Select Income REIT Announces First Quarter 2017 Results

04/25/2017

484,000 Square Feet Leased at 20.9% Rental Rate Increases

NEWTON, Mass.--(BUSINESS WIRE)-- Select Income REIT (Nasdaq: SIR) today announced financial results for the quarter ended March 31, 2017.

David Blackman, President and Chief Operating Officer of SIR, made the following statement:

"Select Income REIT’s solid leasing momentum continued in the first quarter of 2017. We executed 484,000 square feet of new and renewal leases for weighted average rents that were over 20% higher than previous rents for the same space, for 10 years of weighted average lease term, and with leasing concessions and capital commitments of $0.23 per square foot per lease year. We also acquired land to expand a building for an existing tenant and entered agreements to acquire two additional properties."

Results for the Quarter Ended March 31, 2017:

Net income attributed to SIR was $6.7 million, or $0.08 per diluted share, for the quarter ended March 31, 2017, compared to $32.8 million, or $0.37 per diluted share, for the same quarter last year. Net income attributed to SIR per diluted share for the quarter ended March 31, 2017 includes a write-off of straight line rents receivable of $12.5 million, or $0.14 per diluted share, and a loss on asset impairment of $4.0 million, or $0.05 per diluted share, both of which are related to leases associated with a tenant bankruptcy at two properties, as well as estimated business management incentive fees of $7.8 million, or $0.09 per diluted share.

Normalized funds from operations, or Normalized FFO, attributed to SIR for the quarter ended March 31, 2017 were $52.4 million, or $0.59 per diluted share, compared to $66.3 million, or $0.74 per diluted share, for the same quarter last year. Normalized FFO for the quarter ended March 31, 2017 includes a write-off of straight line rents receivable of $12.5 million, or $0.14 per diluted share, related to leases associated with a tenant bankruptcy at two properties.

Reconciliations of net income attributed to SIR determined in accordance with U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, attributed to SIR and to Normalized FFO attributed to SIR for the quarters ended March 31, 2017 and 2016 appear later in this press release.

Leasing, Occupancy and Same Property Results:

SIR entered into lease renewals for approximately 250,000 square feet and new leases for approximately 234,000 square feet, including a 35,000 square foot expansion to be constructed at an existing property, during the quarter ended March 31, 2017, which resulted in combined weighted average (by square feet) rental rates that were approximately 20.9% higher than prior rents for the same space. The weighted average (by square feet) lease terms for these leases was 10.0 years. Commitments for tenant improvements, leasing costs and concessions for these leases totaled approximately $1.1 million, or approximately $0.23 per square foot per weighted average lease year.

As of March 31, 2017, 95.9% of SIR’s total rentable square feet was leased, compared to 96.8% as of December 31, 2016 and 97.8% as of March 31, 2016. Occupancy for properties owned continuously since January 1, 2016 decreased to 95.9% at March 31, 2017 from 97.8% at March 31, 2016. Same property cash basis net operating income, or Cash Basis NOI, decreased 0.8% for the quarter ended March 31, 2017 compared to the quarter ended March 31, 2016, primarily as a result of the decline in occupancy during 2017, partially offset by contractual rent increases for certain properties since January 1, 2016.

In March 2017, one of SIR's tenants filed for bankruptcy and rejected two leases; one for a property located in Huntsville, AL with approximately 1.4 million rentable square feet and an original lease term until August 2032; and one for a property in Hanover, PA with approximately 502,000 rentable square feet and an original lease term until September 2028. The Huntsville property is occupied by a subtenant that continues to pay rent to SIR in an amount equal to the rent under the rejected lease. SIR is holding a security deposit of $3.7 million with respect to the Hanover property, which SIR expects to retain. During the quarter ended March 31, 2017, SIR recorded a non-cash charge of $12.5 million to write off straight line rents receivable (net of the $3.7 million security deposit) related to leases with the former tenant at both properties plus an impairment charge of $4.0 million related to the write-off of lease intangibles at the Hanover property.

Reconciliations of net income determined in accordance with GAAP to net operating income, or NOI, and Cash Basis NOI for the quarters ended March 31, 2017 and 2016 appear later in this press release.

