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EX-99.1 - EXHIBIT 99.1 - OFFICE PROPERTIES INCOME TRUST | exhibit_991.htm |
8-K - 8-K - OFFICE PROPERTIES INCOME TRUST | a8-k.htm |
Third Quarter 2016
Supplemental Operating and Financial Data
All amounts in this report are unaudited.
Government Properties Income Trust
4560 Viewridge Road, San Diego, CA
Square Feet: 93,177
Agency Occupant: Drug Enforcement Agency
Exhibit 99.2
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
TABLE OF CONTENT
S
2
TABLE OF CONTENTS
CORPORATE INFORMATION PAGE/EXHIBIT
Company Profile 6
Investor Information 7
Research Coverage 8
FINANCIALS
Key Financial Data 10
Condensed Consolidated Balance Sheets 11
Condensed Consolidated Statements of Income (Loss) 12
Condensed Consolidated Statements of Cash Flows 13
Debt Summary 14
Debt Maturity Schedule 15
Leverage Ratios, Coverage Ratios and Public Debt Covenants 16
Summary of Capital Expenditures 17
Property Acquisition and Disposition Information Since January 1, 2016 18
Calculation of Property Net Operating Income (NOI) and Cash Basis NOI 19
Calculation of Same Property NOI and Cash Basis NOI 20
Calculation of EBITDA and Adjusted EBITDA 21
Calculation of Funds from Operations (FFO) and Normalized FFO 22
Non-GAAP Financial Measures Definitions 23
PORTFOLIO INFORMATION
Portfolio Summary 25
Summary Consolidated and Same Property Results 26
Occupancy and Leasing Summary 28
Leasing Analysis by Tenant Type 29
Tenant List 30
Lease Expiration Schedule 31
EXHIBIT
Property Detail A
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
W
ARNING CONCERNING FO
RW
ARD LOOKING S
TA
TEMENT
S
3
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESENTATION OF SUPPLEMENTAL OPERATING AND FINANCIAL DATA 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”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF
THESE 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. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:
• OUR ACQUISITIONS AND SALES OF PROPERTIES,
• OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY,
• THE LIKELIHOOD THAT OUR TENANTS WILL PAY RENT OR BE NEGATIVELY AFFECTED BY CYCLICAL ECONOMIC CONDITIONS OR GOVERNMENT BUDGET CONSTRAINTS,
• 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,
• OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,
• OUR EXPECTATION THAT WE BENEFIT FINANCIALLY FROM OUR OWNERSHIP INTEREST IN SELECT INCOME REIT, OR SIR,
• OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,
• THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,
• OUR EXPECTATION THAT THERE WILL BE OPPORTUNITIES FOR US TO ACQUIRE, AND THAT WE WILL ACQUIRE, ADDITIONAL PROPERTIES THAT ARE MAJORITY LEASED TO GOVERNMENT TENANTS,
• OUR EXPECTATIONS REGARDING DEMAND FOR LEASED SPACE BY THE U.S. GOVERNMENT AND STATE AND LOCAL GOVERNMENTS,
• OUR ABILITY TO RAISE EQUITY OR DEBT CAPITAL,
• OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,
• OUR ABILITY TO APPROPRIATELY BALANCE OUR DEBT AND EQUITY CAPITAL,
• OUR CREDIT RATINGS,
• OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF THE RMR GROUP INC., OR RMR INC.,
• OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF AFFILIATES INSURANCE COMPANY, OR AIC, AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,
• THE CREDIT QUALITIES OF OUR TENANTS,
• OUR QUALIFICATION FOR TAXATION AS A REAL ESTATE INVESTMENT TRUST, OR REIT, AND
• OTHER MATTERS.
OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FUNDS FROM OPERATIONS, OR FFO, NORMALIZED FUNDS FROM OPERATIONS, OR NORMALIZED FFO, NET
OPERATING INCOME, OR NOI, CASH BASIS NOI, EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION, OR EBITDA, EBITDA AS ADJUSTED, OR ADJUSTED EBITDA, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE,
BUT ARE NOT LIMITED TO:
• THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS,
• COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY WITH RESPECT TO THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED AND WITH RESPECT TO GOVERNMENT TENANCIES,
• THE IMPACT OF CHANGES IN THE REAL ESTATE NEEDS AND FINANCIAL CONDITIONS OF THE U.S. GOVERNMENT AND STATE AND LOCAL GOVERNMENTS,
• COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,
• ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, THE RMR GROUP LLC, OR RMR LLC, RMR INC., SIR, AIC AND OTHERS AFFILIATED WITH THEM,
• LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES, AND
• ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL.
FOR EXAMPLE:
• OUR ABILITY TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS AND TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE
EARNINGS, THE CAPITAL COSTS WE INCUR TO LEASE OUR PROPERTIES AND OUR RECEIPT OF DISTRIBUTIONS FROM SIR,
• 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,
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016W
ARNING CONCERNING FO
RW
ARD LOOKING S
TA
TEMENTS (continued
)
4
• OUR ABILITY TO GROW OUR BUSINESS AND INCREASE DISTRIBUTIONS TO OUR SHAREHOLDERS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS, LESS
PROPERTY OPERATING EXPENSES, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES,
ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES,
• 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,
• SOME GOVERNMENT TENANTS MAY EXERCISE THEIR RIGHTS TO VACATE THEIR SPACE BEFORE THE STATED EXPIRATION OF THEIR LEASES, AND WE MAY BE UNABLE TO OBTAIN NEW TENANTS TO MAINTAIN THE
HISTORICAL OCCUPANCY RATES OF, OR RENTS FROM, OUR PROPERTIES,
• RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE,
• CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE,
• CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,
• ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY AND OTHER FLOATING RATE CREDIT FACILITIES WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH SUCH
FACILITIES,
• WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,
• THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS MAY BE INCREASED TO UP TO $2.5 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE
MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,
• 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,
• THE BUSINESS MANAGEMENT AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS INCLUDE TERMS WHICH PERMIT EARLY TERMINATION
IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS OR FOR SHORTER TERMS,
• WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., SIR, AIC 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,
• THE PREMIUMS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND TERM LOANS AND THE FACILITY FEE PAYABLE ON OUR REVOLVING CREDIT FACILITY ARE BASED ON OUR CREDIT
RATINGS. FUTURE CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE,
• SIR MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US, AND
• WE MAY BE UNABLE TO SELL OUR SIR COMMON SHARES FOR AN AMOUNT EQUAL TO OUR CARRYING VALUE OF THOSE SHARES AND ANY SUCH SALE MAY BE AT A DISCOUNT TO MARKET PRICE BECAUSE OF THE LARGE SIZE OF
OUR SIR HOLDINGS OR OTHERWISE; WE MAY REALIZE A LOSS ON OUR INVESTMENT IN OUR SIR SHARES.
CURRENTLY UNEXPECTED RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS CHANGES IN GOVERNMENT TENANTS’ NEEDS FOR LEASED SPACE, ACTS OF
TERRORISM, NATURAL DISASTERS OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.
THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION "RISK FACTORS" IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES
OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S 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.
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016CORPORATE INFORMATION 5
One Memphis Place, Memphis, TN
Square Feet: 204,694
Primary Agency Occupant: U.S. Courts
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
COM
PAN
Y PROFIL
E
6
COMPANY PROFILE
The Company:
Government Properties Income Trust, or GOV, we or us, is a real estate investment trust, or REIT, which
primarily owns properties located throughout the United States that are majority leased to government
tenants. The majority of our properties are office buildings. As of September 30, 2016, we also own 24.9
million common shares, or approximately 27.9%, of the then outstanding common shares of Select Income
REIT (Nasdaq: SIR), or SIR, a REIT that is focused on owning and investing in net leased, single tenant
properties. We have been investment grade rated since 2010, and we are included in the S&P Small Cap
600 Index, the Russell 2000® index and the MSCI US REIT index.
Management:
GOV is managed by The RMR Group LLC, the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR).
RMR is an alternative asset management company that was founded in 1986 to manage real estate
companies and related businesses. RMR primarily provides management services to four publicly owned
real estate investment trusts, or REITs, and three real estate related operating businesses. In addition to
managing GOV, RMR manages Hospitality Properties Trust, a REIT that owns hotels and travel centers,
Senior Housing Properties Trust, a REIT that primarily owns healthcare, senior living and medical office
buildings, and Select Income REIT, a REIT that is focused on owning and investing in net leased, single
tenant properties. RMR also provides management services to TravelCenters of America LLC, a publicly
traded operator of travel centers along the U.S. Interstate Highway System, convenience stores and
restaurants, Five Star Quality Care, Inc., a publicly traded operator of senior living communities, and Sonesta
International Hotels Corporation, a privately owned franchisor and operator of hotels and cruise ships. RMR
also manages publicly traded securities of real estate companies and private commercial real estate debt
funds through wholly owned SEC registered investment advisory subsidiaries. As of September 30, 2016,
RMR had $23.8 billion of real estate assets under management and the combined RMR managed companies
had approximately $11 billion of annual revenues, over 1,350 properties and more than 52,000 employees.
We believe that being managed by RMR is a competitive advantage for GOV because of RMR’s depth of
management and experience in the real estate industry. We also believe RMR provides management services
to us at costs that are lower than we would have to pay for similar quality services.
Corporate Headquarters:
Two Newton Place
255 Washington Street, Suite 300
Newton, MA 02458-1634
(t) (617) 219-1440
(f) (617) 219-1441
Stock Exchange Listing:
Nasdaq
Trading Symbols:
Common Shares: GOV
Senior Unsecured Notes due 2046: GOVNI
Issuer Ratings:
Moody’s: Baa3
Standard & Poor’s: BBB-
(1) Excludes one property (one building) classified as discontinued
operations as of September 30, 2016.
