
|
|
2,689
|
|
|
7,761
|
|
|
—
|
|
|
—
|
|
|
2,689
|
|
|
7,761
|
|
|
10,450
|
|
|
(215
|
)
|
|
12/31/2018
|
|
2003
|
|||||||||
Atlantic Corporate Park
|
|
Sterling, VA
|
|
2
|
|
—
|
|
|
5,752
|
|
|
29,316
|
|
|
2,055
|
|
|
—
|
|
|
5,752
|
|
|
31,371
|
|
|
37,123
|
|
|
(1,690
|
)
|
|
10/2/2017
|
|
2008
|
|||||||||
Orbital Sciences Campus
|
|
Sterling, VA
|
|
3
|
|
—
|
|
|
12,275
|
|
|
19,320
|
|
|
25
|
|
|
—
|
|
|
12,275
|
|
|
19,345
|
|
|
31,620
|
|
|
(570
|
)
|
|
12/31/2018
|
|
2001
|
|||||||||
Sterling Business Park Lots 8 and 9
|
|
Sterling, VA
|
|
1
|
|
—
|
|
|
9,177
|
|
|
44,324
|
|
|
52
|
|
|
—
|
|
|
9,177
|
|
|
44,376
|
|
|
53,553
|
|
|
(2,493
|
)
|
|
10/2/2017
|
|
2016
|
|||||||||
65 Bowdoin Street
|
|
S. Burlington, VT
|
|
1
|
|
—
|
|
|
700
|
|
|
8,416
|
|
|
140
|
|
|
—
|
|
|
700
|
|
|
8,556
|
|
|
9,256
|
|
|
(2,090
|
)
|
|
4/9/2010
|
|
2009
|
|||||||||
840 North Broadway
|
|
Everett, WA
|
|
2
|
|
—
|
|
|
3,360
|
|
|
15,376
|
|
|
2,649
|
|
|
—
|
|
|
3,360
|
|
|
18,025
|
|
|
21,385
|
|
|
(3,716
|
)
|
|
6/28/2012
|
|
1985
|
|||||||||
Stevens Center
|
|
Richland, WA
|
|
2
|
|
—
|
|
|
3,970
|
|
|
17,035
|
|
|
4,456
|
|
|
—
|
|
|
4,042
|
|
|
21,419
|
|
|
25,461
|
|
|
(10,658
|
)
|
|
3/31/1997
|
|
1995
|
|||||||||
351, 401, 501 Elliott Ave West
|
|
Seattle, WA
|
|
3
|
|
69,701
|
|
|
26,640
|
|
|
52,740
|
|
|
654
|
|
|
—
|
|
|
26,640
|
|
|
53,394
|
|
|
80,034
|
|
|
(1,467
|
)
|
|
12/31/2018
|
|
2000
|
|||||||||
11050 West Liberty Drive
|
|
Milwaukee, WI
|
|
1
|
|
—
|
|
|
945
|
|
|
4,539
|
|
|
103
|
|
|
—
|
|
|
945
|
|
|
4,642
|
|
|
5,587
|
|
|
(998
|
)
|
|
6/9/2011
|
|
2006
|
|||||||||
5353 Yellowstone Road
|
|
Cheyenne, WY
|
|
1
|
|
—
|
|
|
1,915
|
|
|
8,217
|
|
|
1,346
|
|
|
—
|
|
|
1,950
|
|
|
9,528
|
|
|
11,478
|
|
|
(4,907
|
)
|
|
3/31/1997
|
|
1995
|
|||||||||
|
|
|
|
183
|
|
$
|
309,946
|
|
|
$
|
839,889
|
|
|
$
|
2,425,029
|
|
|
$
|
232,838
|
|
|
$
|
(4,525
|
)
|
|
$
|
840,550
|
|
|
$
|
2,652,681
|
|
|
$
|
3,493,231
|
|
|
$
|
(387,656
|
)
|
|
|
|
|
Properties Held for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||||||||
1 Targeting Center
|
|
Windsor, CT
|
|
1
|
|
—
|
|
|
1,428
|
|
|
588
|
|
|
—
|
|
|
—
|
|
|
1,428
|
|
|
588
|
|
|
2,016
|
|
|
(13
|
)
|
|
12/31/2018
|
|
1980
|
|||||||||
475 Bond Street
|
|
Lincolnshire, IL
