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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 Third Quarter Results

 


 

Newton, MA (November 1, 2011): Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter and nine months ended September 30, 2011.

 

Results for the Quarter Ended September 30, 2011:

 

Normalized funds from operations, or Normalized FFO, were $23.0 million for the quarter ended September 30, 2011, compared to $15.7 million for the same quarter last year.  Normalized FFO per share for the quarter ended September 30, 2011 was $0.51, compared to $0.43 for the same quarter last year.

 

Net income for the quarter ended September 30, 2011 was $11.6 million, or $0.26 per share, compared to $6.7 million, or $0.18 per share, for the quarter ended September 30, 2010.

 

GOV’s weighted average number of common shares outstanding was 45,321,808 and 36,369,473 for the quarters ended September 30, 2011 and 2010, 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, 2011 and 2010 appears later in this press release.

 

Results for the Nine Months Ended September 30, 2011:

 

Normalized FFO were $63.5 million for the nine months ended September 30, 2011, compared to $42.4 million for the same period last year.  Normalized FFO per share for the nine months ended September 30, 2011 was $1.51, compared to $1.31 for the same period last year.

 

Net income for the nine months ended September 30, 2011 was $32.7 million, or $0.78 per share, compared to $21.3 million, or $0.66 per share, for the nine months ended September 30, 2010.

 

GOV’s weighted average number of common shares outstanding was 42,127,110 and 32,264,738 for the nine months ended September 30, 2011 and 2010, respectively.

 

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

 

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.

 



 

Recent Investment Activities:

 

Since July 1, 2011, GOV has acquired or has entered an agreement to acquire seven properties for an aggregate purchase price of $218.5 million, including the assumption of $49.4 million of mortgage debt and excluding acquisition costs, as follows:

 

·                  In August 2011, GOV acquired a previously disclosed 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 purchase price was $39.3 million, excluding acquisition costs.

 

·                  In September 2011, GOV acquired a previously disclosed 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 purchase price was $13.6 million, excluding acquisition costs.

 

·                  Also in September 2011, GOV acquired an office property located in Atlanta, GA with 375,805 rentable square feet.  This property is 97% leased to 19 tenants, of which 78% is leased to the State of Georgia and occupied by the Georgia Department of Transportation.  The purchase price was $48.6 million, excluding acquisition costs.

 

·                  In October 2011, GOV acquired three previously disclosed office properties located in Indianapolis, IN with 433,927 rentable square feet.  These properties are 94% leased to 15 tenants, of which 56% is leased to the U.S. Government and occupied by the U.S. Customs and Border Protection Agency.  The purchase price was $85 million, including the assumption of $49.4 of mortgage debt and excluding acquisition costs.

 

·                  Also in October 2011, GOV entered into an agreement to acquire an office property located in Salem, OR with 233,358 rentable square feet.  This property is 84% leased to five tenants, of which 70% is leased to the State of Oregon and occupied by the Oregon Department of Human Services, Oregon Department of Justice and the Oregon Employment Department.  The contract purchase price is $32 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.

 

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 $157.9 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.

 

·                  On October 18, 2011, GOV amended its unsecured revolving credit facility to among other things, increase maximum borrowings under the facility from $500 million to $550 million, reduce the interest paid on drawings under the facility from LIBOR plus 210 basis points to LIBOR plus 150 basis points, each subject to adjustment based on changes to GOV’s senior unsecured debt ratings, and extend the stated maturity date of the facility from October 28, 2013 to October 19, 2015.  Subject to certain conditions and the payment of a fee, GOV has the option to further extend the stated maturity date by one year to October 19, 2016.

 

Conference Call:

 

On Tuesday, November 1, 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 third quarter 2011 results.

 

The conference call telephone number is (800) 553-0358.  Participants calling from outside the United States and Canada should dial (612) 332-1210.  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 October 8, 2011.  To hear the replay, dial (320) 365-3844.  The replay pass code is 218254.

 

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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 recording and retransmission in any way of GOV’s third quarter conference call is strictly prohibited without the prior written consent of GOV.

