EX-99.2 3 eqc33116ex992.htm EXHIBIT 99.2 Exhibit
Exhibit 99.2






Supplemental Operating and Financial Data

First Quarter 2016








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(312) 646-2800                                        www.eqcre.com







TABLE OF CONTENTS

Corporate Information
 
Company Profile and Investor Information
 
 
 
Financial Information
 
Key Financial Data
 
Condensed Consolidated Balance Sheets
 
Additional Balance Sheet Information
 
Condensed Consolidated Statements of Operations
 
Additional Income Statement Information
 
Calculation of Same Property Net Operating Income (NOI) and Same Property Cash Basis NOI
 
Same Property Results of Operations
 
Calculation of EBITDA and Adjusted EBITDA
 
Calculation of Funds from Operations (FFO) and Normalized FFO
 
Debt Summary
 
Debt Maturity Schedule
 
Leverage Ratios, Coverage Ratios and Public Debt Covenants
 
Acquisitions and Dispositions
 
 
 
Portfolio Information
 
Top 30 Properties by Annualized Rental Revenue
 
Leasing Summary
 
Same Property Leasing Summary
 
Occupancy and Leasing Analysis
 
Capital Summary - Expenditures & Leasing Commitments
 
Tenants Representing 1% or More of Annualized Rental Revenue
 
Same Property Lease Expiration Schedule
 
Property Detail
 
Disposed Property Detail
 
 
 
Additional Support
 
Common & Potential Common Shares
 
Definitions
 
 
 
Forward-Looking Statements
 
 
 
Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws. Any forward-looking statements contained in this presentation are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations and anticipated market conditions are forward-looking statements. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
 
 
 
The forward-looking statements contained in this presentation reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the sections entitled “Risk Factors” in our most recent Annual Report on Form 10-K and quarterly reports on Form 10-Q.

2
COMPANY PROFILE AND INVESTOR INFORMATION

Equity Commonwealth (NYSE: EQC) is an internally managed and self-advised real estate investment trust (REIT) with commercial office properties throughout the United States. As of March 31, 2016, EQC has a portfolio comprising 60 properties and 23.0 million square feet with executive offices in Chicago, IL.
Same Property Statistics
 
 
 
2016 Q1
No. of
 
%
Cash Basis
 Properties
Sq. Feet
 Leased
NOI
60
23,037
91.4%
74,087
 Senior Unsecured Debt Ratings
 
 
 NYSE Trading Symbols
 Moody's -- Baa3
 
 
 Common Stock -- EQC
 Standard & Poor's -- BBB-
 
 
 Preferred Stock Series D -- EQC-PD
 
 
 
 Preferred Stock Series E -- EQC-PE
 
 
 
 5.75% Senior Notes due 2042 -- EQCO
Board of Trustees
 Sam Zell (Chairman)
 
 David A. Helfand
 
 Kenneth Shea
 James S. Corl
 
 Peter Linneman
 
 Gerald A. Spector
 Martin L. Edelman
 
 James L. Lozier, Jr.
 
 James A. Star
 Edward A. Glickman
 
 Mary Jane Robertson
 
 
 
 
 
 
 
Senior Management
David A. Helfand
 
David S. Weinberg
 
 
President and Chief Executive Officer
 
Executive Vice President,
 
 
 
 
Chief Operating Officer
 
 
 
 
 
 
 
Adam S. Markman
 
Orrin S. Shifrin
 
 
Executive Vice President,
 
Executive Vice President,
 
 
Chief Financial Officer and Treasurer
 
General Counsel and Secretary
 
 
Equity Research Coverage (1)
Bank of America / Merrill Lynch
James Feldman
(646) 855-5808
james.feldman@baml.com
Citigroup
Michael Bilerman
(212) 816-1383
michael.bilerman@citi.com
Green Street Advisors
Jed Reagan
(949) 640-8780
jreagan@greenstreetadvisors.com
JMP Securities
Mitch Germain
(212) 906-3546
mgermain@jmpsecurities.com
RBC Capital Markets
Rich Moore
(440) 715-2646
rich.moore@rbccm.com
Stifel Nicolaus
John Guinee
(443) 224-1307
jwguinee@stifel.com
 
 
 
 
 
 
 
 
Debt Research Coverage (1)
Credit Suisse
John Giordano
(212) 538-4935
john.giordano@credit-suisse.com
J.P.Morgan
Mark Streeter
(212) 834-5086
mark.streeter@jpmorgan.com
Wells Fargo Securities
Thierry Perrein
(704) 410-3262
thierry.perrein@wellsfargo.com
 
 
 
 
Rating Agencies (1)
Moody's Investors Service
Lori Marks
(212) 553-1098
lori.marks@moodys.com
Standard & Poor's
Anita Ogbara
(212) 438-5077
anita.ogbara@standardandpoors.com
Certain terms are defined in the definitions section of this document.
 
 
(1)
Any opinions, estimates or forecasts regarding EQC's performance made by these analysts or agencies do not represent opinions, forecasts or predictions of EQC or its management. EQC does not by its reference to the analysts and agencies above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies.

3
KEY FINANCIAL DATA
(amounts in thousands, except per share data)

 
 
As of and for the Three Months Ended
 
 
3/31/2016

 
12/31/2015

 
9/30/2015

 
6/30/2015

 
3/31/2015

OPERATING INFORMATION
 
Ending property count (1)
60

 
65

 
67

 
86

 
154

 
Ending square footage (1)(2)
23,037

 
23,952

 
25,258

 
29,357

 
42,724

 
Percent leased (1)
91.4
 %
 
91.4
 %
 
91.9
%
 
90.6
%
 
85.9
%
 
Total revenues
$
137,135

 
$
138,934

 
$
159,208

 
$
203,694

 
$
213,055

 
NOI
79,877

 
75,114

 
85,637

 
114,008

 
115,184

 
Cash Basis NOI
76,856

 
74,543

 
84,743

 
109,770

 
114,890

 
Adjusted EBITDA
69,634

 
64,755

 
75,697

 
103,790

 
107,781

 
NOI margin
58.2
 %
 
54.1
 %
 
53.8
%
 
56.0
%
 
54.1
%
 
Cash Basis NOI margin
57.3
 %
 
53.9
 %
 
53.5
%
 
55.0
%
 
54.0
%
 
Net income
46,402

 
43,145

 
30,466

 
12,616

 
13,630

 
Net income attributable to EQC common shareholders
39,421

 
36,164

 
23,485

 
5,635

 
6,649

 
FFO attributable to EQC common shareholders
38,799

 
31,839

 
24,214

 
77,238

 
65,384

 
Normalized FFO attributable to EQC common shareholders
37,314

 
34,439

 
46,383

 
67,763

 
71,985

SHARES OUTSTANDING AND PER SHARE DATA (3)
 
Shares Outstanding at End of Period
 
 
 
 
 
 
 
 
 
 
Common stock outstanding - basic (includes unvested restricted shares)
125,503

 
126,350

 
126,350

 
129,760

 
129,734

 
Dilutive restricted share units ("RSU"s) (3)
1,754

 
1,143

 
1,139

 
803

 
254

 
Dilutive Series D Convertible Preferred Shares outstanding(4)
—

 
—

 
—

 
—

 
—

 
Preferred Stock outstanding (4) (5)
15,915

 
15,915

 
15,915

 
15,915

 
15,915

 
Weighted Average Shares Outstanding
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
125,840

 
126,350

 
128,739

 
129,733

 
129,696

 
Weighted average common shares outstanding - diluted
127,522

 
127,493

 
129,878

 
130,537

 
129,874

 
Net income attributable to EQC common shareholders - basic
$
0.31

 
$
0.29

 
$
0.18

 
$
0.04

 
$
0.05

 
Net income attributable to EQC common shareholders - diluted
0.31

 
0.28

 
0.18

 
0.04

 
0.05

 
Normalized FFO attributable to EQC common shareholders - diluted
0.29

 
0.27

 
0.36

 
0.52

 
0.55

BALANCE SHEET
 
Total assets
$5,103,149
 
$5,231,164
 
$5,310,063
 
$5,532,959
 
$5,717,924
 
Total liabilities
1,715,778

 
1,862,677

 
1,982,855

 
2,145,729

 
2,406,746

ENTERPRISE VALUE
 
Total debt (book value)
$
1,557,839

 
$1,697,116
 
$1,813,893
 
$1,958,605
 
$
2,188,703

 
Less: Cash and cash equivalents
(1,742,128)
 
(1,802,729)
 
(1,649,162
)
 
(1,286,902
)
 
(421,736
)
 
Plus: Market value of preferred shares (at end of period)
402,991

 
403,792

 
400,702

 
400,246

 
407,335

 
Plus: Market value of dilutive common shares (at end of period)
3,591,179

 
3,535,381

 
3,472,798

 
3,351,558

 
3,451,175

 
Total enterprise value
$3,809,881
 
$3,833,560
 
$
4,038,231

 
$
4,423,507

 
$
5,625,477

RATIOS
 
Net debt / enterprise value
(4.8
)%
 
(2.8
)%
 
4.1
%
 
15.2
%
 
31.4
%
 
Net debt / annualized adjusted EBITDA
(0.7)x

 
(0.4)x

 
0.5x

 
1.6x

 
4.1x

 
Adjusted EBITDA / interest expense
3.1x

 
2.7x

 
3.0x

 
3.7x

 
3.6x

(1)
Excludes properties classified as held for sale.
(2)
Changes in total square footage result from remeasurement and property dispositions.
(3)
We grant restricted share units ("RSU"s) to certain employees, officers, and the Chairman of the Board of Trustees. The RSUs contain both service and market-based vesting components. None of the RSUs have vested. Refer to the schedule of Common & Potential Common Shares for information regarding RSUs and their impact on weighted average shares outstanding.
(4)
As of March 31, 2016, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 common shares. We exclude these shares from dilutive shares outstanding on March 31, 2016, given this conversion ratio relative to our current common stock price. Refer to the schedule of Common & Potential Common Shares for information regarding the series D preferred shares and their impact on diluted weighted average shares outstanding for EPS, FFO per share and Normalized FFO per share.
(5)
On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date).

