Net Income for Full Year 2017 of $1.75 per
Diluted Common Share
FFO, Excluding Certain Items, for Full Year
2017 of $1.57 per Diluted Common Share
Net Loss for Fourth Quarter of $0.21 per
Diluted Common Share
FFO, Excluding Certain Items, for Fourth
Quarter of $0.40 per Diluted Common Share
3.1% and 4.2% Same Store NOI Growth &
Same Store Cash NOI Growth, Respectively, for Full Year
2017
Announces 500 East Pratt, Loop Central &
Centreport Under Contract for Sale
Acquires Domain Point in Strategic Expansion
of The Domain
Announces Appointment of Certain
Officers
2018 Outlook Provided
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, 2017.
Fourth Quarter & Full Year 2017 Highlights
- Recognized a net loss of $0.21 per
diluted common share for the fourth quarter and net income of $1.75
per diluted common share for the full year 2017
- Reported Funds from Operations (FFO)
attributable to common stockholders of $0.39 per diluted common
share for the fourth quarter and $1.50 per diluted common share for
the full year 2017
- Reported FFO, Excluding Certain Items,
attributable to common stockholders of $0.40 per diluted common
share for the fourth quarter and $1.57 per diluted common share for
the full year 2017
- Recognized Same Store NOI Growth of
3.1% for the full year 2017
- Recognized Same Store Cash NOI Growth
of 4.2% for the full year 2017
- Increased occupancy by 80 basis points
during the fourth quarter to 89.1% at December 31, 2017
“We continue to make strong progress on our strategic plan,”
stated Scott W. Fordham, President & Chief Executive Officer,
“and are pleased to have successfully executed on our key
objectives this past year.”
“We exited five markets during 2017,” continued Mr. Fordham,
“and we announced today that we are under contract on 500 East
Pratt in Baltimore, Loop Central in Houston, and Centreport Office
Center in Fort Worth. Exiting Baltimore and downsizing our Houston
and Fort Worth portfolios will further our continued efforts to
sharpen our geographic footprint and improve the overall quality of
our portfolio. Subject to normal closing conditions, we expect to
complete these transactions during the first quarter.”
“Looking forward, we are excited by the opportunity to continue
creating value within Austin,” added Mr. Fordham. “This includes
our recent acquisition of Domain Point, which is comprised of two
office buildings that total approximately 240,000 square feet on
over 9.5 acres of land. As part of our acquisition, we exercised
our exclusive rights to rebrand and include the property as part of
The Domain, bringing our total Austin office ownership to over 2.1
million square feet, including properties under construction that
are over 95% leased.”
“We’ve always known Austin is a special city,” remarked Mr.
Fordham, “and we are pleased to see its prominence grow not only
within our portfolio, but also as one of the nation’s most
desirable places to live, work and play. Our existing ability to
develop at least 1.2 million square feet inside The Domain, plus
future redevelopment opportunities, positions us for significant
additional value creation opportunities within Austin.”
Fourth Quarter & Full Year Financial Results
For the fourth quarter of 2017, net loss attributable to common
stockholders was $9.9 million, or $0.21 per diluted common share,
as compared to a net loss of $6.3 million, or $0.13 per diluted
common share, for the fourth quarter of 2016. For the full year
2017, net income was $84.3 million, or $1.75 per diluted common
share, as compared to a net loss of $29.4 million, or $0.62 per
diluted common share, for 2016.
For the fourth quarter of 2017, NAREIT-defined FFO attributable
to common stockholders was $19.0 million, or $0.39 per diluted
common share, as compared to $18.9 million, or $0.40 per diluted
common share, for the fourth quarter of 2016. For 2017,
NAREIT-defined FFO was $71.9 million, or $1.50 per diluted common
share, as compared to $76.5 million, or $1.60 per diluted common
share, for 2016.
For the fourth quarter of 2017, FFO attributable to common
stockholders, excluding certain items, was $19.4 million, or $0.40
per diluted common share, as compared to $19.1 million, or $0.40
per diluted common share, for the fourth quarter of 2016. For the
full year 2017, FFO, excluding certain items, was $75.1 million, or
$1.57 per diluted common share, as compared to $79.5 million, or
$1.66 per diluted common share, for 2016.
Property Results
Our occupancy at December 31, 2017, was 89.1%, an increase
of 80 basis points from September 30, 2017.
