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Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

Contacts:

 

Timothy A. Bonang, Vice President, Investor Relations

 

Elisabeth Heiss, Manager, Investor Relations

 

(617) 219-1440

 

Government Properties Income Trust Announces 2012 Third Quarter Results

 


 

Newton, MA (October 30, 2012): Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter and nine months ended September 30, 2012.

 

Results for the Quarter Ended September 30, 2012:

 

Normalized funds from operations, or Normalized FFO, for the quarter ended September 30, 2012 were $25.6 million, or $0.54 per share, compared to Normalized FFO for the quarter ended September 30, 2011 of $23.0 million, or $0.51 per share.

 

Net income was $11.8 million, or $0.25 per share, for the quarter ended September 30, 2012, compared to $11.6 million, or $0.26 per share, for the same quarter last year.

 

GOV’s weighted average number of common shares outstanding was 47.1 million and 45.3 million for the quarters ended September 30, 2012 and 2011, respectively.

 

A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended September 30, 2012 and 2011 appears later in this press release.

 

Results for the Nine Months Ended September 30, 2012:

 

Normalized FFO for the nine months ended September 30, 2012 were $75.1 million, or $1.60 per share, compared to Normalized FFO for the nine months ended September 30, 2011 of $63.5 million, or $1.51 per share.

 

Net income was $36.8 million, or $0.78 per share, for the nine months ended September 30, 2012, compared to $32.7 million, or $0.78 per share, for the same period last year.

 

GOV’s weighted average number of common shares outstanding was 47.1 million and 42.1 million for the nine months ended September 30, 2012 and 2011, respectively.

 

A reconciliation of net income determined according to GAAP to FFO and Normalized FFO for the nine months ended September 30, 2012 and 2011 appears later in this press release.

 

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the New York Stock Exchange.

No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

 



 

Recent Investment Activities:

 

Since July 1, 2012, GOV has acquired or has entered into an agreement to acquire nine properties for an aggregate purchase price of $166.7 million, excluding acquisition costs, as follows:

 

·                  In July 2012, GOV acquired a previously disclosed office property located in Stockton, CA with 22,012 rentable square feet.  This property is 100% leased to the U.S. Government and occupied by the Department of Immigration and Customs Enforcement.  The purchase price was $8.3 million, excluding acquisition costs.

 

·                  Also in July 2012, GOV acquired two previously disclosed office properties located Atlanta, GA and Jackson, MS and an office warehouse property located in Ellenwood, GA with a combined total of 552,571 rentable square feet.  These properties are 100% leased to the U.S. Government and occupied by the Department of Homeland Security, Immigration and Customs Enforcement, the Federal Bureau of Investigation and the National Archives and Records Administration.  The aggregate purchase price was $88.0 million, excluding acquisition costs.

 

·                  In September 2012, GOV acquired three office properties located in Boise, ID with 180,952 rentable square feet.  These properties are 100% leased to the U.S. Government and occupied by the National Resource Center and the Department of Homeland Security.  The aggregate purchase price was $40.2 million, excluding acquisition costs.

 

·                  Also in September 2012, GOV acquired an office property located in Kansas City, MO with 86,739 rentable square feet.  This property is 100% leased to the U.S. Government and occupied by the Federal Bureau of Investigation.  The purchase price was $15.7 million, excluding acquisition costs.

 

·                  In October 2012, GOV entered an agreement to acquire an office property located in Windsor Mill, MD with 78,131 rentable square feet.  This property is 100% leased to two tenants, of which 97% is leased to the U.S. Government and occupied by the Centers for Medicare and Medicaid.  The contract purchase price is $14.5 million, excluding acquisition costs.  This pending acquisition is subject to GOV’s satisfactory completion of diligence and other customary closing conditions; accordingly, GOV can provide no assurance that it will acquire this property.

 

Recent Financing Activities:

 

On October 19, 2012, GOV issued 7,500,000 common shares in a public offering at a price of $23.25 per share and raised net proceeds of approximately $166.6 million.  The net proceeds from this offering were used to repay amounts outstanding under GOV’s revolving credit facility.  GOV also granted the underwriters of the offering a 30-day option to purchase up to an additional 1,125,000 common shares, which option expires on November 15, 2012.

