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EX-99.2 - EX-99.2 - OFFICE PROPERTIES INCOME TRUSTa2205017zex99-2.pdf
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Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

Contacts:

 

Timothy A. Bonang, Vice President, Investor Relations

 

Elisabeth Heiss, Manager, Investor Relations

 

(617) 219-1440

 

Government Properties Income Trust Announces 2011 Second Quarter Results

 


 

Newton, MA (August 2, 2011): Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter and six months ended June 30, 2011.

 

Results for the Quarter Ended June 30, 2011:

 

Normalized funds from operations, or Normalized FFO, were $21.0 million for the quarter ended June 30, 2011, compared to $14.2 million for the same quarter last year.  Normalized FFO per share for the quarter ended June 30, 2011 was $0.52, compared to $0.45 for the same quarter last year.

 

Net income for the quarter ended June 30, 2011 was $10.9 million, or $0.27 per share, compared to $7.7 million, or $0.25 per share, for the quarter ended June 30, 2010.

 

GOV’s weighted average number of common shares outstanding was 40,505,745 and 31,260,553 for the quarters ended June 30, 2011 and 2010, respectively.

 

A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to FFO and Normalized FFO for the quarters ended June 30, 2011 and 2010 appears later in this press release.

 

Results for the Six Months Ended June 30, 2011:

 

Normalized FFO were $40.5 million for the six months ended June 30, 2011, compared to $26.7 million for the same period last year.  Normalized FFO per share for the six months ended June 30, 2011 was $1.00, compared to $0.89 for the same period last year.

 

Net income for the six months ended June 30, 2011 was $21.2 million, or $0.52 per share, compared to $14.6 million, or $0.48 per share, for the six months ended June 30, 2010.

 

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the New York Stock Exchange.

No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

 



 

GOV’s weighted average number of common shares outstanding was 40,503,286 and 30,178,353 for the six months ended June 30, 2011 and 2010, respectively.

 

A reconciliation of net income determined according to GAAP to FFO and Normalized FFO for the six months ended June 30, 2011 and 2010 appears later in this press release.

 

Recent Investment Activities:

 

Since April 1, 2011, GOV has acquired or has entered into purchase and sale agreements to acquire eleven properties for an aggregate purchase price of $327.3 million, including the assumption of $50 million of mortgage debt and excluding acquisition costs, as follows:

 

·                  In May 2011, GOV acquired a previously disclosed office property located in Plantation, FL with 135,819 rentable square feet. This property is 100% leased to the U.S. Government and occupied by the Internal Revenue Service. The purchase price was $40.8 million, excluding acquisition costs.

 

·                  Also in May 2011, GOV acquired a previously disclosed office property in New York, NY with 187,060 rentable square feet. This property is 100% leased to and occupied by the United Nations. The purchase price was $114.1 million, excluding acquisition costs.

 

·                  In June 2011, GOV acquired an office property in Milwaukee, WI with 29,297 rentable square feet. This property is 100% leased to the U.S. Government and occupied as a Military Entrance Processing Station. The purchase price was $6.8 million, excluding acquisition costs.

 

·                  Also in June 2011, GOV acquired two previously disclosed office properties in Stafford, VA with 64,488 rentable square feet. These properties are 100% leased to the U.S. Government and occupied by the Federal Bureau of Investigation. The purchase price was $11.6 million, excluding acquisition costs.

 

·                  Also in June 2011, GOV acquired a previously disclosed office property in Montgomery, AL with 57,815 rentable square feet. This property is 100% leased to the U.S. Government and serves as the office of the U.S. Attorney for the Middle District of Alabama. The purchase price was $11.6 million, excluding acquisition costs.

 

·                  In July 2011, GOV entered into a purchase agreement to acquire an office property located in Holtsville, NY with 264,482 rentable square feet.  This property is 82% leased to three tenants, of which 72% is leased to the U.S. Government and occupied by the Internal Revenue Service and U.S. Citizenship and Immigration Services.  The contract purchase price is $40.8 million, excluding acquisition costs.  This pending acquisition is subject to GOV’s satisfactory completion of diligence and other customary closing conditions; accordingly, GOV can provide no assurance that it will acquire this property.

