Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Select Income REIT | |
Entity Central Index Key | 1,537,667 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 89,550,528 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Real estate properties: | ||
Land | $ 1,057,197 | $ 1,041,767 |
Buildings and improvements | 3,238,661 | 3,178,098 |
Real estate properties, gross | 4,295,858 | 4,219,865 |
Accumulated depreciation | (369,252) | (314,249) |
Real estate properties, net | 3,926,606 | 3,905,616 |
Properties held for sale | 15,289 | 5,829 |
Acquired real estate leases, net | 433,947 | 477,577 |
Cash and cash equivalents | 25,982 | 658,719 |
Restricted cash | 403 | 178 |
Rents receivable, including straight line rents of $121,770 and $122,010, respectively, net of allowance for doubtful accounts of $2,227 and $1,396, respectively | 131,642 | 127,672 |
Deferred leasing costs, net | 14,568 | 14,295 |
Other assets, net | 173,062 | 113,144 |
Total assets | 4,721,499 | 5,303,030 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Unsecured revolving credit facility | 108,000 | 0 |
ILPT revolving credit facility | 380,000 | 750,000 |
Unsecured term loan, net | 0 | 348,870 |
Senior unsecured notes, net | 1,430,688 | 1,777,425 |
Mortgage notes payable, net | 210,624 | 210,785 |
Accounts payable and other liabilities | 92,626 | 101,352 |
Assumed real estate lease obligations, net | 62,176 | 68,783 |
Rents collected in advance | 21,626 | 15,644 |
Security deposits | 9,370 | 8,346 |
Due to related persons | 26,749 | 30,006 |
Total liabilities | 2,341,859 | 3,311,211 |
Commitments and contingencies | ||
Shareholders' equity attributable to SIR: | ||
Common shares of beneficial interest, $.01 par value: 125,000,000 shares authorized; 89,550,528 and 89,487,371 shares issued and outstanding, respectively | 896 | 895 |
Additional paid in capital | 2,312,724 | 2,180,896 |
Cumulative net income | 634,849 | 508,213 |
Cumulative other comprehensive income | 863 | 52,665 |
Cumulative common distributions | (887,776) | (750,850) |
Total shareholders' equity attributable to SIR | 2,061,556 | 1,991,819 |
Noncontrolling interest in consolidated subsidiary | 318,084 | 0 |
Total shareholders' equity | 2,379,640 | 1,991,819 |
Total liabilities and shareholders' equity | $ 4,721,499 | $ 5,303,030 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Rents receivable, including straight line rents | $ 121,770 | $ 122,010 |
Rents receivable, allowance for doubtful accounts | $ 2,227 | $ 1,396 |
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 125,000,000 | 125,000,000 |
Common shares, shares issued (in shares) | 89,550,528 | 89,487,371 |
Common shares, shares outstanding (in shares) | 89,550,528 | 89,487,371 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
REVENUES: | ||||
Rental income | $ 101,833 | $ 98,635 | $ 298,003 | $ 293,020 |
Tenant reimbursements and other income | 20,048 | 19,379 | 60,514 | 57,158 |
Total revenues | 121,881 | 118,014 | 358,517 | 350,178 |
EXPENSES: | ||||
Real estate taxes | 12,518 | 11,489 | 36,748 | 33,168 |
Other operating expenses | 14,814 | 14,649 | 43,714 | 41,039 |
Depreciation and amortization | 35,371 | 34,713 | 105,326 | 102,770 |
Acquisition and transaction related costs | 3,796 | 0 | 3,796 | 0 |
General and administrative | 15,331 | 1,608 | 47,353 | 24,697 |
Write-off of straight line rents receivable, net | 0 | 0 | 10,626 | 12,517 |
Loss on asset impairment | 0 | 0 | 0 | 4,047 |
Loss on impairment of real estate assets | 9,706 | 0 | 9,706 | 229 |
Total expenses | 91,536 | 62,459 | 257,269 | 218,467 |
Operating income | 30,345 | 55,555 | 101,248 | 131,711 |
Dividend income | 397 | 397 | 1,190 | 1,190 |
Unrealized gain on equity securities | 22,771 | 0 | 53,159 | 0 |
Interest income | 133 | 19 | 753 | 39 |
Interest expense (including net amortization of debt issuance costs, premiums and discounts of $1,746, $1,716, $5,245 and $4,688, respectively) | (23,287) | (24,383) | (69,446) | (68,278) |
Loss on early extinguishment of debt | 0 | 0 | (1,192) | 0 |
Income before income tax expense, equity in earnings of an investee and gain on sale of real estate | 30,359 | 31,588 | 85,712 | 64,662 |
Income tax expense | (185) | (177) | (446) | (364) |
Equity in earnings of an investee | 831 | 31 | 882 | 533 |
Income before gain on sale of real estate | 31,005 | 31,442 | 86,148 | 64,831 |
Gain on sale of real estate | 4,075 | 0 | 4,075 | 0 |
Net income | 35,080 | 31,442 | 90,223 | 64,831 |
Net income allocated to noncontrolling interest | (5,597) | 0 | (15,841) | 0 |
Net income attributed to SIR | 29,483 | 31,442 | 74,382 | 64,831 |
Other comprehensive income: | ||||
Unrealized gain on investment in available for sale securities | 0 | 4,284 | 0 | 18,804 |
Unrealized gain on interest rate swap | 3 | 27 | 362 | 61 |
Equity in unrealized gain of an investee | 173 | 116 | 90 | 296 |
Other comprehensive income | 176 | 4,427 | 452 | 19,161 |
Comprehensive income | 35,256 | 35,869 | 90,675 | 83,992 |
Comprehensive income allocated to noncontrolling interest | (5,597) | 0 | (15,841) | 0 |
Comprehensive income attributed to SIR | $ 29,659 | $ 35,869 | $ 74,834 | $ 83,992 |
Weighted average common shares outstanding - basic (in shares) | 89,410 | 89,355 | 89,395 | 89,341 |
Weighted average common shares outstanding - diluted (in shares) | 89,437 | 89,379 | 89,411 | 89,364 |
