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Section 1: 8-K (8-K)

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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): May 9, 2019
 
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, $.0001 par value per share
TIER
The New York Stock Exchange




Item 2.02                                 Results of Operations and Financial Condition.
 
On May 9, 2019, TIER REIT, Inc. released supplemental information regarding its financial results and operations for the quarter and the period ended March 31, 2019, by posting to its website its First Quarter 2019 Supplemental Operating and Financial Data. The supplemental information is included as Exhibit 99.1 to this report and is incorporated herein by reference.
The information included in this Item 2.02, including Exhibits 99.1, 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, or the Exchange Act.

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

99.1    First Quarter 2019 Supplemental Operating and Financial Data


                        




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: May 9, 2019
By:
/s/ Hannah Q. Wrenn
 
 
Hannah Q. Wrenn
 
 
Chief Accounting Officer
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
                                            

397878086_tierreit2018suppcover1q19.jpg


                                            

Supplemental Operating and Financial Data
For the Quarter Ended March 31, 2019

397878086_tierrgbfullcolora16.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 March 31, 2019, we owned interests in 17 operating office properties with approximately 6.1 million rentable square feet and two development properties that will consist of approximately 620,000 rentable square feet. As of March 31, 2019, our properties are located in five 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
 
 
 
Christie B. Kelly
 
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
 
Robert W. Baird & Co.
 
 
John Kim
 
Robert Stevenson
 
Mitch Germain
 
David Rodgers
 
 
212.885.4115
 
646.840.3217
 
212.906.3546
 
216.737.7341
 
 



                                            

Supplemental Operating and Financial Data
For the Quarter Ended March 31, 2019
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
24-25

Acquisition and Disposition Activities
26

Summary of Financing
27

Principal Payments by Year
28

Definitions of Non-GAAP Financial Measures
29-30


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,” "begin," "potential" 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, 2018 and Quarterly Report on Form 10-Q for the three months ended March 31, 2019. 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 March 31, 2019

Company Activity

On March 25, 2019, we announced our entry into a definitive merger agreement with Cousins Properties Incorporated (“Cousins”) and Murphy Subsidiary Holdings Corporation ( a wholly-owned subsidiary of Cousins)
to combine in a 100% stock-for-stock transaction (the “Merger”). Under the terms of the agreement, Cousins will issue 2.98 shares of newly issued common stock in exchange for each share of TIER common stock. The all-stock merger is intended to qualify as a tax-free “reorganization” for U.S. federal income tax purposes. Upon closing, Cousins and TIER stockholders will own approximately 72% and 28% of the combined company’s stock, respectively. The transaction is subject to customary closing conditions, including receipt of the approval of both Cousins and TIER stockholders.
Property Results
Occupancy at March 31, 2019, was 92.0%, reflecting an increase of 170 basis points from December 31, 2018.
67,000 square feet leased - 8,000 square feet of renewals, 27,000 square feet of expansions, and 32,000 square feet of new leasing.
Real Estate Activity
On January 31, 2019, we sold One & Two Eldridge Place and Three Eldridge Place (collectively, the “Eldridge Properties”), which are located in Houston, Texas, and contain 824,000 combined rentable square feet. In addition to the contract sales price of $78.4 million, we expect to receive additional insurance proceeds related to the loss, damage, and destruction suffered because of Hurricane Harvey and its aftermath, including a claim for the loss in value attributable to the storm. However, the ultimate timing and amounts to be collected for the remaining claims are currently undetermined. During the first quarter of 2019, we received $5.4 million in insurance proceeds related to our property damages claim.
On February 27, 2019, we acquired a 95% interest in land located at 3354 Peachtree Road in Atlanta, Georgia, for a future development project. The total purchase price of the joint venture transaction was $14.2 million (at 100%).
Capital Markets Activity
On February 6, 2019, our board of directors authorized a distribution of $0.18 per share of common stock for the first quarter of 2019, that was paid on March 29, 2019.
On March 1, 2019, we repaid the $75.5 million debt secured by our One BriarLake Plaza property. The debt was scheduled to mature in August 2021. We paid a $5.7 million pre-payment penalty in connection with the repayment.
During the three months ended March 31, 2019, we issued 1,441,969 shares of common stock under our at-the-market equity offering programs, for proceeds of $34.5 million, net of commissions and issuance costs.
Subsequent Event
A special meeting of stockholders will be held on June 12, 2019, to consider and vote on the proposed Merger with Cousins, as described above.


