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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): April 29, 2019

EQUITY COMMONWEALTH
(Exact Name of Registrant as Specified in Its Charter)

Maryland
(State or Other Jurisdiction of Incorporation)
 
1-9317
 
04-6558834
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
Two North Riverside Plaza,
Suite 2100, Chicago, IL
 

60606
(Address of Principal Executive Offices)
 
(Zip Code)
(312) 646-2800
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title Of Each Class
 
Trading Symbol
 
Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest
 
EQC
 
New York Stock Exchange
6 1/2% Series D Cumulative Convertible Preferred Shares of Beneficial Interest
 
EQCpD
 
New York Stock Exchange

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 April 29, 2019, Equity Commonwealth, or the Company, issued a press release setting forth the Company’s results of operations and financial condition for the quarter ended March 31, 2019, and also provided certain supplemental operating and financial data for the quarter ended March 31, 2019.  Copies of the Company’s press release and supplemental operating and financial data are furnished as Exhibits 99.1 and 99.2 hereto, respectively.
Item 9.01.  Financial Statements and Exhibits.
(d)          Exhibits
99.1         Press Release Dated April 29, 2019.
99.2         First Quarter 2019 Supplemental Operating and Financial Data.



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SIGNATURES

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 hereunto duly authorized.

 
EQUITY COMMONWEALTH
 
By:
/s/ Adam S. Markman
 
Name:
Adam S. Markman
 
Title:
Executive Vice President, Chief
 
 
Financial Officer and Treasurer
Date: April 29, 2019




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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
Exhibit 99.1

397707241_earningslogoa16.jpg
Two North Riverside Plaza, Suite 2100, Chicago, Illinois 60606

            
Equity Commonwealth Reports First Quarter 2019 Results

Chicago - April 29, 2019 - Equity Commonwealth (NYSE: EQC) today reported financial results for the quarter ended March 31, 2019. All per share results are reported on a diluted basis.

Financial results for the quarter ended March 31, 2019
Net income attributable to common shareholders was $208.5 million, or $1.67 per share, for the quarter ended March 31, 2019. This compares to net income attributable to common shareholders of $185.6 million, or $1.48 per share, for the quarter ended March 31, 2018. The increase in net income was primarily due to a loss on asset impairment in the prior period and increases in interest and other income in the current period.

Funds from Operations, or FFO, as defined by the National Association of Real Estate Investment Trusts, for the quarter ended March 31, 2019, were $23.8 million, or $0.19 per share. This compares to FFO for the quarter ended March 31, 2018 of $6.1 million, or $0.05 per share. The following items impacted FFO for the quarter ended March 31, 2019, compared to the corresponding 2018 period:
($0.08) per share from properties sold;
$0.10 per of share of increase in interest and other income;
$0.05 per share of interest expense savings; and
$0.04 per share decrease in loss on debt extinguishment.

Normalized FFO was $23.1 million, or $0.19 per share. This compares to Normalized FFO for the quarter ended March 31, 2018 of $17.5 million, or $0.14 per share. The following items impacted Normalized FFO for the quarter ended March 31, 2019, compared to the corresponding 2018 period:
($0.07) per share from properties sold;
$0.06 per share of increase in interest income; and
$0.05 per share of interest expense savings.

Normalized FFO begins with FFO and eliminates certain items that we view as nonrecurring or impacting comparability from period to period. Definitions of FFO, Normalized FFO and reconciliations to net income, determined in accordance with U.S. generally accepted accounting principles, or GAAP, are included at the end of this press release.

For the quarter ended March 31, 2019, the company’s cash and cash equivalents balance was $3.1 billion. Total debt outstanding was $275 million.

The weighted average number of diluted common shares outstanding when calculating net income per share for the quarter ended March 31, 2019 was 125,822,059 shares, compared to 127,097,324 for the quarter ended March 31, 2018. The weighted average number of diluted common shares outstanding when calculating FFO or Normalized FFO per share for the quarter ended March 31, 2019 was 123,304,504 shares, compared to 124,734,221 for the quarter ended March 31, 2018.

Same property results for the quarter ended March 31, 2019
The companys same property portfolio at the end of the quarter consisted of 9 properties totaling 3.8 million square feet. Operating results were as follows:
The same property portfolio was 94.4% leased as of March 31, 2019, compared to 95.5% as of December 31, 2018, and 92.3% as of March 31, 2018.

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The same property portfolio commenced occupancy was 93.7% as of March 31, 2019, compared to 93.9% as of December 31, 2018, and 91.2% as of March 31, 2018.
Same property NOI increased 7.0% when compared to the same period in 2018.
Same property cash NOI increased 9.7% when compared to the same period in 2018.
The company entered into leases for approximately 108,000 square feet, including renewal leases for approximately 95,000 square feet and new leases for approximately 13,000 square feet.
GAAP rental rates on new and renewal leases were 17.9% higher compared to prior GAAP rental rates for the same space.
Cash rental rates on new and renewal leases were 8.0% higher compared to prior cash rental rates for the same space.

The definitions and reconciliations of same property NOI and same property cash NOI to net income, determined in accordance with GAAP, are included at the end of this press release. The same property portfolio includes properties continuously owned from January 1, 2018 through March 31, 2019 and excludes properties sold or classified as held for sale during the period.

Significant events during the quarter ended March 31, 2019
The company authorized the repurchase of $150 million of its outstanding common shares, replacing the expiring authorization.
The company completed the sale of 1735 Market Street, a 1,287,000 square foot, office building in Philadelphia, PA, for a gross price of $451.6 million. Proceeds after credits for capital costs, contractual lease costs, and rent abatements were approximately $435.4 million.