 

Conference Call:

 

On Tuesday, October 30, 2012, at 1:00 p.m. Eastern Time, David Blackman, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the third quarter 2012 results.

 

The conference call telephone number is (800) 230-1074. Participants calling from outside the United States and Canada should dial (612) 234-9960.  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 11:59 p.m. Eastern Time on November 6, 2012.  To hear the replay, dial (320) 365-3844.  The replay pass code is 260114.

 

A live audio webcast of the conference call will also be available in a listen only mode on GOV’s website, which is located at www.govreit.com.  Participants wanting to access the webcast should visit GOV’s website about five minutes before the call.  The

 

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archived webcast will be available for replay on GOV’s website for about one week after the call.  The recording and retransmission in any way of GOV’s third quarter conference call is strictly prohibited without the prior written consent of GOV.

 

Supplemental Data:

 

A copy of GOV’s Third Quarter 2012 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.

 

Government Properties Income Trust is a real estate investment trust, or REIT, which owns properties located throughout the United States that are majority leased to the U.S. Government and other government tenants.  As of September 30, 2012, GOV owned 82 properties with approximately 10.0 million rentable square feet.  GOV is headquartered in Newton, Massachusetts.

 

Please see the following pages for a more detailed statement of GOV’s operating results and financial condition and for an explanation of GOV’s calculation of FFO and Normalized FFO.

 

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GOVERNMENT PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS AND

NORMALIZED FUNDS FROM OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

54,083

 

$

45,889

 

$

154,811

 

$

127,224

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Real estate taxes

 

5,728

 

4,853

 

17,210

 

13,947

 

Utility expenses

 

5,140

 

4,375

 

12,845

 

11,422

 

Other operating expenses

 

9,565

 

7,893

 

27,743

 

22,074

 

Depreciation and amortization

 

13,056

 

10,379

 

37,281

 

27,862

 

Acquisition related costs

 

763

 

1,008

 

1,057

 

2,846

 

General and administrative

 

3,637

 

2,746

 

9,395

 

7,655

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

37,889

 

31,254

 

105,531

 

85,806

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

16,194

 

14,635

 

49,280

 

41,418

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

7

 

54

 

21

 

89

 

Interest expense (including net amortization of debt premiums and deferred financing fees of $339, $266, $998 and $787, respectively)

 

(4,530

)

(3,162

)

(12,649

)

(8,775

)

Equity in earnings of an investee

 

115

 

28

 

236

 

111

 

 

 

 

 

 

 

 

 

 

 

Income before income tax benefit (expense)

 

11,786

 

11,555

 

36,888

 

32,843

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

(30

)

8

 

(119

)

(94

)

Net income

 

$

11,756

 

$

11,563

 

$

36,769

 

$

32,749

 

 

 

 

 

 

 

 

 

 

 

Calculation of Funds from Operations (FFO) and Normalized FFO(1)

 

 

 

 

 

 

 

 

 

Net income

 

$

11,756

 

$

11,563

 

$

36,769

 

$

32,749

 

Plus: depreciation and amortization

 

13,056

 

10,379

 

37,281

 

27,862

 

FFO

 

24,812

 

21,942

 

74,050

 

60,611

 

Plus: acquisition related costs

 

763

 

1,008

 

1,057

 

2,846

 

Normalized FFO

 

$

25,575

 

$

22,950

 

$

75,107

 

$

63,457

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

47,108

 

45,322

 

47,086

 

42,127

 

 

 

 

 

 

 

 

 

 

 

Per common share

 

 

 

 

 

 

 

 

 

Net income

 

$

0.25

 

$

0.26

 

$

0.78

 

$

0.78

 

FFO

 

$

0.53

 

$

0.48

 

$

1.57

 

$

1.44

 

Normalized FFO

 

$

0.54

 

$

0.51

 

$

1.60

 

$

1.51

 

 