Supplemental Operating and
Financial Data
397878086_tierrgbfullcolora16.jpg
1Q’19
Page 1

                                            

Financial Highlights
(in thousands, except per share data, effective rent data, percentages, and number of properties)
 
 
 
 
 
 
 
 
 
 
 
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
Portfolio Summary:
 
 
 
 
 
 
 
 
 
 
Total operating office properties
 
17

 
19

 
18

 
18

 
18

Rentable square feet (100%) (operating properties)
 
6,149

 
6,973

 
6,657

 
6,657

 
6,657

Rentable square feet (own %) (operating properties)
 
5,940

 
6,764

 
6,633

 
6,633

 
6,633

Occupancy %
 
92.0
%
 
90.3
%
 
90.1
%
 
89.4
%
 
89.4
%
Executed % SF leased
 
92.3
%
 
90.5
%
 
90.4
%
 
89.8
%
 
89.6
%
Economic % SF leased
 
78.2
%
 
77.1
%
 
86.2
%
 
85.3
%
 
86.1
%
Average effective rent/square foot
 
$
31.41

 
$
30.92

 
$
32.89

 
$
32.60

 
$
32.55

 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
Financial Results:
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
50,092

 
$
55,552

 
$
54,832

 
$
53,990

 
$
54,143

Property related expenses
 
(11,050
)
 
(12,862
)
 
(13,262
)
 
(12,395
)
 
(13,155
)
Real estate taxes
 
(8,101
)
 
(8,625
)
 
(9,229
)
 
(9,074
)
 
(8,754
)
Property management fees
 
(63
)
 
(76
)
 
(80
)
 
(97
)
 
(85
)
NOI
 
$
30,878

 
$
33,989

 
$
32,261

 
$
32,424

 
$
32,149

Base rent
 
$
34,761

 
$
35,381

 
$
35,759

 
$
35,556

 
$
35,118

Free rent
 
$
(4,780
)
 
$
(2,379
)
 
$
(1,218
)
 
$
(1,776
)
 
$
(1,304
)
Net income (loss) attributable to common stockholders
 
$
(14,124
)
 
$
(27,779
)
 
$
22,645

 
$
(8,277
)
 
$
8,390

Diluted net income (loss) per common share (1)
 
$
(0.26
)
 
$
(0.52
)
 
$
0.43

 
$
(0.17
)
 
$
0.17

FFO attributable to common stockholders
 
$
10,510

 
$
20,055

 
$
50,678

 
$
18,804

 
$
9,889

Diluted FFO per common share
 
$
0.19

 
$
0.37

 
$
0.96

 
$
0.39

 
$
0.20

FFO attributable to common stockholders, excluding certain items
 
$
20,207

 
$
23,054

 
$
20,070

 
$
19,521

 
$
19,494

Diluted FFO, excluding certain items, per common share
 
$
0.37

 
$
0.42

 
$
0.38

 
$
0.40

 
$
0.40

Adjusted EBITDAre
 
$
26,806

 
$
25,770

 
$
26,407

 
$
28,359

 
$
28,203

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
54,320

 
53,622

 
51,900

 
47,684

 
47,645

Weighted average common shares outstanding - diluted
 
55,045

 
54,536

 
52,617

 
48,534

 
48,300

 
 
 
 
 
 
 
 
 
 
 
Selected Additional Trend Information:
 
 
 
 
 
 
 
 
 
 
Renewal % based on square feet
 
28
%
 
78
%
 
61
%
 
74
%
 
64
%
Distributions declared on common shares
 
$
9,994

 
$
9,698

 
$
9,671

 
$
8,628

 
$
8,626

Annualized distribution yield (2)
 
2.5
%
 
3.5
%
 
3.0
%
 
3.0
%
 
3.9
%
______________________________
(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.
(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 30-31.