|
|
1
|
|
—
|
|
|
4,764
|
|
|
552
|
|
|
—
|
|
|
—
|
|
|
4,764
|
|
|
552
|
|
|
5,316
|
|
|
(11
|
)
|
|
12/31/2018
|
|
2000
|
|||||||||
50 West State Street
|
|
Trenton, NJ
|
|
1
|
|
—
|
|
|
5,000
|
|
|
38,203
|
|
|
3,337
|
|
|
(18,623
|
)
|
|
3,866
|
|
|
24,051
|
|
|
27,917
|
|
|
—
|
|
|
12/30/2010
|
|
1989
|
|||||||||
3920 Pender Drive
|
|
Fairfax, VA
|
|
1
|
|
13,128
|
|
|
2,934
|
|
|
12,840
|
|
|
538
|
|
|
—
|
|
|
2,934
|
|
|
13,378
|
|
|
16,312
|
|
|
(1,796
|
)
|
|
3/21/2014
|
|
1981
|
|||||||||
Aquia Commerce Center
|
|
Stafford, VA
|
|
2
|
|
—
|
|
|
2,090
|
|
|
7,465
|
|
|
784
|
|
|
—
|
|
|
2,090
|
|
|
8,249
|
|
|
10,339
|
|
|
(1,733
|
)
|
|
6/22/2011
|
|
1988; 1999
|
|||||||||
|
|
|
|
6
|
|
13,128
|
|
|
16,216
|
|
|
59,648
|
|
|
4,659
|
|
|
(18,623
|
)
|
|
15,082
|
|
|
46,818
|
|
|
61,900
|
|
|
(3,553
|
)
|
|
|
|
|
|||||||||
|
|
|
|
189
|
|
$
|
323,074
|
|
|
$
|
856,105
|
|
|
$
|
2,484,677
|
|
|
$
|
237,497
|
|
|
$
|
(23,148
|
)
|
|
$
|
855,632
|
|
|
$
|
2,699,499
|
|
|
$
|
3,555,131
|
|
|
$
|
(391,209
|
)
|
|
|
|
|
|
Real Estate Properties
|
|
Accumulated Depreciation
|
||||
Balance at December 31, 2016
|
$
|
1,888,760
|
|
|
$
|
296,804
|
|
Additions
|
1,100,138
|
|
|
45,315
|
|
||
Loss on asset impairment
|
(9,490
|
)
|
|
—
|
|
||
Disposals
|
(3,687
|
)
|
|
(271
|
)
|
||
Balance at December 31, 2017
|
2,975,721
|
|
|
341,848
|
|
||
Additions
|
1,486,342
|
|
|
65,215
|
|
||
Loss on asset impairment
|
(8,630
|
)
|
|
—
|
|
||
Disposals
|
(286,837
|
)
|
|
(18,740
|
)
|
||
Cost basis adjustment (1)
|
(5,005
|
)
|
|
(5,005
|
)
|
||
Reclassification of assets of properties held for sale
|
(216,955
|
)
|
|
(8,171
|
)
|
||
Balance at December 31, 2018
|
3,944,636
|
|
|
375,147
|
|
||
Additions
|
66,221
|
|
|
89,398
|
|
||
Loss on asset impairment
|
(22,255
|
)
|
|
—
|
|
||
Disposals
|
(424,302
|
)
|
|
(64,167
|
)
|
||
Cost basis adjustment (1)
|
(9,169
|
)
|
|
(9,169
|
)
|
||
Reclassification of assets of properties held for sale
|
(61,900
|
)
|
|
(3,553
|
)
|
||
Balance at December 31, 2019
|
$
|
3,493,231
|
|
|
$
|
387,656
|
|
(1)
|
Represents the reclassification between accumulated depreciation and building made to certain properties reclassified as assets of properties held for sale at fair value in accordance with GAAP.