 

Supplemental Data:

 

A copy of GOV’s Third 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 September 30, 2011, GOV owned 67 properties with 8.3 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 September 30,

 

Nine Months Ended September 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

45,719

 

$

30,746

 

$

126,718

 

$

80,040

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Real estate taxes

 

4,853

 

3,292

 

13,947

 

8,624

 

Utility expenses

 

4,375

 

2,836

 

11,422

 

6,246

 

Other operating expenses

 

7,723

 

5,147

 

21,568

 

12,667

 

Depreciation and amortization

 

10,379

 

6,321

 

27,862

 

16,602

 

Acquisition related costs

 

1,008

 

2,687

 

2,846

 

4,542

 

General and administrative

 

2,746

 

1,833

 

7,655

 

4,915

 

Total expenses

 

31,084

 

22,116

 

85,300

 

53,596

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

14,635

 

8,630

 

41,418

 

26,444

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

54

 

12

 

89

 

80

 

Interest expense (including net amortization of debt premiums and deferred financing fees of $418, $635, $1,254 and $1,791, respectively)

 

(3,162

)

(1,973

)

(8,775

)

(5,182

)

Equity in earnings (losses) of an investee

 

28

 

35

 

111

 

(17

)

 

 

 

 

 

 

 

 

 

 

Income before income tax benefit (expense)

 

11,555

 

6,704

 

32,843

 

21,325

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

8

 

(35

)

(94

)

(71

)

Net income

 

$

11,563

 

$

6,669

 

$

32,749

 

$

21,254

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Net income

 

$

11,563

 

$

6,669

 

$

32,749

 

$

21,254

 

Plus: depreciation and amortization

 

10,379

 

6,321

 

27,862

 

16,602

 

FFO

 

21,942

 

12,990

 

60,611

 

37,856

 

Plus: acquisition related costs

 

1,008

 

2,687

 

2,846

 

4,542

 

Normalized FFO

 

$

22,950

 

$

15,677

 

$

63,457

 

$

42,398

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

45,322

 

36,369

 

42,127

 

32,265

 

 

 

 

 

 

 

 

 

 

 

Per common share

 

 

 

 

 

 

 

 

 

Net income

 

$

0.26

 

$

0.18

 

$

0.78

 

$

0.66

 

FFO

 

$

0.48

 

$

0.36

 

$

1.44

 

$

1.17

 

Normalized FFO

 

$

0.51

 

$

0.43

 

$

1.51

 

$

1.31

 

 


(1)  We compute Funds from Operations, or 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 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 our 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 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.  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)

 

 

 

September 30,
2011

 

December 31,
2010

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Real estate properties:

 

 

 

 

 

Land

 

$

213,994

 

$

143,774

 

Buildings and improvements

 

1,040,149

 

833,719

 

 

 

1,254,143

 

977,493

 

Accumulated depreciation

 

(149,583

)

(131,046

)

 

 

1,104,560

 

846,447

 

 

 

 

 

 

 

Acquired real estate leases, net

 

103,901

 

60,097

 

Cash and cash equivalents

 

5,724

 

2,437

 

Restricted cash

 

1,858

 

1,548

 

Rents receivable, net

 

22,096

 

19,200

 

Deferred leasing costs, net

 

1,059

 

1,002

 

Deferred financing costs, net

 

2,488

 

3,935

 

Other assets, net

 

24,982

 

16,622

 

Total assets

 

$

1,266,668

 

$

951,288

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Revolving credit facility

 

$

282,500

 

$

118,000

 

Mortgage notes payable

 

45,608

 

46,428

 

Accounts payable and accrued expenses

 

21,885

 

14,436

 

Due to related persons

 

6,633

 

1,348

 

Assumed real estate lease obligations, net

 

11,853

 

13,679

 

 

 

368,479

 

193,891

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common shares of beneficial interest, $.01 par value:

 

 

 

 

 

70,000,000 shares authorized, 47,051,650 and 40,500,800 shares issued and outstanding, respectively

 

471

 

405

 

Additional paid in capital

 

935,463

 

776,913

 

Cumulative net income

 

74,085

 

41,336

 

Cumulative other comprehensive income

 

59

 

2

 

Cumulative common distributions

 

(111,889

)

(61,259

)

Total shareholders’ equity

 

898,189

 

757,397

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,266,668

 

$

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.  ALSO, 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, INCLUDING SOME THAT ARE BEYOND OUR CONTROL.  FOR EXAMPLE:

 

·                  THIS PRESS RELEASE STATES THAT WE HAVE ENTERED AN AGREEMENT TO PURCHASE A PROPERTY IN SALEM, OREGON.  THIS TRANSACTION IS SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS.  THESE TERMS AND CONDITIONS MAY NOT BE MET.  AS A RESULT, THIS TRANSACTION MAY NOT OCCUR ON THE TERMS DESCRIBED, MAY NOT OCCUR OR MAY BE DELAYED.

 

THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, INCLUDING UNDER “RISK FACTORS” IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S 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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