Subsequent Events
The company sold 600 108th Avenue NE in Bellevue, WA, for a gross price of $195 million. The property includes a 254,510 square foot office building and additional development rights.
The company currently has one property totaling 1.1 million square feet in the sale process.

Earnings Conference Call & Supplemental Data
Equity Commonwealth will host a conference call to discuss first quarter results on Tuesday, April 30, 2019, at 8:00 A.M. CDT. The conference call will be available via live audio webcast on the Investor Relations section of the companys website (www.eqcre.com). A replay of the audio webcast will also be available following the call.

A copy of EQCs First Quarter 2019 Supplemental Operating and Financial Data is available on the Investor Relations section of EQCs website at www.eqcre.com.

About Equity Commonwealth
Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States. As of April 29, 2019, EQCs portfolio comprised 8 properties and 3.6 million square feet.

Regulation FD Disclosures
We intend to use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

Forward-Looking Statements
Some of the statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to the marketing of certain properties for sale, consummating any sales, and future share repurchases. Any forward-looking statements contained in this press release are intended to be made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as may, will, should, expects, intends, plans, anticipates, believes, estimates, predicts, or potential or the negative of these words and phrases or similar words or phrases

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which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this press release reflect the companys current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause the companys actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the companys future results to differ materially from any forward-looking statements, see the section entitled Risk Factors in the companys Annual Report on Form 10-K for the year ended December 31, 2018.



Contact:
Sarah Byrnes, Investor Relations
(312) 646-2801
[email protected]









    




3

CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)


 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Real estate properties:
 
 
 
Land
$
110,395

 
$
135,142

Buildings and improvements
704,142

 
1,004,500

 
814,537

 
1,139,642

Accumulated depreciation
(245,528
)
 
(375,968
)
 
569,009

 
763,674

Acquired real estate leases, net
183

 
275

Cash and cash equivalents
3,069,501

 
2,400,803

Marketable securities

 
249,602

Restricted cash
1,767

 
3,298

Rents receivable
31,151

 
51,089

Other assets, net
42,326

 
62,031

Total assets
$
3,713,937

 
$
3,530,772

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Senior unsecured debt, net
$
248,689

 
$
248,473

Mortgage notes payable, net
26,288

 
26,482

Accounts payable, accrued expenses and other
42,280

 
62,368

Rent collected in advance
5,119

 
9,451

Total liabilities
$
322,376

 
$
346,774

 
 
 
 
Shareholders' equity:
 
 
 
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
 
 
 
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880
$
119,263

 
$
119,263

Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 121,899,625 and 121,572,155 shares issued and outstanding, respectively
1,219

 
1,216

Additional paid in capital
4,304,560

 
4,305,974

Cumulative net income
3,081,492

 
2,870,974

Cumulative other comprehensive loss

 
(342
)
Cumulative common distributions
(3,420,512
)
 
(3,420,548
)
Cumulative preferred distributions
(695,733
)
 
(693,736
)
Total shareholders’ equity
3,390,289

 
3,182,801

Noncontrolling interest
1,272

 
1,197

Total equity
$
3,391,561

 
$
3,183,998

Total liabilities and equity
$
3,713,937

 
$
3,530,772



4

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)



 
Three Months Ended
 
March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental revenue
$
38,890

 
$
55,273

Other revenue
2,862

 
3,315

Total revenues
$
41,752

 
$
58,588

 
 
 
 
Expenses:
 
 
 
Operating expenses
$
15,780

 
$
24,599

Depreciation and amortization
8,585

 
13,903

General and administrative
12,096

 
13,339

Loss on asset impairment

 
12,087

Total expenses
$
36,461

 
$
63,928

 
 
 
 
Interest and other income, net
17,775

 
5,780

Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $165 and $801, respectively)
(4,206
)
 
(10,115
)
Loss on early extinguishment of debt

 
(4,867
)
Gain on sale of properties, net
193,037

 
205,211

Income before income taxes
211,897

 
190,669

Income tax expense
(1,300
)
 
(3,007
)
Net income
$
210,597

 
$
187,662

Net income attributable to noncontrolling interest
(79
)
 
(63
)
Net income attributable to Equity Commonwealth
$
210,518

 
$
187,599

Preferred distributions
(1,997
)
 
(1,997
)
Net income attributable to Equity Commonwealth common shareholders
$
208,521

 
$
185,602

Weighted average common shares outstanding — basic (1)
121,960

 
123,867

Weighted average common shares outstanding — diluted (1)
125,822

 
127,097

 
 
 
 
Earnings per common share attributable to Equity Commonwealth common shareholders:
 
 
 
Basic
$
1.71

 
$
1.50

Diluted
$
1.67

 
$
1.48

Certain reclassifications were made to conform the prior period to our presentation of the condensed consolidated statements of operations due to the impact of adopting ASU 2016-02.  Amounts that were previously disclosed as "Tenant reimbursements and other income" are now included in "Rental revenue" and are no longer presented as a separate line item.  Parking revenues that do not represent components of leases and were previously disclosed as "Rental income" are now included in "Other revenue."  Subsequent to January 1, 2019, provisions for credit losses are included in "Rental revenue."  Provisions for credit losses prior to January 1, 2019 were disclosed as "Operating expenses" and were not reclassified to conform prior periods to the current presentation.
(1)
Weighted average common shares outstanding for the three months ended March 31, 2019 and 2018 includes 187 and 307 unvested, earned RSUs, respectively.

