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Section 1: 8-K (8-K)

Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 
Date of Report (Date of earliest event reported): November 5, 2018
 
TIER REIT, Inc.
(Exact Name of Registrant as Specified in Its Charter) 
 
 
 
 
 
 
Maryland
 
001-37512
 
68-0509956
(State or other jurisdiction of incorporation
or organization)
 
(Commission File Number)
 
 
(I.R.S. Employer
Identification No.)
 
5950 Sherry Lane, Suite 700, Dallas, Texas
75225
(Address of principal executive offices)
(Zip Code)
 
(972) 483-2400
(Registrant’s telephone number, including area code)
 
None
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02                                 Results of Operations and Financial Condition.
 
On November 5, 2018, TIER REIT, Inc. released supplemental information regarding its financial results and operations for the quarter and the period ended September 30, 2018, by posting to its website its Third Quarter 2018 Supplemental Operating and Financial Data and issued a press release announcing its financial results for the third quarter of 2018. The supplemental information and press release are included as Exhibit 99.1 and Exhibit 99.2 to this report and are incorporated herein by reference.
The information included in this Item 2.02, including Exhibits 99.1 and 99.2, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, nor shall the information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act.
Item 7.01                                           Regulation FD Disclosure

Attached to this Form 8-K as Exhibit 99.3 and Exhibit 99.4 are copies of a company presentation and a property portfolio, which are also available on the Company’s website, that the Company intends to use in upcoming investor meetings, including at Nareit’s REITworld 2018 Investor Conference in San Francisco, California.
The information in this Item 7.01, including Exhibits 99.3 and 99.4, is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall the information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act.

Item 9.01.                              Financial Statements and Exhibits.
 
(d)                                 Exhibits.

99.1    Third Quarter 2018 Supplemental Operating and Financial Data
99.2    Press release, dated November 5, 2018
99.3    Company Presentation
99.4    Property Portfolio
                        




SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
 
 
 
TIER REIT, INC.
 
 
 
 
 
 
Dated: November 5, 2018
By:
/s/ Hannah Q. Wrenn
 
 
Hannah Q. Wrenn
 
 
Chief Accounting Officer
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

395635446_tiersupp18coverq3.jpg




Supplemental Operating and Financial Data
For the Quarter Ended September 30, 2018

395635446_tierrgbfullcolora11.jpg

About the Company
    
TIER REIT, Inc. is a publicly traded (NYSE: TIER), self-managed, Dallas-based real estate investment trust focused on owning quality, well-managed commercial office properties in dynamic markets throughout the U.S. TIER REIT’s vision is to be the premier owner and operator of best-in-class office properties in TIER1 submarkets, which are primarily higher density and amenity-rich locations within select, high-growth metropolitan areas that offer a walkable experience to various amenities. Our mission is to provide unparalleled, TIER ONE Property Services to our tenants and outsized total return through stock price appreciation and dividend growth to our stockholders.
As of September 30, 2018, we owned interests in 18 operating office properties with approximately 6.7 million rentable square feet and three development properties that will consist of approximately 989,000 rentable square feet. As of September 30, 2018, our operating properties are located in six markets throughout the United States.
Board of Directors
 
Executive Officers and Senior Management
Richard I. Gilchrist
 
Scott W. Fordham
Chairman of the Board and Independent Director
 
Chief Executive Officer and Director
 
 
 
Scott W. Fordham
 
Dallas E. Lucas
Chief Executive Officer and Director
 
President and Chief Operating Officer
 
 
 
R. Kent Griffin, Jr.
 
James E. Sharp
Independent Director
 
Chief Financial Officer and Treasurer
 
 
 
Thomas M. Herzog
 
William J. Reister
Independent Director
 
Chief Investment Officer and Executive Vice President
 
 
 
Dennis J. Martin
 
Telisa Webb Schelin
Independent Director
 
Chief Legal Officer, Executive Vice President, and Secretary
 
 
 
Gregory J. Whyte
 
Hannah Q. Wrenn
Independent Director
 
Chief Accounting Officer
 
 
 