During the fourth quarter of 2017, we leased 165,000 square
feet, which included 30,000 square feet of renewals, 2,000 square
feet of expansions, and 133,000 square feet of new leasing.
During the fourth quarter of 2017, we continued to abate rent at
One & Two Eldridge Place and Three Eldridge Place (collectively
known as the “Eldridge Properties”), located in Houston, Texas,
because the properties had not been restored to pre-loss condition
following Hurricane Harvey. Rent abatements of $5.1 million and
$7.0 million were provided to tenants for the fourth quarter of
2017 and for the year, respectively. A total of $6.2 million of
these losses was recovered from business interruption insurance
proceeds in the fourth quarter, which included $1.9 million for the
third quarter and $4.3 million for the fourth quarter, net of a
deductible and estimated saved expenses.
Subsequent to quarter end, the total office space leased at our
Third + Shoal development property increased to over 90% (88.7% of
the total rentable space).
Real Estate Activity
Subsequent to quarter end, on January 4, 2018, we acquired a
96.5% promoted economic interest in Domain Point. Domain Point is
located in Austin, Texas, adjacent to our other Domain office
properties and includes two buildings with 240,000 rentable square
feet (combined).
Further, we are currently under contract to sell three
properties that are outside of our target growth markets or our
target submarkets. These properties consist of 500 East Pratt,
located in Baltimore, Maryland, with approximately 280,000 rentable
square feet; Loop Central, located in Houston, Texas, with
approximately 575,000 rentable square feet; and Centreport Office
Center, located in Fort Worth, Texas, with approximately 133,000
rentable square feet. These properties are under contracts for an
aggregate anticipated sales price of approximately $145.0 million,
and each is expected to close during the first quarter of 2018. The
sale of each of these properties is subject to closing conditions,
and there is no assurance we will sell these properties on the
terms or timing we expect or at all.
Capital Markets Activity
On October 27, 2017, we entered into a construction loan secured
by Third + Shoal with available borrowings of up to $103.8 million
(at 100%). The loan is scheduled to mature in October 2021, with
two, one-year extension options, subject to certain conditions and
our payment of an extension fee.
On November 3, 2017, our board of directors authorized a
distribution of $0.18 per share of common stock for the fourth
quarter of 2017, which was paid on December 29, 2017.
Subsequent to quarter end, on February 7, 2018, our board of
directors authorized a distribution of $0.18 per share of common
stock for the first quarter of 2018, payable on March 29, 2018.
Subsequent to quarter end, on January 18, 2018, we amended our
existing multi-bank unsecured credit facility. The amendment
provides for total unsecured borrowings under the credit facility
to increase from $860 million to $900 million, with the ability to
further increase total borrowings by up to an additional $300
million in the aggregate subject to certain requirements. The
revolving line of credit was increased to $325 million and the
maturity date extended from December 2018 to January 2022, which
can be extended one additional year subject to certain conditions
and our payment of an extension fee, and the maturity date of the
$300 million term loan was extended from December 2019 to January
2025.
Appointment of Certain Officers
On February 8, 2018, our board of directors appointed Dallas E.
Lucas as our President and Chief Operating Officer, James E. Sharp
as our Chief Financial Officer and Treasurer, and Hannah Wrenn as
our Chief Accounting Officer, in each case effective as of February
15, 2018. Mr. Fordham will remain our Chief Executive Officer and a
director.
2018 Outlook
We have released our 2018 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.
Our 2018 outlook and assumptions are as follows:
2018 Outlook Projected net loss per basic &
diluted common share ($0.15) -
($0.08) Adjustments: Real estate depreciation and amortization
$1.92 Gain on sale of depreciable real estate
($0.55)
Projected FFO per diluted common share $1.22 -
$1.29 Adjustments: Reversal of Fifth Third Center default
interest $0.05 Loss on early extinguishment of debt
1
$0.18
Projected FFO, excluding certain items, per
diluted common share $1.45 - $1.52 Assumptions
used in 2018 outlook above: Dispositions of non-target
properties $145mm - $270mm Strategic acquisitions $75mm - $175mm
Same store cash NOI growth 6.5% - 7.5% Same store NOI growth 0.5% -
1.5% Straight line rent and lease incentive revenue $5.5mm - $6.5mm
Above- and below-market rent amortization $5.5mm - $6.5mm General
& administrative expenses, excluding certain items $21.0mm -
$22.0mm Year-end occupancy 88.5% - 90.5% Weighted average shares of
common stock outstanding 48.5mm
1 Represents $8.5mm loss from write-off of deferred
financing costs upon recast of our credit facility on January 18,
2018
Supplemental Information
A copy of our supplemental information regarding our financial
results and operations for the quarter ended December 31,
2017, is available on our Investor Relations website at
www.tierreit.com/ir, or by contacting our Investor Relations
department by email to ir@tierreit.com.