5

CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(amounts in thousands, except per share data)


 
Three Months Ended
 
March 31,
 
2019
 
2018
Calculation of FFO
 
 
 
Net income
$
210,597

 
$
187,662

Real estate depreciation and amortization
8,277

 
13,603

Loss on asset impairment

 
12,087

Gain on sale of properties, net
(193,037
)
 
(205,211
)
FFO attributable to Equity Commonwealth
25,837

 
8,141

Preferred distributions
(1,997
)
 
(1,997
)
FFO attributable to EQC common shareholders and unitholders
$
23,840

 
$
6,144

 
 
 
 
Calculation of Normalized FFO
 
 
 
FFO attributable to EQC common shareholders and unitholders
$
23,840

 
$
6,144

Lease value amortization
(39
)
 
98

Straight line rent adjustments
(837
)
 
(1,528
)
Loss on early extinguishment of debt

 
4,867

Loss on sale of securities

 
4,987

Income taxes related to gains on property sales, net
150

 
2,969

Normalized FFO attributable to EQC common shareholders and unitholders
$
23,114

 
$
17,537

 
 
 
 
Weighted average common shares and units outstanding -- basic (1)
122,006

 
123,910

Weighted average common shares and units outstanding -- diluted (1)
123,305

 
124,734

 
 
 
 
FFO attributable to EQC common shareholders and unitholders per share and unit -- basic
$
0.20

 
$
0.05

FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted
$
0.19

 
$
0.05

Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- basic
$
0.19

 
$
0.14

Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted
$
0.19

 
$
0.14

(1)
Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic for the three months ended March 31, 2019 and 2018 include 46 and 43 LTIP/Operating Partnership Units, respectively, that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only).





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We compute FFO in accordance with standards established by NAREIT. NAREIT defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate, and our portion of these items related to equity investees and noncontrolling interests.  Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.  FFO and Normalized FFO are supplemental non-GAAP financial measures. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income (loss), net income (loss) attributable to EQC common shareholders, and cash flow from operating activities.
 
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 do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income (loss), net income (loss) attributable to EQC common shareholders, or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders, and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.




7

CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(amounts in thousands)


 
For the Three Months Ended
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
Calculation of Same Property NOI and Same Property Cash Basis NOI:
 
 
 
 
 
 
 
 
 
Rental revenue
$
38,890

 
$
39,756

 
$
43,770

 
$
45,569

 
$
55,273

Other revenue
2,862

 
3,169

 
3,103

 
3,067

 
3,315

Operating expenses
(15,780
)
 
(15,539
)
 
(20,257
)
 
(19,521
)
 
(24,599
)
NOI
$
25,972

 
$
27,386

 
$
26,616

 
$
29,115

 
$
33,989

Straight line rent adjustments
(837
)
 
(986
)
 
(1,435
)
 
(1,022
)
 
(1,528
)
Lease value amortization
(39
)
 
(22
)
 
(4
)
 
(18
)
 
98

Lease termination fees

 
(19
)
 
(395
)
 
(1,557
)
 
(965
)
Cash Basis NOI
$
25,096

 
$
26,359

 
$
24,782

 
$
26,518

 
$
31,594

Cash Basis NOI from non-same properties (1)
(3,718
)
 
(6,240
)
 
(4,696
)
 
(6,511
)
 
(12,101
)
Same Property Cash Basis NOI
$
21,378

 
$
20,119

 
$
20,086

 
$
20,007

 
$
19,493

Non-cash rental income and lease termination fees from same properties
(7
)
 
45

 
(22
)
 
284

 
483

Same Property NOI
$
21,371

 
$
20,164

 
$
20,064

 
$
20,291

 
$
19,976

 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Property NOI to GAAP Net Income:
 
 
 
 
 
 
 
 
 
Same Property NOI
$
21,371

 
$
20,164

 
$
20,064

 
$
20,291

 
$
19,976

Non-cash rental income and lease termination fees from same properties
7

 
(45
)
 
22

 
(284
)
 
(483
)
Same Property Cash Basis NOI
$
21,378

 
$
20,119

 
$
20,086

 
$
20,007

 
$
19,493

Cash Basis NOI from non-same properties (1)
3,718

 
6,240

 
4,696

 
6,511

 
12,101

Cash Basis NOI
$
25,096

 
$
26,359

 
$
24,782

 
$
26,518

 
$
31,594

Straight line rent adjustments
837

 
986

 
1,435

 
1,022

 
1,528

Lease value amortization
39

 
22

 
4

 
18

 
(98
)
Lease termination fees

 
19

 
395

 
1,557

 
965

NOI
$
25,972

 
$
27,386

 
$
26,616

 
$
29,115

 
$
33,989

Depreciation and amortization
(8,585
)
 
(10,830
)
 
(11,287
)
 
(13,021
)
 
(13,903
)
General and administrative
(12,096
)
 
(8,973
)
 
(10,905
)
 
(11,222
)
 
(13,339
)
Loss on asset impairment

 

 

 

 
(12,087
)
Interest and other income, net
17,775

 
15,741

 
12,626

 
12,668

 
5,780

Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $165 and $801, respectively)
(4,206
)
 
(5,035
)
 
(5,085
)
 
(6,350
)
 
(10,115
)
Loss on early extinguishment of debt

 
(719
)
 

 
(1,536
)
 
(4,867
)
Gain (loss) on sale of properties, net
193,037

 
(1,608
)
 
20,877

 
26,937

 
205,211

Income before income taxes
$
211,897

 
$
15,962

 
$
32,842

 
$
36,591

 
$
190,669

Income tax (expense) benefit
(1,300
)
 
(540
)
 
(65
)
 
456

 
(3,007
)
Net income
$
210,597

 
$
15,422

 
$
32,777

 
$
37,047

 
$
187,662

 
 
 
 
 
 
 
 
 
 
Same Property capitalized external legal costs(2)
N/A

 
$

 
$
9

 
$
63

 
$
76


(1
)
Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale and land parcels.
(2
)
Effective January 1, 2019, with the adoption of ASU 2016-02, we no longer capitalize external legal costs incurred when we enter into leases. We did not recast the comparative prior periods presented for the external legal leasing costs capitalized in those periods.



