First Quarter Net Income of $0.10 Per
Share
First Quarter Normalized FFO of $0.56 Per
Share
Occupancy was 95.1% at Quarter End, Up 20
Basis Points Year Over Year
Completed 360,103 Square Feet of Leasing in
the First Quarter for a 5.2% Increase in Rents
Government Properties Income Trust (Nasdaq: GOV) today announced
its financial results for the quarter ended March 31,
2017.
David Blackman, President and Chief Operating Officer of GOV,
made the following statement:
"Government Properties Income Trust continued its solid leasing
performance during the first quarter, executing over 360,000 square
feet of new and renewal leases for a weighted average lease term in
excess of 10 years, a 5.2% increase in rents over previous rents
for the same space, and leasing capital and concessions of $0.59
per square foot per lease year. Year over year, our consolidated
occupancy increased 20 basis points to 95.1% as a result of our
strong leasing performance."
Results for the Quarter Ended March 31, 2017:
Net income determined in accordance with U.S. generally accepted
accounting principles, or GAAP, was $7.4 million, or $0.10 per
diluted share, for the quarter ended March 31, 2017, compared
to net income of $17.4 million, or $0.24 per diluted share, for the
quarter ended March 31, 2016. The weighted average number of
diluted common shares outstanding was 71.1 million for the quarter
ended March 31, 2017, and 71.0 million for the quarter ended
March 31, 2016.
Normalized funds from operations, or Normalized FFO, for the
quarter ended March 31, 2017 were $39.9 million, or $0.56 per
diluted share, compared to Normalized FFO for the quarter ended
March 31, 2016 of $44.4 million, or $0.62 per diluted
share.
Reconciliations of net income determined in accordance with GAAP
to funds from operations, or FFO, and Normalized FFO for the
quarters ended March 31, 2017 and 2016 appear later in this
press release.
Leasing, Occupancy and Same Property Results:
During the quarter ended March 31, 2017, GOV entered into
new and renewal leases for 360,103 rentable square feet at weighted
(by rentable square feet) average rents that were 5.2% above prior
rents for the same space. The weighted average (by rentable square
feet) lease term for leases entered into during the quarter ended
March 31, 2017 was 10.6 years. Leasing capital commitments for
new and renewal leases entered into during the quarter ended
March 31, 2017 were $2.2 million, or $0.59 per square foot,
per weighted average lease year.
As of March 31, 2017, 95.1% of GOV’s rentable square feet
at properties classified as continuing operations was leased. This
compares with 95.1% as of December 31, 2016 and 94.9% as of
March 31, 2016. Occupancy for properties classified as
continuing operations and owned continuously since January 1,
2016, or same properties, was 95.1% as of March 31, 2017,
which compares with 95.1% as of December 31, 2016 and 95.4% as
of March 31, 2016. Same properties net operating income, or
NOI, increased 0.8% and same properties cash basis NOI, or Cash
Basis NOI, decreased 1.4% for the quarter ended March 31, 2017
compared to the same period in 2016.
Reconciliations of net income determined in accordance with GAAP
to NOI and to Cash Basis NOI for the quarters ended March 31,
2017 and 2016 appear later in this press release.
Recent Acquisition Activities:
As previously disclosed, in January 2017, GOV acquired an office
property (one building) located in Manassas, VA with 69,374
rentable square feet for a purchase price of $12.6 million,
excluding acquisition costs. This property is 100% leased to Prince
William County with a remaining lease term of 9.1 years as of the
date of acquisition.
Recent Disposition Activities:
As previously disclosed, in March 2016, GOV entered an agreement
to sell an office property (one building) located in Falls Church,
VA with 164,746 rentable square feet. In March 2017, we agreed to
extend the closing date for this sale to June 1, 2017 and increased
the sales price by $150,000, which we received as a non-refundable
deposit. The contract sales price is now $13.3 million, excluding
closing costs.
