NEWTON, Mass.--(BUSINESS WIRE)--
Government Properties Income Trust (NYSE: GOV) today announced its
financial results for the quarter and year ended December 31, 2013.
Results for the Quarter Ended December 31, 2013:
Normalized funds from operations, or Normalized FFO, for the quarter
ended December 31, 2013 were $28.2 million, or $0.52 per share, compared
to Normalized FFO for the quarter ended December 31, 2012 of $28.1
million, or $0.53 per share.
Net income was $12.7 million, or $0.23 per share, for the quarter ended
December 31, 2013, compared to $13.2 million, or $0.25 per share, for
the quarter ended December 31, 2012.
The weighted average number of common shares outstanding was 54.7
million and 53.2 million for the quarters ended December 31, 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 December 31, 2013 and
2012 appears later in this press release.
Results for the Year Ended December 31, 2013:
Normalized FFO for the year ended December 31, 2013 were $115.8 million,
or $2.12 per share, compared to Normalized FFO for the year ended
December 31, 2012 of $103.2 million, or $2.12 per share.
Net income was $54.6 million, or $1.00 per share, for the year ended
December 31, 2013, compared to $50.0 million, or $1.03 per share, for
the year ended December 31, 2012. Net income for the year ended December
31, 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 48.6 million for the years ended December 31, 2013 and 2012,
respectively.
A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the years ended December 31, 2013 and 2012 appears
later in this press release.
Occupancy and Leasing Results:
As of December 31, 2013, 94.8% of GOV's rentable square feet from
continuing operations was leased, compared to 93.6% as of December 31,
2012, and 94.6% as of September 30, 2013.
GOV entered into new and renewal leases of 126,130 rentable square feet
for government tenants during the quarter ended December 31, 2013 which
had: weighted average rental rates 2.5% 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; a weighted (by
square feet) average lease term of 3.4 years; and tenant leasing costs
and concession commitments that totaled approximately $594,000, or $1.37
per square foot per year of lease term.
GOV also entered into new and renewal leases of 133,132 rentable square
feet for non-government tenants during the quarter ended December 31,
2013 which had: weighted average rental rates 23.3% below 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; a weighted (by square feet) average lease term of 11.1
years; and tenant leasing costs and concession commitments that totaled
approximately $8.8 million, or $5.91 per square foot per year of lease
term.
Recent Acquisition and Sales Activities:
Since October 1, 2013, GOV has acquired or has entered into agreements
to acquire five properties consisting of nine buildings for an aggregate
purchase price of $201.8 million, including the assumption of $97.6
million of mortgage debt and excluding acquisition costs, as follows:
-
In October 2013, GOV acquired a previously disclosed 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 for a weighted (by square feet) average
remaining lease term of 13.7 years. The purchase price was $21.2
million, excluding acquisition costs.
-
In November 2013, GOV acquired a previously disclosed office property
consisting of four buildings located in Fairfax, VA with 170,940
rentable square feet. This property is 100% leased to eight tenants,
of which 51% is leased to the Commonwealth of Virginia and occupied by
Northern Virginia Community College. The weighted (by square feet)
average remaining lease term for the property was 4.9 years. The
purchase price was $31.5 million, excluding acquisition costs.
-
In December 2013, GOV acquired a previously disclosed 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 for a weighted (by square feet) average
remaining lease term of 15.5 years. The purchase price was $16.0
million, excluding acquisition costs.
-
In November 2013, GOV entered an agreement to acquire an office
property located in Fairfax, VA with 83,130 rentable square feet. This
property is 100% leased to the U.S. Government. The contract purchase
price is $19.8 million, including the assumption of $14.6 million of
mortgage debt and excluding acquisition costs.
-
In December 2013, GOV entered an agreement to acquire an office
property consisting of two buildings located in Reston, VA with
406,388 rentable square feet. This property is 100% leased to the U.S.
Government. The contract purchase price is $113.3 million, including
the assumption of $83.0 million of mortgage debt and excluding
acquisition costs.
GOV is currently marketing for sale three office properties located in
Phoenix, AZ, San Diego, CA, and Falls Church, VA with an aggregate of
356,163 rentable square feet which are included in discontinued
operations and classified as held for sale as of December 31, 2013. The
aggregate net book value of these properties totaled $25.6 million at
December 31, 2013. In January 2014, GOV entered an agreement to sell the
property located in Phoenix, AZ with a net book value of $2.3 million at
December 31, 2013, for $5.0 million, excluding closing costs. In
February 2014, GOV entered an agreement to sell the property located in
Falls Church, VA with a net book value of $12.3 million at December 31,
2013, for $15.8 million, excluding closing costs.
Conference Call:
On Tuesday, February 18, 2014, 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 2013 fourth quarter and year end results.
The conference call telephone number is (877) 531-2986. Participants
calling from outside the United States and Canada should dial (612)
332-7516. 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, February 25, 2014.
To hear the replay, dial (320) 365-3844. The replay pass code is 318030.