Supplemental Operating and
Financial Data
397878086_tierrgbfullcolora16.jpg
1Q’19
Page 2

                                            

Financial Highlights (continued)
(in thousands, except stock prices, percentages, and ratios)
 
 
 
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
Selected Balance Sheet Items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total book value of real estate
 
$
1,331,951

 
$
1,365,084

 
$
1,386,255

 
$
1,434,814

 
$
1,430,355

 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
9,805

 
$
30,741

 
$
5,192

 
$
8,359

 
$
10,183

 
 
 
 
 
 
 
 
 
 
 
Unconsolidated cash and cash equivalents
(at ownership %)
 
$
464

 
$
345

 
$
550

 
$
327

 
$
282

 
 
 
 
 
 
 
 
 
 
 
Restricted cash
 
$
3,327

 
$
6,141

 
$
10,232

 
$
14,086

 
$
12,565

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
1,544,085

 
$
1,617,551

 
$
1,662,342

 
$
1,696,121

 
$
1,688,999

 
 
 
 
 
 
 
 
 
 
 
Mortgage debt
 
$
66,000

 
$
141,654

 
$
142,162

 
$
280,311

 
$
280,689

 
 
 
 
 
 
 
 
 
 
 
Revolving credit facility and term loans
 
$
597,000

 
$
575,000

 
$
591,000

 
$
608,000

 
$
612,000

 
 
 
 
 
 
 
 
 
 
 
Unconsolidated debt (at ownership %)
 
$
34,895

 
$
31,474

 
$
26,137

 
$
21,248

 
$
16,239

 
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
$
761,860

 
$
840,070

 
$
836,797

 
$
1,001,531

 
$
1,001,439

 
 
 
 
 
 
 
 
 
 
 
Capitalization:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of common stock outstanding
 
55,299

 
53,840

 
53,491

 
48,575

 
47,656

 
 
 
 
 
 
 
 
 
 
 
Restricted stock units outstanding
 
357

 
240

 
351

 
351

 
356

 
 
 
 
 
 
 
 
 
 
 
Shares of restricted stock outstanding
 
222

 
154

 
260

 
260

 
265

 
 
 
 
 
 
 
 
 
 
 
 
 
55,878

 
54,234

 
54,102

 
49,186

 
48,277

 
 
 
 
 
 
 
 
 
 
 
High stock price
 
$
28.96

 
$
24.32

 
$
24.98

 
$
24.22

 
$
20.51

 
 
 
 
 
 
 
 
 
 
 
Low stock price
 
$
19.63

 
$
19.59

 
$
22.66

 
$
18.06

 
$
17.04

 
 
 
 
 
 
 
 
 
 
 
Average closing stock price
 
$
23.75

 
$
22.40

 
$
23.67

 
$
20.81

 
$
19.01

 
 
 
 
 
 
 
 
 
 
 
Closing stock price
 
$
28.66

 
$
20.63

 
$
24.10

 
$
23.78

 
$
18.48

 
 
 
 
 
 
 
 
 
 
 
Market capitalization (1)
 
$
1,601,463

 
$
1,118,847

 
$
1,303,858

 
$
1,169,643

 
$
892,159

 
 
 
 
 
 
 
 
 
 
 
Total debt (2)
 
$
697,895

 
$
748,128

 
$
759,299

 
$
909,559

 
$
908,928

 
 
 
 
 
 
 
 
 
 
 
Net debt (3)
 
$
687,626

 
$
717,042

 
$
753,557

 
$
900,873

 
$
898,463

 
 
 
 
 
 
 
 
 
 
 
Total capitalization
 
$
2,299,358

 
$
1,866,975

 
$
2,063,157

 
$
2,079,202

 
$
1,801,087

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin % (4)
 
61.6
%
 
61.2
%
 
58.8
%
 
60.1
%
 
59.4
%
 
 
 