 
 
R. Heath Johnson
 
 
Managing Director - Asset Management
 
 
 
 
 
Dean R. Hook
 
 
Senior Vice President - Information Technology and Property Management
 
 
 
 
 
Company Information
 
 
Corporate Headquarters
 
Website
 
Trading Information
 
Investor inquiries should be directed to:
5950 Sherry Lane, Suite 700
 
www.tierreit.com
 
Trading Symbol: TIER
 
Scott A. McLaughlin
Dallas, Texas 75225
 
 
 
New York Stock Exchange
 
Senior Vice President - Investor Relations
 
 
 
 
 
 
at 972.483.2400 or ir@tierreit.com
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Research Coverage
 
 
 
 
 
 
BMO Capital
 
Janney Montgomery Scott
 
JMP Securities
 
J.P. Morgan Securities
 
Robert W. Baird & Co.
John Kim
 
Robert Stevenson
 
Mitch Germain
 
Anthony Paolone
 
David Rodgers
212.885.4115
 
646.840.3217
 
212.906.3546
 
212.622.6682
 
216.737.7341





Supplemental Operating and Financial Data
For the Quarter Ended September 30, 2018
Table of Contents
Overview and Highlights
 
Overview
1

Financial Highlights
2-3

Consolidated Balance Sheets
4

Consolidated Statements of Operations
5

Calculations of FFO and Additional Information
6

Calculations of EBITDAre
7

Unconsolidated Entities Financial Summary
8

Same Store Analysis
9

Schedule of Properties Owned
10

Portfolio Analysis
11

Components of Net Asset Value
12

Significant Tenants
13

Industry Diversification
14

 
 
Leasing
 
Leasing Activity
15-16

Lease Expirations
17-18

Occupancy Trends
19

 
 
Capital Expenditures
 
Leasing Cost Summary
20

Development, Leasing, and Capital Expenditures Summary
21

 
 
Other Information
 
Potential Future Development and Redevelopment Sites
22

Summary of Development Activity
23

Properties Under Development
24-27

Acquisition and Disposition Activities
28

Summary of Financing
29

Principal Payments by Year
30

Definitions of Non-GAAP Financial Measures
31-32


Forward-Looking Statements
This supplemental operating and financial data report contains forward-looking statements within the meaning of the federal securities laws relating to the business and financial outlook of TIER REIT, Inc. that are based on current expectations, estimates, forecasts, and projections and are not guarantees of future performance. Statements contained herein may be impacted by a number of risks and uncertainties, including the company’s ability to rent space on favorable terms, its ability to address debt maturities and fund its capital requirements, its intentions to acquire, develop, or sell certain properties, the value of its assets, its anticipated capital expenditures, and other matters. Words such as “may,” "will," “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “outlook,” “would,” “could,” “should,” “objectives,” “strategies,” “opportunities,” “goals,” “position,” “future,” “vision,” “mission,” “strive,” “project” and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this document, as well as other factors described in the Risk Factors section of TIER REIT, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017. Forward-looking statements in this document speak only as of the date on which such statements were made, and we undertake no obligation to update any such statements that may become untrue because of subsequent events.