(2) See page 22 for the calculation of Normalized FFO and a
reconciliation of this amount from net income, as applicable,
determined in accordance with U.S. generally accepted
accounting principles, or GAAP.
Total Properties 71 (91 buildings)
Total sq. ft. 10,950
Percent Leased 95.0%
Q3 2016 total rental income $64,478
Q3 2016 net income $11,578
Q3 2016 Normalized FFO(2) $38,590
Key data (as of 9/30/2016)(1):
(dollars and sq. ft. in 000s)
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
INVES
TOR INFORM
ATIO
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INVESTOR INFORMATION
Board of Trustees
Barbara D. Gilmore John L. Harrington Jeffrey P. Somers
Independent Trustee Independent Trustee Independent Trustee
Adam D. Portnoy Barry M. Portnoy
Managing Trustee Managing Trustee
Senior Management
David M. Blackman Mark L. Kleifges
President and Chief Operating Officer Chief Financial Officer and Treasurer
Contact Information
Investor Relations Inquiries
Government Properties Income Trust Financial inquiries should be directed to Mark L. Kleifges,
Two Newton Place Chief Financial Officer and Treasurer, at (617) 219-1440
255 Washington Street, Suite 300 or mkleifges@rmrgroup.com.
Newton, MA 02458-1634
(t) (617) 219-1440 Investor and media inquiries should be directed to
(f) (617) 796-8267 Christopher Ranjitkar, Director, Investor Relations, at (617) 219-1473 or
(e-mail) info@govreit.com cranjitkar@rmrgroup.com.
(website) www.govreit.com
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
RESEARCH COVERAG
E
8
RESEARCH COVERAGE
Equity Research Coverage
Bank of America Merrill Lynch Research FBR & Co.
James Feldman Bryan Maher
James.Feldman@baml.com bmaher@fbr.com
(646) 855-5808 (646) 885-5423
Jeffries & Company, Inc. JMP Securities
Jonathan Petersen Mitch Germain
jpetersen@jefferies.com mgermain@jmpsecurities.com
(212) 284-1705 (212) 906-3546
Morgan Stanley RBC Capital Markets
Sumit Sharma Mike Carroll
Sumit.Sharma@morganstanley.com Michael.Carroll@rbccm.com
(212) 761-7567 (440) 715-2649
Rating Agencies
Moody’s Investors Service Standard & Poor’s
Lori Marks Sarah Sherman
Lori.marks@moodys.com sarah.sherman@standardandpoors.com
(212) 553-1653 (212) 438-3550
GOV is followed by the analysts and its credit is rated by the rating agencies listed above. Please note that any opinions, estimates
or forecasts regarding GOV’s performance made by these analysts or agencies do not represent opinions, forecasts or predictions
of GOV or its management. GOV does not by its reference above imply its endorsement of or concurrence with any information,
conclusions or recommendations provided by any of these analysts or agencies.
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
FINANCIALS
9960 Maryland Drive, Richmond, VA
Square Feet: 173,932
Agency Occupant: The Commonwealth of Virginia
9
625 Indiana Avenue, Washington, DC
Square Feet: 160,897
Primary Agency Occupant: U.S. Courts 9
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
KE
Y FINANCIA
L D
AT
A
10
KEY FINANCIAL DATA
(dollar and share amounts in thousands, except per share data)
(1) Total gross assets is total assets plus accumulated depreciation.
(2) Net loss for the three months ended December 31, 2015 includes a $12,368, or $0.17 per basic and diluted share, loss on the distribution of RMR common stock to our shareholders.
(3) See page 19 for the calculation of NOI and a reconciliation of that amount to net income (loss) determined in accordance with GAAP.
(4) See page 21 for the calculation of Adjusted EBITDA and a reconciliation of net income (loss) determined in accordance with GAAP to that amount.
(5) See page 22 for the calculation of FFO and Normalized FFO and a reconciliation of net income (loss) determined in accordance with GAAP to those amounts.
(6) Annualized distributions paid per share for the three months ended December 31, 2015 excludes a $0.13 per common share non-cash distribution of RMR common stock to our shareholders on December 14, 2015.
As of and for the Three Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015
Selected Balance Sheet Data:
Total gross assets (1) $ 2,551,044 $ 2,526,611 $ 2,525,238 $ 2,424,389 $ 2,466,799
Total assets $ 2,265,070 $ 2,251,210 $ 2,259,395 $ 2,168,510 $ 2,220,608
Total liabilities $ 1,314,330 $ 1,293,998 $ 1,298,498 $ 1,211,859 $ 1,207,164
Total shareholders' equity $ 950,740 $ 957,212 $ 960,897 $ 956,651 $ 1,013,444
Selected Income Statement Data:
Rental income $ 64,478 $ 64,061 $ 63,611 $ 61,685 $ 62,092
Net income (loss) (2) $ 11,578 $ 16,813 $ 17,387 $ (2,339) $ 16,911
NOI (3) $ 37,550 $ 39,556 $ 38,873 $ 36,704 $ 36,882
Adjusted EBITDA (4) $ 47,122 $ 48,949 $ 47,907 $ 46,539 $ 45,821
FFO (5) $ 38,512 $ 43,302 $ 44,312 $ 24,208 $ 41,534
Normalized FFO (5) $ 38,590 $ 43,350 $ 44,377 $ 43,619 $ 41,903
Per Share Data (basic and diluted):
Net income (loss) (2) $ 0.16 $ 0.24 $ 0.24 $ (0.03) $ 0.24
FFO (5) $ 0.54 $ 0.61 $ 0.62 $ 0.34 $ 0.58
Normalized FFO (5) $ 0.54 $ 0.61 $ 0.62 $ 0.61 $ 0.59
Dividends:
Annualized distributions paid per share during period (6) $ 1.72 $ 1.72 $ 1.72 $ 1.72 $ 1.72
Annualized distributions yield (at end of period) (6) 7.6% 7.5% 9.6% 10.8% 10.8%
Normalized FFO payout ratio (5) (6) 79.6% 70.5% 69.4% 70.5% 72.9%
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CONDENSED CONSOLID
ATED BALANCE SHEET
S
11
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except share data)
September 30, December 31,
2016 2015
ASSETS
Real estate properties:
Land $ 259,416 $ 253,058
Buildings and improvements 1,528,585 1,443,074
Total real estate properties, gross 1,788,001 1,696,132
Accumulated depreciation (285,974) (255,879)
Total real estate properties, net 1,502,027 1,440,253
Equity investment in Select Income REIT 491,973 491,369
Assets of discontinued operations 12,490 12,468
Assets of property held for sale — 3,098
Acquired real estate leases, net 105,499 118,267
Cash and cash equivalents 13,749 8,785
Restricted cash 514 1,022
Rents receivable, net 49,350 45,269
Deferred leasing costs, net 20,012 14,299
Other assets, net 69,456 33,680
Total assets $ 2,265,070 $ 2,168,510
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving credit facility $ 25,000 $ 117,000
Unsecured term loans, net 547,000 546,490
Senior unsecured notes, net 646,551 345,809
Mortgage notes payable, net 28,250 136,299
Liabilities of discontinued operations 61 54
Liabilities of property held for sale — 43
Accounts payable and other liabilities 52,237 50,543
Due to related persons 3,974 2,886
Assumed real estate lease obligations, net 11,257 12,735
Total liabilities 1,314,330 1,211,859
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.01 par value:
100,000,000 shares authorized, 71,178,999 and
71,126,308 issued and outstanding, respectively 712 711
Additional paid in capital 1,473,557 1,472,482
Cumulative net income 84,264 38,486
Cumulative other comprehensive income (loss) 24,127 (14,867)
Cumulative common distributions (631,920) (540,161)
Total shareholders' equity 950,740 956,651
Total liabilities and shareholders' equity $ 2,265,070 $ 2,168,510
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CONDENSED CONSOLID
ATED S
TA
TEMENTS OF INCOME (LOSS
)
12
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(dollars and share amounts in thousands, except per share data)
(1) We report rental income on a straight line basis over the terms of the respective leases; accordingly, 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 us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any.
(2) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR common stock in June 2015. This liability is being amortized on a straight line basis through
December 31, 2035 as an allocated reduction to business management fees and property management fees, which are included in general and administrative and other operating expenses, respectively.
