Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter and nine months ended September 30, 2013. Results for the Quarter Ended September 30, 2013: Normalized funds from operations, or Normalized FFO, for the quarter ended September 30, 2013 were $27.9 million, or $0.51 per share, compared to Normalized FFO for the quarter ended September 30, 2012 of $25.6 million, or $0.54 per share. Net income was $2.0 million, or $0.04 per share, for the quarter ended September 30, 2013 compared to $11.8 million, or $0.25 per share, for the quarter ended September 30, 2012. Net income for the quarter ended September 30, 2013 includes a loss on asset impairment from discontinued operations of $10.1 million, or $0.19 per share. The weighted average number of common shares outstanding was 54.7 million and 47.1 million for the quarters ended September 30, 2013 and 2012, respectively. A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended September 30, 2013 and 2012 appears later in this press release. Results for the Nine Months Ended September 30, 2013: Normalized FFO for the nine months ended September 30, 2013 were $87.6 million, or $1.60 per share, compared to Normalized FFO for the nine months ended September 30, 2012 of $75.1 million, or $1.60 per share. Net income was $41.9 million, or $0.77 per share, for the nine months ended September 30, 2013 compared to $36.8 million, or $0.78 per share, for the nine months ended September 30, 2012. Net income for the nine months ended September 30, 2013 includes a net gain on sale of properties from discontinued operations of $8.2 million, or $0.15 per share, and a loss on asset impairment from discontinued operations of $10.1 million, or $0.19 per share.
The weighted average number of common shares outstanding was 54.7 million and 47.1 million for the nine months ended September 30, 2013 and 2012, respectively.A reconciliation of net income determined according to GAAP to FFO and Normalized FFO for the nine months ended September 30, 2013 and 2012 appears later in this press release. Occupancy and Leasing Results: As of September 30, 2013, 94.6% of GOV’s rentable square feet from continuing operations was leased, compared to 93.5% as of September 30, 2012, and 94.1% as of June 30, 2013. GOV entered into lease renewals for 176,008 rentable square feet and new leases for 69,438 rentable square feet during the quarter ended September 30, 2013 which had weighted average rental rates that were approximately 10.6% above prior rents for the same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition. The weighted average lease term based on square feet for leases entered into during the quarter ended September 30, 2013 was 7.8 years. Commitments for tenant improvements, leasing costs and concessions for leases entered into during the quarter ended September 30, 2013 totaled approximately $6.3 million, or $3.28 per square foot per year of the lease term. Recent Acquisition and Sales Activities: Since July 1, 2013, GOV has acquired or has entered agreements to acquire eight properties for an aggregate purchase price of $99.1 million, excluding acquisition costs, as follows:
- In August 2013, GOV acquired a previously disclosed warehouse property located in Chester, VA with 228,108 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the United States Army. The purchase price was $12.5 million, excluding acquisition costs.
- Also in August 2013, GOV acquired an office property located in Bethesda, MD with 128,645 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the National Institutes of Health. The purchase price was $18.3 million, excluding acquisition costs.
- In September 2013, GOV entered an agreement to acquire an office property located in Rancho Cordova, CA with 93,807 rentable square feet. This property is 100% leased to the State of California and occupied by the Department of Consumer Affairs. The contract purchase price is $20.7 million, excluding acquisition costs.
- Also in September 2013, GOV entered an agreement to acquire four office properties located in Fairfax, VA with a combined total of 170,940 rentable square feet. These properties are 100% leased to eight tenants, of which 51% is leased to the Commonwealth of Virginia and occupied by Northern Virginia Community College. The contract purchase price is $31.5 million, excluding acquisition costs.
- In October 2013, GOV entered an agreement to acquire an office property located in Montgomery, AL with 49,370 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the Social Security Administration. The contract purchase price is $16.1 million, excluding acquisition costs.
Conference Call:On Tuesday, October 29, 2013, at 1:00 p.m. Eastern Time, David Blackman, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the third quarter 2013 results. The conference call telephone number is (800) 553-5275. Participants calling from outside the United States and Canada should dial (612) 332-0932. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Tuesday, November 5, 2013. To hear the replay, dial (320) 365-3844. The replay pass code is 305212. A live audio webcast of the conference call will also be available in a listen only mode on GOV’s website, which is located at www.govreit.com. Participants wanting to access the webcast should visit GOV’s website about five minutes before the call. The archived webcast will be available for replay on GOV’s website for about one week after the call. The transcription, recording and retransmission in any way of GOV’s third quarter conference call are strictly prohibited without the prior written consent of GOV. Supplemental Data: A copy of GOV’s Third Quarter 2013 Supplemental Operating and Financial Data is available for download at GOV’s website, www.govreit.com. GOV’s website is not incorporated as part of this press release. GOV is a real estate investment trust, or REIT, which owns properties located throughout the United States that are majority leased to the U.S. Government and other government tenants. GOV is headquartered in Newton, Massachusetts. Please see the following pages for a more detailed statement of GOV’s operating results and financial condition and for an explanation of GOV’s calculation of FFO and Normalized FFO.