 
 
 
 
 
 
 
 
Normalized fixed charge coverage (5)
 
3.65

 
3.18

 
3.06

 
3.00

 
3.00

 
 
 
 
 
 
 
 
 
 
 
Normalized interest coverage (5)
 
3.72

 
3.39

 
3.14

 
3.12

 
3.13

 
 
 
 
 
 
 
 
 
 
 
Net debt/adjusted annualized estimated full period EBITDAre from properties owned at period end (5)
 
6.58x

 
7.03x

 
7.15x

 
7.94x

 
8.34x

 
 
 
 
 
 
 
 
 
 
 
Net debt/adjusted annualized estimated full period EBITDAre from properties owned at period end, including development properties (5) (6)
 
6.11x

 
6.12x

 
6.22x

 
7.13x

 
7.67x

 
 
 
 
 
 
 
 
 
 
 
 
(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
397878086_tierrgbfullcolora16.jpg
1Q’19
Page 3

                                            

Consolidated Balance Sheets
(in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Real estate
 
 
 
 
 
 
 
 
 
 
 
Land
 
$
148,122

 
$
154,422

 
$
150,473

 
$
156,517

 
$
156,577

 
Land held for development
 
50,240

 
36,830

 
45,059

 
45,059

 
45,059

 
Buildings and improvements, net
 
1,062,177

 
1,132,428

 
1,097,613

 
1,160,273

 
1,177,433

 
Real estate under development
 
71,412

 
41,404

 
93,110

 
72,965

 
51,286

 
Total real estate
 
1,331,951

 
1,365,084

 
1,386,255

 
1,434,814

 
1,430,355

 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
9,805

 
30,741

 
5,192

 
8,359

 
10,183

 
Restricted cash
 
3,327

 
6,141

 
10,232

 
14,086

 
12,565

 
Accounts receivable, net
 
61,237

 
67,335

 
69,592

 
80,755

 
76,385

 
Prepaid expenses and other assets
 
9,072

 
11,376

 
19,357

 
17,124

 
14,238

 
Investments in unconsolidated entities
 
30,187

 
32,746

 
32,112

 
31,714

 
31,314

 
Deferred financing fees, net
 
2,526

 
2,756

 
2,985

 
3,211

 
3,426

 
Acquired above-market leases, net
 

 

 
20

 
180

 
288

 
Other lease intangibles, net
 
95,980

 
101,372

 
103,511

 
105,878

 
110,245

 
Assets associated with real estate held for sale
 

 

 
33,086

 

 

Total assets
 
$
1,544,085

 
$
1,617,551

 
$
1,662,342

 
$
1,696,121

 
$
1,688,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage debt
 
$
66,000

 
$
141,654

 
$
142,162

 
$
280,311

 
$
280,689

 
Unsecured term loans
 
575,000

 
575,000

 
575,000

 
575,000

 
575,000

 
Unsecured revolving credit facility
 
22,000

 

 
16,000

 
33,000

 
37,000

 
Unamortized debt issuance costs
 
(1,450
)
 
(1,899
)
 
(2,029
)
 
(2,051
)
 
(2,156
)
 
Total notes payable, net
 
661,550

 
714,755

 
731,133

 
886,260

 
890,533

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
63,350

 
91,548

 
74,560

 
82,816

 
76,144

 
Acquired below-market leases, net
 
21,165

 
22,651

 
24,312

 
25,910

 
27,684

 
Other liabilities
 
15,795

 
11,116

 
6,471

 
6,545

 
7,078

 
Obligations associated with real estate held for sale
 

 

 
321

 

 

Total liabilities
 
761,860

 
840,070

 
836,797

 
1,001,531

 
1,001,439

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 

 

 

 

 

 
Convertible stock
 

 

 

 

 

 
Common stock
 
6

 
5

 
5

 
5

 
5

 
Additional paid-in capital
 
2,784,317

 
2,749,106

 
2,747,825

 
2,632,635

 
2,610,288

 
Cumulative distributions and net loss attributable to common stockholders
 
(2,002,087
)
 
