NEWTON, Mass.--(BUSINESS WIRE)--
Government Properties Income Trust (NYSE: GOV) today announced its
financial results for the quarter and nine months ended September 30,
2013.
Results for the Quarter Ended September 30, 2013:
Normalized funds from operations, or Normalized FFO, for the quarter
ended September 30, 2013 were $27.9 million, or $0.51 per share,
compared to Normalized FFO for the quarter ended September 30, 2012 of
$25.6 million, or $0.54 per share.
Net income was $2.0 million, or $0.04 per share, for the quarter ended
September 30, 2013 compared to $11.8 million, or $0.25 per share, for
the quarter ended September 30, 2012. Net income for the quarter ended
September 30, 2013 includes a loss on asset impairment from discontinued
operations of $10.1 million, or $0.19 per share.
The weighted average number of common shares outstanding was 54.7
million and 47.1 million for the quarters ended September 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 September 30, 2013 and
2012 appears later in this press release.
Results for the Nine Months Ended September 30, 2013:
Normalized FFO for the nine months ended September 30, 2013 were $87.6
million, or $1.60 per share, compared to Normalized FFO for the nine
months ended September 30, 2012 of $75.1 million, or $1.60 per share.
Net income was $41.9 million, or $0.77 per share, for the nine months
ended September 30, 2013 compared to $36.8 million, or $0.78 per share,
for the nine months ended September 30, 2012. Net income for the nine
months ended September 30, 2013 includes a net gain on sale of
properties from discontinued operations of $8.2 million, or $0.15 per
share, and a loss on asset impairment from discontinued operations of
$10.1 million, or $0.19 per share.
The weighted average number of common shares outstanding was 54.7
million and 47.1 million for the nine months ended September 30, 2013
and 2012, respectively.
A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the nine months ended September 30, 2013 and 2012
appears later in this press release.
Occupancy and Leasing Results:
As of September 30, 2013, 94.6% of GOV's rentable square feet from
continuing operations was leased, compared to 93.5% as of September 30,
2012, and 94.1% as of June 30, 2013.
GOV entered into lease renewals for 176,008 rentable square feet and new
leases for 69,438 rentable square feet during the quarter ended
September 30, 2013 which had weighted average rental rates that were
approximately 10.6% above prior rents for the same space or, in the case
of space acquired vacant, market rental rates for similar space in the
building at the date of acquisition. The weighted average lease term
based on square feet for leases entered into during the quarter ended
September 30, 2013 was 7.8 years. Commitments for tenant improvements,
leasing costs and concessions for leases entered into during the quarter
ended September 30, 2013 totaled approximately $6.3 million, or $3.28
per square foot per year of the lease term.
Recent Acquisition and Sales Activities:
Since July 1, 2013, GOV has acquired or has entered agreements to
acquire eight properties for an aggregate purchase price of $99.1
million, excluding acquisition costs, as follows:
-
In August 2013, GOV acquired a previously disclosed warehouse property
located in Chester, VA with 228,108 rentable square feet. This
property is 100% leased to the U.S. Government and occupied by the
United States Army. The purchase price was $12.5 million, excluding
acquisition costs.
-
Also in August 2013, GOV acquired an office property located in
Bethesda, MD with 128,645 rentable square feet. This property is 100%
leased to the U.S. Government and occupied by the National Institutes
of Health. The purchase price was $18.3 million, excluding acquisition
costs.
-
In September 2013, GOV entered an agreement to acquire an office
property located in Rancho Cordova, CA with 93,807 rentable square
feet. This property is 100% leased to the State of California and
occupied by the Department of Consumer Affairs. The contract purchase
price is $20.7 million, excluding acquisition costs.
-
Also in September 2013, GOV entered an agreement to acquire four
office properties located in Fairfax, VA with a combined total of
170,940 rentable square feet. These properties are 100% leased to
eight tenants, of which 51% is leased to the Commonwealth of Virginia
and occupied by Northern Virginia Community College. The contract
purchase price is $31.5 million, excluding acquisition costs.
-
In October 2013, GOV entered an agreement to acquire an office
property located in Montgomery, AL with 49,370 rentable square feet.
This property is 100% leased to the U.S. Government and occupied by
the Social Security Administration. The contract purchase price is
$16.1 million, excluding acquisition costs.
GOV is currently marketing for sale three office properties located in
Phoenix, AZ, San Diego, CA, and Falls Church, VA with a combined total
of 356,163 rentable square feet which are included in discontinued
operations and classified as held for sale as of September 30, 2013. The
aggregate net book value of these properties, after recording a $10.1
million loss on asset impairment during the third quarter of 2013,
totaled $25.6 million at September 30, 2013.
Conference Call:
On Tuesday, October 29, 2013, at 1:00p.m. Eastern Time, David Blackman,
President and Chief Operating Officer, and Mark Kleifges, Treasurer and
Chief Financial Officer, will host a conference call to discuss the
third quarter 2013 results.