Net income attributed to SIR per common share - basic and diluted (in USD per share) | $ 0.33 | $ 0.35 | $ 0.83 | $ 0.73 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Amortization of debt premiums and discounts and debt issuance costs | $ 1,746 | $ 1,716 | $ 5,245 | $ 4,688 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Shares | Additional Paid In Capital | Cumulative Net Income | Cumulative Other Comprehensive Income | Cumulative Common Distributions | Shareholders' Equity Attributable to SIR | Noncontrolling Interest in Consolidated Subsidiary |
Increase (Decrease) in Stockholders' Equity | ||||||||
Cumulative adjustment upon adoption of ASU No. 2016-01 | $ 52,254 | $ (52,254) | ||||||
Balance at January 1, 2018 | $ 1,991,819 | $ 895 | $ 2,180,896 | 560,467 | 411 | $ (750,850) | $ 1,991,819 | $ 0 |
Balance (in shares) (Before the adjustment) at Dec. 31, 2017 | 89,487,371 | |||||||
Balance (in shares) at Dec. 31, 2017 | 89,487,371 | |||||||
Balance at the beginning of the period (Before the adjustment) at Dec. 31, 2017 | 1,991,819 | $ 895 | 2,180,896 | 508,213 | 52,665 | (750,850) | 1,991,819 | 0 |
Balance at the beginning of the period at Dec. 31, 2017 | $ 1,991,819 | 52,665 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Share repurchases (in shares) | (617) | |||||||
Balance (in shares) (Before the adjustment) at Dec. 31, 2017 | 89,487,371 | |||||||
Balance (in shares) at Dec. 31, 2017 | 89,487,371 | |||||||
Balance at the beginning of the period (Before the adjustment) at Dec. 31, 2017 | $ 1,991,819 | $ 895 | 2,180,896 | 508,213 | 52,665 | (750,850) | 1,991,819 | 0 |
Balance at the beginning of the period at Dec. 31, 2017 | 1,991,819 | 52,665 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 90,223 | 74,382 | 74,382 | 15,841 | ||||
Share grants (in shares) | 76,700 | |||||||
Share grants | 2,054 | 1,086 | 1,087 | 967 | ||||
Share repurchases (in shares) | (13,063) | |||||||
Share repurchases | (283) | (283) | (283) | |||||
Forfeited share grants (in shares) | (480) | |||||||
Issuance of shares of subsidiary, net | 444,309 | 131,025 | 131,025 | 313,284 | ||||
Other comprehensive income | 452 | 452 | 452 | |||||
Distributions to common shareholders | (136,926) | (136,926) | (136,926) | |||||
Distributions to noncontrolling interest | (12,008) | (12,008) | ||||||
Balance (in shares) at Sep. 30, 2018 | 89,550,528 | |||||||
Balance at the end of the period at Sep. 30, 2018 | 2,379,640 | $ 896 | 2,312,724 | 634,849 | 863 | (887,776) | 2,061,556 | 318,084 |
Balance at the beginning of the period at Jun. 30, 2018 | 687 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 35,080 | |||||||
Other comprehensive income | 176 | |||||||
Balance (in shares) at Sep. 30, 2018 | 89,550,528 | |||||||
Balance at the end of the period at Sep. 30, 2018 | $ 2,379,640 | $ 896 | $ 2,312,724 | $ 634,849 | $ 863 | $ (887,776) | $ 2,061,556 | $ 318,084 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 90,223 | $ 64,831 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 61,162 | 59,994 |
Net amortization of debt issuance costs, premiums and discounts | 5,245 | 4,688 |
Amortization of acquired real estate leases and assumed real estate lease obligations | 41,331 | 40,308 |
Amortization of deferred leasing costs | 1,440 | 1,170 |
Write-off of straight line rents and provision for losses on rents receivable | 11,509 | 12,856 |
Straight line rental income | (9,994) | (16,361) |
Impairment losses | 9,706 | 4,276 |
Loss on early extinguishment of debt | 1,192 | 0 |
Gain on sale of real estate | (4,075) | 0 |
Other non-cash expenses, net | 155 | (453) |
Unrealized gain on equity securities | (53,159) | 0 |
Equity in earnings of an investee | (882) | (533) |
Change in assets and liabilities: | ||
Rents receivable | (5,485) | 1,563 |
Deferred leasing costs | (1,677) | (2,591) |
Other assets | (1,285) | (7,355) |
Accounts payable and other liabilities | (8,208) | (4,910) |
Rents collected in advance | 5,982 | 1,312 |
Security deposits | 1,024 | 263 |
Due to related persons | (3,257) | 3,706 |
Net cash provided by operating activities | 140,947 | 162,764 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Real estate acquisitions and deposits | (95,078) | (117,458) |
Real estate improvements | (16,630) | (11,723) |
Proceeds from sale of properties, net | 9,394 | 0 |
Net cash used in investing activities | (102,314) | (129,181) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common shares in subsidiary, net | 444,309 | 0 |
Proceeds from issuance of senior unsecured notes, after discounts | 0 | 345,394 |
Repayments of mortgage notes payable | (54) | (17,552) |
Borrowings under revolving credit facilities | 342,000 | 220,000 |
Repayments of revolving credit facilities | (604,000) | (445,000) |
Payment of debt issuance costs | (4,183) | (3,197) |
Repayment of unsecured term loan | (350,000) | 0 |
Repayment of senior unsecured notes | (350,000) | 0 |
Distributions to common shareholders | (136,926) | (136,832) |
Repurchase of common shares | (283) | (309) |
Distributions to noncontrolling interest | (12,008) | 0 |
Net cash used in financing activities | (671,145) | (37,496) |
Decrease in cash, cash equivalents and restricted cash | (632,512) | (3,913) |
Cash, cash equivalents and restricted cash at beginning of period | 658,897 | 22,171 |
Cash, cash equivalents and restricted cash at end of period | 26,385 | 18,258 |
SUPPLEMENTAL DISCLOSURES: | ||
Interest paid | 76,142 | 71,913 |