Conference Call:
On Thursday, April 27, 2017, at 11:00 a.m. Eastern
Time, President and Chief Operating Officer, David Blackman, and
Chief Financial Officer and Treasurer, Mark Kleifges, will host a
conference call to discuss GOV’s first quarter 2017 results.
The conference call telephone number is (877) 328-1172.
Participants calling from outside the United States and Canada
should dial (412) 317-5418. No pass code is necessary to access the
call from either number. Participants should dial in about 15
minutes prior to the scheduled start of the call. A replay of the
conference call will be available through Thursday, May 4, 2017. To
hear the replay, dial (412) 317-0088. The replay pass code is
10104347. A live audio webcast of the conference call will also be
available in a listen only mode on GOV’s website, at
www.govreit.com. Participants wanting to access the webcast should
visit GOV’s website about five minutes before the call. The
archived webcast will be available for replay on GOV’s website
following the call for about one week. The transcription,
recording and retransmission in any way of GOV’s first quarter
conference call are strictly prohibited without the prior written
consent of GOV.
Supplemental Data:
A copy of GOV’s First Quarter 2017 Supplemental Operating and
Financial Data is available for download at GOV’s website,
www.govreit.com. GOV’s website is not incorporated as part of
this press release.
GOV is a real estate investment trust, or REIT, which primarily
owns properties located throughout the United States that are
majority leased to the U.S. Government and other government
tenants. GOV is managed by the operating subsidiary of The RMR
Group Inc. (Nasdaq: RMR), an alternative asset management company
that is headquartered in Newton, Massachusetts.
Please see the pages attached to this news release for a
more detailed statement of GOV’s operating results and financial
condition and for an explanation of GOV’s calculation of FFO,
Normalized FFO, NOI and Cash Basis NOI.
WARNING CONCERNING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO,
WHENEVER GOV USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”,
“INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR
DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, GOV IS MAKING FORWARD
LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
GOV’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING
STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN
OR IMPLIED BY GOV’S FORWARD LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. FOR EXAMPLE:
- MR. BLACKMAN'S STATEMENTS REGARDING
GOV'S QUARTERLY LEASING PERFORMANCE, INCREASED RENTS AND IMPROVED
OCCUPANCY MAY IMPLY THAT THESE MEASURES MAY CONTINUE TO INCREASE.
HOWEVER, THERE CAN BE NO ASSURANCE THAT GOV'S RENTS OR OCCUPANCY
WILL INCREASE IN THE FUTURE OR REMAIN AT CURRENT LEVELS OR THAT
FUTURE LEASING ACTIVITY WILL RESULT IN HIGHER RENTAL RATES THAN
PREVIOUS LEASES FOR THE SAME SPACE . IN FACT, GOV'S FUTURE PROPERTY
OCCUPANCIES MAY DECREASE AND ANY FUTURE LEASING ACTIVITY MAY YIELD
LOWER RENTAL RATES THAN PREVIOUS LEASES FOR THE SAME SPACE.