4
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)

 
March 31, 2016
 
December 31, 2015
ASSETS
 
 
 
Real estate properties:
 
 
 
Land
$
372,714

 
$
389,410

Buildings and improvements
3,399,909

 
3,497,942

 
3,772,623

 
3,887,352

Accumulated depreciation
(880,678
)
 
(898,939
)
 
2,891,945

 
2,988,413

Properties held for sale
20,347

 
—

Acquired real estate leases, net
83,121

 
88,760

Cash and cash equivalents
1,742,128

 
1,802,729

Restricted cash
36,190

 
32,245

Rents receivable, net of allowance for doubtful accounts of $4,193 and $7,715, respectively
176,740

 
174,676

Other assets, net
152,678

 
144,341

Total assets
$
5,103,149

 
$
5,231,164

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Revolving credit facility
$
—

 
$
—

Senior unsecured debt, net
1,312,148

 
1,450,606

Mortgage notes payable, net
245,691

 
246,510

Liabilities related to properties held for sale
169

 
—

Accounts payable and accrued expenses
120,888

 
123,587

Assumed real estate lease obligations, net
3,624

 
4,296

Rent collected in advance
23,588

 
27,340

Security deposits
9,670

 
10,338

Total liabilities
$
1,715,778

 
$
1,862,677

 
 
 
 
Shareholders’ equity:
 
 
 
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
 
 
 
Series D preferred shares; 6 1/2% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880
$
119,263

 
$
119,263

Series E preferred shares; 7 1/4% cumulative redeemable on or after May 15, 2016; 11,000,000 shares issued and outstanding, aggregate liquidation preference $275,000 (1)
265,391

 
265,391

Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 125,502,748 and 126,349,914 shares issued and outstanding, respectively
1,255

 
1,263

Additional paid in capital
4,393,409

 
4,414,611

Cumulative net income
2,380,111

 
2,333,709

Cumulative other comprehensive loss
(3,014
)
 
(3,687
)
Cumulative common distributions
(3,111,868
)
 
(3,111,868
)
Cumulative preferred distributions
(657,176
)
 
(650,195
)
Total shareholders’ equity
$
3,387,371

 
$
3,368,487

Total liabilities and shareholders’ equity
$
5,103,149

 
$
5,231,164

(1)
On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date).


5
ADDITIONAL BALANCE SHEET INFORMATION
(amounts in thousands)

 
March 31, 2016
December 31, 2015
Additional Balance Sheet Information
 
 
 
 
 
Straight-line rents receivable, net of allowance for doubtful accounts
$
158,564

$
157,600

Accounts receivable, net of allowance for doubtful accounts
18,176

17,076

Rents receivable, net of allowance for doubtful accounts
$
176,740

$
174,676

 
 
 
Capitalized lease incentives, net
$
9,006

$
9,124

Deferred financing fees, net
4,576

4,980

Deferred leasing costs, net
112,876

110,228

Other
26,220

20,009

Other assets, net
$
152,678

$
144,341

 
 
 
Accounts payable
$
5,047

$
5,321

Accrued interest
12,793

19,971

Accrued taxes
34,836

36,724

Accrued capital expenditures
27,218

21,136

Accrued leasing costs
5,525

802

Other accrued liabilities
35,469

39,633

Accounts payable and accrued expenses
$
120,888

$
123,587



6

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)

 
Three Months Ended
 
March 31,
 
2016
 
2015
Revenues
 
 
 
Rental income
$
109,888

 
$
167,972

Tenant reimbursements and other income
27,247

 
45,083

Total revenues
$
137,135

 
$
213,055

 
 
 
 
Expenses:
 
 
 
Operating expenses
$
57,258

 
$
97,871

Depreciation and amortization
36,251

 
62,699

General and administrative
13,312

 
16,558

Loss on asset impairment
—

 
1,904

Total expenses
$
106,821

 
$
179,032

 
 
 
 
Operating income
$
30,314

 
$
34,023

 
 
 
 
Interest and other income
1,967

 
3,448

Interest expense (including net amortization of debt discounts, premiums and deferred financing fees of $983 and $29, respectively)
(22,347
)
 
(29,842
)
Loss on early extinguishment of debt
(118
)
 
(428
)
Foreign currency exchange loss
(5
)
 
—

Gain on sale of properties
36,666

 
5,868

Income before income taxes
46,477

 
13,069

Income tax (expense) benefit
(75
)
 
561

Net income
$
46,402

 
$
13,630

Preferred distributions
(6,981
)
 
(6,981
)
Net income attributable to Equity Commonwealth common shareholders
$
39,421

 
$
6,649

Weighted average common shares outstanding — basic (1)
125,840

 
129,696

Weighted average common shares outstanding — diluted (1)
127,522

 
129,874

 
 
 
 
Earnings per common share attributable to Equity Commonwealth common shareholders:
 
 
 
Basic
$
0.31

 
$
0.05

Diluted
$
0.31

 
$
0.05

(1
)
Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.



7
ADDITIONAL INCOME STATEMENT INFORMATION
(amounts in thousands, except per share data)

 
Three Months Ended March 31,
 
2016
 
2015
 
 
 
 
Additional Income Statement Information
 
 
 
Non-recurring general and administrative
 
 
 
Shareholder litigation and transition related expenses (1)
$
1,102

 
$
3,472

Transition services fee paid to RMR (2)
—

 
2,235

 
 
 
 
(1
)
Shareholder litigation and transition related expenses within general and administrative for the three months ended March 31, 2016 includes $1.1 million for the shareholder-approved liability for the reimbursement of expenses incurred by Related/Corvex since February 2013 in connection with their consent solicitations to remove the former Trustees, elect the new Board of Trustees and engage in related litigation. Approximately $16.7 million was reimbursed to Related/Corvex during 2014, and on August 4, 2015, we reimbursed $8.4 million to Related/Corvex under the terms of the shareholder-approved agreement. An additional $8.4 million will be reimbursed only if the average closing price of our common shares is at least $26.00 (as adjusted for any share splits or share dividends) from August 1, 2015 through July 31, 2016. As of March 31, 2016, the fair value of this liability is $8.3 million. No shareholder litigation related expenses were incurred during 2016.
(2
)
Amounts represent general and administrative expenses under our now-terminated business management agreement with our former manager.

8

CALCULATION OF SAME PROPERTY NET OPERATING INCOME (NOI) AND SAME PROPERTY CASH BASIS NOI
(amounts in thousands)

 
For the Three Months Ended
 
March 31,
 
2016
 
2015
Calculation of Same Property NOI and Same Property Cash Basis NOI:
 
 
 
Rental income
$
109,888

 
$
167,972

Tenant reimbursements and other income
27,247

 
45,083

Operating expenses
(57,258
)
 
(97,871
)
NOI
$
79,877

 
$
115,184

Straight line rent adjustments
(3,831
)
 
181

Lease value amortization
1,121

 
1,474

Lease termination fees
(311
)
 
(1,949
)
Cash Basis NOI
$
76,856

 
$
114,890

Cash Basis NOI from non-same properties (1)
(2,769
)
 
(37,871
)
Same Property Cash Basis NOI
$
74,087

 
$
77,019

Non-cash rental and termination income from same properties
2,998

 
(1,805
)
Same Property NOI
$
77,085

 
$
75,214

 
 
 
 
Reconciliation of Same Property NOI to GAAP Operating Income:
 
 
 
Same Property NOI
$
77,085

 
$
75,214

Non-cash rental and termination income from same properties
(2,998
)
 
1,805

Same Property Cash Basis NOI
$
74,087

 
$
77,019

Cash Basis NOI from non-same properties (1)
2,769

 
37,871

Cash Basis NOI
$
76,856

 
$
114,890

Straight line rent adjustments
3,831

 
(181
)
Lease value amortization
(1,121
)
 
(1,474
)
Lease termination fees
311

 
1,949

NOI
$
79,877

 
$
115,184

Depreciation and amortization
(36,251
)
 
(62,699
)
General and administrative
(13,312
)
 
(16,558
)
Loss on asset impairment
—

 
(1,904
)
Operating Income
$
30,314

 
$
34,023

(1)
Cash Basis NOI from non-same properties for all periods presented includes the operations of properties disposed or classified as held for sale.

9
SAME PROPERTY RESULTS OF OPERATIONS
(dollars and square feet in thousands)


 
As of and for the Three Months Ended March 31,
 
2016
 
2015
 
% Change
Properties
60

 
60

 
 
Square Feet (1)
23,037

 
22,904

 
 
% Leased
91.4
%
 
90.7
%
 
0.7
 %
 
 
 
 
 
 
Total revenue
$
132,608

 
$
128,787

 
3.0
 %
Operating expenses
(55,523
)
 
(53,573
)
 
3.6
 %
NOI
$
77,085

 
$
75,214

 
2.5
 %
NOI Margin
58.1
%
 
58.4
%
 
 
 
 
 
 
 
 
Straight line rent adjustment
$
(3,815
)
 
$
1,991

 
 
Lease value amortization
1,128

 
1,402

 
 
Lease termination fees
(311
)
 
(1,588
)
 
 
Cash Basis NOI
$
74,087

 
$
77,019

 
(3.8
)%
Cash Basis NOI Margin
57.2
%
 
59.0
%
 
 
 
 
 
 
 
 

(1
)
The change in total square footage results from remeasurement.