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NOI is income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses. Cash Basis NOI is NOI excluding the effects of straight line rent adjustments, lease value amortization, and lease termination fees. The quarter-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2018 through March 31, 2019. Land parcels and properties classified as held for sale within our condensed consolidated balance sheets are excluded from the same property versions of these measures.
 
We consider these supplemental non-GAAP financial measures to be appropriate supplemental measures to net income (loss) because they may help to understand the operations of our properties. We use these measures internally to evaluate property level performance, and we believe that they provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. Cash Basis NOI is among the factors considered with respect to acquisition, disposition and financing decisions. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income (loss), net income (loss) attributable to Equity Commonwealth common shareholders, or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income (loss), net income (loss) attributable to EQC common shareholders, and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate these measures differently than we do.



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Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




397707241_a4propbanner33119.jpg

Equity Commonwealth
Supplemental Operating
and Financial Data

First Quarter 2019

397707241_eqcblueboxonlya06.jpg



Corporate Headquarters                                Investor Relations
Two North Riverside Plaza                                Sarah Byrnes
Suite 2100                                        (312) 646-2801
Chicago, IL 60606                                    [email protected]
(312) 646-2800                                        www.eqcre.com





TABLE OF CONTENTS

Corporate Information
 
Company Profile and Investor Information
 
 
 
Financial Information
 
Key Financial Data
 
Condensed Consolidated Balance Sheets
 
Additional Balance Sheet Information
 
Condensed Consolidated Statements of Operations
 
Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI
 
Same Property Results of Operations
 
Calculation of EBITDA, EBITDAre, and Adjusted EBITDAre
 
Calculation of Funds from Operations (FFO) and Normalized FFO
 
Debt Summary
 
Debt Maturity Schedule
 
Leverage Ratios, Coverage Ratios and Public Debt Covenants
 
Acquisitions and Dispositions
 
 
 
Portfolio Information
 
Property Detail
 
Leasing Summary
 
Same Property Leasing Summary
 
Capital Summary - Expenditures & Same Property Leasing Commitments
 
Tenants Representing 1.5% or More of Annualized Rental Revenue
 
Same Property Lease Expiration Schedule
 
 
 
Additional Support
 
Common & Potential Common Shares
 
Definitions
 
 
 
Forward-Looking Statements
 
 
 
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to our capital resources, portfolio performance, results of operations or anticipated market conditions. Any forward-looking statements contained in this presentation are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
 
 
 
The forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018.
 
 
 
Regulation FD Disclosures
 
 
 
 
We intend to use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

2


COMPANY PROFILE AND INVESTOR INFORMATION

Equity Commonwealth (NYSE: EQC) is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties in the United States.
Same Property Statistics
No. of
 
 
 
 Properties
Sq. Feet
% Leased
% Commenced
9
3,833
94.4%
93.7%
 Senior Unsecured Debt Ratings
 
 
 NYSE Trading Symbols
 Moody's: Baa2
 
 
 Common Stock: EQC
 Standard & Poor's: BBB-
 
 
 Preferred Stock Series D: EQCPD
 
 
 
 
Board of Trustees
Sam Zell (Chairman)
 
David A. Helfand
 
Kenneth Shea
James S. Corl
 
Peter Linneman (Lead Independent Trustee)
 
Gerald A. Spector
Martin L. Edelman
 
James L. Lozier, Jr.
 
James A. Star
Edward A. Glickman
 
Mary Jane Robertson
 
 
 
 
 
 
 
Senior Management
David A. Helfand
 
David S. Weinberg
 
 
President and Chief Executive Officer
 
Executive Vice President and
 
 
 
 
Chief Operating Officer
 
 
 
 
 
 
 
Adam S. Markman
 
Orrin S. Shifrin
 
 
Executive Vice President,
 
Executive Vice President,
 
 
Chief Financial Officer and Treasurer
 
General Counsel and Secretary
 
 
Equity Research Coverage (1)
Bank of America / Merrill Lynch
James Feldman
(646) 855-5808
Citigroup
Michael Bilerman
(212) 816-1383
Green Street Advisors
Daniel Ismail
(949) 640-8780
JMP Securities
Mitch Germain
(212) 906-3546
Stifel Nicolaus
John Guinee
(443) 224-1307
 
 
 
 
Debt Research Coverage (1)
J.P.Morgan
Mark Streeter
(212) 834-5086
Wells Fargo Securities
Thierry Perrein
(704) 410-3262
 
 
 
 
Rating Agencies (1)
Moody's Investors Service
Lori Marks
(212) 553-1098
Standard & Poor's
Fernanda Hernandez
(212) 438-1347

Certain terms are defined in the definitions section of this document.
 
