Reports Fourth Quarter Net Loss of $0.13 Per
Basic & Diluted Common Share
Reports Fourth Quarter FFO, Excluding
Certain Items, of $0.40 Per Diluted Common Share
Announces Approximately $100 Million of
Asset Sales Under Contract
Provides 2017 Guidance
TIER REIT, Inc. (NYSE: TIER), a Dallas-based real estate
investment trust that specializes in owning and operating
best-in-class office properties in select U.S. markets, today
announced financial and operating results for the fourth quarter
and full year ended December 31, 2016.
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Fourth Quarter and Full Year 2016 Highlights
- Reported a net loss of $0.13 per basic
and diluted common share for the fourth quarter and $0.62 per basic
and diluted common share for the year ended December 31,
2016
- Reported Funds from Operations (FFO)
attributable to common stockholders of $0.40 per diluted common
share for the fourth quarter and $1.60 per diluted common share for
the year ended December 31, 2016, as compared to $0.37 per diluted
common share for the fourth quarter and $0.71 per diluted common
share for the year ended December 31, 2015
- Reported FFO, excluding certain items,
of $0.40 per diluted common share for the fourth quarter and $1.66
per diluted common share for the year ended December 31, 2016,
as compared to $0.38 per diluted common share for the fourth
quarter and $1.49 per diluted common share for the year ended
December 31, 2015
- Reported Same Store Cash NOI of $29.8
million for the fourth quarter and $106.1 million for the year
ended December 31, 2016, as compared to $27.9 million for the
fourth quarter and $102.6 million for the year ended December 31,
2015
“We are pleased to have successfully accomplished our key 2016
objectives,” stated Scott Fordham, Chief Executive Officer and
President of TIER REIT. “In particular, together with delivering
strong financial results, we have now substantially completed the
strengthening phase of our strategic plan, in which we solidified
our balance sheet by lowering leverage and significantly increased
financial flexibility through the transition of an extensive
portion of our debt structure to unsecured.”
“Looking forward,” Mr. Fordham continued, “as we move to the
recycling phase of our strategic plan in 2017, we will seek to exit
additional non-target markets and reallocate that capital into
prudent development opportunities and strategic acquisitions within
our target markets. In addition to our previously announced
transactions earlier this year, we are currently under contract to
sell approximately $100 million of assets, and are in the market
with additional assets, located outside of our target markets. We
believe the continued execution of our strategic plan will position
the Company for future growth and long-term value creation for our
stockholders.”
Fourth Quarter Financial Results
Net loss attributable to common stockholders was $6.3 million,
or $0.13 per basic and diluted common share, for the quarter ended
December 31, 2016, as compared to $11.2 million, or $0.24 per
basic and diluted common share, for the quarter ended
December 31, 2015.
NAREIT-defined FFO attributable to common stockholders for the
quarter ended December 31, 2016, was $18.9 million, or $0.40
per diluted common share, as compared to $17.4 million, or $0.37
per diluted common share, for the quarter ended December 31,
2015. FFO attributable to common stockholders, excluding certain
items, for the quarter ended December 31, 2016, was $19.1
million, or $0.40 per diluted common share, as compared to $18.0
million, or $0.38 per diluted common share, for the quarter ended
December 31, 2015.
Leasing Update
At December 31, 2016, the Company’s occupancy was 90.7%,
which represents a 100 basis point increase from December 31, 2015,
and a 90 basis point increase from September 30, 2016.
During the fourth quarter of 2016, the Company leased 261,000
square feet, which included 140,000 square feet of renewals, 48,000
square feet of expansion space, and 73,000 square feet of new
leasing.
Acquisitions & Dispositions
On October 27, 2016, the Company sold its 801 Thompson property
for a contract sales price of $4.9 million.