(1)  We calculate funds from operations, or 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, as well as other adjustments currently not applicable to us.  Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we exclude acquisition related costs.  We consider FFO and Normalized FFO to be appropriate measures of performance for a REIT, along with net income, operating income and cash flow from operating, investing and financing activities.  We believe 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 can facilitate a comparison of our operating performance between periods.  FFO

 

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and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders.  Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility agreement and term loan agreement, the availability of debt and equity capital to us, our expectation of our future capital requirements and operating performance and our current and expected needs and availability of cash to pay  our 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, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  We believe that FFO and Normalized FFO may facilitate an understanding of our consolidated historical operating results.  These measures should be considered in conjunction with net income, operating income and cash flow from operating activities as presented in our Condensed Consolidated Statements of Income and Comprehensive Income and Condensed Consolidated Statements of Cash Flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

 

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GOVERNMENT PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

 

 

 

September 30,

 

December 31,

 

 

 

2012

 

2011

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Real estate properties:

 

 

 

 

 

Land

 

$

241,294

 

$

224,674

 

Buildings and improvements

 

1,268,730

 

1,129,994

 

 

 

1,510,024

 

1,354,668

 

Accumulated depreciation

 

(172,066

)

(156,618

)

 

 

1,337,958

 

1,198,050

 

 

 

 

 

 

 

Acquired real estate leases, net

 

131,159

 

117,596

 

Cash and cash equivalents

 

3,169

 

3,272

 

Restricted cash

 

2,189

 

1,736

 

Rents receivable, net

 

26,806

 

29,000

 

Deferred leasing costs, net

 

5,696

 

3,074

 

Deferred financing costs, net

 

6,169

 

5,550

 

Other assets, net

 

11,641

 

10,297

 

Total assets

 

$

1,524,787

 

$

1,368,575

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Unsecured revolving credit facility

 

$

167,000

 

$

345,500

 

Unsecured term loan

 

350,000

 

 

Mortgage notes payable

 

93,709

 

95,383

 

Accounts payable and accrued expenses

 

21,816

 

20,691

 

Due to related persons

 

7,231

 

4,071

 

Assumed real estate lease obligations, net

 

14,038

 

11,262

 

Total liabilities

 

653,794

 

476,907

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares of beneficial interest, $.01 par value: 70,000,000 shares authorized, 47,143,888 and 47,051,650 shares issued and outstanding, respectively

 

471

 

471

 

Additional paid in capital

 

937,285

 

935,438

 

Cumulative net income

 

124,102

 

87,333

 

Cumulative other comprehensive income

 

108

 

77

 

Cumulative common distributions

 

(190,973

)

(131,651

)

Total shareholders’ equity

 

870,993

 

891,668

 

Total liabilities and shareholders’ equity

 

$

1,524,787

 

$

1,368,575

 

 

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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 WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS.  THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR 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 THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.  FOR EXAMPLE:

 

·                  THIS PRESS RELEASE STATES THAT WE HAVE ENTERED AN AGREEMENT TO PURCHASE A PROPERTY.  THIS TRANSACTION IS SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS.  THESE TERMS AND CONDITIONS MAY NOT BE MET.  AS A RESULT, THIS TRANSACTION MAY NOT OCCUR OR MAY BE DELAYED.

 

·                  THIS PRESS RELEASE STATES THAT WE HAVE GRANTED THE UNDERWRITERS OF OUR COMMON SHARE OFFERING AN OPTION TO PURCHASE UP TO AN ADDITIONAL 1,125,000 COMMON SHARES.  AN IMPLICATION OF THIS STATEMENT MAY BE THAT THIS OPTION MAY BE EXERCISED IN WHOLE OR IN PART.  IN FACT, THE COMPANY DOES NOT KNOW WHETHER THIS OPTION, OR ANY PART OF IT, WILL BE EXERCISED, AND THE UNDERWRITERS MAY ELECT NOT TO DO SO.

 

THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING UNDER “RISK FACTORS” IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE ON ITS WEBSITE AT WWW.SEC.GOV.

 

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

 

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

 

(END)

 

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