Three Months Ended For the Nine Months Ended
9/30/2016 9/30/2015 9/30/2016 9/30/2015
Rental income (1) $ 64,478 $ 62,092 $ 192,150 $ 186,864
Expenses:
Real estate taxes 7,591 7,735 22,810 22,819
Utility expenses 5,483 5,194 13,330 13,788
Other operating expenses 13,854 12,281 40,031 36,659
Depreciation and amortization 18,404 17,161 54,713 51,675
Acquisition related costs 147 270 363 459
General and administrative 3,816 3,714 11,350 11,431
Total expenses 49,295 46,355 142,597 136,831
Operating income 15,183 15,737 49,553 50,033
Dividend income 304 — 667 —
Interest income 47 2 63 14
Interest expense (including net amortization of debt premiums and discounts
and debt issuance costs of $805, $360, $2,024, and $1,020, respectively) (12,608) (9,137) (32,286) (27,894)
Gain on early extinguishment of debt — 34 104 34
Gain (loss) on issuance of shares by Select Income REIT 72 (21) 88 (42,145)
Loss on impairment of Select Income REIT investment — — — (203,297)
Income (loss) from continuing operations before income taxes and equity in earnings
of investees 2,998 6,615 18,189 (223,255)
Income tax (expense) benefit (13) 13 (63) (49)
Equity in earnings of investees 8,668 10,294 28,002 16,072
Income (loss) from continuing operations 11,653 16,922 46,128 (207,232)
Loss from discontinued operations (154) (11) (429) (390)
Income (loss) before gain on sale of property 11,499 16,911 45,699 (207,622)
Gain on sale of property 79 — 79 —
Net income (loss) $ 11,578 $ 16,911 $ 45,778 $ (207,622)
Weighted average common shares outstanding (basic) 71,054 71,004 71,041 70,589
Weighted average common shares outstanding (diluted) 71,084 71,021 71,064 70,589
Per common share amounts (basic and diluted):
Income (loss) from continuing operations $ 0.16 $ 0.24 $ 0.65 $ (2.94)
Loss from discontinued operations $ — $ — $ (0.01) $ (0.01)
Net income (loss) $ 0.16 $ 0.24 $ 0.64 $ (2.94)
Additional Data:
General and administrative expenses / rental income 5.92% 5.98% 5.91% 6.12%
General and administrative expenses / total assets (at end of period) 0.17% 0.17% 0.50% 0.51%
Non-cash straight line rent adjustments (1) $ 1,205 $ 613 $ 1,789 $ 2,820
Lease value amortization included in rental income (1) $ (370) $ (298) $ (1,103) $ (862)
Non-cash amortization included in other operating expenses (2) $ 121 $ 125 $ 363 $ 125
Non-cash amortization included in general and administrative expenses (2) $ 151 $ 155 $ 452 $ 221
Capitalized interest expense $ 17 $ — $ 26 $ —
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CONDENSED CONSOLID
ATED S
TA
TEMENTS OF CASH FLOW
S
13
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
For the Nine Months Ended
9/30/2016 9/30/2015
Cash flows from operating activities:
Net income (loss) $ 45,778 $ (207,622)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation 31,611 29,115
Net amortization of debt premiums and discounts and debt issuance costs 2,024 1,020
Gain on sale of property (79) —
Gain on early extinguishment of debt (104) (34)
Straight line rental income (1,789) (2,820)
Amortization of acquired real estate leases 21,948 21,771
Amortization of deferred leasing costs 2,343 1,387
Other non-cash (income) expense, net 500 1,288
Equity in earnings of investees (28,002) (16,072)
(Gain) loss on issuance of shares by Select Income REIT (88) 42,145
Loss on impairment of Select Income REIT investment — 203,297
Distributions of earnings from Select Income REIT 25,676 18,850
Change in assets and liabilities:
Restricted cash 508 950
Deferred leasing costs (7,998) (2,408)
Rents receivable (126) 456
Other assets (1,466) (865)
Accounts payable and accrued expenses (150) (1,037)
Due to related persons 1,088 (368)
Net cash provided by operating activities 91,674 89,053
Cash flows from investing activities:
Real estate acquisitions and deposits (83,705) —
Real estate improvements (23,357) (9,746)
Investment in Select Income REIT — (95,821)
Investment in The RMR Group Inc. — (6,467)
Distributions in excess of earnings from Select Income REIT 11,951 15,721
Proceeds from sale of properties, net 263 30,520
Net cash used in investing activities (94,848) (65,793)
Cash flows from financing activities:
Repayment of mortgage notes payable (107,562) (48,476)
Proceeds from issuance of senior unsecured notes 310,000 —
Borrowings on unsecured revolving credit facility 254,000 165,000
Repayments on unsecured revolving credit facility (346,000) (51,000)
Payment of debt issuance costs (10,229) (21)
Repurchase of common shares (312) (174)
Distributions to common shareholders (91,759) (91,074)
Net cash provided by (used in) financing activities 8,138 (25,745)
Increase (decrease) in cash and cash equivalents 4,964 (2,485)
Cash and cash equivalents at beginning of period 8,785 13,791
Cash and cash equivalents at end of period $ 13,749 $ 11,306
Supplemental cash flow information:
Interest paid $ 32,599 $ 30,107
Income taxes paid $ 94 $ 143
Non-cash investing activities:
Investment in The RMR Group Inc. paid in common shares $ — $ 13,545
Sale of property $ 3,600 $ —
Mortgage note receivable related to sale of property $ (3,600) $ —
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
DEBT SUMMA
RY
14
DEBT SUMMARY
(dollars in thousands)
As of September 30, 2016
(1) Principal balances exclude unamortized premiums, discounts and issuance costs related to these debts. Total debt outstanding as of September 30, 2016, net of unamortized premiums, discounts
and certain issuance costs totaling $16,076, was $1,246,801.
(2) We are required to pay interest on borrowings under our $750,000 revolving credit facility at an annual rate of LIBOR plus a premium of 125 basis points. We also pay a facility fee of 25 basis points
per annum on the total amount of lending commitments. Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings. The coupon rate and
interest rate listed above are as of September 30, 2016. Subject to meeting certain conditions and payment of a fee, we may extend the maturity date to January 31, 2020.
(3) We are required to pay interest on the amounts outstanding under our $300,000 unsecured term loan at an annual rate of LIBOR plus a premium of 140 basis points, subject to adjustment based on
changes to our credit ratings. The coupon rate and interest rate listed above are as of September 30, 2016. Our $300,000 unsecured term loan is prepayable without penalty at any time.
(4) We are required to pay interest on the amounts outstanding under our $250,000 unsecured term loan at an annual rate of LIBOR plus a premium of 180 basis points, subject to adjustment based on
changes to our credit ratings. The coupon rate and interest rate listed above are as of September 30, 2016. Our $250,000 unsecured term loan is prepayable at any time, subject to a prepayment
premium of 1% on the amount prepaid on or prior to November 21, 2016, and with no prepayment penalty on amounts paid thereafter.
(5) The maximum aggregate borrowing availability under the credit agreement governing our revolving credit facility and term loans may be increased to up to $2,500,000 on a combined basis in certain
circumstances.
Coupon Interest Principal Maturity Due at Years to
Rate Rate Balance (1) Date Maturity Maturity
Unsecured Floating Rate Debt:
$750,000 unsecured revolving credit facility (2) (5) 1.703% 1.703% $ 25,000 1/31/2019 $ 25,000 2.3
$300,000 unsecured term loan (3) (5) 1.924% 1.924% 300,000 3/31/2020 300,000 3.5
$250,000 unsecured term loan (4) (5) 2.324% 2.324% 250,000 3/31/2022 250,000 5.5
Total / weighted average 2.088% 2.088% 575,000 575,000 4.3
Unsecured Fixed Rate Debt:
Senior unsecured notes due 2019 3.750% 3.930% 350,000 8/15/2019 350,000 2.9
Senior unsecured notes due 2046 5.875% 5.875% 310,000 5/1/2046 310,000 29.6
Total / weighted average 4.748% 4.844% 660,000 660,000 15.4
Secured Fixed Rate Debt:
Mortgage debt - One building in Fairfax, VA 5.877% 5.877% 13,993 8/11/2021 12,702 4.9
Mortgage debt - One building in Tampa, FL 7.000% 5.150% 8,546 3/1/2019 7,890 2.4
Mortgage debt - One building in Lakewood, CO 8.150% 6.150% 5,338 3/1/2021 — 4.4
Total / weighted average 6.657% 5.706% 27,877 20,592 4.0
Total / weighted average 3.579% 3.608% $ 1,262,877 $ 1,255,592 10.1
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
DEBT M
ATURIT
Y SCHEDUL
E
15
DEBT MATURITY SCHEDULE
(dollars in thousands)
As of September 30, 2016
(1) Represents amounts outstanding under our $750,000 revolving credit facility at September 30, 2016. Subject to meeting certain conditions and payment of a fee, we may extend the maturity
date of our revolving credit facility by one year to January 31, 2020.
(2) Represents the outstanding balance of our $300,000 unsecured term loan at September 30, 2016. We may prepay this term loan without penalty at any time.
(3) Represents the outstanding balance of our $250,000 unsecured term loan at September 30, 2016. We may prepay this term loan at any time, subject to a prepayment premium of 1% on the
amount prepaid on or prior to November 21, 2016, and with no prepayment penalty on amounts paid thereafter.
(4) Principal balances are the amounts actually payable pursuant to the applicable agreements. Our carrying values may differ from these amounts because of the effect of unamortized
premiums, discounts and certain issuance costs related to these debts.
(5) Our total debt as of September 30, 2016, net of unamortized premiums, discounts and certain issuance costs totaling $16,076, was $1,246,801.
Unsecured Unsecured Secured
Floating Fixed Rate Fixed Rate
Year Rate Debt Debt (4) Debt (4) Total (5)
2016 $ — $ — $ 369 $ 369
2017 — — 1,549 1,549
2018 — — 1,671 1,671
2019 25,000 (1) 350,000 9,439 384,439
2020 300,000 (2) — 1,619 301,619
2021 — — 13,230 13,230
2022 250,000 (3) — — 250,000
2046 — 310,000 — 310,000
Total $ 575,000 $ 660,000 $ 27,877 $ 1,262,877
Percent of total debt 45.5% 52.3% 2.2% 100.0%
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
LEVERAGE R
ATIOS, COVERAGE R
ATIOS
AND PUBLIC DEBT COVENANT
S
16
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
(1) Debt amounts are net of unamortized premiums, discounts and certain issuance costs.
(2) Total gross assets is total assets plus accumulated depreciation.
(3) Gross book value of real estate assets is real estate properties, at cost, before purchase price allocations, less impairment writedowns, if any, and excludes properties classified as held for sale or
discontinued operations.