Recent Investment Activities:

As previously disclosed, on January 13, 2017, SIR acquired a land parcel adjacent to one of its properties located in McAlester, OK for a purchase price of $225,500, excluding acquisition related costs. The land parcel will be used to expand the building on SIR's adjacent property for an existing tenant by approximately 35,000 rentable square feet. In conjunction with the expansion, SIR is extending the tenant's lease to a term of approximately 11.0 years.

On March 15, 2017, SIR entered an agreement to acquire a single tenant office property located in Norfolk, VA with approximately 289,000 rentable square feet for a purchase price of $57.0 million, excluding acquisition related costs and closing adjustments. This property is 100% leased.

On April 5, 2017, SIR entered an agreement to acquire a single tenant, net leased office property located in Houston, TX with approximately 84,000 rentable square feet for a purchase price of $20.3 million, excluding acquisition related costs. This property is 100% leased.

Conference Call:

At 10:00 a.m. Eastern Time this morning, President and Chief Operating Officer, David Blackman, and Chief Financial Officer and Treasurer, John Popeo, will host a conference call to discuss SIR’s first quarter 2017 financial results.

The conference call telephone number is (877) 328-4494. Participants calling from outside the United States and Canada should dial (412) 317-5433. 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. on Tuesday, May 2, 2017. To access the replay, dial (412) 317-0088. The replay pass code is 10104359.

A live audio webcast of the conference call will also be available in a listen-only mode on SIR's website, which is located at www.sirreit.com. Participants wanting to access the webcast should visit SIR's website about five minutes before the call. The archived webcast will be available for replay on SIR's website following the call for about one week. The transcription, recording and retransmission in any way of SIR’s first quarter conference call are strictly prohibited without the prior written consent of SIR.

Supplemental Data:

A copy of SIR’s First Quarter 2017 Supplemental Operating and Financial Data is available for download at SIR’s website, www.sirreit.com. SIR’s website is not incorporated as part of this press release.

Select Income REIT is a real estate investment trust, or REIT, which owns properties that are primarily net leased to single tenants. SIR is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, MA.

Please see the pages attached hereto for a more detailed statement of SIR’s operating results and financial condition and for an explanation of SIR’s calculation of NOI, Cash Basis NOI, FFO attributed to SIR and Normalized FFO attributed to SIR.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS 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 SIR USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, SIR IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON SIR’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY SIR’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