(1,977,969
)
 
(1,940,492
)
 
(1,953,466
)
 
(1,936,561
)
 
Accumulated other comprehensive income (loss)
 
(3,617
)
 
3,409

 
15,262

 
12,462

 
10,479

 
Stockholders’ equity
 
778,619

 
774,551

 
822,600

 
691,636

 
684,211

 
Noncontrolling interests
 
3,606

 
2,930

 
2,945

 
2,954

 
3,349

Total equity
 
782,225

 
777,481

 
825,545

 
694,590

 
687,560

Total liabilities and equity
 
$
1,544,085

 
$
1,617,551

 
$
1,662,342

 
$
1,696,121

 
$
1,688,999

 
 
 
 
 
 
 
 
 
 
 
 
Common stock, number of shares issued and outstanding
 
55,298,782

 
53,839,766

 
53,490,819

 
48,574,724

 
47,655,669

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Supplemental Operating and
Financial Data
397878086_tierrgbfullcolora16.jpg
1Q’19
Page 4

                                            

 
Consolidated Statements of Operations
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
Revenue
 
 
 
 
 
 
 
 
 
 
 
Rental income
 
$
44,508

 
$
52,548

 
$
52,570

 
$
51,088

 
$
51,941

 
Straight-line rent and lease incentive revenue
 
4,098

 
1,229

 
453

 
862

 
591

 
Above- and below-market rent amortization
 
1,486

 
1,640

 
1,533

 
1,665

 
1,276

 
Lease termination fees
 

 
135

 
276

 
375

 
335

 
Total revenue
 
50,092

 
55,552

 
54,832

 
53,990

 
54,143

Expenses
 
 
 
 
 
 
 
 
 
 
 
Property related expenses
 
11,050

 
12,862

 
13,262

 
12,395

 
13,155

 
Real estate taxes
 
8,101

 
8,625

 
9,229

 
9,074

 
8,754

 
Property management fees
 
63

 
76

 
80

 
97

 
85

 
Total property operating expenses
 
19,214

 
21,563

 
22,571

 
21,566

 
21,994

 
Interest expense
 
5,411

 
5,392

 
6,782

 
8,011

 
7,705

 
Amortization of deferred financing costs
 
348

 
360

 
359

 
358

 
404

 
Total interest expense
 
5,759

 
5,752

 
7,141

 
8,369

 
8,109

 
Asset impairment losses
 
937

 
38,146

 
3,418

 

 

 
General and administrative
 
8,945

 
5,777

 
5,128

 
5,377

 
5,503

 
Real estate depreciation and amortization
 
22,843

 
24,390

 
24,770

 
27,011

 
24,500

 
Depreciation and amortization - non-real estate assets
 
60

 
62

 
64

 
123

 
116

 
Total expenses
 
57,758

 
95,690

 
63,092

 
62,446

 
60,222

 
Interest and other income
 
154

 
140

 
49

 
550

 
45

 
Loss on early extinguishment of debt
 
(6,025
)
 

 

 

 
(8,988
)
 
Gain on troubled debt restructuring
 

 

 
31,006

 

 

 
Gain (loss) on sale of assets
 

 
14,904

 

 
(90
)
 
12,014

 
Hurricane-related loss
 

 
(3,000
)
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes, equity in operations of investments. and gain (loss) on remeasurement of investment in unconsolidated entities
 
(13,537
)
 
(28,094
)
 
22,795

 
(7,996
)
 
(3,008
)
 
Provision for income taxes
 
(234
)
 
(197
)
 
(228
)
 
(214
)
 
(195
)
 
Equity in operations of investments
 
(446
)
 
431

 

 

 
287

 
Gain (loss) on remeasurement of investment in unconsolidated entities
 

 

 

 
(152
)
 
11,242

Net income (loss)
 
(14,217
)
 
(27,860
)
 
22,567

 
(8,362
)
 
8,326

 
Noncontrolling interests
 
93

 
81

 
78

 
85

 
64

Net income (loss) attributable to common stockholders
 
$
(14,124
)
 
