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Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

Contacts:

 

Timothy A. Bonang, Vice President, Investor Relations

 

Elisabeth Olmsted, Manager, Investor Relations

 

(617) 219-1440

 

Government Properties Income Trust Announces 2013 Second Quarter Results

 


 

Newton, MA (July 31, 2013): Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter and six months ended June 30, 2013.

 

Results for the Quarter Ended June 30, 2013:

 

Normalized funds from operations, or Normalized FFO, for the quarter ended June 30, 2013 were $29.3 million, or $0.54 per share, compared to Normalized FFO for the quarter ended June 30, 2012 of $24.4 million, or $0.52 per share.

 

Net income was $15.2 million, or $0.28 per share, for the quarter ended June 30, 2013 compared to $12.0 million, or $0.25 per share, for the quarter ended June 30, 2012.

 

The weighted average number of common shares outstanding was 54.7 million and 47.1 million for the quarters ended June 30, 2013 and 2012, 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 June 30, 2013 and 2012 appears later in this press release.

 

Results for the Six Months Ended June 30, 2013:

 

Normalized FFO for the six months ended June 30, 2013 were $59.6 million, or $1.09 per share, compared to Normalized FFO for the six months ended June 30, 2012 of $49.5 million, or $1.05 per share.

 

Net income was $39.9 million, or $0.73 per share, for the six months ended June 30, 2013 compared to $25.0 million, or $0.53 per share, for the six months ended June 30, 2012. Net income for the six months ended June 30, 2013 includes a net gain on sale of properties from discontinued operations of $8.2 million, or $0.15 per share.

 

The weighted average number of common shares outstanding was 54.7 million and 47.1 million for the six months ended June 30, 2013 and 2012, respectively.

 

A reconciliation of net income determined according to GAAP to FFO and Normalized FFO for the six months ended June 30, 2013 and 2012 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.

 



 

Occupancy and Leasing Results:

 

As of June 30, 2013, 93.4% of GOV’s rentable square feet was leased, compared to 92.6% leased as of June 30, 2012, and 92.8% leased as of March 31, 2013.

 

GOV entered into lease renewals for 236,700 rentable square feet and new leases for 77,827 rentable square feet during the quarter ended June 30, 2013 which had weighted average rental rates that were approximately 1.4% below prior rents for the same space or, in the case of space acquired vacant, rental rates at the date of acquisition. The weighted average lease term based on square feet for leases entered into during the second quarter of 2013 was 13.4 years. Commitments for tenant improvements, leasing commission costs and concessions for leases entered into during the quarter ended June 30, 2013 totaled approximately $5.2 million, or $1.23 per square foot per year of the lease term.

 

Recent Investment Activities:

 

In July 2013, GOV entered an agreement to acquire a warehouse property located in Chester, Virginia with 228,108 rentable square feet.  This property is 100% leased to the U.S. Government and occupied by the United States Army.  The contract price is $12.8 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 or that the acquisition will not be delayed or that the terms will not change.

 

Conference Call:

 

On Wednesday, July 31, 2013, 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 second quarter 2013 results.

 

The conference call telephone number is (877) 531-2987.  Participants calling from outside the United States and Canada should dial (612) 332-0107.  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 August 7, 2013.  To hear the replay, dial (320) 365-3844.  The replay pass code is 296744.

 

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

 

Supplemental Data:

 

A copy of GOV’s Second Quarter 2013 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 June 30, 2013, 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.

 

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”, OR SIMILAR EXPRESSIONS, GOV IS MAKING FORWARD LOOKING STATEMENTS.  THESE FORWARD

 

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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.  GOV’S 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 GOV HAS ENTERED AN AGREEMENT TO PURCHASE A PROPERTY.  THIS TRANSACTION IS SUBJECT TO GOV’S SATISFACTORY COMPLETION OF DILIGENCE AND OTHER CUSTOMARY CLOSING CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS.  THESE CONDITIONS MAY NOT BE MET.  AS A RESULT, THIS TRANSACTION MAY NOT OCCUR, MAY BE DELAYED OR ITS TERMS MAY CHANGE.

 

THE INFORMATION CONTAINED IN GOV’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, 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 ITS FORWARD LOOKING STATEMENTS. GOV’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE ON ITS WEBSITE AT WWW.SEC.GOV.

 

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON GOV’S 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.

