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Press release from Business Wire

Government Properties Income Trust Announces 2013 First Quarter Results

Tuesday, April 30, 2013

Government Properties Income Trust Announces 2013 First Quarter Results

07:00 EDT Tuesday, April 30, 2013

NEWTON, Mass. (Business Wire) -- Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter ended March 31, 2013.

Results for the Quarter Ended March 31, 2013:

Normalized funds from operations, or Normalized FFO, for the quarter ended March 31, 2013 were $30.3 million, or $0.56 per share, compared to Normalized FFO for the quarter ended March 31, 2012 of $25.2 million, or $0.54 per share.

Net income was $24.7 million, or $0.45 per share, for the quarter ended March 31, 2013 compared to $13.1 million, or $0.28 per share, for the quarter ended March 31, 2012. Net income for the quarter ended March 31, 2013 includes a net gain on sale of properties from discontinued operations of $8.2 million, or $0.15 per share.

The weighted average number of common shares outstanding was 54.6 million and 47.1 million for the quarters ended March 31, 2013 and 2012, respectively.

A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended March 31, 2013 and 2012 appears later in this press release.

Occupancy and Leasing Results:

As of March 31, 2013, 92.8% of GOV's rentable square feet was leased, compared to 91.9% leased as of March 31, 2012, and 92.5% leased as of December 31, 2012.

GOV entered into leases for approximately 199,000 rentable square feet during the quarter ended March 31, 2013, which had weighted average rental rates that were approximately 14.8% above prior rents for the same space.

Property Sales:

Since January 1, 2013, GOV has sold two properties for an aggregate sales price of $18.5 million, excluding closing costs, as follows:

  • In February 2013, GOV sold an office property located in Oklahoma City, OK with 185,881 rentable square feet for $16.3 million, excluding closing costs, and recognized a gain on sale of $8.2 million.
  • In March 2013, GOV sold an office property located in Tucson, AZ with 31,051 rentable square feet for $2.2 million, excluding closing costs, and recognized a loss on sale of $30,000.

Conference Call:

On Tuesday, April 30, 2013, at 1:00 p.m. Eastern Time, David Blackman, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the first quarter 2013 results.

The conference call telephone number is (800) 230-1951. Participants calling from outside the United States and Canada should dial (612) 332-0342. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on May 7, 2013. To hear the replay, dial (320) 365-3844. The replay pass code is 290592.

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

Supplemental Data:

A copy of GOV's First Quarter 2013 Supplemental Operating and Financial Data is available for download at GOV's website, www.govreit.com. GOV's website is not incorporated as part of this press release.

Government Properties Income Trust is a real estate investment trust, or REIT, which owns properties located throughout the United States that are majority leased to the U.S. Government and other government tenants. As of March 31, 2013, GOV owned 82 properties with approximately 10.0 million rentable square feet. GOV is headquartered in Newton, Massachusetts.

Please see the following pages for a more detailed statement of GOV's operating results and financial condition and for an explanation of GOV's calculation of FFO and Normalized FFO.

GOVERNMENT PROPERTIES INCOME TRUST
CONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS AND
NORMALIZED FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
         
Three Months Ended March 31,
2013 2012
 
Rental income $ 57,678   $ 49,997  
 
Expenses:
Real estate taxes 6,503 5,479
Utility expenses 3,987 3,731
Other operating expenses 9,578 8,767
Depreciation and amortization 13,696 11,910
Acquisition related costs 34 49
General and administrative   3,249     3,002  
Total expenses   37,047     32,938  
 
Operating income 20,631 17,059
 
Interest and other income 11 8
Interest expense (including net amortization of debt premiums and deferred
financing fees of $331 and $324, respectively) (4,147 ) (4,023 )
Equity in earnings of an investee   76     45  
Income before income tax expense 16,571 13,089
 
Income tax expense   (43 )   (45 )
Net income from continuing operations 16,528 13,044
Discontinued operations:
Income from discontinued operations 30 15
Net gain on sale of properties from discontinued operations   8,168     -  
Net income $ 24,726   $ 13,059  
 
Calculation of Funds from Operations (FFO) and Normalized FFO:(1)
Net income $ 24,726 $ 13,059
Plus: depreciation and amortization from continuing operations 13,696 11,910
Plus: depreciation and amortization from discontinued operations 45 162
Less: net gain on sale of properties from discontinued operations   (8,168 )   -  
FFO 30,299 25,131
Plus: acquisition related costs   34     49  
Normalized FFO $ 30,333   $ 25,180  
 
Weighted average common shares outstanding   54,645     47,052  
 
Per common share:
Income from continuing operations $ 0.30 $ 0.28
Income from discontinued operations $ 0.15 $ -
Net income $ 0.45 $ 0.28
FFO $ 0.55 $ 0.53
Normalized FFO $ 0.56 $ 0.54
 

(1) GOV calculates FFO and Normalized FFO as shown above. FFO 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, excluding any gain or loss on sale of properties, as well as other adjustments currently not applicable to GOV. Our calculation of Normalized FFO differs from NAREIT's definition of FFO because GOV excludes acquisition related costs. GOV considers FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, operating income and cash flow from operating activities. GOV believes 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 between GOV and 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. Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility and term loan agreements, the availability of debt and equity capital to us, our expectation of our future capital requirements and operating performance, and our expected needs and availability of cash to pay our obligations. 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, 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. GOV believes that FFO and Normalized FFO may facilitate an understanding of our consolidated historical operating results. These measures should be considered in conjunction with net income, operating income and cash flow from operating activities as presented in our Condensed Consolidated Statements of Income and Comprehensive Income and Condensed Consolidated Statements of Cash Flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than GOV does.

GOVERNMENT PROPERTIES INCOME TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)
    March 31,     December 31,
2013 2012

ASSETS

 
Real estate properties:
Land $ 243,584 $ 244,655
Buildings and improvements   1,281,140     1,288,813  
1,524,724 1,533,468
Accumulated depreciation   (182,967 )   (175,482 )
1,341,757 1,357,986
 
Acquired real estate leases, net 138,273 144,484
Cash and cash equivalents 3,586 5,255
Restricted cash 2,164 1,553
Rents receivable, net 31,011 29,099
Deferred leasing costs, net 8,301 7,661
Deferred financing costs, net 5,271 5,718
Due from related persons 286 -
Other assets, net   9,321     10,378  
Total assets $ 1,539,970   $ 1,562,134  
 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Unsecured revolving credit facility $ 27,500 $ 49,500
Unsecured term loan 350,000 350,000
Mortgage notes payable 92,526 93,127
Accounts payable and accrued expenses 19,820 19,208
Due to related persons 2,741 3,719
Assumed real estate lease obligations, net   18,196     19,129  
Total liabilities   510,783     534,683  
 
Commitments and contingencies
 
Shareholders' equity:
Common shares of beneficial interest, $.01 par value:
70,000,000 shares authorized, 54,664,118 and 54,643,888
shares issued and outstanding, respectively 547 547
Additional paid in capital 1,104,497 1,103,982
Cumulative net income 162,019 137,293
Cumulative other comprehensive income 91 99
Cumulative common distributions   (237,967 )   (214,470 )
Total shareholders' equity   1,029,187     1,027,451  
 
Total liabilities and shareholders' equity $ 1,539,970   $ 1,562,134  
 

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

Government Properties Income Trust
Timothy A. Bonang, 617-219-1440
Vice President, Investor Relations
or
Elisabeth Olmsted, 617-219-1440
Manager, Investor Relations

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