  • MR. BLACKMAN'S STATEMENT IN THIS PRESS RELEASE THAT SIR EXPERIENCED SOLID LEASING MOMENTUM DURING THE FIRST QUARTER OF 2017 MAY IMPLY THAT SIR WILL CONTINUE TO EXPERIENCE IMPROVING PROPERTY LEASING CONDITIONS. HOWEVER, SIR'S ABILITY TO LEASE ITS PROPERTIES DEPENDS IN LARGE MEASURE ON MARKET CONDITIONS IN THE AREAS WHERE SIR'S PROPERTIES ARE LOCATED WHEN SUCH PROPERTIES BECOME AVAILABLE FOR LEASE. LEASING MARKET CONDITIONS ARE GENERALLY BEYOND SIR'S CONTROL. IN THE FUTURE, SIR MAY EXPERIENCE INCREASING VACANCIES OR LOWER RENTS AT SIR'S OWNED PROPERTIES,
  • THIS PRESS RELEASE STATES THAT SIR INTENDS TO USE THE LAND PARCEL IT ACQUIRED IN MCALESTER, OK TO EXPAND THE BUILDING ON SIR'S ADJACENT PROPERTY FOR AN EXISTING TENANT. HOWEVER, THE EXPANSION OF THE BUILDING MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF THE LEASE EXTENSION MAY CHANGE,
  • THIS PRESS RELEASE STATES THAT SIR HAS ENTERED TWO AGREEMENTS TO ACQUIRE PROPERTIES FOR AN AGGREGATE OF $77.3 MILLION, EXCLUDING ACQUISITION RELATED COSTS AND CLOSING ADJUSTMENTS. THESE TRANSACTIONS ARE SUBJECT TO CLOSING CONDITIONS. THESE CONDITIONS MAY NOT BE SATISFIED AND THESE TRANSACTIONS MAY NOT OCCUR, MAY BE DELAYED OR THE PRICES AND TERMS MAY CHANGE, AND
  • THIS PRESS RELEASE STATES THAT A TENANT OF TWO OF SIR'S PROPERTIES HAS FILED FOR BANKRUPTCY AND REJECTED ITS TWO LEASES WITH SIR. ALTHOUGH SIR HOLDS A SECURITY DEPOSIT OF $3.7 MILLION FROM THIS TENANT, SIR'S ABILITY TO APPLY THAT SECURITY DEPOSIT MAY BE SUBJECT TO BANKRUPTCY COURT APPROVAL. IN ADDITION, SIR WOULD NOT RECEIVE ANY ADDITIONAL CASH PAYMENT WHEN IT APPLIES THE SECURITY DEPOSIT. ALTHOUGH THE SUBTENANT AT ONE OF THE TWO PROPERTIES CONTINUES TO PAY RENT TO SIR IN AN AMOUNT EQUAL TO THE RENT UNDER THE FORMER TENANT'S LEASE, THE SUBTENANT HAS CERTAIN RIGHTS TO TERMINATE ITS SUBLEASE, INCLUDING UPON ONE YEAR'S ADVANCE NOTICE. SIR IS IN DISCUSSIONS WITH THIS SUBTENANT TO CONVERT ITS SUBLEASE TO A DIRECT LEASE WITH SIR. SIR CAN PROVIDE NO ASSURANCE THAT IT WILL BE SUCCESSFUL IN REACHING AGREEMENT WITH THIS SUBTENANT OR THAT THE TERMS OF ANY AGREEMENT WITH THE SUBTENANT WILL BE SIMILAR TO THE TERMS OF THE REJECTED LEASE WITH THE BANKRUPT FORMER TENANT, INCLUDING THE AMOUNT OF RENT UNDER ANY SUCH AGREEMENT,

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

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

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

         

Select Income REIT

Condensed Consolidated Statements of Income

(amounts in thousands, except per share data)

(unaudited)

 
Three Months Ended March 31,
2017     2016
Revenues:
Rental income $ 97,344 $ 97,860
Tenant reimbursements and other income 18,950   19,372  
Total revenues 116,294   117,232  
 
Expenses:
Real estate taxes 10,843 10,288
Other operating expenses 12,867 12,958
Depreciation and amortization 33,740 33,469
Acquisition related costs 58
General and administrative (1) 14,888 6,976
Write-off of straight line rents receivable, net (2) 12,517
Loss on asset impairment (2) 4,047    
Total expenses 88,902   63,749  
 
Operating income 27,392 53,483
 
Dividend income 397

Interest expense (including net amortization of debt issuance costs, premiums and discounts
of $1,404 and $1,374, respectively)

(21,087 ) (20,609 )
Income before income tax expense and equity in earnings of an investee 6,702 32,874
Income tax expense (102 ) (139 )
Equity in earnings of an investee 128   77  
Net income 6,728 32,812
Net income allocated to noncontrolling interest   (33 )
Net income attributed to SIR $ 6,728   $ 32,779  
 
Weighted average common shares outstanding - basic 89,331   89,286  
Weighted average common shares outstanding - diluted 89,348   89,295  
 
Net income attributed to SIR per common share - basic and diluted $ 0.08   $ 0.37  
 

(1) General and administrative expenses include estimated business management incentive fee expense of $7,846 for the three months ended March 31, 2017.