 
(1)
Any opinions, estimates or forecasts regarding EQC's performance made by these analysts or agencies do not represent opinions, forecasts or predictions of EQC or its management. EQC does not by its reference to the analysts and agencies above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies.

3


KEY FINANCIAL DATA
(amounts in thousands, except per share data)

 
 
As of and for the Three Months Ended
 
 
3/31/2019

 
12/31/2018

 
9/30/2018

 
6/30/2018

 
3/31/2018

OPERATING INFORMATION
 
Ending property count (1)
9

 
10

 
11

 
13

 
13

 
Ending square footage (1)(2)
3,833

 
5,120

 
5,410

 
6,341

 
6,344

 
Percent leased (1)
94.4
 %
 
94.8
 %
 
94.0
 %
 
89.8
 %
 
88.6
 %
 
Percent commenced (1)
93.7
 %
 
91.2
 %
 
91.3
 %
 
87.7
 %
 
83.5
 %
 
Net income attributable to EQC common shareholders
$
208,521

 
$
13,420

 
$
30,767

 
$
35,036

 
$
185,602

 
Adjusted EBITDAre (3)
31,651

 
34,154

 
30,454

 
30,561

 
31,417

SAME PROPERTY OPERATING INFORMATION
 
Ending square footage
3,833

 
3,833

 
3,833

 
3,838

 
3,841

 
Percent leased
94.4
 %
 
95.5
 %
 
94.6
 %
 
94.0
 %
 
92.3
 %
 
Percent commenced
93.7
 %
 
93.9
 %
 
93.3
 %
 
91.7
 %
 
91.2
 %
 
Same Property NOI (3)
$
21,371

 
$
20,164

 
$
20,064

 
$
20,291

 
$
19,976

 
Same Property Cash Basis NOI (3)
21,378

 
20,119

 
20,086

 
20,007

 
19,493

 
Same Property NOI margin
65.3
 %
 
63.4
 %
 
63.3
 %
 
65.1
 %
 
65.0
 %
 
Same Property Cash Basis NOI margin
65.3
 %
 
63.4
 %
 
63.3
 %
 
64.8
 %
 
64.4
 %
SHARES OUTSTANDING AND PER SHARE DATA (4)
 
Shares Outstanding at End of Period
 
 
 
 
 
 
 
 
 
 
Common stock outstanding - basic (5)
121,900

 
121,572

 
121,483

 
121,483

 
121,457

 
Dilutive restricted share units (RSUs), Operating Partnership Units, and LTIP Units (4)
1,566

 
1,809

 
1,414

 
1,235

 
1,377

 
Dilutive Series D Convertible Preferred Shares outstanding (6)
2,563

 

 

 

 
2,363

 
Preferred Stock Outstanding (6)
4,915

 
4,915

 
4,915

 
4,915

 
4,915

 
Weighted Average Shares Outstanding - GAAP
 
 
 
 
 
 
 
 
 
 
Basic (5)
121,960

 
121,749

 
121,845

 
121,822

 
123,867

 
Diluted (5)
125,822

 
123,376

 
122,851

 
122,649

 
127,097

 
Distributions Declared Per Common Share
$

 
$

 
$
2.50

 
$

 
$

BALANCE SHEET
 
Total assets
$
3,713,937

 
$
3,530,772

 
$
3,813,728

 
$
3,776,874

 
$
4,137,306

 
Total liabilities
322,376

 
346,774

 
644,217

 
334,565

 
735,827

ENTERPRISE VALUE
 
Total debt (book value)
$
274,977

 
$
274,955

 
$
279,901

 
$
280,012

 
$
678,527

 
Less: Cash and cash equivalents
(3,069,501
)
 
(2,400,803
)
 
(2,673,328
)
 
(2,507,117
)
 
(2,837,671
)
 
Plus: Market value of preferred shares
134,480

 
124,109

 
128,451

 
127,943

 
127,746

 
Plus: Market value of diluted common shares
4,036,090

 
3,698,580

 
3,943,753

 
3,865,605

 
3,767,312

 
Total enterprise value
$
1,376,046

 
$
1,696,841

 
$
1,678,777

 
$
1,766,443

 
$
1,735,914

RATIOS
 
Net debt / enterprise value
(203.1
)%
 
(125.3
)%
 
(142.6
)%
 
(126.1
)%
 
(124.4
)%
 
Net debt / annualized adjusted EBITDAre (3)
(22.1)x

 
(15.6)x

 
(19.6)x

 
(18.2)x

 
(17.2)x

 
Adjusted EBITDAre (3) / interest expense
7.5x

 
6.8x

 
6.0x

 
4.8x

 
3.1x

(1)
Excludes properties classified as held for sale and land parcels.
(2)
Changes in total square footage result from property dispositions, reclassifications, and remeasurement.
(3)
Non-GAAP financial measures are defined and reconciled to the most directly comparable GAAP measure, herein.
(4)
Restricted share units (RSUs) and LTIP Units are equity awards that contain both service and market-based vesting components. Refer to the schedule of Common & Potential Common Shares for information regarding RSUs and LTIP Units and their impact on weighted average shares outstanding.
(5)
Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.
(6)
As of March 31, 2019, we had 4,915 series D preferred shares outstanding that were convertible into 2,563 common shares. The series D preferred shares are dilutive for GAAP EPS for the three months ended March 31, 2019 and 2018, and are anti-dilutive for GAAP EPS for all other periods presented. Refer to the schedule of Common & Potential Common Shares for information regarding the series D preferred shares and their impact on diluted weighted average shares outstanding for EPS, FFO per share and Normalized FFO per share.