Overview
For the Quarter Ended September 30, 2018

Property Results
Occupancy at September 30, 2018, was 90.1%, reflecting an increase of 70 basis points from June 30, 2018.
120,000 square feet leased - 26,000 square feet of renewals, 19,000 square feet of expansions, and 75,000 square feet of new leasing.
During the third quarter of 2018, we received $0.7 million in business interruption insurance proceeds related to rent abatements provided in previous periods as a result of Hurricane Harvey. We anticipate we will receive additional business interruption insurance proceeds in subsequent quarters.
Real Estate Activity
Plaza at MetroCenter was held for sale as of September 30, 2018, and was sold on October 31, 2018, for a contract purchase price of $51.3 million.
During the third quarter of 2018, we pre-leased 100% of Domain 12. Domain 12 is a development property containing 320,000 rentable square feet located in Austin, Texas.
Capital Markets Activity
On August 3, 2018, our board of directors authorized a distribution of $0.18 per share of common stock for the third quarter of 2018, that was paid on September 28, 2018.
On August 15, 2018, we entered into three forward interest rate swaps for a combined notional value of $250.0 million with a maturity date of December 31, 2024. These become effective on October 31, 2019, upon the maturity of two of our outstanding interest rate swaps with a combined notional value of $250.0 million.
On August 21, 2018, we paid off the $89.7 million loan secured by Domain 8 without penalty. The loan was scheduled to mature in June 2020.
On August 27, 2018, ownership of Fifth Third Center, located in Columbus, Ohio, was conveyed to the associated lender pursuant to a foreclosure. The transaction was accounted for as a full settlement of the outstanding debt and related interest. As a result, we recognized a gain on troubled debt restructuring of $31.0 million. We recorded an asset impairment loss of $3.4 million related to the disposition of the property.
In August 2018, we established an additional $125.0 million ATM program for a total of $250.0 million when combined with our May 2017 ATM Program. During the three months ended September 30, 2018, we issued 4,916,095 shares of common stock under our ATM Programs, for proceeds of $114.1 million, net of commissions and issuance costs. Subsequent to September 30, 2018, we issued 130,172 additional shares for net proceeds of $3.1 million, resulting in total net proceeds for the year of $138.0 million.
Subsequent Events
Development on Domain 10 commenced in October 2018. Domain 10 will contain 300,000 rentable square feet and is located in Austin, Texas, adjacent to our other Domain properties.
On November 2, 2018, our board of directors authorized a distribution of $0.18 per share of common stock for the fourth quarter of 2018, that will be paid on December 27, 2018.



Supplemental Operating and
Financial Data
395635446_tierrgbfullcolora11.jpg
3Q’18
Page 1



Financial Highlights
(in thousands, except per share data, effective rent data, percentages, and number of properties)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30-Sep-18
 
30-Sep-17
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
Portfolio Summary:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating office properties
18

 
20

 
 
18

 
18

 
18

 
20

 
20

Rentable square feet (100%) (operating properties)
6,657

 
7,405

 
 
6,657

 
6,657

 
6,657

 
7,405

 
7,405

Rentable square feet (own %) (operating properties)
6,633

 
7,260

 
 
6,633

 
6,633

 
6,633

 
7,260

 
7,260

Occupancy %
90.1
%
 
88.3
%
 
 
90.1
%
 
89.4
%
 
89.4
%
 
89.1
%
 
88.3
%
Executed % SF leased
90.4
%
 
89.0
%
 
 
90.4
%
 
89.8
%
 
89.6
%
 
89.7
%
 
89.0
%
Economic % SF leased
86.2
%
 
82.4
%
 
 
86.2
%
 
85.3
%
 
86.1
%
 
84.4
%
 
82.4
%
Average effective rent/square foot
$
32.89

 
$
29.58

 
 
$
32.89

 
$
32.60

 
$
32.55

 
$
30.33

 
$
29.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
Three Months Ended
 
30-Sep-18
 
30-Sep-17
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
Financial Results:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
162,965

 
$
161,835

 
 
$
54,832

 
$
53,990

 
$
54,143

 
$
54,626

 
$
50,920

Property related expenses
(38,812
)
 
(41,790
)
 
 
(13,262
)
 
(12,395
)
 
(13,155
)
 
(14,131
)
 
(13,170
)
Real estate taxes
(27,057
)
 
(25,752
)
 
 
(9,229
)
 
(9,074
)
 
(8,754
)
 
(8,512
)
 
(8,439
)
Property management fees
(262
)
 
(181
)
 
 
(80
)
 
(97
)
 
(85
)
 
(51
)
 
(49
)
NOI
$
96,834

 
$
94,112

 
 
$
32,261

 
$
32,424

 
$
32,149

 
$
31,932

 
$
29,262

Base rent
$
106,433

 
$
116,002

 
 