(2) In March 2017, one of SIR's tenants filed for bankruptcy and rejected two leases; one for a property located in Huntsville, AL with approximately 1.4 million rentable square feet and an original lease term until August 2032; and one for a property in Hanover, PA with approximately 502,000 rentable square feet and an original lease term until September 2028. The Huntsville property is occupied by a subtenant that continues to pay rent to SIR in an amount equal to the rent under the rejected lease. The sublease term runs concurrently with the former tenant’s original lease term, subject to certain termination rights by the subtenant. SIR expects that the lost rents plus carrying costs, such as real estate taxes, insurance, security and other operating costs, from a fully vacant Hanover property may total approximately $3,800 per year. SIR is holding a security deposit of $3,739 from the tenant with respect to the Hanover property, which SIR expects to retain and, therefore, has offset the amount of the security deposit against its lease rejection damages. SIR recorded a non-cash charge of $12,517 to write off straight line rents receivable (net of the $3,739 security deposit) related to leases with the former tenant at both properties plus an impairment charge of $4,047 related to the write off of lease intangibles related to the property located in Hanover, PA.

         

Select Income REIT

Funds from Operations Attributed to SIR and Normalized Funds from Operations Attributed to SIR (1)

(amounts in thousands, except per share data)

(unaudited)

 
Three Months Ended March 31,
2017     2016
 
Net income attributed to SIR $ 6,728 $ 32,779
Plus: depreciation and amortization 33,740 33,469
Plus: net income allocated to noncontrolling interest 33
Less: FFO allocated to noncontrolling interest   (77 )
FFO attributed to SIR 40,468 66,204
Plus: acquisition related costs 58
Plus: estimated business management incentive fees (2) 7,846
Plus: loss on asset impairment (3) 4,047    
Normalized FFO attributed to SIR $ 52,361   $ 66,262  
 
Weighted average common shares outstanding - basic 89,331   89,286  
Weighted average common shares outstanding - diluted 89,348   89,295  
 
FFO attributed to SIR per share - basic and diluted $ 0.45   $ 0.74  
Normalized FFO attributed to SIR per share - basic and diluted $ 0.59   $ 0.74  
Distributions declared per share $ 0.51   $ 0.50  
 

(1) SIR calculates FFO attributed to SIR and Normalized FFO attributed to SIR as shown above. FFO attributed to SIR is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, calculated in accordance with GAAP, plus real estate depreciation and amortization, loss on impairment of real estate assets and the difference between net income and FFO allocated to noncontrolling interest, as well as certain other adjustments currently not applicable to SIR. SIR’s calculation of Normalized FFO attributed to SIR differs from NAREIT’s definition of FFO because SIR includes business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of SIR’s core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are determined at the end of the calendar year, and SIR excludes acquisition related costs, loss on asset impairment and Normalized FFO from noncontrolling interest, net of FFO, if any. SIR considers FFO attributed to SIR and Normalized FFO attributed to SIR to be appropriate supplemental measures of operating performance for a REIT, along with net income, net income attributed to a REIT and operating income. SIR believes that FFO attributed to SIR and Normalized FFO attributed to SIR provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO attributed to SIR and Normalized FFO attributed to SIR may facilitate a comparison of its operating performance between periods and with other REITs. FFO attributed to SIR and Normalized FFO attributed to SIR are among the factors considered by SIR’s Board of Trustees when determining the amount of distributions to SIR’s shareholders. Other factors include, but are not limited to, requirements to maintain SIR’s qualification for taxation as a REIT, limitations in SIR’s credit agreement and public debt covenants, the availability to SIR of debt and equity capital, SIR’s expectation of its future capital requirements and operating performance and SIR’s expected needs and availability of cash to pay its obligations. FFO attributed to SIR and Normalized FFO attributed to SIR do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributed to SIR or operating income as an indicator of SIR’s operating performance or as a measure of SIR’s liquidity. These measures should be considered in conjunction with net income, net income attributed to SIR and operating income as presented in SIR’s condensed consolidated statements of income. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than SIR does.

(2) Incentive fees under SIR’s business management agreement with The RMR Group LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expenses in SIR’s condensed consolidated statements of income. In calculating net income in accordance with GAAP, SIR recognizes estimated business management incentive fee expense, if any, in the first, second and third quarters. Although SIR recognizes this expense, if any, in the first, second and third quarters for purposes of calculating net income, SIR does not include such expense in the calculation of Normalized FFO attributed to SIR until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. Normalized FFO attributed to SIR excludes estimated business management incentive fee expense of $7,846 for the three months ended March 31, 2017.