Income taxes paid | 421 | 373 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ 658,897 | $ 22,171 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation The accompanying condensed consolidated financial statements of Select Income REIT and its consolidated subsidiaries, or the Company, SIR, we, us or our, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2017 , or our 2017 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years' condensed consolidated financial statements to conform to the current year's presentation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in the condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and the assessments of the carrying values and impairments of long lived assets. On January 17, 2018, Industrial Logistics Properties Trust and its consolidated subsidiaries, or ILPT, our then wholly owned subsidiary, completed an initial public offering and listing on The Nasdaq Stock Market LLC, or Nasdaq, of 20,000,000 of its common shares, or the ILPT IPO. ILPT intends to qualify for taxation as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the IRC, for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2018 and to maintain such qualification thereafter. Upon the completion of the ILPT IPO, ILPT owned 266 of our consolidated buildings, leasable land parcels and easements with a combined 28,540,000 rentable square feet, consisting of 226 buildings, leasable land parcels and easements with approximately 16,834,000 rentable square feet located on the island of Oahu, HI, and 40 industrial buildings with approximately 11,706,000 rentable square feet located in 24 other states, or collectively, the ILPT Properties. Following the ILPT IPO, most of our 100% owned properties are office properties. As of September 30, 2018, we continue to own 45,000,000 common shares of beneficial interest of ILPT, or ILPT common shares, or approximately 69.2% of the outstanding ILPT common shares. We accounted for the sale of the ILPT common shares in accordance with Accounting Standards Codification Topic 810, Consolidation , and concluded that we retained control under the voting interest model given our ownership percentage in ILPT; therefore, ILPT remains one of our consolidated subsidiaries and the difference between the net book value sold and the share price paid is treated as an increase to additional paid in capital. The 30.8% portion of ILPT that is not controlled by us, or the noncontrolling interest, is presented as a separate component of equity in our condensed consolidated balance sheets. In addition, net income attributable to the noncontrolling interest is calculated based on the 30.8% of ILPT shares not owned by us and is presented separately in our condensed consolidated statements of comprehensive income. See Note 13 for additional information regarding the ILPT IPO. References to and data for "the Company", "SIR", "we", "us" and "our" refer to and include data for Select Income REIT and its consolidated subsidiaries, including its consolidated subsidiary, ILPT, unless the context indicates otherwise. On September 14, 2018, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Government Properties Income Trust, or GOV, and GOV’s wholly owned subsidiary, GOV MS REIT, or Merger Sub, pursuant to which we have agreed to merge with and into Merger Sub, with Merger Sub continuing as the surviving entity in the merger, or the Merger. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger, or the Effective Time, each of our common shares issued and outstanding immediately prior to the Effective Time will be converted into the right to receive 1.04 , or the Exchange Ratio, newly issued common shares of beneficial interest of GOV, or GOV common shares, subject to adjustment as described in the Merger Agreement, with cash paid in lieu of fractional shares. The Exchange Ratio is fixed and will not be adjusted to reflect changes in the market price of our common shares or GOV common shares prior to the Effective Time. At the Effective Time, any outstanding unvested common share awards under our equity compensation plan will be converted into an award under GOV’s equity compensation plan, subject to substantially similar vesting requirements and other terms and conditions, of a number of GOV common shares determined by multiplying the number of our unvested common shares subject to such award by the Exchange Ratio (rounded down to the nearest whole number). Also pursuant to the Merger Agreement, we and GOV agreed that, prior to the Effective Time, GOV would sell, for cash consideration, all 24,918,421 of our common shares owned by GOV, or the Secondary Sale, which sale was completed on October 9, 2018 as further described below, and further that, subject to the satisfaction of certain conditions, we will declare and, at least one business day prior to the closing date of the Merger, pay a pro rata distribution to our shareholders of all 45,000,000 ILPT common shares that we own, or the ILPT Distribution. The Merger and the other transactions contemplated by the Merger Agreement, including the Secondary Sale and the ILPT Distribution, are collectively referred to herein as the Transactions. We expect that immediately after the Merger is effective, Merger Sub will then merge with and into GOV, with GOV as the surviving entity, and GOV will change its name to “Office Properties Income Trust,” following which its ticker symbol on Nasdaq will be changed to “OPI”. We also expect that immediately following that second merger, the combined company will effect a reverse stock split of its common shares pursuant to which every four common shares of the combined company will be converted into one common share of the combined company. The combined company will continue to be managed by The RMR Group LLC, or RMR LLC, pursuant to GOV’s existing business and property management agreements with RMR LLC. The completion of the Merger is subject to the satisfaction or waiver of various conditions, including, among other things, approval by our shareholders