Subsequent to quarter end, the Company acquired the remaining
50.16% interest in its Domain 2 and Domain 7 properties on January
4, 2017, for a combined contract purchase price of $51.2 million
and assumed additional debt of $40.1 million. In addition, on
January 17, 2017, the Company sold substantially all of its
noncontrolling interest in the entity that indirectly owns the
Wanamaker Building for a contract sales price of $114.3 million,
including the buyer’s assumption of $41.8 million in debt. On
January 18, 2017, the Company sold its Buena Vista Plaza property
for a contract sales price of $52.5 million.
Financing and Capital Markets Activity
On October 11, 2016, the Company repaid (without penalty) the
$70.0 million loan secured by its One & Two Eldridge Place
property that was scheduled to mature in January 2017. This loan
had an effective interest rate of 5.49%.
Subsequent to quarter end, on February 1, 2017, the Company
repaid (without penalty) the $58.8 million loan secured by its 500
E. Pratt property. This loan was scheduled to mature in May
2017.
Distributions
For the fourth quarter of 2016, the Company’s board of directors
authorized a distribution in the amount of $0.18 per share on its
common stock to stockholders of record as of the close of business
on December 28, 2016, which was paid on January 6, 2017.
On January 23, 2017, the Company’s board of directors authorized
a distribution for the first quarter of 2017 in the amount of $0.18
per share on its common stock to stockholders of record as of the
close of business on March 15, 2017, payable on March 31, 2017.
2017 Outlook
The Company has released its 2017 outlook to reflect
management’s view of current and future market conditions,
including assumptions such as acquisition and disposition activity,
rental rates, occupancy levels, operating and general and
administrative expenses, weighted average diluted shares
outstanding, and interest rates.
The Company’s 2017 outlook and assumptions are as follows:
2017 Guidance Projected net income per basic &
diluted common share $1.56 - $1.66
Adjustments: Real estate depreciation and
amortization $2.00 Gain on sale of depreciable real estate
($2.05)
Projected FFO per diluted common share
$1.51 - $1.61 Adjustments: Gain on debt restructuring
/ reversal of default interest ($0.14) Loss on early extinguishment
of debt $0.01
Projected FFO, excluding certain
items, per diluted common share $1.38 -
$1.48 Assumptions used in 2017 outlook above:
Dispositions of non-target properties (including Wanamaker &
Buena Vista) $300mm - $400mm Strategic acquisitions $100mm - $225mm
Same store cash NOI growth 2.0% - 3.0% Same store NOI growth 0.0% -
1.0% Straight line rent and lease incentive revenue $6.5mm - $8.5mm
Lease termination fees $1.0mm - $1.5mm Above- and below-market rent
amortization $4.0mm - $5.0mm General & administrative expenses,
excluding certain items $22.0mm - $23.0mm Year-end occupancy 88.0%
- 90.0% Weighted average shares of common stock outstanding 48.1
million
Included with this release is a bridge that provides additional
details regarding the Company’s 2017 guidance for FFO, excluding
certain items (“2017 Guidance Bridge”). The 2017 Guidance Bridge is
also available in the “Investor Relations” section of the Company’s
website at www.tierreit.com, or by contacting the Investor
Relations department by email to ir@tierreit.com.
Supplemental Information
A copy of the Company’s supplemental information regarding its
financial results and operations for the quarter ended
December 31, 2016, is available in the “Investor Relations”
section of the Company’s website at www.tierreit.com, or by
contacting the Investor Relations department by email to
ir@tierreit.com.
Conference Call
A conference call will be held on Tuesday, February 14, 2017, at
11:30 AM Eastern time / 10:30 AM Central time. TIER REIT will host
the conference call to discuss matters related to the Company’s
financial results and operating performance, as well as business
highlights and outlook. In addition, the Company may discuss
business and financial developments and trends and other matters
affecting the Company, some of which may not have been previously
disclosed. A live audio webcast can be accessed through the
Company’s website at www.tierreit.com under the “Investor
Relations” section. A replay of the call will also be available on
the website for 30 days.
To Participate in the Telephone Conference Call
Dial in at least five minutes prior to start time.Domestic
Call-In Number: 877.407.0789International Call-In Number:
201.689.8562
Conference Call Playback
Call-in Number: 844.512.2921International: 412.317.6671Passcode:
13652997The audio playback can be accessed through February 28,
2017.