|
|
OFFICE PROPERTIES INCOME TRUST
|
|
|
|
By:
|
/s/ David M. Blackman
|
|
|
|
David M. Blackman
President and Chief Executive Officer
|
|
|
|
|
|
|
Dated: February 20, 2020
|
|
|
|
|
Signature
|
Title
|
Date
|
|
|
|
/s/ David M. Blackman
|
Managing Trustee, President and Chief Executive Officer (principal executive officer)
|
February 20, 2020
|
David M. Blackman
|
||
|
|
|
/s/ Matthew C. Brown
|
Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
|
February 20, 2020
|
Matthew C. Brown
|
||
|
|
|
/s/ Adam D. Portnoy
|
Managing Trustee
|
February 20, 2020
|
Adam D. Portnoy
|
||
|
|
|
/s/ Donna D. Fraiche
|
Independent Trustee
|
February 20, 2020
|
Donna D. Fraiche
|
||
|
|
|
/s/ Barbara D. Gilmore
|
Independent Trustee
|
February 20, 2020
|
Barbara D. Gilmore
|
||
|
|
|
/s/ John L. Harrington
|
Independent Trustee
|
February 20, 2020
|
John L. Harrington
|
||
|
|
|
/s/ William A. Lamkin
|
Independent Trustee
|
February 20, 2020
|
William A. Lamkin
|
||
|
|
|
/s/ Elena Poptodorova
|
Independent Trustee
|
February 20, 2020
|
Elena Poptodorova
|
||
|
|
|
/s/ Jeffrey P. Somers
|
Independent Trustee
|
February 20, 2020
|
Jeffrey P. Somers
|
•
|
the general reputation and moral character of the person requesting an exemption;
|
•
|
whether the person’s ownership of shares would be direct or through ownership attribution;
|
•
|
whether the person’s ownership of shares would adversely affect our ability to acquire additional properties or engage in other business;
|
•
|
whether granting an exemption would adversely affect any of our existing contractual arrangements or business policies.
|
•
|
whether the person requesting an exemption has been approved as an owner by all regulatory or other governmental authorities that have jurisdiction over us; and
|
•
|
whether the person requesting an exemption is attempting a change in control or to affect our policies in a way in which our Board of Trustees, in its discretion, considers adverse to our or our shareholders’ best interests.
|
•
|
the prohibited owner will receive the lesser of:
|
(1)
|
the net price paid by the prohibited owner for the shares or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the charitable trust, for example, in the case of a gift, devise or other similar transaction, the market price (as defined in our declaration of trust) of the shares on the day of the event causing the shares to be transferred to the charitable trust less our and the charitable trustee’s costs, expenses and compensation described below; and
|
(2)
|
the net sales proceeds received by the trustee from the sale or other disposition of the shares held in the charitable trust.
|
•
|
any net sale proceeds in excess of the amount payable to the prohibited owner shall be immediately paid to the charitable beneficiary, less the costs, expenses and compensation of the charitable trust and trustee.
|
•
|
those shares will be deemed to have been sold on behalf of the charitable trust; and
|
•
|
to the extent that the prohibited owner received an amount for those shares that exceeds the amount that the prohibited owner was entitled to receive from a sale by the trustee, the prohibited owner must pay the excess to the trustee upon demand.
|
•
|
the price per share in the transaction that resulted in the transfer to the charitable trust or, in the case of a devise or gift, the market price at the time of the devise, gift or other similar transaction, the market price per share on the day of the event causing that transfer; and
|
•
|
the market price on the date we or our designee accepts the offer.
|
•
|
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the trust’s outstanding voting shares; or
|
•
|
an affiliate or associate of the trust who, at any time within the two year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting shares of the trust.
|
•
|
the affirmative vote of at least 80% of the votes entitled to be cast by holders of outstanding voting shares of the trust; and
|
•
|
the affirmative vote of at least two thirds of the votes entitled to be cast by holders of voting shares other than shares held by the interested shareholder with whom or with whose affiliate or associate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.
|
•
|
one tenth or more but less than one third;
|
•
|
one third or more but less than a majority; or
|
•
|
a majority or more of all voting power.
|
•
|
shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction; or
|
•
|
acquisitions approved or exempted by a provision in the declaration of trust or bylaws of the trust adopted before the acquisition of shares.