10

CALCULATION OF EBITDA AND ADJUSTED EBITDA
(amounts in thousands)


 
For the Three Months Ended
 
March 31,
 
2016
 
2015
Net income
$
46,402

 
$
13,630

Interest expense
22,347

 
29,842

Income tax expense (benefit)
75

 
(561
)
Depreciation and amortization
36,251

 
62,699

EBITDA
$
105,075

 
$
105,610

Loss on asset impairment
—

 
1,904

Loss on early extinguishment of debt
118

 
428

Shareholder litigation costs and transition-related expenses
1,102

 
3,472

Transition services fee
—

 
2,235

Gain on sale of properties
(36,666
)
 
(5,868
)
Foreign currency exchange loss
5

 
—

Adjusted EBITDA
$
69,634

 
$
107,781




11

CALCULATION OF FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(amounts in thousands, except per share data)

 
Three Months Ended
 
March 31,
 
2016
 
2015
Calculation of FFO
 
 
 
Net income
$
46,402

 
$
13,630

Real estate depreciation and amortization
36,044

 
62,699

Loss on asset impairment
—

 
1,904

Gain on sale of properties
(36,666
)
 
(5,868
)
FFO attributable to Equity Commonwealth
45,780

 
72,365

Preferred distributions
(6,981
)
 
(6,981
)
FFO attributable to EQC Common Shareholders
$
38,799

 
$
65,384

 
 
 
 
Calculation of Normalized FFO
 
 
 
FFO attributable to EQC common shareholders
$
38,799

 
$
65,384

Recurring adjustments:
 
 
 
Lease value amortization
1,121

 
1,474

Straight line rent adjustments
(3,831
)
 
181

Loss on early extinguishment of debt
118

 
428

Minimum cash rent from direct financing lease (1)
—

 
2,032

Interest earned from direct financing lease
—

 
(141
)
Other items which affect comparability:
 
 
 
Shareholder litigation and transition related expenses (2)
1,102

 
3,472

Transition services fee
—

 
2,235

Gain on sale of securities
—

 
(3,080
)
Foreign currency exchange loss
5

 
—

Normalized FFO attributable to EQC Common Shareholders
$
37,314

 
$
71,985

 
 
 
 
Weighted average common shares outstanding -- basic (3)
125,840

 
129,696

Weighted average common shares outstanding -- diluted (3)
127,522

 
129,874

FFO attributable to EQC common shareholders per share -- basic (3)
$
0.31

 
$
0.50

FFO attributable to EQC common shareholders per share -- diluted(3)
$
0.30

 
$
0.50

Normalized FFO attributable to EQC common shareholders per share -- basic (3)
$
0.30

 
$
0.56

Normalized FFO attributable to EQC common shareholders per share -- diluted (3)
$
0.29

 
$
0.55

(1)
Amounts relate to contractual cash payments (including management fees) from one tenant at Arizona Center. Arizona Center was sold during the fourth quarter of 2015. Our calculation of Normalized FFO reflects the cash payments received from this tenant. The terms of this tenant's lease required us to classify the lease as a direct financing (or capital) lease. As such, the revenue recognized on a GAAP basis within our condensed consolidated statements of operations was $141 for the three months ended March 31, 2015.
(2)
Refer to the Additional Income Statement Information for a discussion of expenses related to the shareholder-approved Related/Corvex consent solicitation liability. No shareholder litigation related expenses were incurred during 2016.
(3)
Refer to the schedule of Common & Potential Common Shares for information regarding the components of our weighted average common shares outstanding.

12
DEBT SUMMARY
As of March 31, 2016
(dollars in thousands)

 
Interest Rate
 
Principal Balance
 
Maturity Date
 
Due at Maturity
 
Years to Maturity
Unsecured Debt:
 
 
 
 
 
 
 
 
 
Unsecured Floating Rate Debt:
 
 
 
 
 
 
 
 
 
Revolving credit facility (LIBOR + 125 bps) (1)
1.69
%
 
$
—

 
1/28/2019
 
$
—

 
2.8

Term loan (LIBOR + 140 bps) (2)
1.84
%
 
200,000

 
1/28/2020
 
200,000

 
3.8

Term loan (LIBOR + 180 bps) (2)
2.24
%
 
200,000

 
1/28/2022
 
200,000

 
5.8

Total / weighted average unsecured floating rate debt
2.04
%
 
$
400,000

 
 
 
$
400,000

 
4.8

 
 
 
 
 
 
 
 
 
 
Unsecured Fixed Rate Debt:
 
 
 
 
 
 
 
 
 
6.25% Senior Unsecured Notes Due 2017
6.25
%
 
250,000

 
6/15/2017
 
250,000

 
1.2

6.65% Senior Unsecured Notes Due 2018
6.65
%
 
250,000

 
1/15/2018
 
250,000

 
1.8

5.875% Senior Unsecured Notes Due 2020
5.88
%
 
250,000

 
9/15/2020
 
250,000

 
4.5

5.75% Senior Unsecured Notes Due 2042
5.75
%
 
175,000

 
8/1/2042
 
175,000

 
26.4

Total / weighted average unsecured fixed rate debt
6.16
%
 
$
925,000

 
 
 
$
925,000

 
7.0

 
 
 
 
 
 
 
 
 
 
Secured Fixed Rate Debt:
 
 
 
 
 
 
 
 
 
Parkshore Plaza
5.67
%
 
41,275

 
5/1/2017
 
41,275

 
1.1

1735 Market Street (3)
5.66
%
 
169,119

 
12/2/2019
 
160,710

 
3.7

206 East 9th Street
5.69
%
 
27,397

 
1/5/2021
 
24,836

 
4.8

33 Stiles Lane
6.75
%
 
2,694

 
3/1/2022
 
—

 
5.9

97 Newberry Road
5.71
%
 
6,259

 
3/1/2026
 
—

 
9.9

Total / weighted average secured fixed rate debt
5.68
%
 
$
246,744

 
 
 
$
226,821

 
3.6

 
 
 
 
 
 
 
 
 
 
Total / weighted average (4)
5.04
%
 
$
1,571,744

 
 
 
$
1,551,821

 
5.9

 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents amounts outstanding on EQC's $750,000 revolving credit facility as of March 31, 2016. The interest rate presented is as of March 31, 2016, and equals LIBOR plus 1.25%. We also pay a 25 basis point facility fee annually. The spread over LIBOR and the facility fee vary depending upon EQC's credit rating.
(2)
Represents amounts outstanding on EQC's term loans as of March 31, 2016. The interest rate presented is as of March 31, 2016, and equals LIBOR plus 1.4% for the loan maturing on January 28, 2020, and LIBOR plus 1.8% for the loan maturing January 28, 2022. The spreads over LIBOR vary depending upon EQC's credit rating. We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019.
(3)
Interest is payable at a rate equal to LIBOR plus 2.625% but has been fixed by a cash flow hedge, which sets the rate at approximately 5.66% until December 1, 2016.
(4)
Total debt outstanding as of March 31, 2016, including net unamortized premiums, discounts, and deferred financing fees was $1,557,839. Net unamortized deferred financing fees related to our revolving credit facility of $4,576 are included in other assets, net on our condensed consolidated balance sheets as of March 31, 2016.

13

DEBT MATURITY SCHEDULE
(dollars in thousands)

Scheduled Payments During Period
Year
Unsecured Floating Rate Debt
 
Unsecured Fixed Rate Debt
 
Secured Fixed Rate Debt
 
Total
 
Weighted Average Interest Rate
2016
$
—

 
$
—

 
$
2,528

 
$
2,528

 
5.8
%
2017
—

 
250,000

 
44,865

 
294,865

 
6.2
%
2018
—

 
250,000

 
3,847

 
253,847

 
6.6
%
2019
—

 
—

 
164,613

(2) 
164,613

 
5.7
%
2020
200,000

(1) 
250,000

 
1,674

 
451,674

 
4.1
%
2021
—

 
—

 
25,982

 
25,982

 
5.7
%
2022
200,000

(1) 
—

 
799

 
200,799

 
2.3
%
2023
—

 
—

 
702

 
702

 
5.7
%
2024
—

 
—

 
743

 
743

 
5.7
%
2025
—

 
—

 
787

 
787

 
5.7
%
Thereafter
—

 
175,000

 
204

 
175,204

 
5.7
%
Total
$
400,000

 
$
925,000

 
$
246,744


$
1,571,744

(3) 
5.0
%
 
 
 
 
 
 
 
 
 
 
Percent
25.4
%
 
58.9
%
 
15.7
%
 
100.0
%
 
 
(1)
Represents amounts outstanding on EQC's term loans as of March 31, 2016. The interest rate presented is as of March 31, 2016, and equals LIBOR plus 1.4% for the loan maturing on January 28, 2020, and LIBOR plus 1.8% for the loan maturing January 28, 2022. The spreads over LIBOR vary depending upon EQC's credit rating. We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019.
(2)
Interest is payable at a rate equal to LIBOR plus 2.625% but has been fixed by a cash flow hedge, which sets the rate at approximately 5.66% until December 1, 2016.
(3)
Total debt outstanding as of March 31, 2016, including net unamortized premiums, discounts, and deferred financing fees was $1,557,839. Net unamortized deferred financing fees related to our revolving credit facility of $4,576 are included in other assets, net on our condensed consolidated balance sheets as of March 31, 2016.