About TIER REIT, Inc.
TIER REIT, Inc. is a self-managed, Dallas-based real estate
investment trust focused on delivering outsized stockholder return
through stock price appreciation and dividend growth while offering
unparalleled tenant service. TIER REIT’s investment strategy is to
acquire, develop and operate a portfolio of best-in-class office
properties in select U.S. markets that consistently lead the nation
in both population and office-using employment growth. Within these
markets, we target TIER1 submarkets, which are primarily urban and
amenity-rich locations. For additional information regarding TIER
REIT, please visit www.tierreit.com or call 972.483.2400.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws relating to the business
and financial outlook of TIER REIT that are based on our current
expectations, estimates, forecasts and projections and are not
guarantees of future performance. These forward-looking statements
include discussion and analysis of the financial condition of us
and our subsidiaries, including our ability to rent space on
favorable terms, our ability to address debt maturities and fund
our capital requirements, our intentions to acquire and sell
certain properties, our intentions with respect to development
activity, the value of our assets, our anticipated capital
expenditures, the amount and timing of any anticipated future cash
distributions to our stockholders, and other matters. Words such as
“may,” “will,” “anticipates,” “expects,” “believes,” “intends,”
“plans,” “seeks,” “estimates,” “look,” “move,” “would,” “could,”
“should,” “opportunities,” “position,” “objectives,” “strategies,”
“goals,” “growth,” “long-term,” “future,” “assumptions,” and
variations of these words and similar expressions are intended to
identify forward-looking statements.
Actual results may differ materially from those expressed in
these forward-looking statements, and you should not place undue
reliance on any such statements. Factors that could cause actual
results to vary materially from those expressed in forward-looking
statements include changes in real estate conditions and in the
capital markets, as well as the risk factors included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2016.
Forward-looking statements in this press release speak only as of
the date on which such statements were made and, except as required
by law, we undertake no obligation to update any such statements
that may become untrue because of subsequent events.
TIER REIT, Inc.
Consolidated Balance Sheets As of December 31, 2016 and
2015 (in thousands, except share and per share amounts)
December 31,2016
December 31,2015
Assets Real estate Land $ 143,537 $ 179,989 Land held
for development 45,059 45,059 Buildings and improvements, net
1,043,641 1,348,200 Real estate under development 17,961
—
Total real estate 1,250,198 1,573,248
Cash and cash equivalents 14,884 12,248 Restricted cash 7,509
10,712 Accounts receivable, net 71,459 76,228 Prepaid expenses and
other assets 25,305 6,712 Investments in unconsolidated entities
76,813 88,998 Deferred financing fees, net 2,395 3,111 Lease
intangibles, net 61,844 83,548 Other intangible assets, net 9,787
10,086 Assets associated with real estate held for sale
32,346 —
Total assets $ 1,552,540
$ 1,864,891
Liabilities and equity
Liabilities Notes payable, net $ 826,783 $ 1,071,571
Accounts payable and accrued liabilities 74,458 71,597 Payables to
related parties — 292 Acquired below-market leases, net 6,886