|
•
|
a classified board;
|
•
|
a two thirds vote requirement for removing a trustee;
|
•
|
a requirement that the number of trustees be fixed only by vote of the trustees;
|
•
|
a requirement that a vacancy on the board be filled only by the remaining trustees in office and for the replacement trustee to serve for the remainder of the full term of the class of trustees in which the vacancy occurred; and
|
•
|
a majority requirement for the calling of a shareholder requested special meeting of shareholders.
|
•
|
the prohibition in our declaration of trust of any shareholder other than excepted holders, including RMR LLC and its affiliates from owning more than 9.8% in value or in number, whichever is more restrictive, of any class or series of our outstanding shares, including our common shares;
|
•
|
the division of our Trustees into three classes, with the term of one class expiring each year and, in each case, until a successor is elected and qualifies;
|
•
|
shareholder voting rights and standards for the election of Trustees and other matters which generally require larger majorities for approval of actions which are not approved by our Trustees than for actions which are approved by our Trustees;
|
•
|
the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;
|
•
|
the fact that only our Board of Trustees, or if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;
|
•
|
required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be Managing Trustees and other Trustees be Independent Trustees;
|
•
|
limitations on the ability of, and various requirements that must be satisfied in order for, our shareholders to propose nominees for election to our Board of Trustees and propose other business to be considered at a meeting of our shareholders;
|
•
|
the requirement that an individual Trustee may be removed by our shareholders, with cause, by the affirmative vote of holders of not less than 75% of our common shares entitled to vote in the election of such Trustee or, with or without cause, by the affirmative vote of not less than 75% of the remaining Trustees;
|
•
|
the authority of our Board of Trustees to adopt certain amendments to our declaration of trust without shareholder approval, including the authority to increase or decrease the number of authorized shares, to create new classes or series of shares (including a class or series of shares that could delay or prevent a transaction or a change in our control that might involve a premium for our shares or otherwise be in the best interests of our
|
•
|
the requirement that amendments to our declaration of trust may be made only if approved by 60% of our Trustees, including 60% of our Independent Trustees (as defined in our declaration of trust);
|
•
|
the business combination provisions of the MGCL, if the applicable resolution of our Board of Trustees is rescinded or if our Board’s approval of a combination is not obtained; and
|
•
|
the control share acquisition provisions of the MGCL, if the provision in our bylaws exempting acquisitions of our shares from such provisions is amended or eliminated.
|
(1)
|
Total Assets as of the end of the calendar quarter covered by our Annual Report on Form 10-K or our Quarterly Report on Form 10-Q, as the case may be, most recently filed with the SEC (or, if such filing is not permitted under the Exchange Act, with the Trustee) prior to the incurrence of such additional Debt; and
|
(2)
|
the purchase price of any real estate assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent that such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by us or any Subsidiary since the end of such calendar quarter, including those proceeds obtained in connection with the incurrence of such additional Debt.
|
•
|
if we merge out of existence or sell substantially all our assets, the surviving company must be an entity organized and validly existing under the laws of the United States, any state or the District of Columbia and must agree to be legally responsible for our obligations under the Indenture and the Notes;
|
•
|
immediately after the merger, sale of assets or other transaction, we may not be in default under the Indenture. A default for this purpose would include any event that would be an event of default if the requirements for giving us default notice or our default having to exist for a specific period of time were disregarded; and
|
•
|
immediately after the merger, sale of assets or other transaction, we or the successor entity could incur at least $1.00 of Debt in accordance with the Indenture covenants limiting the incurrence of Debt.