 

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·                  Also in July 2011, GOV entered into a purchase agreement to acquire an office property located in Sacramento, CA with 87,863 rentable square feet.  This property is 100% leased to the State of California and occupied by the California State Employment Development Department.  The contract purchase price is $13.6 million, excluding acquisition costs.  This pending acquisition is subject to GOV’s satisfactory completion of diligence and other customary closing conditions; accordingly, GOV can provide no assurance that it will acquire this property.

 

·                  In addition, as previously disclosed, GOV entered into a purchase agreement to acquire three office properties located in Indianapolis, IN with 433,927 rentable square feet. These properties are 97% leased to 18 tenants, of which 58% is leased to the U.S. Government and occupied by the U.S. Customs and Border Protection Agency. The contract purchase price is $88 million, including the assumption of $50 million of mortgage debt and excluding acquisition costs. This pending acquisition is subject to GOV’s satisfactory completion of diligence and other customary closing conditions, as well as the assumption of mortgage debt; accordingly, GOV can provide no assurance that it will acquire these properties.

 

Recent Financing Activities:

 

·                  On July 25, 2011, GOV issued 6,500,000 common shares in a public offering at a price of $25.40 per share and raised net proceeds of $157.7 million.  The net proceeds from this offering were used to reduce amounts outstanding under GOV’s revolving credit facility and for general business purposes, including funding acquisitions.  GOV also granted the underwriters of the offering a 30-day option to purchase an additional 975,000 common shares to cover overallotments, if any.

 

Conference Call:

 

On Tuesday, August 2, 2011, at 1:00 p.m. Eastern Daylight Time, David Blackman, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the second quarter 2011 results.

 

The conference call telephone number is (800) 230-1074.  Participants calling from outside the United States and Canada should dial (612) 288-0337.  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 midnight Eastern Daylight Time on August 9, 2011.  To hear the replay, dial (320) 365-3844.  The replay pass code is 179321.

 

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.

 

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Supplemental Data:

 

A copy of GOV’s Second Quarter 2011 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.

 

Government Properties Income Trust is a real estate investment trust, or REIT, which owns properties located throughout the United States which are majority leased to the U.S. Government and several state government tenants.  As of June 30, 2011, GOV owned 64 properties with 7.6 million rentable square feet.  GOV is headquartered in Newton, Massachusetts.

 

Please see the following pages for a more detailed statement of our operating results and financial condition.

 

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Government Properties Income Trust

Condensed Consolidated Statements of Income and Normalized Funds from Operations

(amounts in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

Rental income

 

$

41,923

 

$

25,940

 

$

80,999

 

$

49,295

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Real estate taxes

 

4,637

 

2,764

 

9,094

 

5,332

 

Utility expenses

 

3,540

 

1,733

 

7,047

 

3,410

 

Other operating expenses

 

7,076

 

3,963

 

13,845

 

7,520

 

Depreciation and amortization

 

9,097

 

5,401

 

17,483

 

10,281

 

Acquisition related costs

 

1,009

 

1,011

 

1,838

 

1,855

 

General and administrative

 

2,566

 

1,623

 

4,909

 

3,082

 

Total expenses

 

27,925

 

16,495

 

54,216

 

31,480

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

13,998

 

9,445

 

26,783

 

17,815

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

20

 

16

 

35

 

68

 

Interest expense (including net amortization of debt premiums and deferred financing fees of $418, $624, $836 and $1,156, respectively)

 

(3,076

)

(1,678

)

(5,613

)

(3,209

)

Equity in earnings (losses) of an investee

 

46

 

(23

)

83

 

(52

)

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

10,988

 

7,760

 

21,288

 

14,622

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(56

)

(25

)

(102

)

(36

)

Net income

 

$

10,932

 

$

7,735

 

$

21,186

 

$

14,586

 

 

 

 

 

 

 

 

 

 

 

Calculation of Funds from Operations (FFO) and Normalized FFO (1)

 

 

 

 

 

 

 

 

 

Net income

 

$

10,932

 

$

7,735

 

$

21,186

 

$

14,586

 

Plus: depreciation and amortization

 

9,097

 

5,401

 

17,483

 

10,281

 

FFO

 

20,029

 

13,136

 

38,669

 

24,867

 

Plus: acquisition related costs

 

1,009

 

1,011

 

1,838

 

1,855

 

Normalized FFO

 

$

21,038

 

$

14,147

 

$

40,507

 

$

26,722

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

40,506

 

31,261

 

40,503

 

30,178

 

 

 

 

 

 

 

 

 

 

 

Per common share

 