of the Merger and the other transactions contemplated by the Merger Agreement to which we are a party, and by GOV's shareholders of the issuance of GOV common shares in the Merger, or the GOV Share Issuance, the absence of any law or order by any governmental authority prohibiting, making illegal, enjoining or otherwise restricting, preventing or prohibiting the consummation of the Merger and the other transactions, the effectiveness of the registration statement on Form S-4, as amended, or the Form S-4, filed by GOV with the Securities and Exchange Commission, or SEC, to register the GOV common shares to be issued in the Merger and the approval of Nasdaq for the listing of such shares on Nasdaq, subject to official notice of issuance, and, subject to the satisfaction of certain other conditions, the payment of the ILPT Distribution at least one business day before the completion of the Merger. We and GOV expect to consummate the Merger by December 31, 2018. The Merger Agreement provides that either party may terminate the Merger Agreement if the Merger is not consummated by the outside closing date of June 30, 2019. The Merger Agreement contains certain customary representations, warranties and covenants, including, among others, covenants with respect to the conduct of our and GOV’s respective businesses prior to closing, subject to certain consent rights by GOV and us, respectively, and covenants prohibiting us and GOV from soliciting, providing information or entering into discussions concerning competing proposals (generally defined as proposals for 20% or more of the assets, revenues or earnings or equity of the applicable party), subject to certain exceptions. In addition, because GOV owned our common shares that it sold pursuant to the Secondary Sale as of October 1, 2018, the record date set by our Board of Trustees for shareholders eligible to vote at our special meeting of shareholders to approve the Merger and the other transactions contemplated by the Merger Agreement to which we are a party, or the Record Date, GOV is entitled to vote those shares at that meeting, unless the Record Date is changed. Pursuant to the Merger Agreement, GOV has agreed to vote those shares at that meeting in favor of approval of the Merger and the other transactions contemplated by the Merger Agreement to which we are a party. The Merger Agreement contains certain termination rights for both us and GOV, including that under specified circumstances, either party is entitled to terminate the Merger Agreement to accept a superior proposal (generally defined as proposals for 75% or more of the assets, revenues or earnings or equity of such party, which proposal such party’s board of trustees (or an authorized committee thereof) has determined in good faith, after consultation with outside financial advisors and outside legal counsel, (1) would, if consummated, result in a transaction that is more favorable to the shareholders of such party from a financial point of view than the Merger and the other Transactions, (2) for which the third party has demonstrated that the financing for such offer is fully committed or is reasonably likely to be obtained and (3) which is reasonably likely to receive all required approvals from any governmental authority and otherwise reasonably likely to be consummated on the terms proposed). Neither we nor GOV is entitled to any termination fee under the Merger Agreement. All fees and expenses incurred in connection with the Merger and the other Transactions will be paid by the party incurring those expenses, except that we and GOV will share equally any filing fees incurred in connection with the filing of the Form S-4 and related joint proxy statement/prospectus and, as explained below, GOV is responsible for all of the costs and expenses incurred in connection with the Secondary Sale, including our and our affiliates’ costs and expenses. Contemporaneously with the execution of the Merger Agreement, and in connection with the Secondary Sale, we entered into a registration agreement with GOV, or the Registration Agreement, pursuant to which GOV received demand registration rights, subject to certain limitations, with respect to the resale of all 24,918,421 of our common shares which GOV then owned. The Registration Agreement provides that GOV will pay all the costs and expenses incurred in connection with the Secondary Sale, including costs and expenses incurred by us and our affiliates. On October 9, 2018, pursuant to the terms of the Registration Agreement, GOV sold all 24,918,421 of our common shares that GOV then owned in an underwritten public offering at a price of $18.25 per share, raising net proceeds of approximately $434,700 after underwriting discounts and other estimated expenses. Also contemporaneously with the execution of the Merger Agreement, we and RMR LLC entered into a letter agreement, or the RMR LLC Letter Agreement, pursuant to which, on the terms and subject to the conditions set forth therein, we and RMR LLC agreed that, effective upon consummation of the Merger, we shall have terminated our business and property management agreements with RMR LLC for convenience, and RMR LLC shall have waived its right to receive payment of the termination fee due on account thereof. Following termination of the management agreements in accordance with the RMR LLC Letter Agreement, pro rata base management fees and incentive management fees will continue to be payable under the terms of the management agreements. The RMR LLC Letter Agreement further provides that such termination by us and waiver by RMR LLC shall