(4) As of September 30, 2016, we owned 24,918,421 common shares of SIR. The closing price of SIR's common shares on September 30, 2016 was $26.90 per share.
(5) Total market capitalization is total debt plus the market value of our common shares at the end of each period.
(6) See page 21 for the calculation of EBITDA and Adjusted EBITDA and a reconciliation of net income (loss) determined in accordance with GAAP to those amounts.
As of and for the Three Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015
Leverage Ratios:
Total debt (book value) (1) / total gross assets (2) 48.9% 48.4% 48.8% 47.3% 46.3%
Total debt (book value) (1) / gross book value of real estate assets (3) and
market value of SIR common shares (4) 46.4% 46.1% 48.0% 47.6% 48.1%
Total debt (book value) (1) / total market capitalization (5) 43.6% 42.7% 49.3% 50.4% 50.1%
Secured debt (book value) (1) / total assets 1.2% 1.3% 1.3% 6.3% 6.2%
Variable rate debt (book value) (1) / total debt (book value) (1) 45.9% 44.8% 69.6% 57.9% 57.8%
Coverage Ratios:
Adjusted EBITDA (6) / interest expense 3.7x 4.7x 5.1x 5.1x 5.0x
Total debt (book value) (1) / Annualized Adjusted EBITDA (6) 6.6x 6.2x 6.4x 6.2x 6.2x
Public Debt Covenants:
Total debt / adjusted total assets - allowable maximum 60.0% 45.1% 45.1% 46.5% 46.4% 46.7%
Secured debt / adjusted total assets - allowable maximum 40.0% 1.0% 1.0% 1.1% 5.5% 5.5%
Consolidated income available for debt service / debt service - required minimum 1.50x 3.9x 3.9x 5.3x 5.6x 5.4x
Total unencumbered assets to unsecured debt - required minimum 150.0% 221.7% 221.9% 214.9% 222.6% 220.9%
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
SUMMA
RY
OF CAPI
TA
L EXPENDITURE
S
17
SUMMARY OF CAPITAL EXPENDITURES (1)
(dollars and sq. ft. in thousands, except per sq. ft. data)
(1) Amounts exclude one property (one building) classified as discontinued operations.
(2) Tenant improvements include capital expenditures used to improve tenants' space or amounts paid directly to tenants to improve their space.
(3) Leasing costs include leasing related costs, such as brokerage commissions and tenant inducements.
(4) Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets.
(5) Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of a property acquisition and incurred within a short
time period after acquiring the property, and (ii) capital expenditure projects that reposition a property or result in new sources of revenue.
(6) Rentable square footage is subject to changes when space is re-measured or re-configured for tenants.
For the Three Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015
Tenant improvements (2) $ 5,636 $ 4,681 $ 1,989 $ 2,763 $ 2,213
Leasing costs (3) 655 3,035 4,312 2,290 439
Building improvements (4) 3,009 2,649 3,033 5,256 2,210
Recurring capital expenditures 9,300 10,365 9,334 10,309 4,862
Development, redevelopment and other activities (5) 1,292 2,161 768 1,247 946
Total capital expenditures $ 10,592 $ 12,526 $ 10,102 $ 11,556 $ 5,808
Average rentable sq. ft. during period (6) 10,968 10,986 10,844 10,701 10,700
Building improvements per average sq. ft. during period $ 0.27 $ 0.24 $ 0.28 $ 0.49 $ 0.21
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
PROPERT
Y
ACQUISITION
AND DISPOSITION INFORM
ATION SINCE JANUA
RY
1, 201
6
18
PROPERTY ACQUISITION AND DISPOSITION INFORMATION SINCE JANUARY 1, 2016
(dollars and sq. ft. in thousands, except per sq. ft. data)
Acquisitions:
Weighted
Average
Purchase Remaining
Date Number of Number of Purchase Price (1) / Cap Lease Percent
Acquired City and State Properties Buildings Sq. Ft. Price (1) Sq. Ft. Rate (2) Term (3) Leased (4) Major Tenant
1/29/2016 Sacramento, CA 1 1 338 $ 79,235 $ 234 7.2% 7.0 86.1% State of California
Total / Weighted Average 1 1 338 $ 79,235 $ 234 7.2% 7.0 86.1%
(1) Represents the purchase price, including assumed debt, if any, and excludes acquisition costs, amounts necessary to adjust assumed liabilities to their fair values and purchase
price allocations to intangibles.
(2) Represents the ratio of (x) annual straight line rental income, excluding the impact of above and below market lease amortization, based on existing leases at the acquisition date,
less estimated annual property operating expenses as of the date of acquisition, excluding depreciation and amortization expense, to (y) the acquisition purchase price, including the
principal amount of assumed debt, if any, and excluding acquisition related costs.
(3) Average remaining lease term in years weighted based on rental income as of the date of acquisition.
(4) Percent leased as of the date of acquisition.
Dispositions:
Date Number of Number of Sale
Sold City and State Properties Buildings Sq. Ft. Price (1) (2)
7/22/2016 Savannah, GA 1 1 35 $ 4,000
1 1 35 $ 4,000
(1) Represents the gross contract sale price and excludes closing costs.
(2) In connection with this sale, we provided $3.6 million of mortgage financing to the buyer.
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CALCUL
ATION OF PROPERT
Y NET OPER
ATING INCOME (NOI)
AND CASH BASIS NOI
19
CALCULATION OF PROPERTY NET OPERATING INCOME (NOI) AND CASH BASIS NOI (1)
(dollars in thousands)
(1) See Definitions of Certain Non-GAAP Financial Measures on page 23 for a definition of NOI and Cash Basis NOI, a description of why we believe they are appropriate supplemental measures and a description of how we use
these measures.
(2) Excludes one property (one building) classified as discontinued operations.
(3) We report 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 us by our tenants, as well as the net effect of non-cash amortization of intangible lease assets and liabilities.
(4) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our 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) Amount represents a non-cash loss recorded as a result of the closing price of RMR common stock being lower than our carrying amount per share on the day we distributed RMR common stock to our shareholders.
For the Three Months Ended For the Nine Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015 9/30/2016 9/30/2015
Calculation of NOI and Cash Basis NOI (2):
Rental income (3) $ 64,478 $ 64,061 $ 63,611 $ 61,685 $ 62,092 $ 192,150 $ 186,864
Property operating expenses (26,928) (24,505) (24,738) (24,981) (25,210) (76,171) (73,266)
Property net operating income (NOI) 37,550 39,556 38,873 36,704 36,882 115,979 113,598
Non-cash straight line rent adjustments included in rental income (3) (1,205) (435) (149) (1,159) (613) (1,789) (2,820)
Lease value amortization included in rental income (3) 370 425 307 293 298 1,103 862
Non-cash amortization included in property operating expenses (4) (121) (121) (121) (121) (125) (363) (125)
Cash Basis NOI $ 36,594 $ 39,425 $ 38,910 $ 35,717 $ 36,442 $ 114,930 $ 111,515
Reconciliation of NOI and Cash Basis NOI to Net Income (Loss):
Cash Basis NOI $ 36,594 $ 39,425 $ 38,910 $ 35,717 $ 36,442 $ 114,930 $ 111,515
Non-cash straight line rent adjustments included in rental income (3) 1,205 435 149 1,159 613 1,789 2,820
Lease value amortization included in rental income (3) (370) (425) (307) (293) (298) (1,103) (862)
Non-cash amortization included in property operating expenses (4) 121 121 121 121 125 363 125
NOI 37,550 39,556 38,873 36,704 36,882 115,979 113,598
Depreciation and amortization (18,404) (17,985) (18,324) (17,021) (17,161) (54,713) (51,675)
Acquisition related costs (147) (64) (152) (352) (270) (363) (459)
General and administrative (3,816) (4,008) (3,526) (3,395) (3,714) (11,350) (11,431)
Operating income 15,183 17,499 16,871 15,936 15,737 49,553 50,033
Dividend income 304 363 — 811 — 667 —
Interest income 47 10 6 — 2 63 14
Interest expense (12,608) (10,314) (9,364) (9,114) (9,137) (32,286) (27,894)
Gain on early extinguishment of debt — — 104 — 34 104 34
Loss on distribution to common shareholders of RMR common stock (5) — — — (12,368) — — —
Gain (loss) on issuance of shares by SIR 72 16 — — (21) 88 (42,145)
Loss on impairment of SIR investment — — — — — — (203,297)
Income tax (expense) benefit (13) (35) (15) (37) 13 (63) (49)
Equity in earnings of investees 8,668 9,400 9,934 2,568 10,294 28,002 16,072
Income (loss) from continuing operations 11,653 16,939 17,536 (2,204) 16,922 46,128 (207,232)
Loss from discontinued operations (154) (126) (149) (135) (11) (429) (390)
Income (loss) before gain on sale of property 11,499 16,813 17,387 (2,339) 16,911 45,699 (207,622)
Gain on sale of property 79 — — — — 79 —
Net income (loss) $ 11,578 $ 16,813 $ 17,387 $ (2,339) $ 16,911 $ 45,778 $ (207,622)
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CALCUL
ATION OF SAME PROPERT
Y NOI
AND CASH BASIS NOI
20
CALCULATION OF SAME PROPERTY NOI AND CASH BASIS NOI (1)
(dollars in thousands)
(1) See Definitions of Certain Non-GAAP Financial Measures on page 23 for a definition of NOI and Cash Basis NOI, a description of why we believe they are appropriate supplemental
measures and a description of how we use these measures.
(2) Excludes one property (one building) classified as discontinued operations.