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 fourth
quarter conference call are strictly prohibited without the prior
written consent of GOV.
Supplemental Data:
A copy of GOV's Fourth 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 primarily 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 ENTERED AGREEMENTS TO PURCHASE TWO
PROPERTIES. THESE TRANSACTIONS ARE SUBJECT TO CLOSING CONDITIONS
TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS AND LENDER APPROVAL OF
GOV'S ASSUMPTION OF MORTGAGE DEBT. 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 DECEMBER 31, 2013 AND THAT THE AGGREGATE NET BOOK
VALUE OF THESE PROPERTIES TOTALED $25.6 MILLION. AN IMPLICATION 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 THOSE
PROPERTIES OR MAY SELL THE PROPERTIES AT AMOUNTS THAT ARE LESS THAN
THEIR CURRENT CARRYING VALUES.
-
THIS PRESS RELEASE STATES THAT GOV HAS ENTERED AGREEMENTS TO SELL TWO
OF THE PROPERTIES CLASSIFIED AS HELD FOR SALE. THESE TRANSACTIONS ARE
SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF COMMERCIAL REAL
ESTATE TRANSACTIONS. THESE TERMS AND CONDITIONS MAY NOT BE MET. AS A
RESULT, THESE TRANSACTIONS MAY NOT OCCUR, MAY BE DELAYED OR THEIR
TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN GOV'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING UNDER "RISK FACTORS" IN GOV'S PERIODIC
REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS
THAT COULD CAUSE GOV'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN
ITS FORWARD LOOKING STATEMENTS. GOV'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION ARE AVAILABLE ON ITS WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON GOV'S FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, GOV DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
|
|
|
GOVERNMENT PROPERTIES INCOME TRUST
|
|
CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS AND
|
|
NORMALIZED FUNDS FROM OPERATIONS
|
|
(amounts in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
58,271
|
|
|
$
|
54,629
|
|
|
$
|
226,910
|
|
|
$
|
203,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate taxes
|
|
|
6,650
|
|
|
|
5,965
|
|
|
|
25,710
|
|
|
|
22,485
|
|
|
Utility expenses
|
|
|
4,052
|
|
|
|
3,732
|
|
|
|
17,116
|
|
|
|
15,767
|
|
|
Other operating expenses
|
|
|
11,845
|
|
|
|
10,407
|
|
|
|
41,134
|
|
|
|
37,074
|
|
|
Depreciation and amortization
|
|
|
14,739
|
|
|
|
13,428
|
|
|
|
55,699
|
|
|
|
49,070
|
|
|
Acquisition related costs
|
|
|
738
|
|
|
|
557
|
|
|
|
2,439
|
|
|
|
1,614
|
|
|
General and administrative
|
|
|
3,361
|
|
|
|
2,853
|
|
|
|
12,710
|
|
|
|
11,924
|
|
|
Total expenses
|
|
|
41,385
|
|
|
|
36,942
|
|
|
|
154,808
|
|
|
|
137,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
16,886
|
|
|
|
17,687
|
|
|
|
72,102
|
|
|
|
65,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
17
|
|
|
|
8
|
|
|
|
37
|
|
|
|
29
|
|
|
Interest expense (including net amortization of debt premiums and
deferred financing fees of $338, $334, $1,340 and $1,332,
respectively)
|
|
|
(4,443
|
)
|
|
|
(4,243
|
)
|
|
|
(16,831
|
)
|
|
|
(16,892
|
)
|
|
Income from continuing operations before income tax expense and
equity in earnings of an investee
|
|
|
12,460
|
|
|
|
13,452
|
|
|
|
55,308
|
|
|
|
48,903
|
|
|
Income tax expense
|
|
|
(83
|
)
|
|
|
(40
|
)
|
|
|
(133
|
)
|
|
|
(159
|
)
|
|
Equity in earnings of an investee
|
|
|
115
|
|
|
|
80
|
|
|
|
334
|
|
|
|
316
|
|
|
Net income from continuing operations
|
|
|
12,492
|
|
|
|
13,492
|
|
|
|
55,509
|
|
|
|
49,060
|
|
|
Income (loss) from discontinued operations
|
|
|
232
|
|
|
|
(301
|
)
|
|
|
(889
|
)
|
|
|
900
|
|
|
Net income
|
|
$
|
12,724
|
|
|
$
|
13,191
|
|
|
$
|
54,620
|
|
|
$
|
49,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Funds from Operations (FFO) and Normalized FFO:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
12,724
|
|
|
$
|
13,191
|
|
|
$
|
54,620
|
|
|
$
|
49,960
|
|
|
Plus: depreciation and amortization from continuing operations
|
|
|
14,739
|
|
|
|
13,428
|
|
|
|
55,699
|
|
|
|
49,070
|
|
|
Plus: depreciation and amortization from discontinued operations