4


CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)

 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
Real estate properties:
 
 
 
Land
$
110,395

 
$
135,142

Buildings and improvements
704,142

 
1,004,500

 
814,537

 
1,139,642

Accumulated depreciation
(245,528
)
 
(375,968
)
 
569,009

 
763,674

Acquired real estate leases, net
183

 
275

Cash and cash equivalents
3,069,501

 
2,400,803

Marketable securities

 
249,602

Restricted cash
1,767

 
3,298

Rents receivable
31,151

 
51,089

Other assets, net
42,326

 
62,031

Total assets
$
3,713,937

 
$
3,530,772

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Senior unsecured debt, net
$
248,689

 
$
248,473

Mortgage notes payable, net
26,288

 
26,482

Accounts payable, accrued expenses and other
42,280

 
62,368

Rent collected in advance
5,119

 
9,451

Total liabilities
$
322,376

 
$
346,774

 
 
 
 
Shareholders' equity:
 
 
 
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
 
 
 
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880
$
119,263

 
$
119,263

Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 121,899,625 and 121,572,155 shares issued and outstanding, respectively
1,219

 
1,216

Additional paid in capital
4,304,560

 
4,305,974

Cumulative net income
3,081,492

 
2,870,974

Cumulative other comprehensive loss

 
(342
)
Cumulative common distributions
(3,420,512
)
 
(3,420,548
)
Cumulative preferred distributions
(695,733
)
 
(693,736
)
Total shareholders’ equity
3,390,289

 
3,182,801

Noncontrolling interest
1,272

 
1,197

Total equity
$
3,391,561

 
$
3,183,998

Total liabilities and equity
$
3,713,937

 
$
3,530,772



5


ADDITIONAL BALANCE SHEET INFORMATION
(amounts in thousands)

 
March 31, 2019
December 31, 2018
Additional Balance Sheet Information
 
 
 
 
 
Straight-line rents receivable
$
27,966

$
47,393

Accounts receivable
3,185

3,696

Rents receivable
$
31,151

$
51,089

 
 
 
Capitalized lease incentives, net
$
1,721

$
4,308

Deferred leasing costs, net
31,058

51,123

Other
9,547

6,600

Other assets, net
$
42,326

$
62,031

 
 
 
Accounts payable
$
3,014

$
2,932

Accrued interest
759

4,432

Accrued taxes
7,914

13,228

Accrued capital expenditures
2,907

13,540

Accrued leasing costs
5,661

6,181

Assumed real estate lease obligations, net
78

117

Security deposits
4,141

4,137

Other accrued liabilities
17,806

17,801

Accounts payable and accrued expenses
$
42,280

$
62,368



6


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)

 
Three Months Ended
 
March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental revenue
$
38,890

 
$
55,273

Other revenue
2,862

 
3,315

Total revenues
$
41,752

 
$
58,588

 
 
 
 
Expenses:
 
 
 
Operating expenses
$
15,780

 
$
24,599

Depreciation and amortization
8,585

 
13,903

General and administrative
12,096

 
13,339

Loss on asset impairment

 
12,087

Total expenses
$
36,461

 
$
63,928

 
 
 
 
Interest and other income, net
17,775

 
5,780

Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $165 and $801, respectively)
(4,206
)
 
(10,115
)
Loss on early extinguishment of debt

 
(4,867
)
Gain on sale of properties, net
193,037

 
205,211

Income before income taxes
211,897

 
190,669

Income tax expense
(1,300
)
 
(3,007
)
Net income
$
210,597

 
$
187,662

Net income attributable to noncontrolling interest
(79
)
 
(63
)
Net income attributable to Equity Commonwealth
$
210,518

 
$
187,599

Preferred distributions
(1,997
)
 
(1,997
)
Net income attributable to Equity Commonwealth common shareholders
$
208,521

 
$
185,602

 
 
 
 
Weighted average common shares outstanding — basic (1)
121,960

 
123,867

Weighted average common shares outstanding — diluted (1)
125,822

 
127,097

 
 
 
 
Earnings per common share attributable to Equity Commonwealth common shareholders:
 
 
 
Basic
$
1.71

 
$
1.50

Diluted
$
1.67

 
$
1.48

Certain reclassifications were made to conform the prior period to our presentation of the condensed consolidated statements of operations due to the impact of adopting ASU 2016-02.  Amounts that were previously disclosed as "Tenant reimbursements and other income" are now included in "Rental revenue" and are no longer presented as a separate line item.  Parking revenues that do not represent components of leases and were previously disclosed as "Rental income" are now included in "Other revenue."  Subsequent to January 1, 2019, provisions for credit losses are included in "Rental revenue."  Provisions for credit losses prior to January 1, 2019 were disclosed as "Operating expenses" and were not reclassified to conform prior periods to the current presentation.
 