The conference call telephone number is (800) 553-5275. Participants
calling from outside the United States and Canada should dial (612)
332-0932. 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 Tuesday, November 5, 2013.
To hear the replay, dial (320) 365-3844. The replay pass code is 305212.
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 third
quarter conference call are strictly prohibited without the prior
written consent of GOV.
Supplemental Data:
A copy of GOV's Third 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.
GOV 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. GOV is headquartered in
Newton, Massachusetts.
Please see the following pagesfor 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
REFORMACT 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 LOOKING STATEMENTS ARE BASED UPON GOV'S
PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS
ARE NOT GUARANTEED TO OCCUR AND MAYNOT OCCUR. GOV'S ACTUAL RESULTS
MAYDIFFER 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 AGREEMENTS TO PURCHASE
SIX PROPERTIES. THESE TRANSACTIONS ARE 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, THESE TRANSACTIONS MAY NOT OCCUR, MAY BE DELAYED OR
THEIR TERMS MAY CHANGE.
-
THIS PRESS RELEASE STATES THAT GOV HAS THREE PROPERTIES CLASSIFIED AS
HELD FOR SALE AS OF SEPTEMBER 30, 2013 AND THAT THE AGGREGATE NET BOOK
VALUE OF THESE PROPERTIES TOTALED $25.6 MILLION. IMPLICATIONS OF THOSE
STATEMENTS MAY BE THAT GOV WILL SELL THOSE PROPERTIES FOR AT LEAST
$25.6 MILLION. HOWEVER, GOV MAY NOT BE ABLE TO SELL ANY OF THESE
PROPERTIES OR MAY SELL THE PROPERTIES AT AMOUNTS THAT ARE LESS THAN
THEIR CURRENT CARRYING VALUES.
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.
(END)
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GOVERNMENT PROPERTIES INCOME TRUST
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM
OPERATIONS AND
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NORMALIZED FUNDS FROM OPERATIONS
|
|
(amounts in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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Three Months Ended September 30,
|
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|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
56,401
|
|
|
$
|
52,426
|
|
|
|
$
|
168,639
|
|
|
$
|
149,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate taxes
|
|
|
6,255
|
|
|
|
5,498
|
|
|
|
|
19,060
|
|
|
|
16,520
|
|
|
Utility expenses
|
|
|
5,355
|
|
|
|
4,801
|
|
|
|
|
13,064
|
|
|
|
12,035
|
|
|
Other operating expenses
|
|
|
10,169
|
|
|
|
9,171
|
|
|
|
|
29,288
|
|
|
|
26,667
|
|
|
Depreciation and amortization
|
|
|
14,032
|
|
|
|
12,537
|
|
|
|
|
40,960
|
|
|
|
35,642
|
|
|
Acquisition related costs
|
|
|
1,562
|
|
|
|
763
|
|
|
|
|
1,701
|
|
|
|
1,057
|
|
|
General and administrative
|
|
|
2,941
|
|
|
|
3,529
|
|
|
|
|
9,350
|
|
|
|
9,071
|
|
|
|
Total expenses
|
|
|
40,314
|
|
|
|
36,299
|
|
|
|
|
113,423
|
|
|
|
100,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
16,087
|
|
|
|
16,127
|
|
|
|
|
55,216
|
|
|
|
48,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
10
|
|
|
|
7
|
|
|
|
|
20
|
|
|
|
21
|
|
Interest expense (including net amortization of debt premiums and
deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financing fees of $339, $339, $1,002 and $998, respectively)
|
|
|
(4,176)
|
|
|
|
(4,530)
|
|
|
|
|
(12,388)
|
|
|
|
(12,649)
|
|
Equity in earnings of an investee
|
|
|
64
|
|
|
|
115
|
|
|
|
|
219
|
|
|
|
236
|
|
Income from continuing operations before income tax benefit (expense)
|
|
|
11,985
|
|
|
|
11,719
|
|
|
|
|
43,067
|
|
|
|
35,687
|
|
Income tax benefit (expense)
|
|
|
36
|
|
|
|
(30)
|
|
|
|
|
(50)
|
|
|
|
(119)
|
|
Net income from continuing operations
|
|
|
12,021
|
|
|
|
11,689
|
|
|
|
|
43,017
|
|
|
|
35,568
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from discontinued operations
|
|
|
(10,055)
|
|
|
|
67
|
|
|
|
|
(1,121)
|
|
|
|
1,201
|
|
Net income
|
|
$
|
1,966
|
|
|
$
|
11,756
|
|
|
|
$
|
41,896
|
|
|
$
|
36,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Funds from Operations (FFO) and Normalized FFO:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,966
|
|
|
$
|
11,756
|
|
|
|
$
|
41,896
|
|
|
$
|
36,769
|
|
Plus: depreciation and amortization from continuing operations
|
|
|
14,032
|
|
|
|
12,537
|
|
|
|
|
40,960
|
|
|
|
35,642
|
|
Plus: depreciation and amortization from discontinued operations
|
|
|
242
|
|
|
|
519
|
|
|
|
|
1,026
|
|
|
|
1,639
|
|
Plus: loss on asset impairment from discontinued operations
|
|
|
10,142
|
|
|
|
-
|
|
|
|
|
10,142
|
|
|
|
-
|
|
Less: net gain on sale of properties from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(8,168)
|
|
|
|
-
|
|
FFO
|
|
|
26,382
|
|
|
|
24,812
|
|
|
|
|
85,856
|
|
|
|
74,050
|
|
Plus: acquisition related costs
|
|
|
1,562
|
|
|
|
763
|
|
|
|
|
1,701
|
|
|
|
1,057
|
|
Normalized FFO
|
|
$
|
27,944
|
|
|
$
|
25,575
|
|
|
|
$
|
87,557
|
|
|
$
|
75,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
54,684
|
|
|
|
47,108
|
|
|
|
|
54,666
|
|
|
|
47,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.22
|
|
|
$
|
0.25
|
|
|
|
$
|
0.79
|
|
|
$
|
0.76
|
|
|
Income (loss) from discontinued operations
|
|
$
|
(0.18)
|
|
|
$
|
-
|
|
|
|
$
|
(0.02)
|
|
|
$
|
0.03
|
|
|
Net income
|
|
$
|
0.04
|
|
|
$
|
0.25
|
|
|
|
$
|
0.77
|
|
|
$
|
0.78
|
|
|
FFO
|
|
$
|
0.48
|
|
|
$
|
0.53
|
|
|
|
$
|
1.57
|
|
|
$
|
1.57
|
|
|
Normalized FFO
|
|
$
|
0.51
|
|
|
$
|
0.54
|
|
|
|
$
|
1.60
|
|
|
$
|
1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
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|
|