$
(27,779
)
 
$
22,645

 
$
(8,277
)
 
$
8,390

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
54,319,635

 
53,621,536

 
51,899,779

 
47,684,152

 
47,645,050

Weighted average common shares outstanding - diluted (1)
 
54,319,635

 
53,621,536

 
52,616,570

 
47,684,152

 
48,299,882

 
 
 
 
 
 
 
 
 
 
 
 
Basic net income (loss) per common share
 
$
(0.26
)
 
$
(0.52
)
 
$
0.43

 
$
(0.17
)
 
$
0.18

Diluted net income (loss) per common share (1)
 
$
(0.26
)
 
$
(0.52
)
 
$
0.43

 
$
(0.17
)
 
$
0.17

 
 
 
 
 
 
 
 
 
 
 
 
Distributions declared per common share
 
$
0.18

 
$
0.18

 
$
0.18

 
$
0.18

 
$
0.18

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

Supplemental Operating and
Financial Data
397878086_tierrgbfullcolora16.jpg
1Q’19
Page 5

                                            

Calculations of FFO and Additional Information
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 Three Months Ended
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(14,217
)
 
$
(27,860
)
 
$
22,567

 
$
(8,362
)
 
$
8,326

Noncontrolling interests
 
93

 
81

 
78

 
85

 
64

Net income (loss) attributable to common stockholders
 
(14,124
)
 
(27,779
)
 
22,645

 
(8,277
)
 
8,390

Adjustments (1):
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization from consolidated properties
 
22,843

 
24,390

 
24,770

 
27,011

 
24,500

 
Real estate depreciation and amortization from unconsolidated properties
 
1,001

 
356

 

 

 
391

 
Real estate depreciation and amortization - noncontrolling interest
 
(450
)
 
(963
)
 
(544
)
 
(782
)
 
(433
)
 
Impairment of depreciable real estate assets
 
937

 
38,146

 
3,418

 

 

 
Loss (gain) on sale of depreciable real estate
 

 
(14,904
)
 

 
90

 
(12,014
)
 
Loss (gain) on remeasurement of investment in unconsolidated entities
 

 

 

 
152

 
(11,242
)
 
Noncontrolling interests
 
303

 
809

 
389

 
610

 
297

FFO attributable to common stockholders
 
10,510

 
20,055

 
50,678

 
18,804

 
9,889

 
 
 
 
 
 
 
 
 
 
 
Adjustments (1):
 
 
 
 
 
 
 
 
 
 
 
Severance charges
 

 

 

 
108

 
19

 
Merger expenses
 
3,674

 

 

 

 

 
Loss on early extinguishment of debt
 
6,025

 

 

 

 
8,988

 
Gain on troubled debt restructuring
 

 

 
(31,006
)
 

 

 
Hurricane-related loss
 

 
3,000

 

 

 

 
Default interest (2)
 

 

 
388

 
609

 
602

 
Noncontrolling interests
 
(2
)
 
(1
)
 
10

 

 
(4
)
FFO attributable to common stockholders, excluding certain items
 
$
20,207

 
$
23,054

 
$
20,070

 
$
19,521

 
$
19,494

 
 
 
 
 
 
 
 
 
 
 
Recurring capital expenditures (1)
 
$
(1,917
)
 
$
(3,079
)
 
$
(3,252
)
 
$
(2,337
)
 
$
(6,192
)
Straight-line rent adjustments (1)
 
$
(5,967
)
 
$
(2,396
)
 
$
(769
)
 
$
(1,165
)
 
$
(1,349
)
Above- and below-market rent amortization (1)
 
$
(1,458
)
 
$
(1,612
)
 
$
(1,503
)
 
$
(1,634
)
 
$
(1,245
)
Amortization of deferred financing costs (1)
 