|
•
|
we do not pay the principal of or any premium on the Notes when due and payable;
|
•
|
we do not pay interest on the Notes within 30 days after the applicable due date;
|
•
|
we remain in breach of any other term of the Indenture (other than a term added to the Indenture solely for the benefit of series of debt other than the Notes) for 60 days after we receive a notice of default stating we are in breach. Either the Trustee or holders more than 25% in principal amount of the Notes may send the notice;
|
•
|
final judgments aggregating in excess of $25 million (exclusive of amounts covered by insurance) are entered against us or our Subsidiaries and are not paid, discharged or stayed for a period of 60 days;
|
•
|
we default under any of our other indebtedness in an aggregate principal amount exceeding $25 million after the expiration of any applicable grace period, which default results in the acceleration of the maturity of such indebtedness; provided, however, that if we have no other senior unsecured indebtedness the maturity of which would be accelerated by a default under any of our indebtedness in an aggregate principal amount of $25 million or less, the reference to $25 million in this bullet point shall be replaced by the lesser of the indebtedness cross-default amount contained in our then existing senior unsecured credit facility or such other senior unsecured indebtedness, as long as such amount is greater than $25 million, but not to exceed $50 million. Such default is
|
•
|
we or one of our Significant Subsidiaries, if any, experiences specified events of bankruptcy, insolvency or reorganization;
|
•
|
the holder must give the Trustee written notice that an event of default has occurred and is continuing;
|
•
|
the holders of not less than a majority in principal amount of all outstanding Notes of the relevant series must make a written request that the Trustee take action because of the default and must offer reasonable indemnity to the Trustee against the cost and other liabilities of taking that action; and
|
•
|
the Trustee must have not taken action for 60 days after receipt of the notice and offer of indemnity.
|
•
|
change the stated maturity of the principal of, or interest on, the Notes;
|
•
|
reduce the principal amount of, or the rate of interest on, the Notes;
|
•
|
reduce the amount of any premium due upon redemption;
|
•
|
reduce the amount of principal of an original issue discount security payable upon acceleration of its maturity;
|
•
|
change the currency or place of payment on the Notes;
|
•
|
impair a holder’s right to sue for payment on or after the stated maturity of the Notes;
|
•
|
reduce the percentage of holders of Notes whose consent is needed to modify or amend an Indenture;
|
•
|
reduce the percentage of holders of Notes whose consent is needed to waive compliance with certain provisions of an Indenture or certain defaults and their consequences;
|
•
|
waive past defaults in the payment of principal of or premium, if any, or interest on the Notes or in respect of any covenant or provision that cannot be modified or amended without the approval of each holder of the Notes; or
|
•
|
modify any of the foregoing provisions.
|
•
|
to evidence the assumption by a successor obligor of our obligations;
|
•
|
to add to our covenants for the benefit of holders of the Notes or to surrender any right or power conferred upon us;
|
•
|
to add any additional events of default for the benefit of holders of all or any of the Notes;
|
•
|
to add to or change any provisions necessary to permit or facilitate the issuance of Notes in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Notes in uncertificated form;
|
•
|
to add to, change or eliminate any of the provisions, so long as such addition, change or elimination does not apply to any Notes entitled to the benefit of such provision or modify the rights of the holder of any such Notes with respect to such provision or such addition, change or elimination only becomes effective when there is no such Notes outstanding;
|
•
|
to establish the form or terms of the Notes;
|
•
|
to evidence and provide for the acceptance of appointment of a successor trustee;
|
•
|
to cure any ambiguity, to correct or supplement any provision in the Indenture which may be defective or inconsistent with any other provision contained therein, or to make any other provisions with respect to matters or questions arising under the Indenture, provided that such action pursuant to this bullet point shall not adversely affect the interests of the holders of the Notes in any material respect;
|
•
|
to conform, with respect to the Notes, the terms of the Indenture or Notes to the descriptions thereof contained in any prospectus, prospectus supplement and free writing prospectus relating to the offer and sale of the Notes; provided that such action pursuant to bullet point shall not adversely affect the interests of the holders of the notes of any other series in any material respect; or
|
•
|
to change anything that does not adversely affect the interests of the holders of the Notes in any material respect.