14

LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
(dollars in thousands)

 
As of and for the Three Months Ended
 
3/31/2016

 
12/31/2015

 
9/30/2015

 
6/30/2015

 
3/31/2015

Leverage Ratios
 
 
 
 
 
 
 
 
 
Total debt / total assets
30.5
 %
 
32.4
 %
 
34.2
%
 
35.4
%
 
38.3
%
Total debt / total market capitalization
28.1
 %
 
30.1
 %
 
31.9
%
 
34.3
%
 
36.2
%
Total debt + preferred stock / total market capitalization
35.3
 %
 
37.3
 %
 
38.9
%
 
41.3
%
 
42.9
%
Total debt / annualized adjusted EBITDA
5.6x

 
6.6x

 
6.0x

 
4.7x

 
5.1x

Total debt + preferred stock / annualized adjusted EBITDA
7.0x

 
8.1x

 
7.3x

 
5.7x

 
6.0x

Net debt / enterprise value
(4.8
)%
 
(2.8
)%
 
4.1
%
 
15.2
%
 
31.4
%
Net debt + preferred stock / enterprise value
5.7
 %
 
7.8
 %
 
14.0
%
 
24.2
%
 
38.7
%
Net debt / annualized adjusted EBITDA
(0.7)x

 
(0.4)x

 
0.5x

 
1.6x

 
4.1x

Net debt + preferred stock / annualized adjusted EBITDA
0.8x

 
1.2x

 
1.9x

 
2.6x

 
5.0x

Secured debt / total assets
4.8
 %
 
4.7
 %
 
6.9
%
 
9.2
%
 
10.5
%
Variable rate debt (1) / total debt
25.7
 %
 
23.6
 %
 
22.1
%
 
20.4
%
 
18.3
%
Variable rate debt (1) / total assets
7.8
 %
 
7.6
 %
 
7.5
%
 
7.2
%
 
7.0
%
 
 
 
 
 
 
 
 
 
 
Coverage Ratios
 
 
 
 
 
 
 
 
 
Adjusted EBITDA / interest expense
3.1x

 
2.7x

 
3.0x

 
3.7x

 
3.6x

Adjusted EBITDA / interest expense + preferred distributions
2.4x

 
2.1x

 
2.4x

 
3.0x

 
2.9x

 
 
 
 
 
 
 
 
 
 
Public Debt Covenants
 
 
 
 
 
 
 
 
 
Debt / adjusted total assets (2) (maximum 60%)
26.4
 %
 
27.9
 %
 
29.5
%
 
29.9
%
 
30.9
%
Secured debt / adjusted total assets (2) (maximum 40%)
4.1
 %
 
4.0
 %
 
5.9
%
 
7.8
%
 
8.5
%
Consolidated income available for debt service / debt service (minimum 1.5x)
3.1x

 
2.9x

 
3.1x

 
3.3x

 
3.9x

Total unencumbered assets (2) / unsecured debt (minimum 150% / 200%)
412.7
 %
 
386.9
 %
 
378.3
%
 
394.7
%
 
386.5
%
(1)
We entered into an interest rate cap with coverage effective April 1, 2016 that caps LIBOR at 2.5% until March 1, 2019.
(2)
Adjusted total assets and total unencumbered assets includes original cost of real estate assets plus capital improvements, both calculated in accordance with GAAP, and excludes depreciation and amortization, accounts receivable, other intangible assets and impairment write downs, if any.

15

ACQUISITIONS AND DISPOSITIONS
(dollars in thousands)

Acquisitions
None
Dispositions
Property/Portfolio
City
State
No. of Properties
Sq. Feet (1)
 
% Leased(1)
 
Gross Sales Price
 
Net Book Value (1)
 
Annualized Rental Revenue (1)
Executive Park
Atlanta
GA
1

427,443

 
72.8
%
 
$
50,865

 
$
29,365

 
$
4,990

3330 N Washington Blvd
Arlington
VA
1

55,719

 
15.3
%
 
11,250

 
5,519

 
273

111 East Kilbourn Avenue
Milwaukee
WI
1

373,669

 
81.1
%
 
60,500

 
44,577

 
8,169

Total Q1 Dispositions
 
3

856,831

 
72.7
%
 
$
122,615

 
$
79,461

 
$
13,432

 
 
 
 
 
 
 
 
 
 
 
 
 
The dispositions above resulted in a gain on sale of properties of $36.7 million for the three months ended March 31, 2016.
      
(1
)
As of or for the quarter-ended preceding each sale.


16
TOP 30 PROPERTIES BY ANNUALIZED RENTAL REVENUE (1) 
As of March 31, 2016
(sorted by annualized rental revenue, dollars in thousands)

Property
 
City
 
State
 
No. of Buildings
 
Sq. Feet
 
% Leased
 
Annualized Rental Revenue
 
Undepreciated Book Value
 
Net Book Value
 
Year Acquired
 
Weighted Average Year Built or Substantially Renovated (2)
1
600 West Chicago Avenue
 
Chicago
 
IL
 
2

 
1,511,849
 
98.3
%
 
$
46,587

 
$
370,472

 
$
332,606

 
2011
 
2001
2
1500 Market Street
 
Philadelphia
 
PA
 
1

 
1,773,967
 
94.2
%
 
35,973

 
294,695

 
213,981

 
2002
 
1974
3
1735 Market Street
 
Philadelphia
 
PA
 
1

 
1,290,678
 
79.8
%
 
30,855

 
298,479

 
179,385

 
1998
 
1990
4
111 Monument Circle
 
Indianapolis
 
IN
 
2

 
1,121,764
 
82.1
%
 
23,780

 
176,314

 
162,025

 
2012
 
1990
5
111 River Street (3)
 
Hoboken
 
NJ
 
1

 
566,215
 
100.0
%
 
23,408

 
137,448

 
114,933

 
2009
 
2002
6
1225 Seventeenth Street
 
Denver
 
CO
 
1

 
672,465
 
96.8
%
 
20,942

 
152,381

 
129,777

 
2009
 
1982
7
333 108th Avenue NE
 
Bellevue
 
WA
 
1

 
440,565
 
100.0
%
 
19,337

 
152,583

 
129,629

 
2009
 
2008
8
1600 Market Street
 
Philadelphia
 
PA
 
1

 
825,968
 
84.4
%
 
19,086

 
133,626

 
77,265

 
1998
 
1983
9
8750 Bryn Mawr Avenue
 
Chicago
 
IL
 
2

 
631,518
 
89.0
%
 
16,896

 
91,787

 
79,411

 
2010
 
2005
10
6600 North Military Trail
 
Boca Raton
 
FL
 
3

 
639,830
 
100.0
%
 
16,577

 
145,808

 
128,772

 
2011
 
2008
11
North Point Office Complex
 
Cleveland
 
OH
 
2

 
873,335
 
78.7
%
 
15,509

 
124,635

 
101,336

 
2008
 
1988
12
101-115 W. Washington Street
 
Indianapolis
 
IN
 
1

 
634,058
 
94.0
%
 
13,050

 
91,323

 
66,601

 
2005
 
1977
13
111 Market Place
 
Baltimore
 
MD
 
1

 
569,617
 
99.3
%
 
12,582

 
77,400

 
52,157

 
2003
 
1990
14
Foster Plaza
 
Pittsburgh
 
PA
 
8

 
727,365
 
84.1
%
 
12,429

 
75,040

 
55,182

 
2005
 
1993
15
Research Park
 
Austin
 
TX
 
4

 
1,110,007
 
98.0
%
 
11,709

 
90,635

 
60,388

 
1998
 
1976
16
Bridgepoint Square
 
Austin
 
TX
 
5

 
440,007
 
94.1
%
 
11,391

 
88,434

 
50,733

 
1997
 
1995
17
100 East Wisconsin Avenue
 
Milwaukee
 
WI
 
1

 
435,067
 
89.7
%
 
11,118

 
83,008

 
70,873

 
2010
 
1989
18
109 Brookline Avenue
 
Boston
 
MA
 
1

 
285,556
 
99.7
%
 
10,579

 
46,140

 
27,141

 
1995
 
1915
19
East Eisenhower Parkway
 
Ann Arbor
 
MI
 
2

 
410,464
 
92.4
%
 
10,559

 
55,293

 
48,123

 
2010
 
2006
20
1601 Dry Creek Drive
 
Longmont
 
CO
 
1

 
552,865
 
97.0
%
 
8,664

 
34,055

 
24,688

 
2004
 
1982
21
1250 H Street, NW
 
Washington
 
DC
 
1

 
196,489
 
79.8
%
 
7,553

 
71,673

 
45,029

 
1998
 
1992
22
25 S. Charles Street
 
Baltimore
 
MD
 
1

 
343,815
 
93.7
%
 
7,221

 
38,504

 
25,695

 
2004
 
1972
23
5073, 5075, & 5085 S. Syracuse Street
 
Denver
 
CO
 
1

 
248,493
 
100.0
%
 
7,164

 
63,610

 
54,899

 
2010
 
2007
24
Danac Stiles Business Park
 
Rockville
 
MD
 
3

 
276,637
 
85.4
%
 
6,899

 
65,564

 
46,100

 
2004
 
2002
25
600 108th Avenue NE
 
Bellevue
 
WA
 
1

 
256,829
 
96.3
%
 
6,837

 
48,364

 
36,432

 
2004
 
2012
26
Georgetown-Green and Harris Buildings
 
Washington
 
DC
 
2

 
240,475
 
100.0
%
 
6,325

 
60,023

 
54,100

 
2009
 
2006
27
Cherrington Corporate Center
 
Moon Township
 
PA
 
7

 
454,890
 
63.8
%
 
6,070

 
72,525

 
51,588

 
1998; 1999
 
1997
28
206 East 9th Street
 
Austin
 
TX
 
1

 
170,052
 
95.9
%
 
6,039

 
48,850

 
44,870

 
2012
 
1984
29
1200 Lakeside Drive
 
Bannockburn
 
IL
 
1

 
260,084
 
100.0
%
 
4,407

 
67,350

 
54,293

 
2005
 
1999
30
802 Delaware Avenue
 
Wilmington
 
DE
 
1

 
240,780
 
100.0
%
 
4,280

 
43,467

 
20,095

 
1998
 
1986
 
Subtotal (30 properties)
 