$
35,759

 
$
35,556

 
$
35,118

 
$
34,122

 
$
36,002

Free rent
$
(4,298
)
 
$
(8,040
)
 
 
$
(1,218
)
 
$
(1,776
)
 
$
(1,304
)
 
$
(1,570
)
 
$
(2,288
)
Net income (loss) attributable to common stockholders
$
22,758

 
$
94,161

 
 
$
22,645

 
$
(8,277
)
 
$
8,390

 
$
(9,875
)
 
$
(8,041
)
Diluted income (loss) per common share (1)
$
0.46

 
$
1.95

 
 
$
0.43

 
$
(0.17
)
 
$
0.17

 
$
(0.21
)
 
$
(0.17
)
FFO attributable to common stockholders
$
79,371

 
$
52,918

 
 
$
50,678

 
$
18,804

 
$
9,889

 
$
19,020

 
$
15,885

Diluted FFO per common share
$
1.59

 
$
1.10

 
 
$
0.96

 
$
0.39

 
$
0.20

 
$
0.39

 
$
0.33

FFO attributable to common stockholders, excluding certain items
$
59,085

 
$
55,748

 
 
$
20,070

 
$
19,521

 
$
19,494

 
$
19,374

 
$
16,508

Diluted FFO, excluding certain items, per common share
$
1.18

 
$
1.16

 
 
$
0.38

 
$
0.40

 
$
0.40

 
$
0.40

 
$
0.34

Adjusted EBITDAre
$
82,969

 
$
81,865

 
 
$
26,407

 
$
28,359

 
$
28,203

 
$
26,321

 
$
26,181

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
49,092

 
47,532

 
 
51,900

 
47,684

 
47,645

 
47,554

 
47,550

Weighted average common shares outstanding - diluted
49,950

 
47,956

 
 
52,617

 
48,534

 
48,300

 
48,207

 
48,160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Additional Trend Information:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewal % based on square feet
67
%
 
73
%
 
 
61
%
 
74
%
 
64
%
 
30
%
 
83
%
Distributions declared on common shares
$
26,925

 
$
25,829

 
 
$
9,671

 
$
8,628

 
$
8,626

 
$
8,612

 
$
8,612

Annualized distribution yield (2)
3.0
%
 
3.7
%
 
 
3.0
%
 
3.0
%
 
3.9
%
 
3.5
%
 
3.7
%
_______________________________
(1) In periods of net loss from continuing operations there are no dilutive securities and diluted loss per common share is calculated using weighted average common shares outstanding - basic as the denominator.
(2) Based on the closing price of our common stock as of the last day of the associated period.
Notes:
Occupancy % represents the total square footage subject to commenced leases as of the reporting date as a percentage of the total rentable square feet (at our ownership interest).
Executed % SF leased represents the total square footage subject to commenced leases plus the square footage for currently vacant space that is subject to executed leases that have not commenced as of the reporting date as a percentage of the total rentable square feet (at our ownership interest).
Economic % SF leased represents the total square footage subject to commenced leases as of the reporting date adjusted to exclude the square footage associated with leases receiving rental abatements as a percentage of the total rentable square feet (at our ownership interest).
Average effective rent represents 12 times the sum of the monthly contractual amounts for base rent and the pro rata budgeted operating expense reimbursements, as of period end, related to leases in place as of period end, as reduced for free rent and excluding any scheduled future rent increases, as adjusted for our ownership interest, divided by the total square footage under commenced leases at period end.
This section includes non-GAAP financial measures, which are accompanied by what we consider the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Quantitative reconciliations of the differences between the non-GAAP financial measures presented and the most directly comparable GAAP financial measures are shown on pages 6-7. A description of the non-GAAP financial measures we present and a statement of the reasons why management believes the non-GAAP measures provide useful information to investors about the Company’s financial condition and results of operations can be found on pages 31-32.