(3) SIR recorded a $4,047 loss on asset impairment for unamortized lease intangibles during the three months ended March 31, 2017 related to a lease associated with a tenant bankruptcy at a property located in Hanover, PA.

     

Select Income REIT

Calculation and Reconciliation of Property Net Operating Income and Cash Basis Net Operating Income (1)

(dollars in thousands)

(unaudited)

 
Three Months Ended March 31,
2017     2016
Calculation of NOI and Cash Basis NOI:
Rental income $ 97,344 $ 97,860
Tenant reimbursements and other income 18,950 19,372
Real estate taxes (10,843 ) (10,288 )
Other operating expenses (12,867 ) (12,958 )
NOI 92,584 93,986
Non-cash straight line rent adjustments included in rental income (2) (5,391 ) (6,302 )
Lease value amortization included in rental income (2) (434 ) (436 )
Non-cash amortization included in other operating expenses (3) (213 ) (213 )
Cash Basis NOI $ 86,546   $ 87,035  
 
Reconciliation of Net Income to NOI and Cash Basis NOI:
Net income $ 6,728 $ 32,812
Equity in earnings of an investee (128 ) (77 )
Income tax expense 102   139  
Income before income tax expense and equity in earnings of an investee 6,702 32,874
Interest expense 21,087 20,609
Dividend income (397 )  
Operating income 27,392 53,483
 
Loss on asset impairment (4) 4,047
Write-off of straight line rents receivable, net (4) 12,517
General and administrative 14,888 6,976
Acquisition related costs 58
Depreciation and amortization 33,740   33,469  
NOI 92,584 93,986
 
Non-cash straight line rent adjustments included in rental income (2) (5,391 ) (6,302 )
Lease value amortization included in rental income (2) (434 ) (436 )
Non-cash amortization included in other operating expenses (3) (213 ) (213 )
Cash Basis NOI $ 86,546   $ 87,035  
 

(1) The calculations of NOI and Cash Basis NOI exclude certain components of net income in order to provide results that are more closely related to SIR’s property level results of operations. SIR calculates NOI and Cash Basis NOI as shown above. SIR defines NOI as income from its rental of real estate less its property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions because SIR records those amounts as depreciation and amortization. SIR defines Cash Basis NOI as NOI excluding non-cash straight line rent adjustments, lease value amortization, lease termination fees, if any, and non-cash amortization included in other operating expenses. SIR considers NOI and Cash Basis NOI to be appropriate supplemental measures to net income because they may help both investors and management to understand the operations of SIR’s properties. SIR uses NOI and Cash Basis NOI to evaluate individual and company wide property level performance, and SIR believes that NOI and Cash Basis NOI provide useful information to investors regarding its results of operations because they reflect only those income and expense items that are generated and incurred at the property level and may facilitate comparisons of SIR’s operating performance between periods and with other REITs. NOI and Cash Basis NOI do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, net income attributed to SIR or operating income as an indicator of SIR’s operating performance or as a measure of SIR’s liquidity. These measures should be considered in conjunction with net income, net income attributed to SIR and operating income as presented in SIR’s condensed consolidated statements of income. Other real estate companies and REITs may calculate NOI and Cash Basis NOI differently than SIR does.

(2) SIR reports rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any.

(3) SIR recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price SIR paid for its investment in RMR common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees, which are included in other operating expenses.

(4) SIR recorded a $12,517 non-cash write-off of straight line rents receivable related to leases associated with a tenant bankruptcy at two properties located in Huntsville, AL and Hanover, PA and a $4,047 loss on asset impairment for unamortized lease intangibles during the three months ended March 31, 2017 related to a lease associated with a tenant bankruptcy at the property located in Hanover, PA.