(3) For the three months and nine months ended September 30, 2016, same property NOI and same property Cash Basis NOI are based on properties we owned as of September 30,
2016, and which we owned continuously since July 1, 2015 and January 1, 2015, respectively, excluding one property (one building) classified as discontinued operations.
(4) We report 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 us by our tenants, as well as the net effect of
non-cash amortization of intangible lease assets and liabilities.
(5) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our 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.
For the Three Months Ended For the Nine Months Ended
9/30/2016 9/30/2015 9/30/2016 9/30/2015
Reconciliation of Property NOI to Same Property NOI: (2) (3)
Rental income $ 64,478 $ 62,092 $ 192,150 $ 186,864
Property operating expenses (26,928) (25,210) (76,171) (73,266)
Property NOI 37,550 36,882 115,979 113,598
Less: NOI of properties not included in same property results (1,182) 38 (3,364) (970)
Same property NOI $ 36,368 $ 36,920 $ 112,615 $ 112,628
Calculation of Same Property Cash Basis NOI: (3)
Same property NOI $ 36,368 $ 36,920 $ 112,615 $ 112,628
Add: Lease value amortization included in rental income (4) 380 298 1,112 862
Less: Non-cash straight line rent adjustments included in rental income (4) (1,143) (612) (1,612) (2,909)
Non-cash amortization included in property operating expenses (5) (121) (121) (363) (121)
Same property Cash Basis NOI $ 35,484 $ 36,485 $ 111,752 $ 110,460
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CALCUL
ATION OF EBITD
A
AND
ADJUSTED EBITD
A
21
CALCULATION OF EBITDA AND ADJUSTED EBITDA (1)
(dollars in thousands)
(1) See Definitions of Certain Non-GAAP Financial Measures on page 23 for a definition of EBITDA and Adjusted EBITDA and a description of why we believe they are appropriate
supplemental measures. Adjustments were made to certain prior period amounts to conform to the current period Adjusted EBITDA calculation.
(2) Amounts represent the portion of business management fees that were payable in our common shares as well as equity compensation awarded to our trustees, officers and
certain other employees of RMR’s operating subsidiary, The RMR Group LLC. Beginning June 1, 2015, all business management fees are paid in cash.
(3) Amount represents a non-cash loss recorded as a result of the closing price of RMR common stock being lower than our carrying amount per share on the day we distributed
RMR common stock to our shareholders.
For the Three Months Ended For the Nine Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015 9/30/2016 9/30/2015
Net income (loss) $ 11,578 $ 16,813 $ 17,387 $ (2,339) $ 16,911 $ 45,778 $ (207,622)
Add: Interest expense 12,608 10,314 9,364 9,114 9,137 32,286 27,894
Income tax expense 13 35 15 37 — 63 62
Depreciation and amortization 18,404 17,985 18,324 17,021 17,161 54,713 51,675
Less: Income tax benefit — — — — (13) — (13)
EBITDA 42,603 45,147 45,090 23,833 43,196 132,840 (128,004)
Add: Acquisition related costs 147 64 152 352 270 363 459
General and administrative expense paid in common shares (2) 470 678 167 145 227 1,314 1,200
Loss on distribution to common shareholders of RMR common stock (3) — — — 12,368 — — —
Loss on issuance of shares by SIR — — — — 21 — 42,145
Loss on impairment of SIR investment — — — — — — 203,297
Distributions received from SIR 12,708 12,459 12,459 12,459 12,459 37,627 34,571
Less: Gain on early extinguishment of debt — — (104) — (34) (104) (34)
Equity in earnings of SIR (8,655) (9,383) (9,857) (2,618) (10,318) (27,895) (16,002)
Gain on issuance of shares by SIR (72) (16) — — — (88) —
Gain on sale of property (79) — — — — (79) —
Adjusted EBITDA $ 47,122 $ 48,949 $ 47,907 $ 46,539 $ 45,821 $ 143,978 $ 137,632
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
CALCUL
ATION OF FUNDS FROM OPER
ATIONS (FFO)
AND NORMALIZED FF
O
22
CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO (1)
(amounts in thousands, except per share data)
(1) See Definitions of Certain Non-GAAP Financial Measures on page 23 for a definition of FFO and Normalized FFO, a description of why we believe they are appropriate supplemental measures
and a description of how we use these measures.
(2) Amount represents a non-cash loss recorded as a result of the closing price of RMR common stock being lower than our carrying amount per share on the day we distributed RMR common stock
to our shareholders.
For the Three Months Ended For the Nine Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015 9/30/2016 9/30/2015
Net income (loss) $ 11,578 $ 16,813 $ 17,387 $ (2,339) $ 16,911 $ 45,778 $ (207,622)
Add: Depreciation and amortization 18,404 17,985 18,324 17,021 17,161 54,713 51,675
FFO attributable to SIR investment 17,264 17,887 18,458 12,144 17,780 53,609 43,961
Less: Equity in earnings of SIR (8,655) (9,383) (9,857) (2,618) (10,318) (27,895) (16,002)
Gain on sale of property (79) — — — — (79) —
FFO 38,512 43,302 44,312 24,208 41,534 126,126 (127,988)
Add: Acquisition related costs 147 64 152 352 270 363 459
Loss on distribution to common shareholders of RMR common stock (2) — — — 12,368 — — —
Loss on issuance of shares by SIR — — — — 21 — 42,145
Loss on impairment of SIR investment — — — — — — 203,297
Normalized FFO attributable to SIR investment 17,267 17,887 18,475 18,835 17,892 53,629 51,177
Less: FFO attributable to SIR investment (17,264) (17,887) (18,458) (12,144) (17,780) (53,609) (43,961)
Gain on early extinguishment of debt — — (104) — (34) (104) (34)
Gain on issuance of shares by SIR (72) (16) — — — (88) —
Normalized FFO $ 38,590 $ 43,350 $ 44,377 $ 43,619 $ 41,903 $ 126,317 $ 125,095
Weighted average common shares outstanding (basic) 71,054 71,038 71,031 71,030 71,004 71,041 70,589
Weighted average common shares outstanding (diluted) 71,084 71,061 71,031 71,030 71,021 71,064 70,589
Per common share amounts (basic and diluted):
Net income (loss) $ 0.16 $ 0.24 $ 0.24 $ (0.03) $ 0.24 $ 0.64 $ (2.94)
FFO $ 0.54 $ 0.61 $ 0.62 $ 0.34 $ 0.58 $ 1.78 $ (1.81)
Normalized FFO $ 0.54 $ 0.61 $ 0.62 $ 0.61 $ 0.59 $ 1.78 $ 1.77
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
NON-GAA
P FINANCIA
L MEASURES DEFINITION
S
23
DEFINITIONS OF CERTAIN NON-GAAP FINANCIAL MEASURES
Definition of NOI and Cash Basis NOI
We calculate NOI and Cash Basis NOI as shown on page 19. The calculations of NOI and Cash Basis NOI exclude certain components of net income (loss) in order to provide results
that are more closely related to our property level results of operations. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes
amortization of capitalized tenant improvement costs and leasing commissions because we record those amounts as depreciation and amortization. We define Cash Basis NOI as NOI
excluding non-cash straight line rent adjustments, lease value amortization and non-cash amortization included in other operating expenses. We consider NOI and Cash Basis NOI to be
appropriate supplemental measures to net income (loss) because they may help both investors and management to understand the operations of our properties. We use NOI and Cash
Basis NOI to evaluate individual and company wide property level performance, and we believe that NOI and Cash Basis NOI provide useful information to investors regarding our 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 our 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 (loss) or operating income as an indicator of our operating performance or as a measure of our liquidity. These measures should be considered in
conjunction with net income (loss) and operating income as presented in our Condensed Consolidated Statements of Income (Loss). Other REITs and real estate companies may
calculate NOI and Cash Basis NOI differently than we do.
Definition of EBITDA and Adjusted EBITDA
We calculate EBITDA and Adjusted EBITDA as shown on page 20. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our operating performance,
along with net income (loss) and operating income. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain
historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with our past
operating performance. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net
income (loss) or operating income as an indicator of operating performance or as a measure of GOV’s liquidity. These measures should be considered in conjunction with net income
(loss) and operating income as presented in our Condensed Consolidated Statements of Income (Loss). Other REITs and real estate companies may calculate EBITDA and Adjusted
EBITDA differently than we do.
Definition of FFO and Normalized FFO
We calculate FFO and Normalized FFO as shown on page 22. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is
net income (loss), 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 us. Our calculation of Normalized FFO differs from NAREIT's definition of FFO because we include the difference between FFO and Normalized FFO attributable to our equity
investment in SIR, we include 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 our core operating performance and the uncertainty as to whether any such business management incentive fees will
ultimately be payable when all contingencies for determining any such fees are determined at the end of the calendar year and we exclude acquisition related costs, gains or losses on
early extinguishment of debt, loss on impairment of SIR investment, gains or losses on issuance of shares by SIR and loss on distribution to common shareholders of RMR common
stock. We consider FFO and Normalized FFO to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss) and operating income. 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 may facilitate a comparison of our operating performance between periods and with other REITs. FFO 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 qualification for taxation as
a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating
performance, our receipt of distributions from SIR and our 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 (loss) or operating income as an indicator of our operating performance or as a
measure of our liquidity. These measures should be considered in conjunction with net income (loss) and operating income as presented in our Condensed Consolidated Statements of
Income (Loss). Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
PORTFOLIO INFORMATION
24
Stevens Center, Richland, WA
Square Feet: 140,152
Agency Occupant: Department of Energy
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
PORTFOLIO SUMMA
RY
25
PORTFOLIO SUMMARY (1)
As of September 30, 2016
(1) Excludes one property (one building) classified as discontinued operations.