Conference Call
A conference call will be held on Tuesday, February 13, 2018, at
11:00 a.m. Eastern time/10:00 a.m. Central time to discuss matters
pertaining to this release. Callers in the US or Canada may join
the conference call by dialing 877.407.0789.
A live, listen-only webcast and subsequent replay will also be
available on our Investor Relations website at
www.tierreit.com/ir.
About TIER REIT, Inc.
TIER REIT, Inc. is a publicly traded (NYSE: TIER), self-managed,
Dallas-based real estate investment trust focused on owning
quality, well-managed commercial office properties in dynamic
markets throughout the U.S. Our vision is to be the premier owner
and operator of best-in-class office properties in TIER1
submarkets, which are primarily higher density and amenity-rich
locations within select, high-growth metropolitan areas that offer
a walkable experience to various amenities. Our mission is to
provide unparalleled, TIER ONE Property Services to our tenants and
outsized total return through stock price appreciation and dividend
growth to our stockholders.
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,” “intends,” “plans,”
“believes,” “seeks,” “estimates,” “outlook,” “would,” “could,”
“should,” “objectives,” “strategies,” “opportunities,” “goals,”
“position,” “future,” “vision,” “mission,” “strive,” “project” 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, 2017,
and in our other filings with the Securities and Exchange
Commission. 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 (in thousands, except share and per share
amounts) December 31,
December 31, 2017 2016
Assets Real estate Land $ 139,951 $ 143,537
Land held for development 45,059 45,059 Buildings and improvements,
net 1,061,418 1,043,641 Real estate under development 29,525
17,961
Total real estate 1,275,953
1,250,198 Cash and cash equivalents 13,800 14,884 Restricted cash
8,510 7,509 Accounts receivable, net 81,129 71,459 Prepaid expenses
and other assets 28,112 25,305 Investments in unconsolidated
entities 31,852 76,813 Deferred financing fees, net 1,387 2,395
Lease intangibles, net 87,047 61,844 Other intangible assets, net —
9,787 Assets associated with real estate held for sale
53,348 32,346
Total assets $ 1,581,138
$ 1,552,540
Liabilities and equity
Liabilities Notes payable, net $ 794,538 $ 826,783
Accounts payable and accrued liabilities 81,166 74,458 Acquired
below-market leases, net 17,942 6,886 Distributions payable — 8,601
Other liabilities 7,567 14,353 Obligations associated with real
estate held for sale 2,354 943
Total
liabilities 903,567 932,024
Commitments and contingencies Equity Preferred
stock, $.0001 par value per share; 17,500,000 shares authorized at
December 31, 2017 and 2016, 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, 47,623,324 and 47,473,218
shares issued and outstanding at December 31, 2017 and 2016,
respectively 5 5 Additional paid-in capital 2,609,540 2,606,098
Cumulative distributions and net loss attributable to common
stockholders (1,936,960 ) (1,986,515 ) Accumulated other
comprehensive income (loss) 4,218 (1,042 )
Stockholders’ equity 676,803 618,546
Noncontrolling
interests 768 1,970
Total
equity 677,571 620,516
Total
liabilities and equity $ 1,581,138 $ 1,552,540
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, December 31, December
31, December 31, 2017 2016
2017 2016 Rental revenue $ 54,626 $
54,075 $ 216,461 $ 242,818
Expenses
Property operating expenses 14,131 15,998 55,921 72,603 Interest
expense 8,155 8,565 33,576 43,257 Real estate taxes 8,512 7,454
34,264 36,297 Property management fees 51 197 232 917 Asset
impairment losses 5,250 — 5,250 8,977 General and administrative
4,956 5,796 21,446 23,649 Depreciation and amortization