apply only in respect of the Merger and will not apply in respect of any competing proposal or superior proposal (as those terms are defined in the Merger Agreement) or to any other transaction or arrangement. The transactions contemplated by the Merger Agreement and the terms thereof were evaluated, negotiated and recommended to each of our and GOV’s board of trustees by a special committee of our and GOV’s board of trustees, respectively, each comprised solely of our and GOV’s disinterested, independent trustees, respectively, and were separately approved and adopted by our and GOV’s independent trustees and by our and GOV’s board of trustees. UBS Securities LLC acted as financial advisor to the special committee of our board of trustees, and Citigroup Global Markets Inc. acted as financial advisor to the special committee of GOV’s board of trustees. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. On January 1, 2018, we adopted FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $51,413 from cumulative other comprehensive income to cumulative net income. We also reclassified $ 841 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of our equity method investee. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash , which requires companies to show the changes in the total of cash and cash equivalents and restricted cash in the statements of cash flows. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash in our condensed consolidated balance sheets are presented with cash and cash equivalents in the condensed consolidated statements of cash flows. We have also included a reconciliation of the totals in the condensed consolidated statements of cash flows to the related captions in the condensed consolidated balance sheets. The adoption of this update did not change our balance sheet presentation. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. ASU No. 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2018-07 will have in our condensed consolidated financial statements. |
Real Estate Properties
Real Estate Properties | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate [Abstract] | |
Real Estate Properties | Real Estate Properties As of September 30, 2018 , we owned 368 buildings, leasable land parcels and easements with approximately 45,754,000 rentable square feet. Acquisitions: During the nine months ended September 30, 2018 , ILPT acquired three properties with a combined 666,173 rentable square feet for an aggregate purchase price of $93,578 , including acquisition related costs of $ 1,253 . These acquisitions were accounted for as acquisitions of assets and these properties are included in our ILPT segment. We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets as follows: Rentable Acquired Number of Square Purchase Buildings and Real Estate Date Location Properties Feet Price Land Improvements Leases June 27, 2018 Doral, FL (1) 1 240,283 $ 43,326 $ 15,225 $ 28,101 $ — September 20, 2018 Carlisle, PA 1 205,090 20,451 3,299 15,515 1,637 September 28, 2018 Upper Marlboro, MD 1 220,800 29,801 5,296 21,833 2,672 3 666,173 $ 93,578 $ 23,820 $ 65,449 $ 4,309 (1) This property was acquired and simultaneously leased back to the seller. In October 2018, ILPT acquired a land parcel adjacent to a property it owns located in Ankeny, IA for a purchase price of $450 , excluding acquisition related costs. This land parcel will be used for a 194,000 square foot expansion for the existing tenant at such property. Also in October 2018, ILPT acquired a multi-tenant, net leased property located in Maple Grove, MN with approximately 319,000 rentable square feet for a purchase price of $27,700 , excluding acquisition related costs. Dispositions: In August 2018, we sold a 100% owned vacant land parcel in Kapolei, HI with 417,610 rentable square feet for $ 10,300 , excluding closing costs, resulting in a net gain of $ 4,075 . This property is included in our SIR segment. In September 2018, we accepted offers to sell a 100% owned vacant land parcel in Kapolei, HI with 416,956 rentable square feet and a 100% owned vacant office building in Hanover, PA with 502,300 rentable square feet. We recorded a loss on impairment of real estate assets for the property in Hanover, PA of $9,706 in September 2018 to reduce its carrying value from $21,450 to its estimated fair value less costs to sell of $11,744 . As of September 30, 2018, both of these properties were classified as held for sale in our condensed consolidated balance sheets and included in continuing operations in our condensed consolidated statements of comprehensive income. Both of these properties are included in our SIR segment. Tenant Improvements and Leasing Costs: During the nine months ended September 30, 2018 , we committed $ 1,533 for expenditures related to tenant improvements and leasing costs for approximately 967,000 square feet of leases executed during the period. Committed but unspent tenant related obligations based on existing leases as of September 30, 2018 were $23,814 . |
Tenant Concentration