 

 

 

 

 

 

 

 

Net income

 

$

0.27

 

$

0.25

 

$

0.52

 

$

0.48

 

FFO

 

$

0.49

 

$

0.42

 

$

0.95

 

$

0.82

 

Normalized FFO

 

$

0.52

 

$

0.45

 

$

1.00

 

$

0.89

 

 


(1) We compute FFO and Normalized FFO as shown above.  FFO is computed on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, computed in accordance with U.S. generally accepted accounting principles, or GAAP, plus real estate depreciation and amortization.  Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we exclude acquisition related costs.  We consider FFO and Normalized FFO to be appropriate measures of performance for a REIT, along with net income and cash flow from operating, investing and financing 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 can facilitate a comparison of operating performances between periods.  FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to shareholders.  Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility, the availability of debt and equity capital to us and our expectation of our future capital requirements and operating performance.  These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income or cash flow from operating activities, determined in accordance with GAAP, as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  We believe that this data may facilitate an understanding of our consolidated historical operating results. These measures should be considered in conjunction with net income and cash flow from operating activities as presented in our Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

 

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Government Properties Income Trust

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2011

 

2010

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Real estate properties:

 

 

 

 

 

Land

 

$

195,764

 

$

143,774

 

Buildings and improvements

 

984,033

 

833,719

 

 

 

1,179,797

 

977,493

 

Accumulated depreciation

 

(143,335

)

(131,046

)

 

 

1,036,462

 

846,447

 

Acquired real estate leases, net

 

80,075

 

60,097

 

Cash and cash equivalents

 

1,081

 

2,437

 

Restricted cash

 

1,593

 

1,548

 

Rents receivable, net

 

21,200

 

19,200

 

Deferred leasing costs, net

 

976

 

1,002

 

Deferred financing costs, net

 

2,971

 

3,935

 

Other assets, net

 

18,376

 

16,622

 

Total assets

 

$

1,162,734

 

$

951,288

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

338,000

 

$

118,000

 

Mortgage notes payable

 

45,898

 

46,428

 

Accounts payable and accrued expenses

 

17,885

 

14,436

 

Due to affiliates

 

3,060

 

1,348

 

Assumed real estate lease obligations, net

 

12,626

 

13,679

 

 

 

417,469

 

193,891

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares of beneficial interest, $.01 par value: 50,000,000 shares authorized, 40,510,800 and 40,500,800 shares issued and outstanding, respectively

 

405

 

405

 

Additional paid in capital

 

777,169

 

776,913

 

Cumulative net income

 

62,522

 

41,336

 

Cumulative other comprehensive income

 

44

 

2

 

Cumulative common distributions

 

(94,875

)

(61,259

)

Total shareholders’ equity

 

745,265

 

757,397

 

Total liabilities and shareholders’ equity

 

$

1,162,734

 

$

951,288

 

 

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WARNING CONCERNING FORWARD LOOKING STATEMENTS

 

THIS PRESS RELEASE CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS.  THESE FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.  OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.  FOR EXAMPLE:

 

·                  THIS PRESS RELEASE STATES THAT WE HAVE ENTERED AGREEMENTS TO PURCHASE PROPERTIES.  THESE TRANSACTIONS ARE SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS.  THESE TERMS AND CONDITIONS MAY NOT BE MET.  AS A RESULT, SOME OR ALL OF THESE TRANSACTIONS MAY NOT OCCUR OR MAY BE DELAYED.

 

·                  THIS PRESS RELEASE STATES THAT WE HAVE GRANTED THE UNDERWRITERS OF OUR COMMON SHARE OFFERING A 30-DAY OPTION TO PURCHASE AN ADDITIONAL 975,000 COMMON SHARES TO COVER OVERALLOTMENTS, IF ANY.  AN IMPLICATION OF THIS STATEMENT MAY BE THAT THIS OPTION MAY BE EXERCISED IN WHOLE OR IN PART.  IN FACT WE DO NOT KNOW WHETHER THE UNDERWRITERS WILL EXERCISE THIS OPTION, OR ANY PART OF IT.

 

THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING UNDER “RISK FACTORS” IN OUR PERIODIC REPORTS AND IN OUR PROSPECTUS SUPPLEMENT FILED JULY 21, 2011, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE ON ITS WEBSITE AT WWW.SEC.GOV.

 

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

 

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

 

(END)

 

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