     

Select Income REIT

Reconciliation of Net Operating Income to Same Property Net Operating Income and Calculation of Same

Property Cash Basis Net Operating Income (1)

(amounts in thousands)

(unaudited)

 
Three Months Ended March 31,
2017     2016
Reconciliation of NOI to Same Property NOI (2):
Rental income $ 97,344 $ 97,860
Tenant reimbursements and other income 18,950 19,372
Real estate taxes (10,843 ) (10,288 )
Other operating expenses (12,867 ) (12,958 )
NOI 92,584 93,986
Less:
NOI of properties not included in same property results (383 )  
Same property NOI $ 92,201   $ 93,986  
 
 
Calculation of Same Property Cash Basis NOI (2):
Same property NOI $ 92,201 $ 93,986
Less:
Non-cash straight line rent adjustments included in rental income (3) (5,248 ) (6,302 )
Lease value amortization included in rental income (3) (443 ) (436 )
Non-cash amortization included in other operating expenses (4) (213 ) (213 )
Same property Cash Basis NOI $ 86,297   $ 87,035  
 

(1) See footnote (1) on page 8 of this press release for the definitions of NOI and Cash Basis NOI, a description of why SIR believes they are appropriate supplemental measures and a description of how SIR uses these measures.

(2) For the three months ended March 31, 2017, same property NOI and same property Cash Basis NOI are based on properties SIR owned as of March 31, 2017, and which it owned continuously since January 1, 2016.

(3) SIR reports rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any.

(4) SIR recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price SIR paid for its investment in RMR common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees, which are included in other operating expenses.

         

Select Income REIT

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

 
March 31, December 31,
2017 2016

ASSETS

Real estate properties:
Land $ 1,038,963 $ 1,038,686
Buildings and improvements 3,105,382   3,103,734  
4,144,345 4,142,420
Accumulated depreciation (262,400 ) (242,628 )
3,881,945 3,899,792
Acquired real estate leases, net 486,932 506,298
Cash and cash equivalents 18,101 22,127
Restricted cash 44 44

Rents receivable, including straight line rents of $106,433 and $117,008, respectively, net
of allowance for doubtful accounts of $809 and $873, respectively

111,688 124,089
Deferred leasing costs, net 11,094 10,051
Other assets, net 104,261   77,281  
Total assets $ 4,614,065   $ 4,639,682  
 

LIABILITIES AND SHAREHOLDERS' EQUITY

Unsecured revolving credit facility $ 342,000 $ 327,000
Unsecured term loan, net 348,497 348,373
Senior unsecured notes, net 1,431,368 1,430,300
Mortgage notes payable, net 245,418 245,643
Accounts payable and other liabilities 80,931 101,605
Assumed real estate lease obligations, net 75,411 77,622
Rents collected in advance 18,678 18,815
Security deposits 8,341 11,887
Due to related persons 12,218   4,475  
Total liabilities 2,562,862   2,565,720  
 
Commitments and contingencies
 
Shareholders' equity:

Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized;
89,427,869 shares issued and outstanding

894 894
Additional paid in capital 2,179,669 2,179,669
Cumulative net income 448,035 441,307
Cumulative other comprehensive income 36,593 20,472
Cumulative common distributions (613,988 ) (568,380 )
Total shareholders' equity 2,051,203   2,073,962  
Total liabilities and shareholders' equity $ 4,614,065   $ 4,639,682  
 

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

Source: Select Income REIT

Select Income REIT

Christopher Ranjitkar, 617-796-8320

Director, Investor Relations

  • ICPE Award
  • U.S Green Building Council
  • Energy Star Partner
Cautionary Language

The information appearing in SIR’s website includes statements which constitute forward looking statements. These forward looking statements are based upon SIR’s present intents, beliefs or expectations, but forward looking statements are not guaranteed to occur and may not occur. SIR’s actual results may differ materially from those contained in SIR’s forward looking statements. The information contained in SIR’s filings with the Securities and Exchange Commission (SEC), including under “Risk Factors” and “Warnings Concerning Forward Looking Statements” in SIR’s periodic reports and other filings, identifies important factors that could cause SIR’s actual results to differ materially from those stated or implied in SIR’s forward looking statements. SIR’s filings with the SEC are available on the SEC’s website at www.sec.gov and are also accessible on SIR’s website at the following link: SEC Filings. You should not place undue reliance upon forward looking statements. Except as required by law, SIR does not intend to update or change any forward looking statements as a result of new information, future events or otherwise.

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