 
 
60

 
18,201,704
 
91.3
%
 
$
433,826

 
$
3,299,486

 
$
2,538,107

 
 
 
 
 
All other properties (30 properties)
 
54

 
4,835,121

 
91.8
%
 
53,417

 
473,137

 
353,838

 
 
 
 
 
Total (60 properties)
 
 
 
114

 
23,036,825

 
91.4
%
 
$
487,243

 
$
3,772,623

 
$
2,891,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same Property NOI & Cash Basis NOI Composition
 
Q1 2016 NOI
 
% of NOI
 
Q1 2016 Cash Basis NOI
 
% of Cash Basis NOI
 
 
 
 
 
 
 
 
 
Top 30 Properties
 
 
 
$
66,200

 
85.9
%
 
$
63,496

 
85.7
%
 
 
 
 
 
 
 
 
 
All other properties (30 properties)
 
10,885

 
14.1
%
 
10,591

 
14.3
%
 
 
 
 
 
 
 
 
 
Total (60 properties)
 
 
 
$
77,085

 
100.0
%
 
$
74,087

 
100.0
%
 
 
 
 
 
 
 
 

(1)
Excludes properties classified as held for sale.
(2)
Weighted based on square feet.
(3)
Property is subject to a ground lease.

17

LEASING SUMMARY
(dollars and square feet in thousands, except per square foot data)

 
 
As of and for the Three Months Ended
 
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
Properties (1)
 
60

 
65

 
67

 
86

 
154

Total square feet (1)(2)
 
23,037

 
23,952

 
25,258

 
29,357

 
42,724

Percentage leased
 
91.4
 %
 
91.4
%
 
91.9
%
 
90.6
 %
 
85.9
 %
 
 
 
 
 
 
 
 
 
 
 
Total Leasing Activity
 
 
 
 
 
 
 
 
 
 
Square feet
 
1,853

 
984

 
1,384

 
1,030

 
1,478

Lease term (years)
 
7.8

 
6.7

 
6.3

 
5.5

 
6.6

Starting cash rent
 
$
29.48

 
$
24.57

 
$
29.89

 
$
21.37

 
$
21.70

Percent change in cash rent (3)
 
(1.3
)%
 
5.6
%
 
3.2
%
 
(1.9
)%
 
0.0
 %
Percent change in GAAP rent (3)
 
11.2
 %
 
15.5
%
 
9.1
%
 
5.4
 %
 
5.6
 %
Total TI & LC per square foot (4)
 
$
25.44

 
$
38.44

 
$
39.35

 
$
22.63

 
$
27.61

Total TI & LC per sq. ft. per year of lease term (4)
 
$
3.27

 
$
5.74

 
$
6.22

 
$
4.11

 
$
4.20

 
 
 
 
 
 
 
 
 
 
 
Renewal Leases
 
 
 
 
 
 
 
 
 
 
Square feet
 
1,569

 
585

 
955

 
518

 
758

Lease term (years)
 
7.4

 
4.0

 
5.0

 
5.2

 
4.5

Starting cash rent
 
$
28.92

 
$
23.58

 
$
28.95

 
$
22.55

 
$
19.99

Percent change in cash rent (3)
 
0.3
 %
 
5.4
%
 
3.1
%
 
(3.4
)%
 
(2.8
)%
Percent change in GAAP rent (3)
 
13.2
 %
 
15.3
%
 
8.5
%
 
5.3
 %
 
(0.1
)%
Total TI & LC per square foot (4)
 
$
17.33

 
$
15.13

 
$
29.74

 
$
19.37

 
$
12.09

Total TI & LC per sq. ft. per year of lease term (4)
 
$
2.33

 
$
3.81

 
$
5.89

 
$
3.74

 
$
2.70

 
 
 
 
 
 
 
 
 
 
 
New Leases
 
 
 
 
 
 
 
 
 
 
Square feet
 
284

 
399

 
429

 
512

 
720

Lease term (years)
 
9.7

 
10.7

 
9.2

 
5.8

 
8.8

Starting cash rent
 
$
32.55

 
$
26.03

 
$
31.98

 
$
20.18

 
$
23.49

Percent change in cash rent (3)
 
(8.9
)%
 
6.4
%
 
3.6
%
 
0.7
 %
 
3.6
 %
Percent change in GAAP rent (3)
 
1.9
 %
 
16.3
%
 
11.4
%
 
5.5
 %
 
12.7
 %
Total TI & LC per square foot (4)
 
$
69.13

 
$
72.68

 
$
60.72

 
$
25.93

 
$
43.95

Total TI & LC per sq. ft. per year of lease term (4)
 
$
7.15

 
$
6.78

 
$
6.62

 
$
4.44

 
$
4.99

The above leasing summary is based on leases executed during the periods indicated.
 
 
(1)
Excludes properties classified as held for sale.
(2)
Changes in total square footage result from remeasurement and property dispositions.
(3)
Percent change in GAAP and cash rent is a comparison of current rent (including tenant expense reimbursements, if any, and excluding any initial period free rent), to the rent (including tenant expense reimbursements, if any) last received for the same space during EQC's ownership on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years were excluded from the calculation.
(4)
Includes tenant improvements (TI) and leasing commissions (LC).


18
SAME PROPERTY LEASING SUMMARY
(dollars and square feet in thousands, except per square foot data)


 
 
As of and for the Three Months Ended
 
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
Properties
 
60

 
60

 
60

 
60

 
60

Total square feet
 
23,037

 
22,904

 
22,904

 
22,904

 
22,904

Percentage leased
 
91.4
 %
 
92.2
%
 
92.3
%
 
92.1
 %
 
90.7
%
 
 
 
 
 
 
 
 
 
 
 
Total Leasing Activity
 
 
 
 
 
 
 
 
 
 
Square feet
 
1,853

 
970

 
1,337

 
782

 
739

Lease term (years)
 
7.8

 
6.7

 
6.3

 
6.0

 
8.6

Starting cash rent
 
$
29.48

 
$
24.60

 
$
30.28

 
$
22.10

 
$
24.49

Percent change in cash rent (1)
 
(1.3
)%
 
5.8
%
 
3.2
%
 
(0.4
)%
 
3.3
%
Percent change in GAAP rent (1)
 
11.2
 %
 
15.8
%
 
9.1
%
 
7.0
 %
 
12.1
%
Total TI & LC per square foot (2)
 
$
25.44

 
$
38.65

 
$
40.39

 
$
25.99

 
$
42.09

Total TI & LC per sq. ft. per year of lease term (2)
 
$
3.27

 
$
5.79

 
$
6.43

 
$
4.33

 
$
4.90

 
 
 
 
 
 
 
 
 
 
 
Renewal Leases
 
 
 
 
 
 
 
 
 
 
Square feet
 
1,569

 
573

 
934

 
335

 
125

Lease term (years)
 
7.4

 
3.9

 
5.1

 
6.2

 
5.8

Starting cash rent
 
$
28.92

 
$
23.59

 
$
29.18

 
$
24.27

 
$
26.41

Percent change in cash rent (1)
 
0.3
 %
 
5.7
%
 
3.1
%
 
(3.6
)%
 
3.2
%
Percent change in GAAP rent (1)
 
13.2
 %
 
15.6
%
 
8.5
%
 
6.4
 %
 
10.0
%
Total TI & LC per square foot (2)
 
$
17.33

 
$
14.93

 
$
30.42

 
$
25.53

 
$
19.64

Total TI & LC per sq. ft. per year of lease term (2)
 
$
2.33

 
$
3.86

 
$
6.00

 
$
4.14

 
$
3.37

 
 
 
 
 
 
 
 
 
 
 
New Leases
 
 
 
 
 
 
 
 
 
 
Square feet
 
284

 
398

 
402

 
447

 
615

Lease term (years)
 
9.7

 
10.7

 
9.1

 
5.9

 
9.1

Starting cash rent
 
$
32.55

 
$
26.04

 
$
32.84

 
$
20.47

 
$
24.10

Percent change in cash rent (1)
 
(8.9
)%
 
6.4
%
 
3.7
%
 
2.0
 %
 
3.3
%
Percent change in GAAP rent (1)
 
1.9
 %
 
16.3
%
 
11.6
%
 
7.7
 %
 
12.7
%
Total TI & LC per square foot (2)
 
$
69.13

 
$
72.81

 
$
63.52

 
$
26.33

 
$
46.63

Total TI & LC per sq. ft. per year of lease term (2)
 
$
7.15

 
$
6.79

 
$
6.99

 
$
4.49

 
$
5.10

The above leasing summary is based on leases executed during the periods indicated.
 
 
(1)
Percent change in GAAP and cash rent is a comparison of current rent (including tenant expense reimbursements, if any, and excluding any initial period free rent), to the rent (including tenant expense reimbursements, if any) last received for the same space during EQC's ownership on a GAAP and cash basis, respectively. New leasing in suites vacant longer than 2 years were excluded from the calculation.
(2)
Includes tenant improvements (TI) and leasing commissions (LC).