(2) Rentable square footage is subject to changes when space is re-measured or re-configured for tenants.
(3) Percent leased includes (i) space being fitted out for 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.
(4) See page 19 for the calculation of NOI and Cash Basis NOI and a reconciliation of those amounts to net income (loss) determined in accordance with GAAP.
% of Total % Rental Income % NOI % Cash Basis NOI
Number of Number of Sq. Ft. Three Months Three Months Three Months
Properties Buildings Sq. Ft. (2) % Sq. Ft. % Leased (3) Leased Ended 9/30/2016 Ended 9/30/2016 (4) Ended 9/30/2016 (4)
Properties majority leased to the U.S. Government 46 60 7,208,577 65.8% 96.9% 67.1% 65.1% 68.3% 69.5%
Properties majority leased to state governments 19 25 2,935,519 26.8% 94.5% 26.7% 27.5% 24.8% 24.1%
Properties majority leased to other government tenants 2 2 377,104 3.4% 96.9% 3.5% 5.5% 5.7% 5.2%
Properties majority leased to non-government tenants 2 2 319,344 2.9% 86.6% 2.7% 1.9% 1.5% 1.5%
Other properties (currently vacant) 2 2 109,595 1.1% 0.0% 0.0% 0.0% (0.3%) (0.3%)
Total / Average 71 91 10,950,139 100.0% 95.0% 100.0% 100.0% 100.0% 100.0%
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
SUMMA
RY
CONSOLID
ATED
AND SAME PROPERT
Y RESU
LT
S
26
SUMMARY CONSOLIDATED AND SAME PROPERTY RESULTS – THIRD QUARTER
(dollars and sq. ft. in thousands)
(1) Based on properties we owned as of September 30, 2016, excluding one property (one building) classified as discontinued operations.
(2) Based on properties we owned as of September 30, 2016 and which we owned continuously since July 1, 2015, excluding one property (one building) classified as discontinued operations.
(3) Subject to changes when space is re-measured or re-configured for tenants.
(4) Percent leased includes (i) space being fitted out for 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.
(5) We report rental income on a straight line basis over the terms of the respective leases; accordingly, 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 us by our tenants, as well as the net effect of non-cash amortization of
intangible lease assets and liabilities.
(6) See page 19 for the calculation of NOI and Cash Basis NOI and a reconciliation of those amounts to net income (loss) determined in accordance with GAAP and see page 20 for a calculation and
reconciliation of same property NOI and same property Cash Basis NOI.
(7) NOI margin is defined as NOI as a percentage of rental income. Cash Basis NOI margin is defined as Cash Basis NOI as a percentage of cash basis rental income. Cash basis rental income
excludes non-cash straight line rent adjustments as well as the net effect of non-cash amortization of intangible lease assets and liabilities.
Summary Consolidated Results (1) Summary Same Property Results (2)
For the Three Months Ended For the Three Months Ended
9/30/2016 9/30/2015 9/30/2016 9/30/2015
Properties (end of period) 71 71 70 70
Total sq. ft. (3) 10,950 10,701 10,612 10,666
Percent leased (4) 95.0% 93.5% 95.2% 93.8%
Rental income (5) $ 64,478 $ 62,092 $ 62,298 $ 62,072
NOI (6) $ 37,550 $ 36,882 $ 36,368 $ 36,920
Cash Basis NOI (6) $ 36,594 $ 36,442 $ 35,484 $ 36,485
NOI % margin (7) 58.2% 59.4% 58.4% 59.5%
Cash Basis NOI % margin (7) 57.5% 59.0% 57.7% 59.1%
NOI % change 1.8% — (1.5%) —
Cash Basis NOI % change 0.4% — (2.7%) —
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
SUMMA
RY
CONSOLID
ATED
AND SAME PROPERT
Y RESU
LT
S
27
SUMMARY CONSOLIDATED AND SAME PROPERTY RESULTS – NINE MONTHS
(dollars and sq. ft. in thousands)
(1) Based on properties we owned as of September 30, 2016, excluding one property (one building) classified as discontinued operations.
(2) Based on properties we owned as of September 30, 2016 and which we owned continuously since January 1, 2015, excluding one property (one building) classified as discontinued operations.
(3) Subject to changes when space is re-measured or re-configured for tenants.
(4) Percent leased includes (i) space being fitted out for 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.
(5) We report rental income on a straight line basis over the terms of the respective leases; accordingly, 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 us by our tenants, as well as the net effect of non-cash amortization of
intangible lease assets and liabilities.
(6) See page 19 for the calculation of NOI and Cash Basis NOI and a reconciliation of those amounts to net income (loss) determined in accordance with GAAP and see page 20 for a calculation and
reconciliation of same property NOI and same property Cash Basis NOI.
(7) NOI margin is defined as NOI as a percentage of rental income. Cash Basis NOI margin is defined as Cash Basis NOI as a percentage of cash basis rental income. Cash basis rental income
excludes non-cash straight line rent adjustments as well as the net effect of non-cash amortization of intangible lease assets and liabilities.
Summary Consolidated Results (1) Summary Same Property Results (2)
For the Nine Months Ended For the Nine Months Ended
9/30/2016 9/30/2015 9/30/2016 9/30/2015
Properties (end of period) 71 71 70 70
Total sq. ft. (3) 10,950 10,701 10,612 10,666
Percent leased (4) 95.0% 93.5% 95.2% 93.8%
Rental income (5) $ 192,150 $ 186,864 $ 186,297 $ 185,062
NOI (6) $ 115,979 $ 113,598 $ 112,615 $ 112,628
Cash Basis NOI (6) $ 114,930 $ 111,515 $ 111,752 $ 110,460
NOI % margin (7) 60.4% 60.8% 60.4% 60.9%
Cash Basis NOI % margin (7) 60.0% 60.3% 60.1% 60.4%
NOI % change 2.1% — 0.0% —
Cash Basis NOI % change 3.1% — 1.2% —
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
OCCU
PANC
Y
AND LEASING SUMMA
RY
28
OCCUPANCY AND LEASING SUMMARY (1)
(dollars and sq. ft. in thousands, except per sq. ft. data)
(1) Excludes one property (one building) classified as discontinued operations.
(2) Rentable square footage is subject to changes when space is re-measured or re-configured for tenants.
(3) Rentable square footage includes a 25.6 square foot expansion to be constructed at an existing property prior to the commencement of the lease.
(4) Percent difference in prior rents charged for same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition. Rents include estimated recurring expense
reimbursements paid to us, exclude lease value amortization and are net of lease concessions.
(5) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
The above leasing summary is based on leases entered into during the periods indicated.
As of and for the Three Months Ended
9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015
Properties (end of period) 71 72 72 71 71
Total sq. ft. (2) 10,950 10,985 10,985 10,701 10,701
Percentage leased 95.0% 94.2% 94.9% 94.5% 93.5%
Leasing Activity (sq. ft.):
Government tenants 62 515 461 (3) 191 155
Non-government tenants 74 52 62 14 52
Total 136 567 523 205 207
% Change in GAAP Rent (4):
Government tenants 10.5% 4.7% 14.4% (13.4%) 17.4%
Non-government tenants (3.8%) 1.2% (2.3%) (7.6%) 0.6%
Total 2.0% 4.4% 12.4% (13.1%) 10.7%
Leasing Cost and Concession Commitments (5):
Government tenants $ 1,087 $ 10,593 $ 18,420 $ 11,158 $ 150
Non-government tenants 2,341 543 2,049 182 1,598
Total $ 3,428 $ 11,136 $ 20,469 $ 11,340 $ 1,748
Leasing Cost and Concession Commitments per Sq. Ft. (5):
Government tenants $ 17.38 $ 20.57 $ 39.99 $ 58.45 $ 0.96
Non-government tenants $ 31.67 $ 10.50 $ 32.87 $ 13.06 $ 30.55
Total $ 25.12 $ 19.65 $ 39.14 $ 55.36 $ 8.43
Weighted Average Lease Term by Sq. Ft. (years):
Government tenants 6.9 10.7 12.0 6.5 2.4
Non-government tenants 6.6 3.7 8.1 5.1 6.0
Total 6.8 10.1 11.6 6.4 3.3
Leasing Cost and Concession Commitments per Sq. Ft. per Year:
Government tenants $ 2.50 $ 1.92 $ 3.32 $ 9.00 $ 0.40
Non-government tenants $ 4.77 $ 2.85 $ 4.04 $ 2.56 $ 5.10
Total $ 3.71 $ 1.96 $ 3.38 $ 8.65 $ 2.56
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
LEASING
ANA
LYSIS B
Y TENANT TYP
E
29
LEASING ANALYSIS BY TENANT TYPE (1)
(1) Excludes one property (one building) classified as discontinued operations.
(2) Rentable sq. ft. leased is pursuant to leases existing as of the measurement date and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased, but is
not occupied or is being offered for sublease, if any, as of the measurement date. Sq. ft. measurements are subject to changes when space is re-measured or re-configured for
new tenants.
(3) Rentable square footage excludes a 25,579 square foot expansion to be constructed at an existing property prior to the commencement of the lease.
Sq. Ft. During the Three Months Ended 9/30/2016
Sq. Ft. Leased % of Sq. Ft. Lease New Net Sq. Ft. Leased % of Sq. Ft.