|
•
|
we must irrevocably deposit, in trust, for the benefit of all direct holders of the Notes money or government obligations (or, in some circumstances, depository receipts representing such government obligations), or a combination thereof, that will generate enough cash to satisfy the principal of and any premium and interest on the Notes at their stated maturity or applicable redemption date (a “government obligation” for these purposes means securities that are (1) direct obligations of the government that issued the currency in which such series is denominated (or, if such series is denominated in euros, the direct obligations of any government that is a member of the European Monetary Union) for the payment of which its full faith and credit is pledged or (2) obligations of a person controlled or supervised by and acting as an agency or instrumentality of such government the payment of which is unconditionally guaranteed as a full faith and credit obligation by such government);
|
•
|
the current U.S. federal income tax law must be changed or an IRS ruling must be issued permitting us to make the deposit described above, without causing the holders to be taxed on the Notes any differently than if we did not make the deposit and instead repaid the Notes ourselves. Under current U.S. federal income tax law, the deposit and our legal release from the Notes would be treated as though we took back the holders’ Notes and gave the holders a share of the cash and notes or bonds deposited in trust. Under such circumstances, the holders could recognize gain or loss on the Notes the holders were deemed to have returned to us; and
|
•
|
we must deliver to the trustee a legal opinion confirming the U.S. federal income tax law change or IRS ruling described above.
|
•
|
Notwithstanding the foregoing, the following rights and obligations will survive full defeasance:
|
•
|
the holders’ right to receive payments from the trust when payments are due;
|
•
|
our obligations relating to registration and transfer of Notes and lost or mutilated certificates; and
|
•
|
our obligations to maintain a payment office and to hold moneys for payment in trust.
|
•
|
most of the covenants applicable to such series of Notes and any events of default for failure to comply with those covenants; and
|
•
|
any subordination provisions.
|
•
|
will not be entitled to have the applicable Notes represented by a registered global security registered in their names;
|
•
|
will not receive or be entitled to receive physical delivery of the applicable Notes in the definitive form; and
|
•
|
will not be considered the owners or holders of the applicable Notes under the applicable Indenture.
|
(1)
|
borrowed money or evidenced by bonds, notes, debentures or similar instruments;
|
(2)
|
indebtedness for borrowed money secured by any Encumbrance existing on property owned by the Company or any Subsidiary, to the extent of the lesser of (x) the amount of indebtedness so secured or (y) the fair market value of the property subject to such Encumbrance;
|
|
|
|
|
Name
|
|
State of Formation,
Organization or Incorporation |
|
1434 Crossways Boulevard I, LLC
|
|
Delaware
|
|
1434 Crossways Boulevard II, LLC
|
|
Delaware
|
|
1441 Crossways Blvd., LLC
|
|
Virginia
|
|
3300 75th Avenue LLC
|
|
Delaware
|
|
403 & 405 Glenn Drive Manager, LLC
|
|
Virginia
|
|
403 & 405 Glenn Drive, LLC
|
|
Virginia
|
|
ACP East LLC
|
|
Maryland