19
OCCUPANCY AND LEASING ANALYSIS
(square feet in thousands)

Square Footage Leased - Three Months Ended March 31, 2016
 
Total Properties
 
 
Square Feet
 
% Leased
Total Portfolio - December 31, 2015
 
21,897

 
91.4
 %
Less: Leased SF of Sold Properties and Properties Held for Sale
 
788

 
75.2
 %
Same Property - December 31, 2015
 
21,109

 
92.2
 %
 
 
 
 
 
Net impact of remeasurements
 
102

 
(0.1
)%
 
 
 
 
 
Expirations
 
(2,009
)
 
(8.7
)%
 
 
 
 
 
Renewal Leases
 
1,569

 
6.8
 %
New Leases
 
284

 
1.2
 %
Total Leasing Activity
 
1,853

 
8.0
 %
 
 
 
 
 
Same Property - March 31, 2016
 
21,055

 
91.4
 %
 
 
 
 
 

Total Square Feet Owned as of
March 31, 2016
 
December 31, 2015
23,037
 
23,952


20

CAPITAL SUMMARY
EXPENDITURES & LEASING COMMITMENTS
(dollars and square feet in thousands, except per square foot data)

CAPITAL SUMMARY
For the Three Months Ended
EXPENDITURES
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
Tenant improvements
$
25,391

 
$
20,874

 
$
13,497

 
$
11,734

 
$
8,167

Leasing costs
9,765

 
9,858

 
14,166

 
9,698

 
10,868

Building improvements (1)
6,541

 
8,151

 
5,327

 
5,175

 
2,750

Total capital expenditures
$
41,697

 
$
38,883

 
$
32,990

 
$
26,607

 
$
21,785

 
 
 
 
 
 
 
 
 
 
Average square feet during period (2)
23,590

 
24,605

 
27,308

 
36,041

 
42,808

 
 
 
 
 
 
 
 
 
 
Building improvements per average total sq. ft. during period
$
0.28

 
$
0.33

 
$
0.20

 
$
0.14

 
$
0.06


CAPITAL SUMMARY
 
For the Three Months Ended
LEASING COMMITMENTS
 
March 31, 2016
 
 
New Leases
 
Renewals
 
Total
Rentable square feet leased during the period
 
284

 
1,569

 
1,853

Total TI & LC (3)
 
$
19,618

 
$
27,132

 
$
46,750

Total TI & LC per square foot (3)
 
$
69.13

 
$
17.33

 
$
25.44

Weighted average lease term by square foot (years)
 
9.7

 
7.4

 
7.8

Total TI & LC per sq. ft. per year of lease term (3)
 
$
7.15

 
$
2.33

 
$
3.27

(1)
Tenant-funded capital expenditures are excluded.
(2)
Average square feet during each period includes properties held for sale at the end of each period.
(3)
Includes tenant improvements (TI) and leasing commissions (LC).


21

TENANTS REPRESENTING 1% OR MORE OF ANNUALIZED RENTAL REVENUE
As of March 31, 2016
(square feet in thousands)



 
 
Tenant (1)
 
Square Feet (2)
 
% of Total Sq. Ft. (2)
 
% of Annualized Rental Revenue (3)
 
Weighted Average Remaining Lease Term
1

 
Expedia, Inc.
 
427

 
2.0
%
 
3.8
%
 
3.8
2

 
Office Depot, Inc.
 
640

 
3.0
%
 
3.4
%
 
7.6
3

 
John Wiley & Sons, Inc.
 
415

 
2.0
%
 
3.4
%
 
15.9
4

 
PNC Financial Services Group
 
587

 
2.8
%
 
3.1
%
 
4.9
5

 
Groupon, Inc. (3)
 
376

 
1.8
%
 
2.4
%
 
9.8
6

 
Flextronics International Ltd.
 
1,051

 
5.0
%
 
2.2
%
 
3.8
7

 
J.P. Morgan Chase & Co.
 
380

 
1.8
%
 
2.1
%
 
8.7
8

 
Jones Day
 
343

 
1.6
%
 
1.8
%
 
10.2
9

 
Towers Watson & Co
 
335

 
1.6
%
 
1.7
%
 
4.2
10

 
Ballard Spahr LLP
 
217

 
1.0
%
 
1.6
%
 
13.9
11

 
Carmike Cinemas, Inc.
 
552

 
2.6
%
 
1.6
%
 
14.4
12

 
RE/MAX Holdings, Inc.
 
248

 
1.2
%
 
1.5
%
 
12.1
13

 
Exelon Corporation
 
296

 
1.4
%
 
1.4
%
 
2.2
14

 
FMC Corporation
 
207

 
1.0
%
 
1.3
%
 
0.2
15

 
Georgetown University
 
240

 
1.1
%
 
1.3
%
 
3.5
16

 
University of Pennsylvania Health System
 
267

 
1.3
%
 
1.2
%
 
9.6
17

 
Wm. Wrigley Jr. Company
 
150

 
0.7
%
 
1.1
%
 
5.8
18

 
West Corporation
 
336

 
1.6
%
 
1.1
%
 
12.9
19

 
Truven Health Analytics
 
179

 
0.9
%
 
1.0
%
 
0.9
20

 
M&T Bank Corporation
 
218

 
1.0
%
 
1.0
%
 
2.5
 
 
Total
 
7,464

 
35.4
%
 
38.0
%
 
7.5
(1)
Tenants located in properties classified as held for sale are excluded.
(2)
Square footage is pursuant to existing leases as of March 31, 2016 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease.
(3)
Groupon, Inc. statistics include 207,536 square feet that are sublet from Bankers Life and Casualty Company.


22
SAME PROPERTY LEASE EXPIRATION SCHEDULE
As of March 31, 2016 (dollars and sq. ft. in thousands)

Year
 
Number of Tenants Expiring
 
 Sq. Ft. Expiring (1)
 
% of Sq. Ft. Expiring
 
Cumulative % of Sq. Ft. Expiring
 
Annualized Rental Revenue Expiring
 
% of Annualized Rental Revenue Expiring
 
Cumulative % of Annualized Rental Revenue Expiring
2016
 
115
 
897
 
4.3
%
 
4.3
%
 
$
19,439

 
4.0
%
 
4.0
%
2017
 
141
 
1,971
 
9.4
%
 
13.7
%
 
46,786

 
9.6
%
 
13.6
%
2018
 
139
 
1,934
 
9.2
%
 
22.9
%
 
44,767

 
9.2
%
 
22.8
%
2019
 
114
 
1,675
 
8.0
%
 
30.9
%
 
36,914

 
7.6
%
 
30.4
%
2020
 
116
 
4,063
 
19.2
%
 
50.1
%
 
79,031

 
16.2
%
 
46.6
%
2021
 
89
 
1,975
 
9.3
%
 
59.4
%
 
48,745

 
10.0
%
 
56.6
%
2022
 
38
 
777
 
3.7
%
 
63.1
%
 
25,419

 
5.2
%
 
61.8
%
2023
 
49
 
1,672
 
7.9
%
 
71.0
%
 
46,921

 
9.7
%
 
71.5
%
2024
 
19
 
608
 
2.9
%
 
73.9
%
 
10,876

 
2.2
%
 
73.7
%
2025
 
26
 
1,177
 
5.6
%
 
79.5
%
 
31,829

 
6.5
%
 
80.2
%
Thereafter
 
50
 
4,306
 
20.5
%
 
100.0
%
 
96,516

 
19.8
%
 
100.0
%
    Total
 
896
 
21,055
 
100.0
%
 
 
 
$
487,243

 
100.0
%
 
 
Weighted average remaining
 
 
 
 
 
 
 
 
 
 
    lease term (in years)
 
6.0

 
 
 
 
 
6.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Square footage is pursuant to existing leases as of March 31, 2016 and includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease.

23

PROPERTY DETAIL (1) 
As of March 31, 2016
(sorted by geographic location, dollars in thousands)

Office Properties
 
Property
 
City and State
 
No. of Bldgs.
 
Sq. Feet
 
% Leased
 
Annualized Rental Revenue
 
Undepreciated Book Value
 
Net Book Value
 
Year Acquired
Weighted Average Year Built or Substantially Renovated (2)
1
Parkshore Plaza
 