Tenant Concentration | 9 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Tenant Concentration | Tenant Concentration During the periods presented in these financial statements, no single tenant accounted for more than 10% of our total revenues. A “net leased property” or a property being “net leased” means that the building or land lease requires the tenant to pay rent and pay, or reimburse us, for all, or substantially all, property level operating expenses and capital expenditures, such as real estate taxes, insurance, utilities, maintenance and repairs, other than, in certain circumstances, roof and structural element related expenditures; however, in some instances, tenants reimburse us for all expenses in excess of certain amounts included in the stated rent. Our buildings and lands are primarily leased to single tenants. We define a single tenant leased building or land parcel as a building or land parcel with at least 90% of its rentable area leased to one tenant. We also own some multi-tenant buildings on the island of Oahu, HI, and one mainland multi-tenant office building. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information In this Note 5, references to SIR refer to SIR and its consolidated subsidiaries, excluding ILPT. As of September 30, 2018 , we had two operating segments: properties 100% owned by SIR (primarily net leased office properties) and properties owned by ILPT (primarily industrial and logistics properties). We have restated the 2017 segment tables below to present our segment information retrospectively. For the Three Months Ended September 30, 2018 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 67,052 $ 34,781 $ — $ 101,833 Tenant reimbursements and other income 14,398 5,650 — 20,048 Total revenues 81,450 40,431 — 121,881 EXPENSES: Real estate taxes 7,576 4,942 — 12,518 Other operating expenses 11,533 3,281 — 14,814 Depreciation and amortization 28,219 7,152 — 35,371 Acquisition and transaction related costs — — 3,796 3,796 General and administrative — — 15,331 15,331 Loss on impairment of real estate assets 9,706 — — 9,706 Total expenses 57,034 15,375 19,127 91,536 Operating income 24,416 25,056 (19,127 ) 30,345 Dividend income — — 397 397 Unrealized gain on equity securities — — 22,771 22,771 Interest income — — 133 133 Interest expense (1,479 ) (437 ) (21,371 ) (23,287 ) Income before income tax expense, equity in earnings of an investee and gain on sale of real estate 22,937 24,619 (17,197 ) 30,359 Income tax expense — — (185 ) (185 ) Equity in earnings of an investee — — 831 831 Income before gain on sale of real estate 22,937 24,619 (16,551 ) 31,005 Gain on sale of real estate 4,075 — — 4,075 Net income 27,012 24,619 (16,551 ) 35,080 Net income allocated to noncontrolling interest — — (5,597 ) (5,597 ) Net income attributed to SIR $ 27,012 $ 24,619 $ (22,148 ) $ 29,483 At September 30, 2018 SIR ILPT Corporate Consolidated Total assets $ 3,042,049 $ 1,489,094 $ 190,356 $ 4,721,499 For the Three Months Ended September 30, 2017 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 65,011 $ 33,624 $ — $ 98,635 Tenant reimbursements and other income 13,937 5,442 — 19,379 Total revenues 78,948 39,066 — 118,014 EXPENSES: Real estate taxes 6,910 4,579 — 11,489 Other operating expenses 11,922 2,727 — 14,649 Depreciation and amortization 27,903 6,810 — 34,713 General and administrative — — 1,608 1,608 Total expenses 46,735 14,116 1,608 62,459 Operating income 32,213 24,950 (1,608 ) 55,555 Dividend income — — 397 397 Interest income — — 19 19 Interest expense (1,480 ) (565 ) (22,338 ) (24,383 ) Income before income tax expense and equity in earnings of an investee 30,733 24,385 (23,530 ) 31,588 Income tax expense — — (177 ) (177 ) Equity in earnings of an investee — — 31 31 Net income 30,733 24,385 (23,676 ) 31,442 Net income allocated to noncontrolling interest — — — — Net income attributed to SIR $ 30,733 $ 24,385 $ (23,676 ) $ 31,442 At December 31, 2017 SIR ILPT Corporate Consolidated Total assets $ 3,128,182 $ 1,405,592 $ 769,256 $ 5,303,030 For the Nine Months Ended September 30, 2018 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 194,533 $ 103,470 $ — $ 298,003 Tenant reimbursements and other income 43,528 16,986 — 60,514 Total revenues 238,061 120,456 — 358,517 EXPENSES: Real estate taxes 22,639 14,109 — 36,748 Other operating expenses 34,064 9,650 — 43,714 Depreciation and amortization 84,411 20,915 — 105,326 Acquisition and transaction related costs — — 3,796 3,796 General and administrative — — 47,353 47,353 Write-off of straight line rents receivable, net 10,626 — — 10,626 Loss on impairment of real estate assets 9,706 — — 9,706 Total expenses 161,446 44,674 51,149 257,269 Operating income 76,615 75,782 (51,149 ) 101,248 Dividend income — — 1,190 1,190 Unrealized gain on equity securities — — 53,159 53,159 Interest income — — 753 753 Interest expense (4,393 ) (1,251 ) (63,802 ) (69,446 ) Loss on early extinguishment of debt — — (1,192 ) (1,192 ) Income before income tax expense, equity in earnings of an investee and gain on sale of real estate 72,222 74,531 (61,041 ) 85,712 Income tax expense — — (446 ) (446 ) Equity in earnings of an investee — — 882 882 Income before gain on sale of real estate 72,222 74,531 (60,605 ) 86,148 Gain on sale of real estate 4,075 — — 4,075 Net income 76,297 74,531 (60,605 ) 90,223 Net income allocated to noncontrolling interest — — (15,841 ) (15,841 ) Net income attributed to SIR $ 76,297 $ 74,531 $ (76,446 ) $ 74,382 For the Nine Months Ended September 30, 2017 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 192,099 $ 100,921 $ — $ 293,020 Tenant reimbursements and other income 40,968 16,190 — 57,158 Total revenues 233,067 117,111 — 350,178 EXPENSES: Real estate taxes 19,911 13,257 — 33,168 Other operating expenses 32,879 8,160 — 41,039 Depreciation and amortization 82,294 20,476 — 102,770 General and administrative — — 24,697 24,697 Write-off of straight line rents receivable, net 12,517 — — 12,517 Loss on asset impairment 4,047 — — 4,047 Loss on impairment of real estate assets 229 — — 229 Total expenses 151,877 41,893 24,697 218,467 Operating income 81,190 75,218 (24,697 ) 131,711 Dividend income — — 1,190 1,190 Interest income — — 39 39 Interest expense (4,845 ) (1,680 ) (61,753 ) (68,278 ) Income before income tax expense and equity in earnings of an investee 76,345 73,538 (85,221 ) 64,662 Income tax expense — — (364 ) (364 ) Equity in earnings of an investee — — 533 533 Net income 76,345 73,538 (85,052 ) 64,831 Net income allocated to noncontrolling interest — — — — Net income attributed to SIR $ 76,345 $ 73,538 $ (85,052 ) $ 64,831 |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities We are exposed to certain risks relating to our ongoing business operations, including the effect of changes in interest rates. We use derivative instruments to manage only a part of our interest rate risk. We have an interest rate swap agreement to manage our interest rate risk exposure on a $40,946 mortgage note due 2020, with interest payable at a rate equal to LIBOR plus a premium. We record all derivatives on our balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate swap agreement, which we designate as a cash flow hedge: Fair Value Notional of Asset Amount as of Interest Effective Maturity as of Balance Sheet Location September 30, 2018 Rate (1) Date Date September 30, 2018 Interest rate swap Other assets $ 40,946 4.16 % 1/29/2015 8/3/2020 $ 458 (1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. The table below presents the effects of our interest rate derivative on our condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) $ 71 $ 2 $ 482 $ (85 ) Amount of gain (loss) reclassified from cumulative other comprehensive income into interest expense (effective portion) $ (68 ) $ 25 $ (120 ) $ 146 We may enter into additional interest rate swaps or hedge agreements to manage some of our interest rate risk associated with other floating rate borrowings. |
Indebtedness
Indebtedness | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Our principal debt obligations at September 30, 2018 were: (1) $108,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) $ 380,000 of outstanding borrowings under ILPT's $750,000 unsecured revolving credit facility; (3) an aggregate outstanding principal amount of $1,450,000 of public issuances of senior unsecured notes; and (4) an aggregate outstanding principal amount of $210,696 of mortgage notes. Our $750,000 revolving credit facility is governed by a credit agreement with a syndicate of institutional lenders. This credit agreement includes a feature under which the maximum aggregate borrowing availability under our revolving credit facility may be increased to up to $1,850,000 in certain circumstances. Our $750,000 revolving credit facility has a maturity date of March 29, 2019, interest payable on borrowings of LIBOR plus 125 basis points and a facility fee of 25 basis points per annum, based on the total amount of lending commitments. Both the interest rate premium and the facility fee for our revolving credit facility are subject to adjustment based on changes to our credit ratings. Upon the payment of an extension fee and meeting other conditions, we have the option to extend the maturity date of our revolving credit facility to March 29, 2020. As of September 30, 2018 and December 31, 2017 , the interest rate payable on borrowings under our revolving credit facility was 3.34% and 2.53% , respectively. The weighted average interest rate for borrowings under our revolving credit facility was 3.22% and 2.25% for the three months ended September 30, 2018 and 2017 , respectively, and 3.04% and 1.95% for the nine months ended September 30, 2018 and 2017 , respectively. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. As of September 30, 2018 and October 26, 2018 , we had $108,000 and $88,000 , respectively, outstanding under our revolving credit facility, and $ 642,000 and $ 662,000 , respectively, available to borrow under our revolving credit facility. ILPT has a $750,000 unsecured revolving credit facility that is available for ILPT's general business purposes, including acquisitions. The maturity date of ILPT's revolving credit facility is December 29, 2021. ILPT may borrow, repay and reborrow funds under its revolving credit facility until maturity, and no principal repayment is due until maturity. Interest on borrowings under ILPT's revolving credit facility is calculated at floating rates based on LIBOR plus a premium that varies based on ILPT's leverage ratio. ILPT has the option to extend the maturity date of its revolving credit facility for two , six month periods, subject to payment of extension fees and satisfaction of other conditions. If ILPT later achieves an investment grade credit rating, it will then be able to elect to continue to have the interest premium based on ILPT's leverage ratio or ILPT may instead elect to have the interest premium based on its credit rating, or a ratings election. ILPT is also required to pay a commitment fee on the unused portion of ILPT's revolving credit facility until and if such time as ILPT makes a ratings election, and thereafter ILPT will be required to pay a facility fee in lieu of such commitment fee based on the maximum amount of ILPT's revolving credit facility. The agreement governing ILPT's revolving credit facility, or ILPT's credit agreement, also includes a feature under which the maximum borrowing availability under ILPT's revolving credit facility may be increased to up to $1,500,000 in certain circumstances. In addition, during the first quarter of 2018, ILPT completed the syndication of its revolving credit facility with a group of institutional lenders. As of September 30, 2018 and December 31, 2017, the interest rate