- GOV HAS ENTERED INTO AN AGREEMENT TO
SELL ONE PROPERTY. THIS TRANSACTION IS SUBJECT TO CONDITIONS. THESE
CONDITIONS MAY NOT BE MET AND THIS TRANSACTION MAY NOT OCCUR, MAY
BE DELAYED OR THE TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN GOV’S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN
GOV’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER
IMPORTANT FACTORS THAT COULD CAUSE GOV’S ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN OR IMPLIED BY GOV’S FORWARD LOOKING
STATEMENTS. GOV’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S
WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, GOV DOES NOT INTEND TO UPDATE OR
CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
Government Properties Income
Trust
Condensed Consolidated Statements of
Income
(amounts in thousands, except per share
data)
(unaudited)
Three Months Ended March 31, 2017 2016
Rental income $ 69,296 $ 63,611
Expenses: Real estate taxes 8,177 7,653 Utility expenses 4,606
4,174 Other operating expenses 13,992 12,911 Depreciation and
amortization 20,505 18,324 Acquisition related costs — 152 General
and administrative 3,962 3,526
Total expenses
51,242 46,740 Operating income 18,054 16,871 Dividend income
304 — Interest income 61 6 Interest expense (including net
amortization of debt premiums and discounts and debt issuance costs
of $807 and $471, respectively) (13,581 ) (9,364 ) Gain on early
extinguishment of debt — 104 Income from continuing
operations before income taxes and equity in earnings of investees
4,838 7,617 Income tax expense (18 ) (15 ) Equity in earnings of
investees 2,739 9,934 Income from continuing
operations 7,559 17,536 Loss from discontinued operations (144 )
(149 ) Net income $ 7,415 $ 17,387 Weighted
average common shares outstanding (basic) 71,079 71,031
Weighted average common shares outstanding (diluted) 71,094
71,031 Per common share amounts (basic and
diluted): Income from continuing operations $ 0.11 $ 0.25 Loss from
discontinued operations $ — $ — Net income $ 0.10 $ 0.24
Government Properties Income
Trust
Funds from Operations and Normalized
Funds from Operations (1)
(amounts in thousands, except per share
data)
(unaudited)
Three Months Ended March 31, 2017 2016
Calculation of Funds from Operations (FFO) and Normalized FFO: Net
income $ 7,415 $ 17,387 Add: Depreciation and amortization 20,505
18,324 FFO attributable to SIR investment 12,404 18,458 Less:
Equity in earnings of SIR (2,611 ) (9,857 ) FFO 37,713 44,312 Add:
Acquisition related costs — 152 Normalized FFO attributable to SIR
investment 14,590 18,475 Less: FFO attributable to SIR investment
(12,404 ) (18,458 ) Gain on early extinguishment of debt —
(104 ) Normalized FFO $ 39,899 $ 44,377
Weighted average common shares outstanding (basic) 71,079
71,031 Weighted average common shares outstanding (diluted)
71,094 71,031 Per common share amounts (basic
and diluted): Net income $ 0.10 $ 0.24 FFO $ 0.53
$ 0.62 Normalized FFO $ 0.56 $ 0.62
Distributions declared per share $ 0.43 $ 0.43
(1) GOV calculates FFO and Normalized FFO as shown above. FFO is
calculated on the basis defined by The National Association of Real
Estate Investment Trusts, or NAREIT, which is net income,
calculated in accordance with GAAP, plus real estate depreciation
and amortization and the difference between FFO attributable to an
equity investment and equity in earnings of an equity investee but
excluding impairment charges on real estate assets, any gain or
loss on sale of properties, as well as certain other adjustments
currently not applicable to GOV. GOV's calculation of Normalized
FFO differs from NAREIT's definition of FFO because GOV includes
the difference between FFO and Normalized FFO attributable to GOV’s
equity investment in Select Income REIT, or SIR, GOV includes
business management incentive fees, if any, only in the fourth
quarter versus the quarter when they are recognized as expense in
accordance with GAAP due to their quarterly volatility not
necessarily being indicative of GOV’s core operating performance
and the uncertainty as to whether any such business management
incentive fees will be payable when all contingencies for
determining such fees are determined at the end of the calendar
year, and GOV excludes acquisition related costs and gains on early
extinguishment of debt. GOV considers FFO and Normalized FFO to be
appropriate supplemental measures of operating performance for a
REIT, along with net income and operating income. GOV believes that
FFO and Normalized FFO provide useful information to investors
because by excluding the effects of certain historical amounts,
such as depreciation expense, FFO and Normalized FFO may facilitate
a comparison of GOV's operating performance between periods and
with other REITs. FFO and Normalized FFO are among the factors
considered by GOV's Board of Trustees when determining the amount
of distributions to its shareholders. Other factors include, but
are not limited to, requirements to maintain GOV's qualification
for taxation as a REIT, limitations in GOV’s credit agreement and
public debt covenants, the availability to GOV of debt and equity
capital, GOV's expectation of its future capital requirements and
operating performance, GOV’s receipt of distributions from SIR and
GOV’s expected needs and availability of cash to pay its
obligations. FFO and Normalized FFO do not represent cash generated
by operating activities in accordance with GAAP and should not be
considered as alternatives to net income or operating income as an
indicator of GOV's operating performance or as a measure of GOV’s
liquidity. These measures should be considered in conjunction with
net income and operating income as presented in GOV's Condensed
Consolidated Statements of Income. Other REITs and real estate
companies may calculate FFO and Normalized FFO differently than GOV
does.