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(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 loss on impairment of real estate assets and any gain or loss
on sale of properties, as well as certain other adjustments currently
not applicable to GOV. GOV's calculation of Normalized FFO
differs from NAREIT's definition of FFO because GOV excludes acquisition
related costs. GOV considers FFO and Normalized FFO to be
appropriate measures of operating performance for a REIT, along with net
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.
|
|
|
|
|
GOVERNMENT PROPERTIES INCOME TRUST
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(amounts in thousands, except share data)
|
|
(unaudited)
|
|
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties:
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
239,222
|
|
|
|
$
|
234,395
|
|
|
|
Buildings and improvements
|
|
|
1,267,669
|
|
|
|
|
1,233,468
|
|
|
|
|
|
|
1,506,891
|
|
|
|
|
1,467,863
|
|
|
|
Accumulated depreciation
|
|
|
(179,573)
|
|
|
|
|
(156,661)
|
|
|
|
|
|
|
1,327,318
|
|
|
|
|
1,311,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets of discontinued operations
|
|
|
26,207
|
|
|
|
|
47,142
|
|
|
Acquired real estate leases, net
|
|
|
131,683
|
|
|
|
|
144,402
|
|
|
Cash and cash equivalents
|
|
|
2,697
|
|
|
|
|
5,255
|
|
|
Restricted cash
|
|
|
1,590
|
|
|
|
|
1,553
|
|
|
Rents receivable, net
|
|
|
31,373
|
|
|
|
|
28,882
|
|
|
Deferred leasing costs, net
|
|
|
9,523
|
|
|
|
|
7,620
|
|
|
Deferred financing costs, net
|
|
|
4,366
|
|
|
|
|
5,718
|
|
|
Other assets, net
|
|
|
18,322
|
|
|
|
|
10,360
|
|
|
Total assets
|
|
$
|
1,553,079
|
|
|
|
$
|
1,562,134
|
|
|
|
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Unsecured revolving credit facility
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$
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69,000
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$
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49,500
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Unsecured term loan
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350,000
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350,000
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Mortgage notes payable
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91,343
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93,127
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Liabilities of discontinued operations
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288
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298
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Accounts payable and accrued expenses
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23,250
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18,910
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Due to related persons
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1,784
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3,719
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Assumed real estate lease obligations, net
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16,952
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19,129
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Total liabilities
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552,617
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534,683
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Commitments and contingencies
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Shareholders' equity:
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Common shares of beneficial interest, $.01 par value:
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70,000,000 shares authorized, 54,722,468 and 54,643,888
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shares issued and outstanding, respectively
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547
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547
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Additional paid in capital
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1,105,676
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1,103,982
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Cumulative net income
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179,189
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137,293
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Cumulative other comprehensive income
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32
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99
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Cumulative common distributions
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(284,982)
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(214,470)
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Total shareholders' equity
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1,000,462
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1,027,451
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Total liabilities and shareholders' equity
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$
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1,553,079
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$
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1,562,134
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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.
Government Properties Income Trust
Timothy A. Bonang, 617-219-1440
Vice
President, Investor Relations
or
Elisabeth Olmsted,
617-219-1440
Senior Manager, Investor Relations
Source: Government Properties Income Trust
News Provided by Acquire Media