Supplemental Operating and
Financial Data
395635446_tierrgbfullcolora11.jpg
3Q’18
Page 2



Financial Highlights (continued)
(in thousands, except stock prices, percentages, and ratios)
 
 
 
 
 
 
 
 
30-Sep-18
 
30-Sep-17
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
Selected Balance Sheet Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total book value of real estate
$
1,386,255

 
$
1,325,536

 
 
$
1,386,255

 
$
1,434,814

 
$
1,430,355

 
$
1,275,953

 
$
1,325,536

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
5,192

 
$
10,959

 
 
$
5,192

 
$
8,359

 
$
10,183

 
$
13,800

 
$
10,959

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated cash and cash equivalents
(at ownership %)
$
550

 
$
2,495

 
 
$
550

 
$
327

 
$
282

 
$
1,435

 
$
2,495

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted cash
$
10,232

 
$
13,323

 
 
$
10,232

 
$
14,086

 
$
12,565

 
$
8,510

 
$
13,323

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
1,662,342

 
$
1,581,288

 
 
$
1,662,342

 
$
1,696,121

 
$
1,688,999

 
$
1,581,138

 
$
1,581,288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage debt
$
142,162

 
$
191,694

 
 
$
142,162

 
$
280,311

 
$
280,689

 
$
191,339

 
$
191,694

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit facility and term loans
$
591,000

 
$
598,000

 
 
$
591,000

 
$
608,000

 
$
612,000

 
$
610,000

 
$
598,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated debt (at ownership %)
$
26,137

 
$
43,572

 
 
$
26,137

 
$
21,248

 
$
16,239

 
$
52,377

 
$
43,572

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
$
836,797

 
$
889,465

 
 
$
836,797

 
$
1,001,531

 
$
1,001,439

 
$
903,567

 
$
889,465

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capitalization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of common stock outstanding
53,491

 
47,552

 
 
53,491

 
48,575

 
47,656

 
47,623

 
47,552

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted stock units outstanding
351

 
228

 
 
351

 
351

 
356

 
228

 
228

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of restricted stock outstanding
260

 
291

 
 
260

 
260

 
265

 
181

 
291

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54,102

 
48,071

 
 
54,102

 
49,186

 
48,277

 
48,032

 
48,071

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
High stock price
$
24.98

 
$
19.50

 
 
$
24.98

 
$
24.22

 
$
20.51

 
$
20.72

 
$
19.50

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Low stock price
$
17.04

 
$
15.96

 
 
$
22.66

 
$
18.06

 
$
17.04

 
$
18.83

 
$
16.67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average closing stock price
$
21.18

 
$
17.81

 
 
$
23.67

 
$
20.81

 
$
19.01

 
$
19.71

 
$
18.39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closing stock price
$
24.10

 
$
19.30

 
 
$
24.10

 
$
23.78

 
$
18.48

 
$
20.39

 
$
19.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Market capitalization (1)
$
1,303,858

 
$
927,770

 
 
$
1,303,858

 
$
1,169,643

 
$
892,159

 
$
979,372

 
$
927,770

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total debt (2)
$
759,299

 
$
833,266

 
 
$
759,299

 
$
909,559

 
$
908,928

 
$
853,716

 
$
833,266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net debt (3)
$
753,557

 
$
819,812

 
 
$
753,557

 
$
900,873

 
$
898,463

 
$
838,481

 
$
819,812

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capitalization
$
2,063,157

 
$
1,761,036

 
 
$
2,063,157

 
$
2,079,202

 
$
1,801,087

 
$
1,833,088

 
$
1,761,036

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
Three Months Ended
 
30-Sep-18
 
30-Sep-17
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin % (4)
59.4
%
 
58.2
%
 
 
58.8
%
 
60.1
%
 
59.4
%
 
58.5
%
 
57.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Normalized fixed charge coverage (5)
3.02

 
2.99

 
 
3.06

 
3.00

 
3.00

 
2.83

 
2.86

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Normalized interest coverage (5)
3.13

 
3.12

 
 
3.14

 
3.12

 
3.13

 
2.94

 
2.97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net debt/adjusted annualized estimated full period EBITDAre from properties owned at period end (5)
N/A

 
N/A

 
 