Government Properties Income
Trust
Calculation and Reconciliation of
Property Net Operating Income (NOI) and Cash Basis NOI
(1)
(amounts in thousands)
(unaudited)
Three Months Ended March 31, 2017 2016
Calculation of NOI and Cash Basis NOI (2):
Rental income (3) $ 69,296 $ 63,611 Property operating expenses
(26,775 ) (24,738 ) Property net operating income (NOI) 42,521
38,873 Non-cash straight line rent adjustments included in rental
income (3) (1,300 ) (149 ) Lease value amortization included in
rental income (3) 627 307 Non-cash amortization included in
property operating expenses (4) (121 ) (121 ) Cash Basis NOI $
41,727 $ 38,910
Reconciliation of Net
Income to NOI and Cash Basis NOI: Net income $ 7,415 $ 17,387
Loss from discontinued operations 144 149 Income from
continuing operations 7,559 17,536 Equity in earnings of investees
(2,739 ) (9,934 ) Income tax expense 18 15 Gain on early
extinguishment of debt — (104 ) Interest expense 13,581 9,364
Interest income (61 ) (6 ) Dividend income (304 ) —
Operating income 18,054 16,871 General and administrative 3,962
3,526 Acquisition related costs — 152 Depreciation and amortization
20,505 18,324 NOI 42,521 38,873 Non-cash amortization
included in property operating expenses (4) (121 ) (121 ) Lease
value amortization included in rental income (3) 627 307 Non-cash
straight line rent adjustments included in rental income (3) (1,300
) (149 ) Cash Basis NOI $ 41,727 $ 38,910
Reconciliation of NOI to Same Property NOI
(5): Rental income $ 69,296 $ 63,611 Property
operating expenses (26,775 ) (24,738 ) Property NOI 42,521 38,873
Less: NOI of properties not included in same property results
(4,271 ) (908 ) Same property NOI $ 38,250 $ 37,965
Calculation of Same Property Cash Basis NOI
(5): Same property NOI $ 38,250 $ 37,965 Plus: Lease
value amortization included in rental income (3) 429 294 Less:
Non-cash straight line rent adjustments included in rental income
(3) (1,048 ) (102 )
Non-cash amortization included in property
operating expenses (4)
(121 ) (121 ) Same property Cash Basis NOI $ 37,510 $ 38,036
(1) GOV calculates NOI and Cash Basis NOI as shown above. The
calculations of NOI and Cash Basis NOI exclude certain components
of net income in order to provide results that are more closely
related to GOV’s property level results of operations. GOV defines
NOI as income from its rental of real estate less its property
operating expenses. NOI excludes amortization of capitalized tenant
improvement costs and leasing commissions because GOV records those
amounts as depreciation and amortization. GOV defines Cash Basis
NOI as NOI excluding non-cash straight line rent adjustments, lease
value amortization and non-cash amortization included in other
operating expenses. GOV considers NOI and Cash Basis NOI to be
appropriate supplemental measures to net income because they may
help both investors and management to understand the operations of
GOV’s properties. GOV uses NOI and Cash Basis NOI to evaluate
individual and company wide property level performance, and GOV
believes that NOI and Cash Basis NOI provide useful information to
investors regarding GOV’s results of operations because they
reflect only those income and expense items that are generated and
incurred at the property level and may facilitate comparisons of
GOV’s operating performance between periods and with other REITs.