As of Leased as of Leases Renewals Leases Acquisitions/ As of Leased as of
Tenant Type 6/30/2016 (2)(3) 6/30/2016 (2)(3) Expired Executed Executed Dispositions 9/30/2016 (2)(3) 9/30/2016 (2)(3)
U.S. Government 6,694,081 64.7% (49,602) 49,602 1,599 — 6,695,680 64.3%
State Government 2,442,029 23.6% (8,378) 8,178 — — 2,441,829 23.5%
Other Government 298,655 2.9% — — 3,173 — 301,828 2.9%
Non-Government 912,592 8.8% (24,050) 18,115 55,799 — 962,456 9.3%
10,347,357 100.0% (82,030) 75,895 60,571 — 10,401,793 100.0%
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
TENANT LIS
T
30
TENANT LIST (1)
As of September 30, 2016
(1) Amounts exclude one property (one building) classified as discontinued operations.
(2) Rentable sq. ft. is pursuant to leases existing as of September 30, 2016, and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased but is not occupied or is being offered for sublease, if any. Rentable
sq. ft. measurements are subject to changes when space is re-measured or re-configured for new tenants.
(3) Percentage of annualized rental income is calculated using annualized contractual base rents from our tenants pursuant to our lease agreements as of September 30, 2016, plus straight line rent adjustments and estimated recurring
expense reimbursements to be paid to us, and excluding lease value amortization.
(4) Agency occupant cannot be disclosed.
(5) Rentable square footage excludes a 25,579 square foot expansion to be constructed at an existing property prior to the commencement of the lease.
% of Total % of % of Total % of
Rentable Rentable Annualized Rentable Rentable Annualized
Tenant / Agency Sq. Ft. (2) Sq. Ft. (2) Rental Income (3) Tenant Sq. Ft. (2) Sq. Ft. (2) Rental Income (3)
U.S. Government: State Governments:
1 Internal Revenue Service 1,041,806 9.5% 8.3% 1 State of California - nine agency occupants 699,695 6.4% 7.7%
2 Citizenship and Immigration Services 448,607 4.1% 8.2% 2 Commonwealth of Massachusetts - three agency occupants 307,119 2.8% 3.7%
3 U.S. Government (4) 406,388 3.7% 4.8% 3 State of Georgia - Department of Transportation 293,035 2.7% 2.5%
4 Federal Bureau of Investigation 304,425 2.8% 3.4% 4 Commonwealth of Virginia - seven agency occupants 255,241 2.3% 2.2%
5 Centers for Disease Control (5) 352,876 3.2% 3.1% 5 State of New Jersey - Department of Treasury 173,189 1.6% 1.8%
6 Department of Justice 227,201 2.1% 3.0% 6 State of Oregon - two agency occupants 199,018 1.8% 1.8%
7 Customs and Border Protection 243,162 2.2% 2.7% 7 State of Washington - Social and Health Services 111,908 1.0% 1.0%
8 Bureau of Land Management 304,831 2.8% 2.4% 8 State of Arizona - Northern Arizona University 66,743 0.6% 0.6%
9 Department of Veterans Affairs 280,699 2.6% 2.4% 9 State of South Carolina - four agency occupants 121,561 1.1% 0.5%
10 Defense Intelligence Agency 266,000 2.4% 2.1% 10 State of Maryland - two agency occupants 84,674 0.8% 0.5%
11 Immigration and Customs Enforcement 128,725 1.2% 1.9% 11 State of Minnesota - Minnesota State Lottery 61,426 0.6% 0.4%
12 Social Security Administration 189,645 1.7% 1.8% 12 State of New York - Department of Agriculture 64,000 0.6% 0.4%
13 Bureau of Reclamation 212,996 1.9% 1.8% 13 State of Kansas - Kansas University 4,220 0.0% 0.0%
14 National Park Service 166,745 1.5% 1.8% Subtotal State Government 2,441,829 22.3% 23.2%
15 U.S. Courts 115,366 1.1% 1.7% 3 Other Government Tenants 301,828 2.8% 5.3%
16 Department of Health and Human Services 128,645 1.2% 1.3% 146 Non-Government Tenants 962,456 8.8% 7.6%
17 National Archives and Record Administration 352,064 3.2% 1.2% Subtotal Leased Rentable Square Feet 10,401,793 95.0% 100.0%
18 Drug Enforcement Agency 93,177 0.9% 1.2% Available for Lease 548,346 5.0% —%
19 Department of Energy 140,152 1.3% 1.1% Total Rentable Square Feet 10,950,139 100.0% 100.0%
20 Defense Nuclear Facilities Board 60,133 0.5% 1.1%
21 Department of State 89,058 0.8% 1.0%
22 U.S. Postal Service 321,800 2.9% 0.9%
23 Occupational Health and Safety Administration 57,770 0.5% 0.8%
24 Bureau of the Fiscal Service 98,073 0.9% 0.7%
25 Centers for Medicare and Medicaid Services 78,361 0.7% 0.7%
26 Military Entrance Processing Station 56,931 0.5% 0.7%
27 Department of Housing and Urban Development 82,497 0.8% 0.6%
28 Environmental Protection Agency 43,232 0.4% 0.6%
29 Department of the Army 228,108 2.1% 0.6%
30 General Services Administration 20,535 0.2% 0.4%
31 Bureau of Prisons 51,138 0.5% 0.4%
32 Food and Drug Administration 33,398 0.3% 0.4%
33 Department of Defense 31,030 0.3% 0.3%
34 Equal Employment Opportunity Commission 21,008 0.2% 0.2%
35 Small Business Administration 8,575 0.1% 0.1%
36 U.S. Coast Guard 4,064 0.0% 0.0%
37 Department of Labor 6,459 0.1% 0.0%
Subtotal U.S. Government 6,695,680 61.1% 63.9%
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
LEASE EXPIR
ATION SCHEDUL
E
31
LEASE EXPIRATION SCHEDULE (1)
(dollars in thousands)
As of September 30, 2016
(1) Excludes one property (one building) classified as discontinued operations.
(2) The year of lease expiration is pursuant to current contract terms. Some of our government tenants have the right to vacate their space before the stated expirations of their
leases. In addition, certain of our government tenants have the right to terminate their leases if their respective legislature or other funding authority does not appropriate rent
in their respective annual budgets.
(3) Sq. ft. is pursuant to leases existing as of September 30, 2016, and includes (i) space being fitted out for occupancy, if any, and (ii) space which is leased, but is not occupied
or is being offered for sublease, if any. Sq. ft. measurements are subject to changes when space is re-measured or re-configured for new tenants.
(4) Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of September 30, 2016, plus straight
line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excludes lease value amortization.
(5) Square footage excludes a 25,579 square foot expansion to be constructed at an existing property prior to the commencement of the lease.
Number of Tenants Expiration of leased Cumulative % Annualized Rental % of Cumulative %
Year (2) Expiring square feet (3) % of Total of Total Income Expiring (4) Annualized Total of Total
2016 20 494,157 4.8% 4.8% $ 21,738 8.5% 8.5%
2017 36 796,454 7.7% 12.5% 16,755 6.5% 15.0%
2018 39 1,067,705 10.3% 22.8% 29,612 11.6% 26.6%
2019 38 1,644,650 15.8% 38.6% 43,215 16.9% 43.5%
2020 33 1,307,618 12.6% 51.2% 31,072 12.1% 55.6%
2021 37 1,058,636 10.2% 61.4% 20,759 8.1% 63.7%
2022 16 710,006 6.8% 68.2% 15,414 6.0% 69.7%
2023 14 536,625 5.2% 73.4% 12,326 4.8% 74.5%
2024 13 960,838 9.2% 82.6% 21,841 8.5% 83.0%
2025 and thereafter 33 1,825,104 (5) 17.4% 100.0% 43,349 17.0% 100.0%
Total 279 10,401,793 100.0% $ 256,081 100.0%
Weighted average remaining
lease term (in years) 5.0 4.8
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
EXHIBIT
32
75 Pleasant Street, Malden, MA
Square Feet: 125,521
Occupant: Department of Education, Commonwealth
of Massachusetts
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
PROPERT
Y DE
TAI
L
33
EXHIBIT APROPERTY DETAIL (1)
(sorted by location)
As of September 30, 2016
(dollars in thousands)
See notes on page 34.