|
|
AP Indian Creek, LLC
|
|
Delaware
|
|
Columbia Holding Associates LLC
|
|
Delaware
|
|
CRI SIR LLC
|
|
Delaware
|
|
Crossways Associates LLC
|
|
Delaware
|
|
Crossways II LLC
|
|
Delaware
|
|
Crossways Land, LLC
|
|
Virginia
|
|
First Potomac DC Holdings, LLC
|
|
Delaware
|
|
First Potomac DC Management LLC
|
|
Delaware
|
|
First Potomac Management LLC
|
|
Delaware
|
|
First Snowden LLC
|
|
Delaware
|
|
FP 11 Dupont Circle Managing Member, LLC
|
|
Delaware
|
|
FP 11 Dupont Circle, LLC
|
|
Delaware
|
|
FP 1211 Connecticut Avenue, LLC
|
|
Delaware
|
|
FP 1401 K, LLC
|
|
Delaware
|
|
FP 1408 Stephanie Way, LLC
|
|
Virginia
|
|
FP 1775 Wiehle Avenue, LLC
|
|
Virginia
|
|
FP 2550 Ellsmere Avenue, LLC
|
|
Virginia
|
|
FP 3 Flint Hill, LLC
|
|
Virginia
|
|
FP 440 1st Street, LLC
|
|
Delaware
|
|
FP 500 First Street REIT GP, LLC
|
|
Delaware
|
|
FP 500 First Street, LLC
|
|
Delaware
|
|
FP 535 Independence Parkway, LLC
|
|
Virginia
|
|
FP 540 Gaither, LLC
|
|
Maryland
|
|
FP 6310 Hillside Center, LLC
|
|
Delaware
|
|
FP 6315 Hillside Center, LLC
|
|
Delaware
|
|
FP 840 First Street, LLC
|
|
Delaware
|
|
FP Ammendale Commerce Center, LLC
|
|
Maryland
|
|
FP Atlantic Corporate Park, LLC
|
|
Virginia
|
|
FP Cloverleaf Investor, LLC
|
|
Delaware
|
|
FP Cloverleaf, LLC
|
|
Maryland
|
|
FP CPT 1750 H Street, LLC
|
|
Delaware
|
FP CPT 1750 Holdings, LLC
|
|
Delaware
|
|
FP Davis Drive Lot 5, LLC
|
|
Virginia
|
|
FP Gateway 270, LLC
|
|
New Jersey
|
|
FP Greenbrier Circle, LLC
|
|
Virginia
|
|
FP Greenbrier Towers, LLC
|
|
Virginia
|
|
FP Gude Manager, LLC
|
|
Delaware
|
|
FP Gude, LLC
|
|
Maryland
|
|
FP Indian Creek, LLC
|
|
Delaware
|
|
FP Metro Place, LLC
|
|
Delaware
|
|
FP Patuxent Parkway, LLC
|
|
Delaware
|
|
FP Redland GP, LLC
|
|
Delaware
|
|
FP Redland Technology Center LP
|
|
Delaware
|
|
FP Redland, LLC
|
|
Delaware
|
|
FP Sterling Park 6, LLC
|
|
Virginia
|
|
FP Sterling Park 7, LLC
|
|
Virginia
|
|
FP Sterling Park 8 & 9, LLC
|
|
Virginia
|
|
FP Sterling Park I, LLC
|
|
Virginia
|
|
FP Sterling Park Land, LLC
|
|
Virginia
|
|
GOV Grand Oak Properties Trust
|
|
Maryland
|
|
GOV Intech LLC
|
|
Delaware
|
|
GOV Lake Fairfax Inc.
|
|
Maryland
|
|
GOV Lakewood Properties Trust
|
|
Maryland
|
|
GOV NEW OPPTY LP
|
|
Delaware
|
|
GOV NEW OPPTY LP REIT
|
|
Maryland
|
|
GOV NEW OPPTY REIT
|
|
Maryland
|
|
GOV Pender Drive Inc.
|
|
Maryland
|
|
GOV TRS, Inc.
|
|
Maryland
|
|
Government Properties Income Trust LLC
|
|
Delaware
|
|
GPT Properties LLC
|
|
Delaware
|
|
GPT Properties Trust
|
|
Maryland
|
|
GPT Realty Trust (Nominee Trust)
|
|
Massachusetts
|
|
Greenbrier Holding Associates LLC
|
|
Delaware
|
|
Greenbrier Land, LLC
|
|
Virginia
|
|
Greenbrier/Norfolk Holding LLC
|
|
Delaware
|
|
Greenbrier/Norfolk Investment LLC
|
|
Delaware
|
|
GTC I Second LLC
|
|
Virginia
|
|
GTC II First LLC
|
|
Delaware
|
|
Hanua Street LLC
|
|
Delaware
|
|
Hawaii Metamorphosis LLC
|
|
Maryland
|
|
Indian Creek Investors, LLC
|
|
Maryland
|
|
Kristina Way Investments LLC
|
|
Delaware
|
|
Kuhela Street LLC
|
|
Delaware
|
|
Norfolk Commerce Park LLC
|
|
Delaware
|
|
Norfolk First LLC
|
|
Delaware
|
|
Norfolk Land, LLC
|
|
Virginia
|
|
One State Street Square Urban Renewal L.L.C.
|
|
New Jersey
|
Prosperity Metro Plaza of Virginia, LLC
|
|
Delaware
|
|
Rumsey/Snowden Holding LLC
|
|
Delaware
|
|
Rumsey/Snowden Investment LLC
|
|
Delaware
|
|
SC Merger Sub LLC
|
|
Maryland
|
|
SIR 300 Billerica Inc.