 

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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 June 30,

 

Six Months Ended June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

57,261

 

$

49,808

 

$

114,939

 

$

99,805

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Real estate taxes

 

6,648

 

5,899

 

13,151

 

11,378

 

Utility expenses

 

3,993

 

3,793

 

7,980

 

7,524

 

Other operating expenses

 

10,016

 

9,232

 

19,594

 

17,999

 

Depreciation and amortization

 

13,972

 

11,995

 

27,668

 

23,905

 

Acquisition related costs

 

105

 

245

 

139

 

294

 

General and administrative

 

3,299

 

2,680

 

6,548

 

5,682

 

Total expenses

 

38,033

 

33,844

 

75,080

 

66,782

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

19,228

 

15,964

 

39,859

 

33,023

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

5

 

6

 

16

 

14

 

Interest expense (including net amortization of debt premiums and deferred financing fees of $332, $335, $663 and $659, respectively)

 

(4,065

)

(4,096

)

(8,212

)

(8,119

)

Equity in earnings of an investee

 

79

 

76

 

155

 

121

 

Income from continuing operations before income tax expense

 

15,247

 

11,950

 

31,818

 

25,039

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(43

)

(44

)

(86

)

(89

)

Net income from continuing operations

 

15,204

 

11,906

 

31,732

 

24,950

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

48

 

30

 

63

 

Net gain on sale of properties from discontinued operations

 

 

 

8,168

 

 

Net income

 

$

15,204

 

$

11,954

 

$

39,930

 

$

25,013

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Net income

 

$

15,204

 

$

11,954

 

$

39,930

 

$

25,013

 

Plus: depreciation and amortization from continuing operations

 

13,972

 

11,995

 

27,668

 

23,905

 

Plus: depreciation and amortization from discontinued operations

 

 

158

 

45

 

320

 

Less: net gain on sale of properties from discontinued operations

 

 

 

(8,168

)

 

FFO

 

29,176

 

24,107

 

59,475

 

49,238

 

Plus: acquisition related costs

 

105

 

245

 

139

 

294

 

Normalized FFO

 

$

29,281

 

$

24,352

 

$

59,614

 

$

49,532

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

54,669

 

47,098

 

54,657

 

47,075

 

 

 

 

 

 

 

 

 

 

 

Per common share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.28

 

$

0.25

 

$

0.58

 

$

0.53

 

Income from discontinued operations

 

$

 

$

 

$

0.15

 

$

 

Net income

 

$

0.28

 

$

0.25

 

$

0.73

 

$

0.53

 

FFO

 

$

0.53

 

$

0.51

 

$

1.09

 

$

1.05

 

Normalized FFO

 

$

0.54

 

$

0.52

 

$

1.09

 

$

1.05

 

 


(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, excluding any gain or loss on sale of properties, as well as other adjustments currently not applicable to GOV.  GOV’s calculation of Normalized FFO differs from NAREIT’s definition of FFO because GOV excludes acquisition related costs.  GOV considers FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net

 

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income, operating income and cash flow from operating activities.  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 between GOV and 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 status as a REIT, limitations in its revolving credit facility and term loan agreements, the availability of debt and equity capital to GOV, GOV’s expectation of its future capital requirements and operating performance, and its 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, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of GOV’s financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of GOV’s needs.  GOV believes that FFO and Normalized FFO may facilitate an understanding of its 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 GOV’s 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 GOV does.

 

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GOVERNMENT PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Real estate properties:

 

 

 

 

 

Land

 

$

243,584

 

$

243,611

 

Buildings and improvements

 

1,283,094

 

1,279,343

 

 

 

1,526,678

 

1,522,954

 

Accumulated depreciation

 

(190,581

)

(175,052

)

 

 

1,336,097

 

1,347,902

 

 

 

 

 

 

 

Assets of discontinued operations

 

 

10,278

 

Acquired real estate leases, net

 

132,233

 

144,401

 

Cash and cash equivalents

 

3,119

 

5,255

 

Restricted cash

 

1,736

 

1,553

 

Rents receivable, net

 

30,812

 

28,997

 

Deferred leasing costs, net

 

9,191

 

7,661

 

Deferred financing costs, net

 

4,822

 

5,718

 

Other assets, net

 

9,194

 

10,369

 

Total assets

 

$

1,527,204

 

$

1,562,134

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Unsecured revolving credit facility

 

$

25,000

 

$

49,500

 

Unsecured term loan

 

350,000

 

350,000

 

Mortgage notes payable

 

91,939

 

93,127

 

Liabilities of discontinued operations

 

 

102

 

Accounts payable and accrued expenses

 

18,927

 

19,106

 

Due to related persons

 

2,849

 

3,719

 

Assumed real estate lease obligations, net

 

17,370

 

19,129

 

Total liabilities

 

506,085

 

534,683

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares of beneficial interest, $.01 par value: 70,000,000 shares authorized, 54,674,118 and 54,643,888 shares issued and outstanding, respectively

 

547

 

547

 

Additional paid in capital

 

1,104,803

 

1,103,982

 

Cumulative net income

 

177,223

 

137,293

 

Cumulative other comprehensive income

 

18

 

99

 

Cumulative common distributions

 

(261,472

)

(214,470

)

Total shareholders’ equity

 

1,021,119

 

1,027,451

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,527,204

 

$

1,562,134

 

 

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