11,934 Distributions payable 8,601 8,596 Other liabilities 14,353
23,082 Obligations associated with real estate held for sale
943 —
Total liabilities 932,024
1,187,072
Commitments and
contingencies Series A Convertible Preferred
Stock — 2,700
Equity Preferred stock, $.0001 par
value per share; 17,500,000 and 17,490,000 shares authorized at
December 31, 2016 and 2015, respectively, none outstanding — —
Convertible stock, $.0001 par value per share; 1,000 shares
authorized, none outstanding — — Common stock, $.0001 par value per
share; 382,499,000 shares authorized, 47,473,218 and 47,362,372
shares issued and outstanding at December 31, 2016 and 2015,
respectively 5 5 Additional paid-in capital 2,606,098 2,600,193
Cumulative distributions and net loss attributable to common
stockholders (1,986,515 ) (1,922,721 ) Accumulated other
comprehensive loss (1,042 ) (3,860 )
Stockholders’
equity 618,546 673,617
Noncontrolling interests
1,970 1,502
Total equity 620,516
675,119
Total liabilities and equity $
1,552,540 $ 1,864,891
TIER REIT, Inc. Consolidated Statements of
Operations and Comprehensive Income (Loss) (in thousands,
except share and per share amounts) Three Months
Ended Year Ended
December 31,2016
December 31,2015
December 31,2016
December 31,2015
Rental revenue $ 54,075 $ 67,085 $ 242,818
$ 282,365
Expenses Property operating expenses
15,998 21,812 72,603 89,158 Interest expense 8,565 12,707 43,257
57,454 Real estate taxes 7,454 8,622 36,297 40,134 Property
management fees 197 249 917 5,028 Asset impairment losses — — 8,977
132 General and administrative 5,796 8,934 23,649 44,941
Depreciation and amortization 23,856 30,182
111,830 122,731
Total
expenses 61,866 82,506
297,530 359,578 Interest and other income 303
257 1,169 810 Loss on early extinguishment of debt —
(24 ) — (21,502 )
Loss from
continuing operations before income taxes, equity in operations of
investments, and gain (loss) on sale of assets (7,488 ) (15,188
) (53,543 ) (97,905 ) Provision for income taxes (188 ) (209 ) (655
) (1,507 ) Equity in operations of investments 685
3,829 2,569 3,982
Loss
from continuing operations before gain (loss) on sale of assets
(6,991 ) (11,568 ) (51,629 ) (95,430 )
Discontinued operations Income from discontinued operations
— 17 — 1,407 Gain on sale of discontinued operations —
297 — 15,383
Discontinued operations — 314
— 16,790 Gain (loss) on sale of assets
650 (2 ) 22,176 44,477
Net loss (6,341 ) (11,256 ) (29,453 ) (34,163 )
Noncontrolling interests in continuing operations 8 41 36 159
Noncontrolling interests in discontinued operations — (1 ) — (30 )
Dilution of Series A Convertible Preferred Stock —
— — 1,926
Net loss
attributable to common stockholders $ (6,333 ) $ (11,216 ) $
(29,417 ) $ (32,108 )
Basic and diluted weighted average common
shares outstanding 47,414,021 47,244,471 47,405,564 48,960,393
Basic and diluted income (loss) per common share: Continuing
operations $ (0.13 ) $ (0.24 ) $ (0.62 ) $ (1.00 ) Discontinued
operations — — —
0.34
Basic and diluted loss per common share $ (0.13
) $ (0.24 ) $ (0.62 ) $ (0.66 )
Distributions declared
per common share $ 0.18 $ 0.18 $ 0.72 $
0.54
Net income (loss) attributable to common
stockholders: Continuing operations $ (6,333 ) $ (11,529 ) $
(29,417 ) $ (48,868 ) Discontinued operations —
313 — 16,760
Net loss
attributable to common stockholders $ (6,333 ) $ (11,216 ) $
(29,417 ) $ (32,108 )
Comprehensive loss: Net loss $ (6,341