7.15x

 
7.94x

 
8.34x

 
7.96x

 
7.83x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net debt/adjusted annualized estimated full period EBITDAre from properties owned at period end, including development properties (5) (6)
N/A

 
N/A

 
 
6.22x

 
7.13x

 
7.67x

 
7.47x

 
7.45x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Market capitalization is equal to outstanding shares (common stock, restricted stock, and restricted stock units, as if converted) times the closing price of our common stock as of the last day of the associated period.
(2) Includes book value of mortgage debt, the revolving credit facility and term loans, and unconsolidated debt (at ownership %).
(3) Total debt less cash and cash equivalents and unconsolidated cash and cash equivalents (at ownership %).
(4) NOI margin % is equal to NOI divided by revenue.
(5) See page 7 for more detailed information.
(6) Includes estimated stabilized NOI for development properties, to the extent of percentage of completion of the respective developments based on spend to date.

Supplemental Operating and
Financial Data
395635446_tierrgbfullcolora11.jpg
3Q’18
Page 3



Consolidated Balance Sheets
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Real estate
 
 
 
 
 
 
 
 
 
 
 
Land
 
$
150,473

 
$
156,517

 
$
156,577

 
$
139,951

 
$
140,959

 
Land held for development
 
45,059

 
45,059

 
45,059

 
45,059

 
45,059

 
Buildings and improvements, net
 
1,097,613

 
1,160,273

 
1,177,433

 
1,061,418

 
1,122,072

 
Real estate under development
 
93,110

 
72,965

 
51,286

 
29,525

 
17,446

 
Total real estate
 
1,386,255

 
1,434,814

 
1,430,355

 
1,275,953

 
1,325,536

 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
5,192

 
8,359

 
10,183

 
13,800

 
10,959

 
Restricted cash
 
10,232

 
14,086

 
12,565

 
8,510

 
13,323

 
Accounts receivable, net
 
69,592

 
80,755

 
76,385

 
81,129

 
82,737

 
Prepaid expenses and other assets
 
19,357

 
17,124

 
14,238

 
28,112

 
20,115

 
Investments in unconsolidated entities
 
32,112

 
31,714

 
31,314

 
31,852

 
33,977

 
Deferred financing fees, net
 
2,985

 
3,211

 
3,426

 
1,387

 
1,735

 
Acquired above-market leases, net
 
20

 
180

 
288

 
419

 
543

 
Other lease intangibles, net
 
103,511

 
105,878

 
110,245

 
86,628

 
90,547

 
Other intangible assets, net
 

 

 

 

 
1,816

 
Assets associated with real estate held for sale
 
33,086

 

 

 
53,348

 

Total assets
 
$
1,662,342

 
$
1,696,121

 
$
1,688,999

 
$
1,581,138

 
$
1,581,288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage debt
 
$
142,162

 
$
280,311

 
$
280,689

 
$
191,339

 
$
191,694

 
Unsecured term loans
 
575,000

 
575,000

 
575,000

 
575,000

 
575,000

 
Unsecured revolving credit facility
 
16,000

 
33,000

 
37,000

 
35,000

 
23,000

 
Unamortized debt issuance costs
 
(2,029
)
 
(2,051
)
 
(2,156
)
 
(6,801
)
 
(7,308
)
 
Total notes payable, net
 
731,133

 
886,260

 
890,533

 
794,538

 
782,386

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
74,560

 
82,816

 
76,144

 
81,166

 
78,174

 
Acquired below-market leases, net
 
24,312

 
25,910

 
27,684

 
17,942

 
19,462

 
Other liabilities
 
6,471

 
6,545

 
7,078

 
7,567

 
9,443

 
Obligations associated with real estate held for sale
 
321

 

 

 
2,354

 

Total liabilities
 
836,797

 
1,001,531

 
1,001,439

 
903,567

 
889,465

Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
Convertible stock
 

 

 

 

 