23,788 23,856 94,754
111,830
Total expenses 64,843
61,866 245,443 297,530 Interest
and other income 88 303 1,359 1,169 Loss on early extinguishment of
debt — — (545 ) —
Loss before income taxes, equity in operations of investments,
and gains (10,129 ) (7,488 ) (28,168 ) (53,543 ) Provision for
income taxes (171 ) (188 ) (468 ) (655 ) Equity in operations of
investments 32 685 6,399
2,569
Loss before gains (10,268 )
(6,991 ) (22,237 ) (51,629 ) Gain on sale of
assets 384 650 92,396 22,176 Gain on remeasurement of investment in
unconsolidated entities — —
14,168 —
Net income (loss) (9,884 )
(6,341 ) 84,327 (29,453 ) Noncontrolling interests 9
8 (41 ) 36
Net income (loss)
attributable to common stockholders $ (9,875 ) $ (6,333 ) $
84,286 $ (29,417 )
Basic weighted average common
shares outstanding 47,553,564 47,414,021 47,537,758 47,405,564
Diluted weighted average common shares outstanding
47,553,564 47,414,021 47,882,642 47,405,564
Basic income
(loss) per common share $ (0.21 ) $ (0.13 ) $ 1.76 $ (0.62 )
Diluted income (loss) per common share $ (0.21 ) $ (0.13 ) $
1.75 $ (0.62 )
Comprehensive income (loss): Net
income (loss) $ (9,884 ) $ (6,341 ) $ 84,327 $ (29,453 ) Other
comprehensive income: unrealized gain on interest rate derivatives
3,963 15,634 5,262
2,824
Comprehensive income (loss) (5,921 ) 9,293
89,589 (26,629 ) Comprehensive (income) loss attributable to
noncontrolling interests 7 (6 ) (43 )
30
Comprehensive income (loss) attributable to
common stockholders $ (5,914 ) $ 9,287 $ 89,546 $
(26,599 )
Calculations of FFO and FFO, excluding
certain items (in thousands, except per share amounts)
Three Months Ended
Year Ended December 31, December
31, December 31, December 31,
2017 2016 2017 2016 Net income (loss) $
(9,884 ) $ (6,341 ) $ 84,327 $ (29,453 ) Noncontrolling interests
9 8 (41 ) 36 Net
income (loss) attributable to common stockholders (9,875 ) (6,333 )
84,286 (29,417 )
Adjustments
(1):
Real estate depreciation and amortization from consolidated
properties 23,655 23,771 94,296 111,122 Real estate depreciation
and amortization from unconsolidated properties 391 2,150 1,377
8,258 Real estate depreciation and amortization - noncontrolling
interests — — — (6 ) Impairment of depreciable real estate assets
5,250 — 5,250 8,977 Gain on sale of depreciable real estate (384 )
(650 ) (99,109 ) (22,236 ) Gain on remeasurement of investment in
unconsolidated entities (14,168 ) — Taxes associated with sale of
depreciable real estate — — — (88 ) Noncontrolling interests
(17 ) (21 ) 6 (78 ) FFO attributable to
common stockholders 19,020 18,917 71,938 76,532 Severance
charges — 532 451 1,025 Interest rate hedge ineffectiveness income
(2) (262 ) (979 ) (253 ) (572 ) Loss on early extinguishment of
debt — — 545 — Default interest (3) 616 616 2,443 2,468
Noncontrolling interests — — (2
) (2 ) FFO attributable to common stockholders, excluding
certain items $ 19,374 $ 19,086 $ 75,122 $
79,451 Weighted average common shares outstanding -
basic 47,554 47,414 47,538 47,406 Weighted average common shares
outstanding - diluted (4) 48,207 47,888 47,883 47,819 Net income
(loss) per common share - diluted (4) $ (0.21 ) $ (0.13 ) $ 1.75 $
(0.62 ) FFO per common share - diluted $ 0.39 $ 0.40 $ 1.50 $ 1.60
FFO, excluding certain items, per common share - diluted $ 0.40 $
0.40 $ 1.57 $ 1.66 ______________________ From August 28,
2017 through December 31, 2017, we provided rent abatements of
approximately $7.0 million to tenants at the Eldridge Properties
because the properties had not been restored to pre-loss condition
following Hurricane Harvey. Approximately $6.2 million of these
losses were recovered from business interruption insurance
proceeds, net of a deductible and estimated saved expenses.