) $ (11,256 ) $ (29,453 ) $ (34,163 ) Other comprehensive income
(loss): unrealized gain (loss) on interest rate derivatives 15,634
6,299 2,824 (3,077 ) Dilution of Series A Convertible Preferred
Stock — — — 1,926
Comprehensive income (loss) 9,293 (4,957 ) (26,629 )
(35,314 ) Comprehensive (income) loss attributable to
noncontrolling interests (6 ) 29 30
134
Comprehensive income (loss)
attributable to common stockholders $ 9,287 $ (4,928 ) $
(26,599 ) $ (35,180 )
Calculations of FFO and FFO,
excluding certain items (in thousands, except per share
amounts)
Three Months Ended Year Ended
December 31,2016
December 31,2015
December 31,2016
December 31,2015
Net loss $ (6,341 ) $ (11,256 ) $ (29,453 ) $ (34,163 ) Net loss
attributable to noncontrolling interests 8 40 36 129 Dilution of
Series A Convertible Preferred Stock — —
— 1,926 Net loss attributable to
common stockholders (6,333 ) (11,216 ) (29,417 ) (32,108 )
Adjustments
(1):
Real estate depreciation and amortization from consolidated
properties 23,771 29,910 111,122 122,230 Real estate depreciation
and amortization from unconsolidated properties 2,150 2,427 8,258
6,985 Real estate depreciation and amortization - noncontrolling
interests — (10 ) (6 ) (20 ) Impairment of depreciable real estate
— — 8,977 132 Gain on sale of depreciable real estate (650 ) (3,698
) (22,236 ) (63,263 ) Taxes associated with sale of depreciable
real estate — — (88 ) 1,259 Noncontrolling interests (21 )
(50 ) (78 ) (116 ) FFO attributable to common
stockholders 18,917 17,363 76,532 35,099 Acquisition
expenses — 26 — 1,863 Severance charges 532 — 1,025 — Tender offer
and listing costs — (27 ) — 5,526 Interest rate hedge
ineffectiveness income (2) (979 ) — (572 ) — Loss on early
extinguishment of debt — 31 — 21,606 Default interest (3) 616 625
2,468 980 BHT Advisors termination fee and HPT Management buyout
fee — — — 10,301 Noncontrolling interests — (1 ) (2 ) (70 )
Dilution of Series A Convertible Preferred Stock —
— — (1,926 ) FFO attributable to
common stockholders, excluding certain items $ 19,086 $
18,017 $ 79,451 $ 73,379 Weighted average
common shares outstanding - basic 47,414 47,244 47,406 48,960
Weighted average common shares outstanding - diluted (4) 47,888
47,436 47,819 49,148 Net loss per common share - basic and diluted
(4) $ (0.13 ) $ (0.24 ) $ (0.62 ) $ (0.66 ) FFO per common share -
diluted $ 0.40 $ 0.37 $ 1.60 $ 0.71 FFO, excluding certain items,
per common share - diluted $ 0.40 $ 0.38 $ 1.66 $ 1.49
______________
(1) Reflects the adjustments of continuing operations, as
well as discontinued operations. (2) Interest rate swaps are
adjusted to fair value through other comprehensive income (loss).
However, because our interest rate swaps do not have a LIBOR floor
while the hedged debt is subject to a LIBOR floor, the portion of
the change in fair value of our interest rate swaps attributable to
this mismatch is reclassified to interest rate hedge
ineffectiveness income within “interest expense” on our
consolidated statements of operations and comprehensive income
(loss). (3) We have a non-recourse loan in default which subjects
us to incur default interest at a rate that is 500 basis points
higher than the stated interest rate. Although there can be no
assurance, we anticipate that when this property is sold or when
ownership of this property is conveyed to the lender, this default
interest will be forgiven. (4) There are no dilutive securities for
purposes of calculating net loss per common share.