|
|
Maryland
|
|
SIR Campbell Place Inc.
|
|
Maryland
|
|
SIR Centennial LLC
|
|
Delaware
|
|
SIR Charlotte LLC
|
|
Delaware
|
|
SIR Chicago LLC
|
|
Delaware
|
|
SIR Colorado Springs LLC
|
|
Delaware
|
|
SIR Columbus LLC
|
|
Delaware
|
|
SIR Duluth (Primerica Parkway) LLC
|
|
Delaware
|
|
SIR Duluth LLC
|
|
Delaware
|
|
SIR Ewing LLC
|
|
Delaware
|
|
SIR Fort Mill LLC
|
|
Delaware
|
|
SIR GP Redwood City LLC
|
|
Delaware
|
|
SIR GP San Jose (Fortune) LLC
|
|
Delaware
|
|
SIR GP San Jose (Via Del Oro) LLC
|
|
Delaware
|
|
SIR GP San Jose LLC
|
|
Delaware
|
|
SIR GP Santa Clara (Walsh) LLC
|
|
Delaware
|
|
SIR GP Santa Clara LLC
|
|
Delaware
|
|
SIR Highway 249 REIT LLC
|
|
Delaware
|
|
SIR Holdings Corporation
|
|
Maryland
|
|
SIR Houston (Clay) LLC
|
|
Delaware
|
|
SIR Irving (Freeport) LLC
|
|
Delaware
|
|
SIR Johnston LLC
|
|
Delaware
|
|
SIR Lincolnshire LLC
|
|
Delaware
|
|
SIR Mezz Philadelphia LLC
|
|
Delaware
|
|
SIR Miami LLC
|
|
Delaware
|
|
SIR NE Houston LLC
|
|
Delaware
|
|
SIR OFC Houston LLC
|
|
Delaware
|
|
SIR Omaha LLC
|
|
Delaware
|
|
SIR Operating Partnership LP
|
|
Delaware
|
|
SIR Parsippany (Jefferson) LLC
|
|
Delaware
|
|
SIR Philadelphia LLC
|
|
Delaware
|
|
SIR Phoenix (Dunlap) LLC
|
|
Delaware
|
|
SIR Plano (3400) LLC
|
|
Delaware
|
|
SIR Properties REIT LLC
|
|
Maryland
|
|
SIR Properties Trust
|
|
Maryland
|
|
SIR Redwood City LP
|
|
Delaware
|
|
SIR REIT Arlington LLC
|
|
Delaware
|
|
SIR REIT Houston LLC
|
|
Delaware
|
|
SIR REIT New Braunfels LLC
|
|
Delaware
|
|
SIR REIT Plano LLC
|
|
Delaware
|
|
SIR Roanoke LLC
|
|
Delaware
|
|
SIR Rocklin (Office) LLC
|
|
Delaware
|
SIR San Antonio (Ridgewood Parkway) LLC
|
|
Delaware
|
|
SIR San Jose (Fortune) LP
|
|
Delaware
|
|
SIR San Jose (Via Del Oro) LP
|
|
Delaware
|
|
SIR San Jose LP
|
|
Delaware
|
|
SIR Santa Clara (Walsh) LP
|
|
Delaware
|
|
SIR Santa Clara LP
|
|
Delaware
|
|
SIR Seattle LLC
|
|
Delaware
|
|
SIR TIF Philadelphia LLC
|
|
Delaware
|
|
SIR Westford LLC
|
|
Delaware
|
|
SIR/Duke JV Duluth LLC
|
|
Delaware
|
|
Snowden First LLC
|
|
Delaware
|
|
VEF 500 First REIT L.P.
|
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K of Office Properties Income Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: February 20, 2020
|
/s/ David M. Blackman
|
|
David M. Blackman
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Office Properties Income Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: February 20, 2020
|
/s/ Matthew C. Brown
|
|
Matthew C. Brown
Chief Financial Officer and Treasurer
|
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 M. Blackman
|
|
|
David M. Blackman
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
/s/ Matthew C. Brown
|
|
|
Matthew C. Brown
Chief Financial Officer and Treasurer |