Folsom
CA
 
4

 
269,281

 
68.4
%
 
$
3,342

 
$
49,882

 
$
44,410

 
2011
1999
2
Sky Park Centre
 
San Diego
CA
 
2

 
63,485

 
100.0
%
 
1,429

 
9,786

 
6,408

 
2002
1986
3
9110 East Nichols Avenue
 
Centennial
CO
 
1

 
143,958

 
99.8
%
 
2,433

 
20,326

 
13,711

 
2001
1984
4
1225 Seventeenth Street
 
Denver
CO
 
1

 
672,465

 
96.8
%
 
20,942

 
152,381

 
129,777

 
2009
1982
5
5073, 5075, & 5085 S. Syracuse Street
 
Denver
CO
 
1

 
248,493

 
100.0
%
 
7,164

 
63,610

 
54,899

 
2010
2007
6
1601 Dry Creek Drive
 
Longmont
CO
 
1

 
552,865

 
97.0
%
 
8,664

 
34,055

 
24,688

 
2004
1982
7
1250 H Street, NW
 
Washington
DC
 
1

 
196,489

 
79.8
%
 
7,553

 
71,673

 
45,029

 
1998
1992
8
Georgetown-Green and Harris Buildings
 
Washington
DC
 
2

 
240,475

 
100.0
%
 
6,325

 
60,023

 
54,100

 
2009
2006
9
802 Delaware Avenue
 
Wilmington
DE
 
1

 
240,780

 
100.0
%
 
4,280

 
43,467

 
20,095

 
1998
1986
10
6600 North Military Trail
 
Boca Raton
FL
 
3

 
639,830

 
100.0
%
 
16,577

 
145,808

 
128,772

 
2011
2008
11
1200 Lakeside Drive
 
Bannockburn
IL
 
1

 
260,084

 
100.0
%
 
4,407

 
67,350

 
54,293

 
2005
1999
12
600 West Chicago Avenue
 
Chicago
IL
 
2

 
1,511,849

 
98.3
%
 
46,587

 
370,472

 
332,606

 
2011
2001
13
8750 Bryn Mawr Avenue
 
Chicago
IL
 
2

 
631,518

 
89.0
%
 
16,896

 
91,787

 
79,411

 
2010
2005
14
101-115 W. Washington Street
 
Indianapolis
IN
 
1

 
634,058

 
94.0
%
 
13,050

 
91,323

 
66,601

 
2005
1977
15
111 Monument Circle
 
Indianapolis
IN
 
2

 
1,121,764

 
82.1
%
 
23,780

 
176,314

 
162,025

 
2012
1990
16
109 Brookline Avenue
 
Boston
MA
 
1

 
285,556

 
99.7
%
 
10,579

 
46,140

 
27,141

 
1995
1915
17
111 Market Place
 
Baltimore
MD
 
1

 
569,617

 
99.3
%
 
12,582

 
77,400

 
52,157

 
2003
1990
18
25 S. Charles Street
 
Baltimore
MD
 
1

 
343,815

 
93.7
%
 
7,221

 
38,504

 
25,695

 
2004
1972
19
820 W. Diamond
 
Gaithersburg
MD
 
1

 
134,933

 
88.7
%
 
2,958

 
33,670

 
21,861

 
1997
1995
20
Danac Stiles Business Park
 
Rockville
MD
 
3

 
276,637

 
85.4
%
 
6,899

 
65,564

 
46,100

 
2004
2002
21
East Eisenhower Parkway
 
Ann Arbor
MI
 
2

 
410,464

 
92.4
%
 
10,559

 
55,293

 
48,123

 
2010
2006
22
4700 Belleview Avenue
 
Kansas City
MO
 
1

 
80,615

 
71.8
%
 
1,079

 
7,157

 
6,061

 
2008
1986
23
111 River Street (3)
 
Hoboken
NJ
 
1

 
566,215

 
100.0
%
 
23,408

 
137,448

 
114,933

 
2009
2002
24
North Point Office Complex
 
Cleveland
OH
 
2

 
873,335

 
78.7
%
 
15,509

 
124,635

 
101,336

 
2008
1988
25
Cherrington Corporate Center
 
Moon Township
PA
 
7

 
454,890

 
63.8
%
 
6,070

 
72,525

 
51,588

 
1998; 1999
1997
26
1500 Market Street
 
Philadelphia
PA
 
1

 
1,773,967

 
94.2
%
 
35,973

 
294,695

 
213,981

 
2002
1974
27
1600 Market Street
 
Philadelphia
PA
 
1

 
825,968

 
84.4
%
 
19,086

 
133,626

 
77,265

 
1998
1983
28
1735 Market Street
 
Philadelphia
PA
 
1

 
1,290,678

 
79.8
%
 
30,855

 
298,479

 
179,385

 
1998
1990
29
Foster Plaza
 
Pittsburgh
PA
 
8

 
727,365

 
84.1
%
 
12,429

 
75,040

 
55,182

 
2005
1993
30
1601 Rio Grande Street
 
Austin
TX
 
1

 
56,219

 
89.6
%
 
1,432

 
8,302

 
5,248

 
1999
1985
31
206 East 9th Street
 
Austin
TX
 
1

 
170,052

 
95.9
%
 
6,039

 
48,850

 
44,870

 
2012
1984
32
4515 Seton Center Parkway
 
Austin
TX
 
1

 
117,265

 
95.1
%
 
3,454

 
23,066

 
13,837

 
1999
1997
33
4516 Seton Center Parkway
 
Austin
TX
 
1

 
120,559

 
94.8
%
 
3,249

 
23,301

 
13,385

 
1999
1985
34
7800 Shoal Creek Boulevard
 
Austin
TX
 
4

 
151,917

 
100.0
%
 
3,594

 
21,272

 
13,374

 
1999
1974
35
812 San Antonio Street
 
Austin
TX
 
1

 
59,321

 
90.1
%
 
1,662

 
8,684

 
5,587

 
1999
1987
36
8701 N Mopac
 
Austin
TX
 
1

 
121,901

 
81.3
%
 
1,535

 
18,430

 
11,650

 
1999
1982
37
Bridgepoint Square
 
Austin
TX
 
5

 
440,007

 
94.1
%
 
11,391

 
88,434

 
50,733

 
1997
1995
38
Lakewood on the Park
 
Austin
TX
 
2

 
180,558

 
84.1
%
 
3,516

 
36,872

 
22,371

 
1998
1998
39
Research Park
 
Austin
TX
 
4

 
1,110,007

 
98.0
%
 
11,709

 
90,635

 
60,388

 
1998
1976

24

PROPERTY DETAIL (1) 
As of March 31, 2016
(sorted by geographic location, dollars in thousands)

 
Property
 
City and State
 
No. of Bldgs.
 
Sq. Feet
 
% Leased
 
Annualized Rental Revenue
 
Undepreciated Book Value
 
Net Book Value
 
Year Acquired
Weighted Average Year Built or Substantially Renovated (2)
40
333 108th Avenue NE
 
Bellevue
WA
 
1

 
440,565

 
100.0
%
 
19,337

 
152,583

 
129,629

 
2009
2008
41
600 108th Avenue NE
 
Bellevue
WA
 
1

 
256,829

 
96.3
%
 
$
6,837

 
$
48,364

 
$
36,432

 
2004
2012
42
100 East Wisconsin Avenue
 
Milwaukee
WI
 
1

 
435,067

 
89.7
%
 
11,118

 
83,008

 
70,873

 
2010
1989
Office Properties
80

 
19,701,716

 
91.0
%
 
$
463,509

 
$
3,560,234

 
$
2,716,010

 
2005
1989
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Properties
 
Property
 
City and State
 
No. of Bldgs.
 
Sq. Feet
 
% Leased
 
Annualized Rental Revenue
 
Undepreciated Book Value
 
Net Book Value
 
Year Acquired
Weighted Average Year Built or Substantially Renovated (2)
43
97 Newberry Road
 
East Windsor
CT
 
1

 
289,386

 
100.0
%
 
$
1,816

 
$
15,350

 
$
12,407

 
2006
1989
44
33 Stiles Lane
 
North Haven
CT
 
1

 
175,301

 
52.0
%
 
633

 
9,793

 
7,584

 
2006
2002
45
625 Crane Street
 
Aurora
IL
 
1

 
103,683

 
100.0
%
 
444

 
1,611

 
1,516

 
2007
1977
46
2250 Pilot Knob Road
 
Mendota Heights
MN
 
1

 
87,183

 
100.0
%
 
845

 
6,530

 
3,824

 
1998
1995
47
411 Farwell Avenue
 
South St. Paul
MN
 
1

 
422,727

 
100.0
%
 
1,909

 
16,357

 
12,698

 
2004
1970
48
6200 Glenn Carlson Drive
 
St. Cloud
MN
 
1

 
338,000

 
100.0
%
 
2,196

 
15,753

 
13,510

 
2009
2013
49
Raintree Industrial Park
 
Solon
OH
 
12

 
563,182

 
78.5
%
 
2,240

 
12,208

 
11,267

 
2004
1975
50
128 Crews Drive
 
Columbia
SC
 
1

 
185,600

 
100.0
%
 
639

 
3,747

 
3,232

 
2007
2011
51
111 Southchase Boulevard
 
Fountain Inn
SC
 
1

 
168,087

 
100.0
%
 
812

 
6,164

 
4,599

 
2007
1987
52
1043 Global Avenue
 
Graniteville
SC
 
1

 
450,000

 
100.0
%
 
1,484

 
16,886

 
13,226

 
2007
1998
Industrial/Flex
 
21

 
2,783,149

 
92.6
%
 
$
13,018

 
$
104,399

 
$
83,863

 
2006
1990
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53
785 Schilinger Road South
 
Mobile
AL
 
1

 
72,000

 
100.0
%
 
$
1,318

 
$
11,269

 
$
9,218

 
2007
1998
54
401 Vine Street
 
Delmont
PA
 
1

 
53,980

 
100.0
%
 
—

 
7,117

 
5,952

 
2007
1999
55
633 Frazier Drive
 
Franklin
TN
 
1

 
150,000

 
100.0
%
 
2,402

 
18,980

 
16,187

 
2007
1999
56
9840 Gateway Boulevard North
 
El Paso
TX
 
1

 
72,000

 
100.0
%
 
1,163

 
11,432

 
9,376

 
2007
1999
57
3003 South Expressway 281
 
Hidalgo
TX
 
1

 
150,000

 
100.0
%
 
2,015

 
17,004

 
13,714

 
2007
1999
58
1331 North Center Parkway
 
Kennewick
WA
 
1

 
53,980

 
100.0
%
 
853

 
9,187

 
7,635

 
2007
1999
Movie Theaters
 
6

 
551,960

 
100.0
%
 
$
7,751

 
$
74,989

 
$
62,082

 
2007
1999
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
59
Cabot Business Park Land
 
Mansfield
MA
 
—

 
—

 
—%
 
$
—

 
$
1,033

 
$
1,033

 
2003
—
Land
 
—

 
—

 
0.0
%
 
$
—

 
$
1,033

 
$
1,033

 
2003
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60
Leased Land
 
Gonzalez
CA
 
7

 
—

 
0.0
%
 
$
2,965

 
$
31,968

 
$
28,957

 
2010
—
Vineyards
 
7

 
—

 
0.0
%
 
$
2,965

 
$
31,968

 
$
28,957

 
2010
—
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Same Properties
 
114

 
23,036,825

 
91.4
%
 
$
487,243

 
$
3,772,623

 
$
2,891,945

 
2005
1990


25

PROPERTY DETAIL (1) 
As of March 31, 2016
(sorted by geographic location, dollars in thousands)

Properties Held for Sale as of March 31, 2016 (4)
 
Property
 
City and State
 
No. of Bldgs.
 