Same Store NOI and Same Store Cash NOI (in thousands,
except percentages)
Three Months Ended
Year Ended
December 31,2016
December 31,2015
December 31,2016
December 31,2015
Same Store Revenue: Rental revenue $ 50,999 $ 50,665 $ 188,228 $
190,059 Less: Lease termination fees (106 ) (783 )
(1,443 ) (3,471 ) 50,893 49,882
186,785 186,588 Same
Store Expenses: Property operating expenses (less tenant
improvement demolition costs) 14,633 14,810 53,337 52,782 Real
estate taxes 7,344 5,826 27,786 25,069 Property management fees
161 170 517 3,208
Property Expenses 22,138 20,806
81,640 81,059 Same Store NOI -
consolidated properties 28,755 29,076 105,145 105,529 Same Store
NOI - unconsolidated properties (at ownership %) 3,657
3,550 10,273 9,736
Same Store NOI $ 32,412 $ 32,626 $ 115,418 $
115,265 Increase (decrease) in Same Store NOI (0.7 )%
0.1 % Same Store NOI - consolidated properties $ 28,755 $
29,076 $ 105,145 $ 105,529 Less: Straight-line rent revenue
adjustment (1,529 ) (2,973 ) (4,951 ) (6,187 ) Amortization of
above- and below-market rents, net (960 ) (1,292 )
(3,357 ) (5,486 ) Same Store Cash NOI - consolidated
properties 26,266 24,811 96,837 93,856 Same Store Cash NOI -
unconsolidated properties (at ownership %) 3,523
3,115 9,264 8,787 Same
Store Cash NOI $ 29,789 $ 27,926 $ 106,101 $
102,643 Increase in Same Store Cash NOI 6.7 % 3.4 %
Reconciliation of net loss to Same Store NOI and Same Store
Cash NOI Net loss $ (6,341 ) $ (11,256 ) $ (29,453 ) $ (34,163 )
Adjustments: Interest expense 8,565 12,707 43,257 57,454 Asset
impairment losses — — 8,977 132 Tenant improvement demolition costs
277 45 722 358 General and administrative 5,796 8,934 23,649 44,941
Depreciation and amortization 23,856 30,182 111,830 122,731
Interest and other income (303 ) (257 ) (1,169 ) (810 ) Loss on
early extinguishment of debt — 24 — 21,502 Provision for income
taxes 188 209 655 1,507 Equity in operations of investments (685 )
(3,829 ) (2,569 ) (3,982 ) Income from discontinued operations —
(17 ) — (1,407 ) Gain on sale of discontinued operations — (297 ) —
(15,383 ) (Gain) loss on sale of assets (650 ) 2 (22,176 ) (44,477
) Net operating income of non-same store properties (1,842 ) (6,588
) (27,135 ) (39,403 ) Lease termination fees (106 ) (783 ) (1,443 )
(3,471 ) Same Store NOI of unconsolidated properties (at ownership
%) 3,657 3,550 10,273
9,736 Same Store NOI 32,412 32,626 115,418 115,265
Straight-line rent revenue adjustment (1,529 ) (2,973 ) (4,951 )
(6,187 ) Amortization of above- and below-market rents, net (960 )
(1,292 ) (3,357 ) (5,486 ) Cash NOI adjustments for unconsolidated
properties (at ownership %) (134 ) (435 )
(1,009 ) (949 ) Same Store Cash NOI $ 29,789 $ 27,926
$ 106,101 $ 102,643 Operating
properties (1) 25 20 Rentable square feet (% owned) 8,638 7,805
______________
(1) Excludes properties held for sale and certain operating
properties that were not owned or not fully operational during the
entirety of the comparable periods.
Non-GAAP Financial Measures
We compute our financial results in accordance with accounting
principles generally accepted in the United States of America
(GAAP). Although Funds from Operations and Funds from Operations,
excluding certain items, are non-GAAP financial measures, we
believe that these calculations are helpful to stockholders and
potential investors and are widely recognized measures of real
estate investment trust performance. We have provided a
reconciliation of the non-GAAP financial measures to the most
directly comparable GAAP measure in tables included in this press
release.
Funds from Operations (FFO)
Historical cost accounting for real estate assets in accordance
with GAAP implicitly assumes that the value of real estate
diminishes predictably over time. Since real estate values have
historically risen or fallen with market conditions, many industry
investors and analysts have considered the presentation of
operating results for real estate companies that use historical
cost accounting alone to be insufficient for evaluating operating
performance. FFO is a non-GAAP financial measure that is widely
recognized as a measure of a REIT’s operating performance. We use
FFO as defined by the National Association of Real Estate
Investment Trusts (NAREIT) in the April 2002 “White Paper on
Funds From Operations,” which is net income (loss), computed in
accordance with GAAP, excluding extraordinary items, as defined by
GAAP, gains (or losses) from sales of property and impairments of
depreciable real estate (including impairments of investments in
unconsolidated entities which resulted from measurable decreases in
the fair value of the depreciable real estate held by the
unconsolidated entity), plus depreciation and amortization of real
estate assets, and after related adjustments for unconsolidated
entities and noncontrolling interests. The determination of whether
impairment charges have been incurred is based partly on
anticipated operating performance and hold periods. Estimated
undiscounted cash flows from a property, derived from estimated
future net rental and lease revenues, net proceeds on the sale of
the property, and certain other ancillary cash flows, are taken
into account in determining whether an impairment charge has been
incurred. While impairment charges for depreciable real estate are
excluded from net income (loss) in the calculation of FFO as
described above, impairments reflect a decline in the value of the
applicable property that we may not recover.