$
396

 
$
384

 
$
359

 
$
358

 
$
436

Amortization of restricted shares and units
 
$
1,020

 
$
1,199

 
$
1,206

 
$
1,164

 
$
1,000

Depreciation and amortization - non-real estate assets
 
$
60

 
$
62

 
$
64

 
$
123

 
$
116

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
54,320

 
53,622

 
51,900

 
47,684

 
47,645

Weighted average common shares outstanding - diluted
 
55,045

 
54,536

 
52,617

 
48,534

 
48,300

 
 
 
 
 
 
 
 
 
 
 
Diluted FFO per common share
 
$
0.19

 
$
0.37

 
$
0.96

 
$
0.39

 
$
0.20

Diluted FFO, excluding certain items, per common share
 
$
0.37

 
$
0.42

 
$
0.38

 
$
0.40

 
$
0.40

 
 
 
 
 
 
 
 
 
 
 
 
We provided rent abatements and concessions to tenants at the Eldridge Properties as a result of Hurricane Harvey through the second quarter of 2018. The rent abatements and concessions were offset by business interruption and other insurance proceeds, net of a deductible and estimated saved expenses as detailed below:
Rent abatements
 
$

 
$

 
$

 
$
(775
)
 
$
(3,908
)
Business interruption and other insurance proceeds, net
 
$

 
$
3,462

 
$
719

 
$
358

 
$
3,337

 
 
 
 
 
 
 
 
 
 
 
 
(1) Includes our pro rata share of consolidated and unconsolidated amounts, including for our period of ownership of properties sold.
(2) We had a non-recourse loan in default that subjected us to incur default interest at a rate that was 500 basis points higher than the stated interest rate. The ownership of this property was conveyed to the lender in August 2018.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For additional information regarding the non-GAAP measures, see pages 29-30.

Supplemental Operating and
Financial Data
397878086_tierrgbfullcolora16.jpg
1Q’19
Page 6

                                            

Calculations of EBITDAre
(in thousands, except ratios)
 
 
 
 
 
 Three Months Ended
 
 
31-Mar-19
 
31-Dec-18
 
30-Sep-18
 
30-Jun-18
 
31-Mar-18
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
(14,217
)
 
$
(27,860
)
 
$
22,567

 
$
(8,362
)
 
$
8,326

 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
Interest expense - consolidated
5,411

 
5,392

 
6,782

 
8,011

 
7,705

 
Interest expense - unconsolidated entities
452

 
193

 

 

 
360

 
Amortization of deferred financing costs - consolidated
348

 
360

 
359

 
358

 
404

 
Amortization of deferred financing costs - unconsolidated entities
48

 
24

 

 

 
32

 
Total interest expense
6,259

 
5,969

 
7,141

 
8,369

 
8,501

 
 
 
 
 
 
 
 
 
 
 
 
Tax provision - consolidated
234

 
197

 
228

 
214

 
195

 
Tax provision - unconsolidated entities
2

 

 

 

 
14

 
Depreciation and amortization - consolidated
22,903

 
24,452

 
24,834

 
27,134

 
24,616

 
Depreciation and amortization - unconsolidated entities
1,001

 
356

 

 

 
391

 
Asset impairment losses
937

 
38,146

 
3,418

 

 

 
Loss (gain) on sale of real estate

 
(14,904
)
 

 
90

 
(12,014
)
 
Loss (gain) on remeasurement of investment in unconsolidated entities

 

 

 
152

 
(11,242
)
EBITDAre
17,119

 
26,356

 
58,188

 
27,597

 
18,787

 
 
 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
Loss on early extinguishment of debt
6,025

 

 

 

 
8,988

 
Merger expenses
3,674

 

 

 

 

 
Hurricane-related loss

 
3,000

 

 

 

 
Gain on troubled debt restructuring

 

 
(31,006
)
 

 

 
Non-cash write-off (recoveries), net of tenant receivables
(12
)
 
(14
)
 
(56
)
 
237

 

 
Rent abatements (recoveries), net, due to Hurricane Harvey (1)

 
(3,572
)
 
(719
)
 
417

 
409

 
Severance charges

 

 

 
108

 
19

Adjusted EBITDAre
26,806

 
25,770

 
26,407

 
28,359