|
|
|
-
|
|
|
|
457
|
|
|
|
1,025
|
|
|
|
2,096
|
|
|
Plus: loss on asset impairment from discontinued operations
|
|
|
-
|
|
|
|
494
|
|
|
|
10,142
|
|
|
|
494
|
|
|
Less: net gain on sale of properties from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,168
|
)
|
|
|
-
|
|
|
FFO
|
|
|
27,463
|
|
|
|
27,570
|
|
|
|
113,318
|
|
|
|
101,620
|
|
|
Plus: acquisition related costs
|
|
|
738
|
|
|
|
557
|
|
|
|
2,439
|
|
|
|
1,614
|
|
|
Normalized FFO
|
|
$
|
28,201
|
|
|
$
|
28,127
|
|
|
$
|
115,757
|
|
|
$
|
103,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
54,722
|
|
|
|
53,176
|
|
|
|
54,680
|
|
|
|
48,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
0.23
|
|
|
$
|
0.25
|
|
|
$
|
1.02
|
|
|
$
|
1.01
|
|
|
Income (loss) from discontinued operations
|
|
$
|
-
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.02
|
|
|
Net income
|
|
$
|
0.23
|
|
|
$
|
0.25
|
|
|
$
|
1.00
|
|
|
$
|
1.03
|
|
|
FFO
|
|
$
|
0.50
|
|
|
$
|
0.52
|
|
|
$
|
2.07
|
|
|
$
|
2.09
|
|
|
Normalized FFO
|
|
$
|
0.52
|
|
|
$
|
0.53
|
|
|
$
|
2.12
|
|
|
$
|
2.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 with other REITs. FFO and Normalized FFO are among the
factors considered by GOV's Board of Trustees when determining the
amount of distributions to its shareholders. Other factors
include, but are not limited to, requirements to maintain GOV's 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. These measures should be considered in conjunction
with net income, operating income and cash flow from operating
activities as presented in GOV's Consolidated Statements of Income and
Comprehensive Income and 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
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(amounts in thousands, except share data)
|
|
(unaudited)
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties:
|
|
|
|
|
|
|
|
Land
|
|
$
|
243,686
|
|
|
$
|
234,395
|
|
|
Buildings and improvements
|
|
|
1,324,876
|
|
|
|
1,233,468
|
|
|
|
|
|
1,568,562
|
|
|
|
1,467,863
|
|
|
Accumulated depreciation
|
|
|
(187,635
|
)
|
|
|
(156,661
|
)
|
|
|
|
|
1,380,927
|
|
|
|
1,311,202
|
|
|
|
|
|
|
|
|
|
|
Assets of discontinued operations
|
|
|
25,997
|
|
|
|
47,142
|
|
|
Acquired real estate leases, net
|
|
|
142,266
|
|
|
|
144,402
|
|
|
Cash and cash equivalents
|
|
|
7,663
|
|
|
|
5,255
|
|
|
Restricted cash
|
|
|
1,689
|
|
|
|
1,553
|
|
|
Rents receivable, net
|
|
|
33,350
|
|
|
|
28,882
|
|
|
Deferred leasing costs, net
|
|
|
11,618
|
|
|
|
7,620
|
|
|
Deferred financing costs, net
|
|
|
3,911
|
|
|
|
5,718
|
|
|
Other assets, net
|
|
|
25,031
|
|
|
|
10,360
|
|
|
Total assets
|
|
$
|
1,632,452
|
|
|
$
|
1,562,134
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
157,000
|
|
|
$
|
49,500
|
|
|
Unsecured term loan
|
|
|
350,000
|
|
|
|
350,000
|
|
|
Mortgage notes payable
|
|
|
90,727
|
|
|
|
93,127
|
|
|
Liabilities of discontinued operations
|
|
|
276
|
|
|
|
298
|
|
|
Accounts payable and accrued expenses
|
|
|
23,216
|
|
|
|
18,910
|
|
|
Due to related persons
|
|
|
2,474
|
|
|
|
3,719
|
|
|
Assumed real estate lease obligations, net
|
|
|
19,084
|
|
|
|
19,129
|
|
|
Total liabilities
|
|
|
642,777
|
|
|
|
534,683
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Common shares of beneficial interest, $.01 par value:
|
|
|
|
|
|
|
|
70,000,000 shares authorized, 54,722,018 and 54,643,888 shares
issued and outstanding, respectively
|
|
|
547
|
|
|
|
547
|
|
|
Additional paid in capital
|
|
|
1,105,679
|
|
|
|
1,103,982
|
|
|
Cumulative net income
|
|
|
191,913
|
|
|
|
137,293
|
|
|
Cumulative other comprehensive income
|
|
|
49
|
|
|
|
99
|
|
|
Cumulative common distributions
|
|
|
(308,513
|
)
|
|
|
(214,470
|
)
|
|
Total shareholders' equity
|
|
|
989,675
|
|
|
|
1,027,451
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
1,632,452
|
|
|
$
|
1,562,134
|
|
|
|
|
|
|
|
|
|
|
|
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
Jason Fredette, 617-219-1440
Director,
Investor Relations
www.govreit.com
Source: Government Properties Income Trust
News Provided by Acquire Media