Weighted
Average Year
Annualized Built or
No. of Primary Rentable Rental Undepreciated Depreciated Date Substantially
Property Location Buildings Tenant Type Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovated (4)
1 131 Clayton Street Montgomery, AL 1 Federal 57,815 100.0% $ 1,437 $ 10,020 $ 8,826 6/22/2011 2007
2 4344 Carmichael Road Montgomery, AL 1 Federal 49,370 100.0% 1,514 13,032 12,231 12/17/2013 2009
3 15451 North 28th Avenue Phoenix, AZ 1 State 66,743 100.0% 1,416 9,390 9,002 9/10/2014 2013
4 711 14th Avenue Safford, AZ 1 Federal 36,139 94.4% 912 12,433 10,586 6/16/2010 1992
5 5045 East Butler Street Fresno, CA 1 Federal 531,976 100.0% 8,384 68,452 46,865 8/29/2002 1971
6 10949 N. Mather Boulevard Rancho Cordova, CA 1 State 93,807 100.0% 2,609 17,581 16,347 10/30/2013 2012
7 9800 Goethe Road Sacramento, CA 1 State 110,500 100.0% 2,102 15,304 12,654 12/23/2009 1993
8 9815 Goethe Road Sacramento, CA 1 State 87,863 100.0% 1,953 12,438 11,066 9/14/2011 1992
9 Capitol Place Sacramento, CA 1 State 163,840 92.4% 4,685 42,602 36,042 12/17/2009 1988
10 801 K Street Sacramento, CA 1 State 337,811 89.8% 9,722 69,056 68,026 1/29/2016 2002
11 4181 Ruffin Road San Diego, CA 1 Federal 141,634 83.0% 3,019 19,530 16,933 7/16/2010 1981
12 4560 Viewridge Road San Diego, CA 1 Federal 93,177 100.0% 3,119 24,352 15,236 3/31/1997 1996
13 Sky Park Centre San Diego, CA 1 Federal 43,918 70.7% 868 7,903 5,808 6/24/2002 1986
14 Turning Basin Business Park Stockton, CA 1 Federal 22,012 100.0% 972 6,033 5,463 7/20/2012 2012
15 16194 West 45th Street Golden, CO 1 Federal 43,232 100.0% 1,579 7,102 4,030 3/31/1997 1997
16 12795 West Alameda Parkway Lakewood, CO 1 Federal 166,745 100.0% 4,489 27,462 23,316 1/15/2010 1988
17 Corporate Center Lakewood, CO 3 Federal 212,996 100.0% 4,548 34,273 23,834 10/11/2002 1996
18 20 Massachusetts Avenue Washington, DC 1 Federal 340,119 100.0% 17,537 84,502 53,564 3/31/1997 1996
19 625 Indiana Avenue Washington, DC 1 Federal 160,897 94.3% 7,764 57,423 52,462 8/17/2010 1989
20 7850 Southwest 6th Court Plantation, FL 1 Federal 135,819 100.0% 4,869 35,775 31,555 5/12/2011 1999
21 8900 Grand Oak Circle Tampa, FL 1 Federal 67,916 100.0% 1,872 13,042 11,252 10/15/2010 2008
22 181 Spring Street NW Atlanta, GA 1 Federal 90,688 100.0% 3,713 25,736 23,651 7/25/2012 2007
23 Corporate Square Atlanta, GA 5 Federal 352,876 (5) 100.0% 7,823 40,833 30,706 7/16/2004 1967
24 Executive Park Atlanta, GA 1 Non-Govt 125,788 100.0% 1,608 17,216 12,901 7/16/2004 1972
25 One Georgia Center Atlanta, GA 1 State 375,952 89.3% 7,188 38,630 35,059 9/30/2011 2008
26 4712 Southpark Boulevard Ellenwood, GA 1 Federal 352,064 100.0% 3,134 21,051 19,005 7/25/2012 2005
27 South Vinnell Way Boise, ID 3 Federal 180,952 100.0% 4,647 33,208 30,158 9/11/2012 1997
28 2020 S. Arlington Heights Arlington Heights, IL 1 Federal 57,770 100.0% 2,120 15,536 13,048 12/29/2009 1988
29 Intech Park Indianapolis, IN 3 Federal 433,924 94.9% 10,147 75,821 66,701 10/14/2011 2003
30 400 State Street Kansas City, KS 1 Federal 170,817 91.7% 3,030 13,529 11,668 6/16/2010 1971
31 7125 Industrial Road Florence, KY 1 Federal 167,939 100.0% 2,539 13,438 12,338 12/31/2012 2002
32 251 Causeway Street Boston, MA 1 State 132,876 100.0% 4,020 23,639 20,902 8/17/2010 1988
33 75 Pleasant Street Malden, MA 1 State 125,521 100.0% 4,964 32,268 27,301 5/24/2010 2008
34 25 Newport Avenue Quincy, MA 1 State 92,549 100.0% 2,086 12,671 11,345 2/16/2011 2009
35 One Montvale Avenue Stoneham, MA 1 Federal 97,777 94.1% 2,480 14,042 12,189 6/16/2010 1987
36 4201 Patterson Avenue Baltimore, MD 1 State 84,674 100.0% 1,270 12,469 8,469 10/15/1998 1989
37 20400 Century Boulevard Germantown, MD 1 Vacant 80,550 0.0% — 12,736 7,777 3/31/1997 1995
38 3300 75th Avenue Landover, MD 1 Federal 266,000 100.0% 5,290 41,038 34,964 2/26/2010 2004
39 1401 Rockville Pike Rockville, MD 1 Other Government 190,044 93.8% 4,528 48,019 33,291 2/2/1998 1986
Government Properties Income Trust
Supplemental Operating and Financial Data,September 30, 2016
PROPERT
Y DE
TAI
L (Continued
)
34
EXHIBIT APROPERTY DETAIL (1)
(sorted by location)
(1) Excludes one property (one building) classified as discontinued operations.
(2) Annualized rental income is calculated using annualized contractual base rents from our tenants pursuant to our lease agreements as of September 30, 2016, plus straight line rent adjustments and estimated
recurring expense reimbursements to be paid to us, and excluding lease value amortization.
(3) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in June 2009 as part of our initial
public offering.
(4) Weighted based on rentable square feet.
(5) Rentable square footage excludes a 25,579 square foot expansion to be constructed at an existing property prior to the commencement of the lease.
As of September 30, 2016
(dollars in thousands)
Weighted
Average Year
Annualized Built or
No. of Primary Rentable Rental Undepreciated Depreciated Date Substantially
Property Location Buildings Tenant Type Sq. Ft. % Leased Income (2) Carrying Value Carrying Value Acquired (3) Renovated (4)
40 2115 East Jefferson Street Rockville, MD 1 Federal 128,645 100.0% $ 3,331 $ 14,708 $ 13,841 8/27/2013 2003
41 Rutherford Business Park Windsor Mill, MD 1 Federal 80,398 100.0% 1,902 11,816 10,837 11/16/2012 2011
42 Meadows Business Park Woodlawn, MD 2 Federal 182,561 84.3% 3,211 26,087 23,010 2/15/2011 1996
43 11411 E. Jefferson Avenue Detroit, MI 1 Federal 55,966 100.0% 2,714 18,644 15,756 4/23/2010 2009
44 330 South Second Avenue Minneapolis, MN 1 Non-Govt 193,556 77.9% 2,844 31,716 27,534 7/16/2010 2013
45 Rosedale Corporate Plaza Roseville, MN 1 State 61,426 100.0% 1,126 8,182 5,335 12/1/1999 1987
46 1300 Summit Street Kansas City, MO 1 Federal 86,739 100.0% 2,070 15,073 13,848 9/27/2012 1998
47 4241-4300 NE 34th Street Kansas City, MO 1 Federal 98,073 100.0% 1,902 10,494 6,896 3/31/1997 1995
48 1220 Echelon Parkway Jackson, MS 1 Federal 109,819 100.0% 3,784 25,946 23,286 7/25/2012 2009
49 10-12 Celina Avenue Nashua, NH 1 Federal 321,800 100.0% 2,310 17,423 14,874 8/31/2009 1997
50 50 West State Street Trenton, NJ 1 State 266,995 85.8% 6,200 45,024 39,362 12/30/2010 1989
51 435 Montano Boulevard Albuquerque, NM 1 Vacant 29,045 0.0% — 2,418 2,158 7/16/2010 1986
52 138 Delaware Avenue Buffalo, NY 1 Federal 121,711 84.9% 2,599 28,311 18,191 3/31/1997 2013
53 Airline Corporate Center Colonie, NY 1 State 64,000 100.0% 1,066 7,203 6,523 6/22/2012 2004
54 5000 Corporate Court Holtsville, NY 1 Federal 264,482 84.9% 5,930 26,283 23,845 8/31/2011 2000
55 305 East 46th Street New York, NY 1 Other Government 187,060 100.0% 11,114 106,651 97,652 5/27/2011 2008
56 4600 25th Avenue Salem, OR 1 State 233,358 97.8% 5,151 28,666 25,604 12/20/2011 2007
57 Synergy Business Park Columbia, SC 3 State 180,703 91.2% 2,124 17,298 14,358 5/10/2006;9/17/2010 1984
58 One Memphis Place Memphis, TN 1 Federal 204,694 77.6% 3,072 9,588 8,487 9/17/2010 1985
59 701 Clay Road Waco, TX 1 Federal 137,782 100.0% 2,192 13,508 8,914 12/23/1997 1997
60 Enterchange at Meadowville Chester, VA 1 Federal 228,108 100.0% 1,517 11,327 10,576 8/28/2013 2011
61 3920 Pender Drive Fairfax, VA 1 Federal 83,130 100.0% 2,440 15,815 15,013 3/21/2014 2011
62 Pender Business Park Fairfax, VA 4 State 171,061 96.2% 4,063 24,104 22,478 11/4/2013 2000
63 1759 & 1760 Business Center Drive Reston, VA 2 Federal 406,388 100.0% 12,343 89,630 85,006 5/28/2014 1996
64 9960 Mayland Drive Richmond, VA 1 State 173,932 94.4% 3,338 19,609 18,653 5/20/2014 1994
65 Aquia Commerce Center Stafford, VA 2 Federal 64,656 100.0% 1,872 10,203 9,190 6/22/2011 1998
66 65 Bowdoin Street S. Burlington, VT 1 Federal 26,609 100.0% 1,113 9,236 7,851 4/9/2010 2009
67 840 North Broadway Everett, WA 2 State 111,908 100.0% 2,657 20,037 18,244 6/28/2012 1988
68 Stevens Center Richland, WA 2 Federal 140,152 100.0% 2,812 22,113 13,589 3/31/1997 1995
69 11050 West Liberty Drive Milwaukee, WI 1 Federal 29,297 100.0% 795 5,587 4,971 6/9/2011 2006
70 2029 Stonewall Jackson Drive Falling Waters, WV 1 Federal 40,348 100.0% 777 5,056 3,077 3/31/1997 1993
71 5353 Yellowstone Road Cheyenne, WY 1 Federal 122,647 100.0% 1,755 10,660 6,497 3/31/1997 1995
91 10,950,139 95.0% $ 256,081 $ 1,788,001 $ 1,502,027