 
Common stock
 
5

 
5

 
5

 
5

 
5

 
Additional paid-in capital
 
2,747,825

 
2,632,635

 
2,610,288

 
2,609,540

 
2,609,361

 
Cumulative distributions and net loss attributable to common stockholders
 
(1,940,492
)
 
(1,953,466
)
 
(1,936,561
)
 
(1,936,960
)
 
(1,918,473
)
 
Accumulated other comprehensive income
 
15,262

 
12,462

 
10,479

 
4,218

 
257

 
Stockholders’ equity
 
822,600

 
691,636

 
684,211

 
676,803

 
691,150

 
Noncontrolling interests
 
2,945

 
2,954

 
3,349

 
768

 
673

Total equity
 
825,545

 
694,590

 
687,560

 
677,571

 
691,823

Total liabilities and equity
 
$
1,662,342

 
$
1,696,121

 
$
1,688,999

 
$
1,581,138

 
$
1,581,288

 
 
 
 
 
 
 
 
 
 
 
 
Common stock, number of shares issued and outstanding
 
53,490,819

 
48,574,724

 
47,655,669

 
47,623,324

 
47,552,014

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Supplemental Operating and
Financial Data
395635446_tierrgbfullcolora11.jpg
3Q’18
Page 4



 
Consolidated Statements of Operations
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
Three Months Ended
 
 
30-Sep-18
 
30-Sep-17
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
$
155,599

 
$
152,186

 
 
$
52,570

 
$
51,088

 
$
51,941

 
$
52,362

 
$
47,333

 
Straight-line rent and lease incentive revenue
1,906

 
6,334

 
 
453

 
862

 
591

 
978

 
2,280

 
Above- and below-market rent amortization
4,474

 
2,863

 
 
1,533

 
1,665

 
1,276

 
1,032

 
1,075

 
Lease termination fees
986

 
452

 
 
276

 
375

 
335

 
254

 
232

 
Total revenue
162,965

 
161,835

 
 
54,832

 
53,990

 
54,143

 
54,626

 
50,920

Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property related expenses
38,812

 
41,790

 
 
13,262

 
12,395

 
13,155

 
14,131

 
13,170

 
Real estate taxes
27,057

 
25,752

 
 
9,229

 
9,074

 
8,754

 
8,512

 
8,439

 
Property management fees
262

 
181

 
 
80

 
97

 
85

 
51

 
49

 
Total property operating expenses
66,131

 
67,723

 
 
22,571

 
21,566

 
21,994

 
22,694

 
21,658

 
Interest expense
22,498

 
22,851

 
 
6,782

 
8,011

 
7,705

 
7,534

 
7,516

 
Interest rate hedge ineffectiveness expense (income)

 
9

 
 

 

 

 
(262
)
 
8

 
Amortization of deferred financing costs
1,121

 
2,561

 
 
359

 
358

 
404

 
883

 
882

 
Total interest expense
23,619

 
25,421

 
 
7,141

 
8,369

 
8,109

 
8,155

 
8,406

 
Asset impairment losses
3,418

 

 
 
3,418

 

 

 
5,250

 

 
General and administrative
16,008

 
16,490

 
 
5,128

 
5,377

 
5,503

 
4,956

 
5,157

 
Real estate depreciation and amortization
76,281

 
70,641

 
 
24,770

 
27,011

 
24,500

 
23,655

 
23,653

 
Depreciation and amortization - non-real estate assets
303

 
325

 
 
64

 
123

 
116

 
133

 
132

 
Total expenses
185,760

 
180,600

 
 
63,092

 
62,446

 
60,222

 
64,843

 
59,006

 
Interest and other income
644

 
1,271

 
 
49

 
550

 
45

 
88

 
170

 
Loss on early extinguishment of debt
(8,988
)
 
(545
)
 
 

 

 
(8,988
)
 

 

 
Gain on troubled debt restructuring
31,006

 

 
 
31,006

 

 

 

 

Income (loss) before income taxes, equity in operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of investments, and gains (losses)
(133
)
 
(18,039
)
 
 
22,795

 
(7,906
)
 
(15,022
)
 
(10,129
)
 
(7,916
)
 