Sq. Feet
 
% Leased
 
Annualized Rental Revenue
 
Undepreciated Book Value
 
Net Book Value
 
Year Acquired
Weighted Average Year Built or Substantially Renovated (2)
61

633 Ahua Street (5)
 
Honolulu
HI
 
1

 
93,141

 
81.5
%
 
$
1,808

 
$
16,401

 
$
12,545

 
2003
2006
62

1525 Locust Street
 
Philadelphia
PA
 
1

 
98,009

 
95.4
%
 
2,337

 
11,208

 
7,024

 
1999
1987
Total Held for Sale
 
2

 
191,150

 
88.6
%
 
$
4,145

 
$
27,609

 
$
19,569

 
2001
1996
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio
 
116

 
23,227,975

 
91.4
%
 
$
491,388

 
$
3,800,232

 
$
2,911,514

 
2005
1990
(1
)
Excludes properties disposed prior to April 1, 2016.
(2
)
Weighted based on square feet.
(3
)
Property is subject to a ground lease.
(4
)
All properties held for sale as of March, 31, 2016, have been sold during the second quarter.
(5
)
633 Ahua Street is a self storage facility with 778 units.


26
DISPOSED PROPERTY DETAIL (1) 
(dollars in thousands)


 
Property
 
City and State/Country
 
No. of Bldgs.
 
Sq. Feet
 
% Leased
 
Annualized Rental Revenue
 
Undepreciated Book Value
 
Net Book Value
 
Year Acquired
Weighted Average Year Built or Substantially Renovated (2)
1
Executive Park
 
Atlanta
GA
 
9
 
427,443
 
72.8
%
 
$
4,990

 
$
44,224

 
$
29,365

 
2004; 2007
1972
2
3330 N Washington Boulevard
 
Arlington
VA
 
1
 
55,719
 
15.3
%
 
273
 
8,823
 
5,519
 
1998
1987
3
111 East Kilbourn Avenue
 
Milwaukee
WI
 
1
 
373,669
 
81.1
%
 
8,169
 
55,105
 
44,577
 
2008
1988
 
Q1 2016 Dispositions
 
11
 
856,831
 
72.7
%
 
$
13,432

 
$
108,152

 
$
79,461

 
2006
1980
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1
)
Statistics for disposed properties are presented as of or for the quarter-ended preceding each sale.
(2
)
Weighted based on square feet.

27
COMMON & POTENTIAL COMMON SHARES
(share amounts in thousands)

 
For the Three Months Ended
 
March 31,
Weighted Average Share Calculation
2016
 
2015
Weighted average EQC common shares outstanding
124,964

 
128,897

Weighted average restricted shares outstanding
876

 
799

Weighted average common shares outstanding - basic - GAAP EPS, FFO, Normalized FFO
125,840

 
129,696

Weighted average number of dilutive RSUs(1)
1,682

 
178

Weighted average number of dilutive Series D preferred shares convertible to common shares (2)
—

 
—

Weighted average common shares outstanding - diluted - GAAP EPS, FFO, & Normalized FFO
127,522

 
129,874

Rollforward of Share Count to March 31, 2016
 
 
Series D Preferred Shares(2)
 
Series E Preferred Shares(3)
 
EQC Common Shares(4)
Outstanding on December 31, 2015
 
 
4,915

 
11,000

 
126,350

Issuance of restricted shares
 
 
—

 
—

 
137

Repurchase of common shares
 
 
—

 
—

 
(984
)
Outstanding on March 31, 2016
 
 
4,915

 
11,000

 
125,503

Series D preferred shares convertible into common shares on March 31, 2016(2)
 
 
 
 
 
 
2,363

Common shares issuable from RSUs as measured on March 31, 2016(1)
 
 
 
 
 
 
1,754

Potential common shares as measured on March 31, 2016
 
 
 
 
 
 
129,620

(1
)
As of March 31, 2016, we had granted RSUs to certain employees, officers, and the Chairman of the Board of Trustees.  The RSUs contain both service and market-based vesting components.  None of the RSUs have vested. If the market-based vesting component was measured as of March 31, 2016, and 2015, 1,754 and 254 common shares would be issued to the RSU holders, respectively. Using a weighted average basis, 1,682 and 178 common shares are reflected in diluted earnings per common share, diluted FFO per common share, and diluted Normalized FFO per common share for the three months ended March 31, 2016 and 2015, respectively.
(2
)
As of March 31, 2016, we had 4,915 series D preferred shares outstanding that were convertible into 2,363 common shares. The series D preferred shares are anti-dilutive for GAAP EPS, FFO per common share and Normalized FFO per common share for all periods presented.
(3
)
On April 12, 2016, we sent notice for the redemption of our series E preferred shares. The 11,000 series E preferred shares will be redeemed at a price of $25.00 per share, plus any accrued and unpaid dividends, on May 15, 2016. The redemption payment will occur on May 16, 2016 (the first business day following the redemption date).
(4
)
EQC common shares include unvested restricted shares.

28

DEFINITIONS

Annualized Rental Revenue
Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2016, plus estimated recurring expense reimbursements; includes triple net lease rents and excludes lease value amortization, straight line rent adjustments, free rent periods and parking revenue. The annualized rental revenue of disposed properties is presented for the quarter-ended preceding each disposition.
Building Improvements
Building improvements are expenditures to replace obsolete building components or extend the useful life of existing assets.
Consolidated Income Available for Debt Service
Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, taxes, and certain items that we view as nonrecurring or impacting comparability from period to period, determined together with debt service on a pro forma basis for the four consecutive fiscal quarters most recently ended.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
We calculate EBITDA as net income (loss) excluding 1) interest expense, 2) income tax expense, and 3) depreciation and amortization. Our calculation of Adjusted EBITDA differs from our calculation of EBITDA because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.
We consider EBITDA and Adjusted EBITDA to be appropriate measures of our operating performance, along with net income, net income attributable to EQC common shareholders, operating income and cash flow from operating activities. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain historical amounts, such as interest, depreciation and amortization expense, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with our past operating performance. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net income, net income attributable to EQC common shareholders, operating 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. These measures should be considered in conjunction with net income, net income attributable to EQC common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss) and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate EBITDA and Adjusted EBITDA differently than we do.
Enterprise Value
Enterprise value is net debt plus the market value of our preferred shares plus the market value of our common shares.
Funds from Operations (FFO) and Normalized FFO
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate, and our portion of these items related to equity investees and noncontrolling interests.  Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.  We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating 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 may facilitate a comparison of our operating performance between periods and with other REITs.  FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders.  FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to Equity Commonwealth common shareholders, operating 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.  These measures should be considered in conjunction with net income, net income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.
Leasing Costs
These are leasing costs such as brokerage commissions and related legal expenses.
Net Debt
Net debt is total debt minus cash and cash equivalents.

29

DEFINITIONS

Net Operating Income (NOI), Same Property NOI, Cash Basis NOI, and Same Property Cash Basis NOI
NOI is total revenues minus operating expenses. Cash Basis NOI is NOI excluding the effects of straight line rent adjustments, lease value amortization, and lease termination fees. The quarter-to-date same property versions of these measures include the results of properties continuously owned from January 1, 2015 through March 31, 2016. Properties classified as held for sale within our condensed consolidated balance sheets are excluded.
We consider these measures to be appropriate supplemental measures to net income because they may help both investors and management to understand the operations of our properties. We use these measures internally to evaluate property level performance, and we believe that they provide useful information to investors regarding our results of operations because they reflect only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. These measures 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 attributable to Equity Commonwealth common shareholders, operating 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. These measures should be considered in conjunction with net income, net income attributable to Equity Commonwealth common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of operations, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. Other REITs and real estate companies may calculate these measures differently than we do.
Net Book Value
Net book value represents the carrying value of real estate properties after depreciation and amortization, purchase price allocations, impairment write-downs, and currency adjustments, if any.
NOI Margin
NOI Margin is NOI (or the same property or cash basis derivations of NOI defined above) divided by the total revenues used to calculate NOI (or its derivation).
Percentage Leased
Percentage leased includes: 1) space being fitted out for occupancy pursuant to existing leases and 2) space which is leased but not occupied or is being offered for sublease by tenants.
Same Properties
Our same property portfolio is comprised of those properties continuously owned from January 1, 2015 through March 31, 2016. Properties classified as held for sale within our condensed consolidated balance sheets are excluded.
Tenant Improvements
Tenant improvements are capital expenditures to improve tenant spaces.
Total Debt
Total debt is the aggregate balance of the following line items on our condensed consolidated balance sheets: revolving credit facility, senior unsecured debt, net, and mortgage notes payable, net.
Undepreciated Book Value
Undepreciated book value represents the carrying value of real estate properties after purchase price allocations, impairment write-downs, and currency adjustments, if any.

30