We believe that the use of FFO, together with the required GAAP
presentations, is helpful in understanding our operating
performance because it excludes real estate-related depreciation
and amortization, gains and losses from property dispositions,
impairments of depreciable real estate assets, and extraordinary
items, and as a result, when compared period to period, reflects
the impact on operations from trends in occupancy rates, rental
rates, operating costs, development activities, general and
administrative expenses, and interest costs, which are not
immediately apparent from net income. Factors that impact FFO
include fixed costs, yields on cash held in accounts, income from
portfolio properties and other portfolio assets, interest rates on
debt financing, and operating expenses.
We also evaluate FFO, excluding certain items. The items
excluded relate to certain non-operating activities or certain
non-recurring activities that may create significant FFO
volatility. We believe it is useful to evaluate FFO excluding these
items because it provides useful information in analyzing
comparability between reporting periods and in assessing the
sustainability of our operating performance.
FFO and FFO, excluding certain items, should not be considered
as alternatives to net income (loss), or as indicators of our
liquidity, nor are they indicative of funds available to fund our
cash needs, including our ability to make distributions.
Additionally, the exclusion of impairments limits the usefulness of
FFO and FFO, excluding certain items, as historical operating
performance measures since an impairment charge indicates that
operating performance has been permanently affected. FFO and FFO,
excluding certain items, are non-GAAP measurements and should be
reviewed in connection with other GAAP measurements. Our FFO and
FFO, excluding certain items, as presented may not be comparable to
amounts calculated by other REITs that do not define FFO in
accordance with the current NAREIT definition, or interpret it
differently, or that identify and exclude different items related
to non-operating activities or certain non-recurring
activities.
Same Store NOI and Same Store Cash NOI
Same Store NOI is equal to rental revenue, less lease
termination fee income, property operating expenses (excluding
tenant improvement demolition costs), real estate taxes, and
property management expenses for our same store properties and is
considered a non-GAAP financial measure. Same Store Cash NOI is
equal to Same Store NOI less non-cash revenue items including
straight-line rent adjustments and the amortization of above- and
below-market rent. The same store properties include our operating
office properties not held for sale and owned and operated for the
entirety of both periods being compared and include our comparable
ownership percentage in each period for properties in which we own
an unconsolidated interest that is accounted for using the equity
method. We view Same Store NOI and Same Store Cash NOI as important
measures of the operating performance of our properties because
they allow us to compare operating results of properties owned and
operated for the entirety of both periods being compared and
therefore eliminate variations caused by acquisitions or
dispositions during such periods.
Same Store NOI and Same Store Cash NOI presented by us may not
be comparable to Same Store NOI or Same Store Cash NOI reported by
other REITs that do not define Same Store NOI or Same Store Cash
NOI exactly as we do. We believe that in order to facilitate a
clear understanding of our operating results, Same Store NOI and
Same Store Cash NOI should be examined in conjunction with net
income (loss) as presented in our consolidated financial statements
and notes thereto. Same Store NOI and Same Store Cash NOI should
not be considered as an indicator of our ability to make
distributions, as alternatives to net income (loss) as an
indication of our performance, or as a measure of cash flows or
liquidity.
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TIER REIT, Inc.Scott McLaughlin,
972-483-2465smclaughlin@tierreit.com
Tier Reit Inc. (NYSE:TIER)
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Tier Reit Inc. (NYSE:TIER)
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