Provision for income taxes
(637
)
 
(297
)
 
 
(228
)
 
(214
)
 
(195
)
 
(171
)
 
(202
)
 
Equity in operations of investments
287

 
6,367

 
 

 

 
287

 
32

 
67

Income (loss) before gains (losses)
(483
)
 
(11,969
)
 
 
22,567

 
(8,120
)
 
(14,930
)
 
(10,268
)
 
(8,051
)
Gain (loss) on sale of assets
11,924

 
92,012

 
 

 
(90
)
 
12,014

 
384

 

Gain (loss) on remeasurement of investment in unconsolidated entities
11,090

 
14,168

 
 

 
(152
)
 
11,242

 

 

Net income (loss)
22,531

 
94,211

 
 
22,567

 
(8,362
)
 
8,326

 
(9,884
)
 
(8,051
)
 
Noncontrolling interests
227

 
(50
)
 
 
78

 
85

 
64

 
9

 
10

Net income (loss) attributable to common stockholders
$
22,758

 
$
94,161

 
 
$
22,645

 
$
(8,277
)
 
$
8,390

 
$
(9,875
)
 
$
(8,041
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
49,091,962

 
47,532,432

 
 
51,899,779

 
47,684,152

 
47,645,050

 
47,553,564

 
47,549,635

Weighted average common shares outstanding - diluted (1)
49,950,441

 
47,956,167

 
 
52,616,570

 
47,684,152

 
48,299,882

 
47,553,564

 
47,549,635

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic income (loss) per common share
$
0.46

 
$
1.97

 
 
$
0.43

 
$
(0.17
)
 
$
0.18

 
$
(0.21
)
 
$
(0.17
)
Diluted income (loss) per common share (1)
$
0.46

 
$
1.95

 
 
$
0.43

 
$
(0.17
)
 
$
0.17

 
$
(0.21
)
 
$
(0.17
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions declared per common share
$
0.54

 
$
0.54

 
 
$
0.18

 
$
0.18

 
$
0.18

 
$
0.18

 
$
0.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
In periods of net loss there are no dilutive securities and diluted loss per common share is calculated using weighted average common shares outstanding - basic as the denominator.

Supplemental Operating and
Financial Data
395635446_tierrgbfullcolora11.jpg
3Q’18
Page 5



Calculations of FFO and Additional Information
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 Three Months Ended
 
30-Sep-18
 
30-Sep-17
 
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
31-Dec-17
 
30-Sep-17
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
22,531

 
$
94,211

 
 
$
22,567

 
$
(8,362
)
 
$
8,326

 
$
(9,884
)
 
$
(8,051
)
Noncontrolling interests
227

 
(50
)
 
 
78

 
85

 
64

 
9

 
10

Net income (loss) attributable to common stockholders
22,758

 
94,161

 
 
22,645

 
(8,277
)
 
8,390

 
(9,875
)
 
(8,041
)
Adjustments (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization from consolidated properties
76,281

 
70,641

 
 
24,770

 
27,011

 
24,500

 
23,655

 
23,653

 
Real estate depreciation and amortization from unconsolidated properties
391

 
986

 
 

 

 
391

 
391

 
289

 
Real estate depreciation and amortization - noncontrolling interest
(1,759
)
 

 
 
(544
)
 
(782
)
 
(433
)
 

 

 
Impairment of depreciable real estate assets
3,418

 

 
 
3,418

 

 

 
5,250

 

 
Loss (gain) on sale of depreciable real estate
(11,924
)
 
(98,725
)
 
 

 
90

 
(12,014
)
 
(384
)
 

 
Loss (gain) on remeasurement of investment in unconsolidated entities
(11,090
)
 
(14,168
)
 
 

 
152

 
(11,242
)
 

 

 
Noncontrolling interests
1,296

 
23

 
 
389

 
610

 
297

 
(17
)
 
(16
)
FFO attributable to common stockholders
79,371

 
52,918

 
 
50,678

 
18,804

 
9,889

 
19,020

 
15,885