(1) Includes our pro rata share of consolidated and
unconsolidated amounts, including for our period of ownership of
properties sold. (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, December 31, December 31,
December 31, 2017 2016
2017 2016 Same Store Revenue: Rental revenue (1) $
44,342 $ 42,165 $ 170,997 $ 173,005 Less: Lease termination fees
(254 ) (62 ) (463 ) (1,504 )
44,088 42,103 170,534
171,501 Same Store Expenses: Property operating
expenses (less tenant improvement demolition costs) 11,836 11,920
44,872 46,375 Real estate taxes 7,032 6,730 28,463 29,154 Property
management fees 25 42 91
192 Property Expenses 18,893
18,692 73,426 75,721 Same Store
NOI - consolidated properties 25,195 23,411 97,108 95,780 Same
Store NOI - unconsolidated properties (at ownership %) 1,326
1,266 5,394 3,605
Same Store NOI $ 26,521 $ 24,677 $ 102,502 $
99,385 Increase (decrease) in Same Store NOI 7.5 %
3.1 % Same Store NOI - consolidated properties $ 25,195 $
23,411 $ 97,108 $ 95,780 Less: Straight-line rent revenue
adjustment (505 ) (1,283 ) (5,558 ) (5,269 ) Amortization of above-
and below-market rents, net (656 ) (853 )
(2,586 ) (4,101 ) Same Store Cash NOI - consolidated
properties 24,034 21,275 88,964 86,410 Same Store Cash NOI -
unconsolidated properties (at ownership %) 1,104
1,249 4,418 3,225 Same
Store Cash NOI $ 25,138 $ 22,524 $ 93,382 $
89,635 Increase in Same Store Cash NOI 11.6 % 4.2 %
Reconciliation of net income (loss) to Same Store NOI and
Same Store Cash NOI Net income (loss) $ (9,884 ) $ (6,341 ) $
84,327 $ (29,453 ) Adjustments: Interest expense 8,155 8,565 33,576
43,257 Asset impairment losses 5,250 — 5,250 8,977 Tenant
improvement demolition costs 25 277 267 722 General and
administrative 4,956 5,796 21,446 23,649 Depreciation and
amortization 23,788 23,856 94,754 111,830 Interest and other income
(88 ) (303 ) (1,359 ) (1,169 ) Loss on early extinguishment of debt
— — 545 — Provision for income taxes 171 188 468 655 Equity in
operations of investments (32 ) (685 ) (6,399 ) (2,569 ) Gain on
sale of assets (384 ) (650 ) (92,396 ) (22,176 ) Gain on
remeasurement of investment in unconsolidated entities — — (14,168
) — Net operating income of non-same store properties (6,508 )
(7,230 ) (28,740 ) (36,439 ) Lease termination fees (254 ) (62 )
(463 ) (1,504 ) Same Store NOI of unconsolidated properties (at
ownership %) 1,326 1,266 5,394
3,605 Same Store NOI 26,521 24,677 102,502
99,385 Straight-line rent revenue adjustment (505 ) (1,283 ) (5,558
) (5,269 ) Amortization of above- and below-market rents, net (656
) (853 ) (2,586 ) (4,101 ) Cash NOI adjustments for unconsolidated
properties (at ownership %) (222 ) (17 ) (976
) (380 ) Same Store Cash NOI $ 25,138 $ 22,524
$ 93,382 $ 89,635 Operating properties (2) 17
17 Rentable square feet (% owned) 6,346 6,346 ______________
(1) From August 28, 2017 through December 31, 2017, we
provided rent abatements of approximately $7.0 million to tenants
at the Eldridge Properties because the properties had not been
restored to pre-loss condition following Hurricane Harvey.
Approximately $6.2 million of these losses were recovered from
business interruption insurance proceeds, net of a deductible and
estimated saved expenses. (2) Excludes certain operating properties
that were not owned or not fully operational during the entirety of
the comparable periods. Our Domain 2 and Domain 7 properties (two
properties in which we acquired full ownership in January 2017) are
reflected above as unconsolidated and at their prior year ownership
percentage of 49.84% in both 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) which is net income (loss), computed in
accordance with GAAP, excluding 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, and
impairments of depreciable real estate assets, 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
and affect the comparability of FFO across periods. 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180212006287/en/
TIER REIT, Inc.Scott McLaughlin,
972-483-2465smclaughlin@tierreit.com
Tier Reit Inc. (NYSE:TIER)
Historical Stock Chart
From Jun 2024 to Jul 2024
Tier Reit Inc. (NYSE:TIER)
Historical Stock Chart
From Jul 2023 to Jul 2024