NOI and Cash Basis NOI do not represent cash generated by operating
activities in accordance with GAAP and should not be considered as
alternatives to net income or operating income as an indicator of
our operating performance or as a measure of GOV’s liquidity. These
measures should be considered in conjunction with net income and
operating income as presented in GOV’s Condensed Consolidated
Statements of Income. Other REITs and real estate companies may
calculate NOI and Cash Basis NOI differently than GOV does.
(2) Excludes one property (one building) classified as
discontinued operations.
(3) GOV reports rental income on a straight line basis over the
terms of the respective leases; as a result, rental income includes
non-cash straight line rent adjustments. Rental income also
includes expense reimbursements, tax escalations, parking revenues,
service income and other fixed and variable charges paid to GOV by
its tenants, as well as the net effect of non-cash amortization of
intangible lease assets and liabilities.
(4) GOV recorded a liability for the amount by which the
estimated fair value for accounting purposes exceeded the price GOV
paid for its investment in RMR common stock in June 2015. A portion
of this liability is being amortized on a straight line basis
through December 31, 2035 as a reduction to property management
fees, which are included in property operating expenses.
(5) For the three months ended March 31, 2017 and 2016, same
property NOI and same property cash basis NOI are based on
properties GOV owned as of March 31, 2017 and which it owned
continuously since January 1, 2016, excluding one property
(one building) classified as discontinued operations.
Government Properties Income
Trust
Condensed Consolidated Balance
Sheets
(amounts in thousands, except share
data)
(unaudited)
March 31, December 31, 2017 2016
ASSETS Real estate properties: Land $ 269,410 $ 267,855 Buildings
and improvements 1,640,096 1,620,905 Total real
estate properties, gross 1,909,506 1,888,760 Accumulated
depreciation (308,241 ) (296,804 ) Total real estate properties,
net 1,601,265 1,591,956 Equity investment in Select Income REIT
482,103 487,708 Assets of discontinued operations 12,538 12,541
Acquired real estate leases, net 118,065 124,848 Cash and cash
equivalents 12,808 29,941 Restricted cash 703 530 Rents receivable,
net 50,459 48,458 Deferred leasing costs, net 21,232 21,079 Other
assets, net 77,877 68,005 Total assets $ 2,377,050
$ 2,385,066 LIABILITIES AND SHAREHOLDERS’
EQUITY Unsecured revolving credit facility $ 160,000 $ 160,000
Unsecured term loans, net 547,341 547,171 Senior unsecured notes,
net 647,213 646,844 Mortgage notes payable, net 27,415 27,837
Liabilities of discontinued operations 52 45 Accounts payable and
other liabilities 52,762 54,019 Due to related persons 3,672 3,520
Assumed real estate lease obligations, net 10,025 10,626
Total liabilities 1,448,480 1,450,062
Commitments and contingencies Shareholders’ equity: Common
shares of beneficial interest, $.01 par value: 100,000,000 shares
authorized, 71,177,906 shares issued and outstanding 712 712
Additional paid in capital 1,473,533 1,473,533 Cumulative net
income 103,744 96,329 Cumulative other comprehensive income 43,714
26,957 Cumulative common distributions (693,133 ) (662,527 ) Total
shareholders’ equity 928,570 935,004 Total
liabilities and shareholders’ equity $ 2,377,050 $ 2,385,066
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq.No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170427005317/en/
Government Properties Income TrustChristopher Ranjitkar,
617-219-1410Director, Investor Relations
Government Properties Income (NASDAQ:GOV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Government Properties Income (NASDAQ:GOV)
Historical Stock Chart
From Jul 2023 to Jul 2024