 
(1
)
Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

7


CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(amounts in thousands)

 
For the Three Months Ended
 
3/31/2019
 
12/31/2018
 
9/30/2018
 
6/30/2018
 
3/31/2018
Calculation of Same Property NOI and Same Property Cash Basis NOI:
 
 
 
 
 
 
 
 
 
Rental revenue
$
38,890

 
$
39,756

 
$
43,770

 
$
45,569

 
$
55,273

Other revenue
2,862

 
3,169

 
3,103

 
3,067

 
3,315

Operating expenses
(15,780
)
 
(15,539
)
 
(20,257
)
 
(19,521
)
 
(24,599
)
NOI
$
25,972

 
$
27,386

 
$
26,616

 
$
29,115

 
$
33,989

Straight line rent adjustments
(837
)
 
(986
)
 
(1,435
)
 
(1,022
)
 
(1,528
)
Lease value amortization
(39
)
 
(22
)
 
(4
)
 
(18
)
 
98

Lease termination fees

 
(19
)
 
(395
)
 
(1,557
)
 
(965
)
Cash Basis NOI
$
25,096

 
$
26,359

 
$
24,782

 
$
26,518

 
$
31,594

Cash Basis NOI from non-same properties (1)
(3,718
)
 
(6,240
)
 
(4,696
)
 
(6,511
)
 
(12,101
)
Same Property Cash Basis NOI
$
21,378

 
$
20,119

 
$
20,086

 
$
20,007

 
$
19,493

Non-cash rental income and lease termination fees from same properties
(7
)
 
45

 
(22
)
 
284

 
483

Same Property NOI
$
21,371

 
$
20,164

 
$
20,064

 
$
20,291

 
$
19,976

 
 
 
 
 
 
 
 
 
 
Reconciliation of Same Property NOI to GAAP Net Income:
 
 
 
 
 
 
 
 
 
Same Property NOI
$
21,371

 
$
20,164

 
$
20,064

 
$
20,291

 
$
19,976

Non-cash rental income and lease termination fees from same properties
7

 
(45
)
 
22

 
(284
)
 
(483
)
Same Property Cash Basis NOI
$
21,378

 
$
20,119

 
$
20,086

 
$
20,007

 
$
19,493

Cash Basis NOI from non-same properties (1)
3,718

 
6,240

 
4,696

 
6,511

 
12,101

Cash Basis NOI
$
25,096

 
$
26,359

 
$
24,782

 
$
26,518

 
$
31,594

Straight line rent adjustments
837

 
986

 
1,435

 
1,022

 
1,528

Lease value amortization
39

 
22

 
4

 
18

 
(98
)
Lease termination fees

 
19

 
395

 
1,557

 
965

NOI
$
25,972

 
$
27,386

 
$
26,616

 
$
29,115

 
$
33,989

Depreciation and amortization
(8,585
)
 
(10,830
)
 
(11,287
)
 
(13,021
)
 
(13,903
)
General and administrative
(12,096
)
 
(8,973
)
 
(10,905
)
 
(11,222
)
 
(13,339
)
Loss on asset impairment

 

 

 

 
(12,087
)
Interest and other income, net
17,775

 
15,741

 
12,626

 
12,668

 
5,780

Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $165 and $801, respectively)
(4,206
)
 
(5,035
)
 
(5,085
)
 
(6,350
)
 
(10,115
)
Loss on early extinguishment of debt

 
(719
)
 

 
(1,536
)
 
(4,867
)
Gain (loss) on sale of properties, net
193,037

 
(1,608
)
 
20,877

 
26,937

 
205,211

Income before income taxes
$
211,897

 
$
15,962

 
$
32,842

 
$
36,591

 
$
190,669

Income tax (expense) benefit
(1,300
)
 
(540
)
 
(65
)
 
456

 
(3,007
)
Net income
$
210,597

 
$
15,422

 
$
32,777

 
$
37,047

 
$
187,662

 
 
 
 
 
 
 
 
 
 
Same Property capitalized external legal costs(2)
N/A

 
$

 
$
9

 
$
63

 
$
76

(1)
Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale and land parcels.
(2)
Effective January 1, 2019, with the adoption of ASU 2016-02, we no longer capitalize external legal costs incurred when we enter into leases. We did not recast the comparative prior periods presented for the external legal leasing costs capitalized in those periods.
 
 

8


SAME PROPERTY RESULTS OF OPERATIONS
(dollars and square feet in thousands)


 
For the Three Months Ended March 31,
 
2019
 
2018
 
% Change
Properties
9

 
9

 
 
Square Feet (1)
3,833

 
3,841

 
 
% Leased
94.4
%
 
92.3
%
 
2.1
%
% Commenced
93.7
%
 
91.2
%
 
2.5
%
 
 
 
 
 
 
Rental revenue
$
29,867

 
$
27,467

 
8.7
%
Other revenue
2,847

 
2,801

 
1.6
%
Straight line rent adjustment
(46
)
 
333

 
 
Lease value amortization
39

 
8

 
 
Lease termination fees

 
142

 
 
Total revenue
32,707

 
30,751

 
6.4
%
Operating expenses
(11,336
)
 
(10,775
)
 
5.2
%
NOI
$
21,371

 
$
19,976

 
7.0
%
NOI Margin
65.3
%
 
65.0
%
 
 
 
 
 
 
 
 
Straight line rent adjustment
$
46

 
$
(333
)
 
 
Lease value amortization
(39
)
 
(8
)
 
 
Lease termination fees

 
(142
)
 
 
Cash Basis NOI
$
21,378

 
$
19,493

 
9.7
%
Cash Basis NOI Margin
65.3
%
 
64.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Property capitalized external legal costs(2)

N/A

 
$
76

 
 

(1
)
The change in total square footage results from remeasurement.
(2
)
Effective January 1, 2019, with the adoption of ASU 2016-02, we no longer capitalize external legal costs incurred when we enter into leases. We did not recast the comparative prior periods presented for the external legal leasing costs capitalized in those periods.