WARNING CONCERNING FORWARD LOOKING STATEMENTSTHIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER GOV USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, GOV IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON GOV’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. GOV’S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT GOV HAS ENTERED AGREEMENTS TO PURCHASE SIX PROPERTIES. THESE TRANSACTIONS ARE SUBJECT TO GOV’S SATISFACTORY COMPLETION OF DILIGENCE AND OTHER CUSTOMARY CLOSING CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS. THESE CONDITIONS MAY NOT BE MET. AS A RESULT, THESE TRANSACTIONS MAY NOT OCCUR, MAY BE DELAYED OR THEIR TERMS MAY CHANGE.
- THIS PRESS RELEASE STATES THAT GOV HAS THREE PROPERTIES CLASSIFIED AS HELD FOR SALE AS OF SEPTEMBER 30, 2013 AND THAT THE AGGREGATE NET BOOK VALUE OF THESE PROPERTIES TOTALED $25.6 MILLION. IMPLICATIONS OF THOSE STATEMENTS MAY BE THAT GOV WILL SELL THOSE PROPERTIES FOR AT LEAST $25.6 MILLION. HOWEVER, GOV MAY NOT BE ABLE TO SELL ANY OF THESE PROPERTIES OR MAY SELL THE PROPERTIES AT AMOUNTS THAT ARE LESS THAN THEIR CURRENT CARRYING VALUES.
EXCEPT AS REQUIRED BY LAW, GOV DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.(END)
|GOVERNMENT PROPERTIES INCOME TRUST|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS AND|
|NORMALIZED FUNDS FROM OPERATIONS|
|(amounts in thousands, except per share data)|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Real estate taxes||6,255||5,498||19,060||16,520|
|Other operating expenses||10,169||9,171||29,288||26,667|
|Depreciation and amortization||14,032||12,537||40,960||35,642|
|Acquisition related costs||1,562||763||1,701||1,057|
|General and administrative||2,941||3,529||9,350||9,071|
|Interest and other income||10||7||20||21|
|Interest expense (including net amortization of debt premiums and deferred|
|financing fees of $339, $339, $1,002 and $998, respectively)||(4,176)||(4,530)||(12,388)||(12,649)|
|Equity in earnings of an investee||64||115||219||236|
|Income from continuing operations before income tax benefit (expense)||11,985||11,719||43,067||35,687|
|Income tax benefit (expense)||36||(30)||(50)||(119)|
|Net income from continuing operations||12,021||11,689||43,017||35,568|
|Net income (loss) from discontinued operations||(10,055)||67||(1,121)||1,201|
|Calculation of Funds from Operations (FFO) and Normalized FFO:(1)|
|Plus: depreciation and amortization from continuing operations||14,032||12,537||40,960||35,642|
|Plus: depreciation and amortization from discontinued operations||242||519||1,026||1,639|
|Plus: loss on asset impairment from discontinued operations||10,142||-||10,142||-|
|Less: net gain on sale of properties from discontinued operations||-||-||(8,168)||-|
|Plus: acquisition related costs||1,562||763||1,701||1,057|
|Weighted average common shares outstanding||54,684||47,108||54,666||47,086|
|Per common share:|
|Income from continuing operations||$||0.22||$||0.25||$||0.79||$||0.76|
|Income (loss) from discontinued operations||$||(0.18)||$||-||$||(0.02)||$||0.03|
|GOVERNMENT PROPERTIES INCOME TRUST|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(amounts in thousands, except share data)|
|September 30,||December 31,|
|Real estate properties:|
|Buildings and improvements||1,267,669||1,233,468|
|Assets of discontinued operations||26,207||47,142|
|Acquired real estate leases, net||131,683||144,402|
|Cash and cash equivalents||2,697||5,255|
|Rents receivable, net||31,373||28,882|
|Deferred leasing costs, net||9,523||7,620|
|Deferred financing costs, net||4,366||5,718|
|Other assets, net||18,322||10,360|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Unsecured revolving credit facility||$||69,000||$||49,500|
|Unsecured term loan||350,000||350,000|
|Mortgage notes payable||91,343||93,127|
|Liabilities of discontinued operations||288||298|
|Accounts payable and accrued expenses||23,250||18,910|
|Due to related persons||1,784||3,719|
|Assumed real estate lease obligations, net||16,952||19,129|
|Commitments and contingencies|
|Common shares of beneficial interest, $.01 par value:|
|70,000,000 shares authorized, 54,722,468 and 54,643,888|
|shares issued and outstanding, respectively||547||547|
|Additional paid in capital||1,105,676||1,103,982|
|Cumulative net income||179,189||137,293|
|Cumulative other comprehensive income||32||99|
|Cumulative common distributions||(284,982)||(214,470)|
|Total shareholders' equity||1,000,462||1,027,451|
|Total liabilities and shareholders' equity||$||1,553,079||$||1,562,134|