9


CALCULATION OF EBITDA, EBITDAre, AND ADJUSTED EBITDAre
(amounts in thousands)


 
For the Three Months Ended
 
March 31,
 
2019
 
2018
Net income
$
210,597

 
$
187,662

Interest expense
4,206

 
10,115

Income tax expense
1,300

 
3,007

Depreciation and amortization
8,585

 
13,903

EBITDA
$
224,688

 
$
214,687

Loss on asset impairment

 
12,087

Gain on sale of properties, net
(193,037
)
 
(205,211
)
EBITDAre
$
31,651

 
$
21,563

Loss on early extinguishment of debt

 
4,867

Loss on sale of securities

 
4,987

Adjusted EBITDAre
$
31,651

 
$
31,417


 
 


10


CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(amounts in thousands, except per share data)

 
Three Months Ended
 
March 31,
 
2019
 
2018
Calculation of FFO
 
 
 
Net income
$
210,597

 
$
187,662

Real estate depreciation and amortization
8,277

 
13,603

Loss on asset impairment

 
12,087

Gain on sale of properties, net
(193,037
)
 
(205,211
)
FFO attributable to Equity Commonwealth
25,837

 
8,141

Preferred distributions
(1,997
)
 
(1,997
)
FFO attributable to EQC common shareholders and unitholders
$
23,840

 
$
6,144

 
 
 
 
Calculation of Normalized FFO
 
 
 
FFO attributable to EQC common shareholders and unitholders
$
23,840

 
$
6,144

Lease value amortization
(39
)
 
98

Straight line rent adjustments
(837
)
 
(1,528
)
Loss on early extinguishment of debt

 
4,867

Loss on sale of securities

 
4,987

Income taxes related to gains on property sales, net
150

 
2,969

Normalized FFO attributable to EQC common shareholders and unitholders
$
23,114

 
$
17,537

 
 
 
 
Weighted average common shares and units outstanding -- basic (1)
122,006

 
123,910

Weighted average common shares and units outstanding -- diluted (1)
123,305

 
124,734

FFO attributable to EQC common shareholders and unitholders per share and unit -- basic
$
0.20

 
$
0.05

FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted
$
0.19

 
$
0.05

Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- basic
$
0.19

 
$
0.14

Normalized FFO attributable to EQC common shareholders and unitholders per share and unit -- diluted
$
0.19

 
$
0.14

(1)
Our calculations of FFO and Normalized FFO attributable to EQC common shareholders and unitholders per share and unit - basic for the three months ended March 31, 2019 and 2018 include 46 and 43 LTIP/Operating Partnership Units, respectively, that are excluded from the calculation of basic earnings per common share attributable to EQC common shareholders (only). Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares and units outstanding.

11

DEBT SUMMARY
As of March 31, 2019
(dollars in thousands)

 
Interest Rate
 
Principal Balance
 
Maturity Date
Open at Par Date
 
Due at Maturity
 
Years to Maturity
Unsecured Debt:
 
 
 
 
 
 
 
 
 
 
Unsecured Fixed Rate Debt:
 
 
 
 
 
 
 
 
 
 
5.875% Senior Unsecured Notes Due 2020
5.88
%
 
$
250,000

 
9/15/2020
3/15/2020
 
$
250,000

 
1.5

 
 
 
 
 
 
 
 
 
 
 
Secured Debt:
 
 
 
 
 
 
 
 
 
 
Secured Fixed Rate Debt:
 
 
 
 
 
 
 
 
 
 
206 East 9th Street
5.69
%
 
$
25,856

 
1/5/2021
7/5/2020
 
$
24,836

 
1.8

 
 
 
 
 
 
 
 
 
 
 
Total / weighted average (1)
5.86
%
 
$
275,856

 
 
 
 
$
274,836

 
1.5

 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Total debt outstanding as of March 31, 2019, including net unamortized premiums, discounts, and deferred financing fees was $274,977.
 
 

12


DEBT MATURITY SCHEDULE
(dollars in thousands)

Scheduled Principal Payments During Period
Year
 
Unsecured Fixed Rate Debt
 
Secured Fixed Rate Debt
 
Total
 
Weighted Average Interest Rate
 
 
 
 
 
 
 
 
 
2019
 
$

 
$
423

 
$
423

 
5.7
%
2020
 
250,000

 
597

 
250,597

 
5.9
%
2021
 

 
24,836

 
24,836

 
5.7
%
Thereafter
 

 

 

 
%
 
 
$
250,000

 
$
25,856

 
$
275,856

(1) 
5.9
%
 
 
 
 
 
 
 
 
 
Percent
 
90.6
%
 
9.4
%
 
100.0
%
 
 
(1)
Total debt outstanding as of March 31, 2019, including net unamortized premiums, discounts, and deferred financing fees was $274,977.

13


LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
(dollars in thousands)

 
As of and for the Three Months Ended
 
3/31/2019

 
12/31/2018

 
9/30/2018

 
6/30/2018

 
3/31/2018

Leverage Ratios
 
 
 
 
 
 
 
 
 
Total debt / total assets
7.4
 %
 
7.8
 %
 
7.3
 %
 
7.4
 %
 
16.4
 %
Total debt / total market capitalization
6.2
 %
 
6.7
 %
 
6.4
 %
 
6.6
 %
 
14.8
 %
Total debt + preferred stock / total market capitalization
9.2
 %
 
9.7
 %
 
9.4
 %
 
9.5
 %
 
17.6
 %
Total debt / annualized adjusted EBITDAre (1)
2.2x

 
2.0x

 
2.3x

 
2.3x

 
5.4x

Total debt + preferred stock / annualized adjusted EBITDAre (1)
3.2x

 
2.9x

 
3.4x