payable on borrowings under ILPT's revolving credit facility was 3.50% and 2.89% , respectively. The weighted average interest rate for borrowings under ILPT's revolving credit facility was 3.39% and 3.21% for the three and nine months ended September 30, 2018 , respectively. As of September 30, 2018 and October 26, 2018 , ILPT had $380,000 and $ 405,000 , respectively, outstanding under its revolving credit facility, and $370,000 and $345,000 , respectively, available to borrow under its revolving credit facility. On January 2, 2018, we redeemed at par plus accrued interest all $350,000 of our 2.85% senior unsecured notes due 2018 and, on January 31, 2018, we repaid our $350,000 term loan in full without penalty. During the nine months ended September 30, 2018 , we recognized a loss on early extinguishment of debt aggregating $1,192 from the write-off of unamortized debt issuance costs and discounts related to these repayments. Our credit agreement, ILPT's credit agreement and our senior unsecured notes indenture and its supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement and ILPT's credit agreement, a change of control of us or ILPT, respectively, which includes RMR LLC ceasing to act as business and property manager for us or ILPT, respectively. Our senior unsecured notes indenture and its supplements, our credit agreement and ILPT's credit agreement also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions in certain circumstances, and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the respective covenants under our senior unsecured notes indenture and its supplements and our credit agreement and that ILPT was in compliance with the terms and conditions of the covenants under ILPT's credit agreement at September 30, 2018 . At September 30, 2018 , six of our buildings with a net book value of $336,329 were encumbered by mortgages we assumed in connection with our acquisition of those buildings. One of these buildings with a net book value of $65,323 is owned by ILPT. The aggregate principal amount outstanding under these mortgage notes as of September 30, 2018 was $210,696 , of which $48,750 was owed by ILPT. These mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants. |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets measured at fair value at September 30, 2018 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Fair Value at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Total (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements: Assets: Investment in RMR Inc. (1) $ 147,258 $ 147,258 $ — $ — Interest rate swap (2) 458 — 458 — $ 147,716 $ 147,258 $ 458 $ — Non-Recurring Fair Value Measurements: Assets: Properties held for sale (3) $ 11,744 $ — $ 11,744 $ — (1) Our 1,586,836 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $42,686 . During the three and nine months ended September 30, 2018 , we recorded an unrealized gain of $22,771 and $53,159 , respectively, to adjust our investment in RMR Inc. to its fair value. (2) As discussed in Note 6, we have an interest rate swap agreement in connection with a $40,946 mortgage note. This interest rate swap agreement is carried at fair value, and is included in other assets in our condensed consolidated balance sheet as of September 30, 2018 and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount we could receive upon extinguishment of the related liability. (3) As of September 30, 2018, we recorded a loss on impairment of real estate assets of $ 9,706 to reduce the carrying value of a property located in Hanover, PA from $ 21,450 to its estimate fair value less costs to sell of $ 11,744 . We estimated the fair value of this property based on an offer we accepted to sell this property. In addition to the assets described in the table above, our financial instruments include cash and cash equivalents, restricted cash, rents receivable, our revolving credit facility, ILPT's revolving credit facility, a prior term loan, senior unsecured notes, mortgage notes payable, accounts payable, rents collected in advance, security deposits and amounts due to related persons. At September 30, 2018 and December 31, 2017 , the fair value of these financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or variable interest rates, except as follows: At September 30, 2018 At December 31, 2017 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Senior unsecured notes, due 2018 at 2.85% (2) $ — $ — $ 349,896 $ 349,731 Senior unsecured notes, due 2020 at 3.60% $ 398,192 $ 397,406 $ 397,214 $ 404,050 Senior unsecured notes, due 2022 at 4.15% $ 296,801 $ 298,581 $ 296,143 $ 304,199 Senior unsecured notes, due 2024 at 4.25% $ 343,539 $ 335,375 $ 342,797 $ 347,877 Senior unsecured notes, due 2025 at 4.50% $ 392,156 $ 384,468 $ 391,375 $ 403,998 Mortgage notes payable $ 210,624 $ 205,278 $ 210,785 $ 209,200 (1) Includes unamortized debt issuance costs, premiums and discounts. (2) On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes. We estimate the fair value of our senior unsecured notes using an average of the bid and ask prices of the notes as of the measurement date (Level 2 inputs). We estimate the fair value of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates as of the measurement date (Level 3 inputs). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Awards: On April 2, 2018, in accordance with our Trustee compensation arrangements, and in connection with the election of one of our Managing Trustees, we granted 3,000 of our common shares, valued at $19.15 per share, the closing price of our common shares on Nasdaq on that day, to the Managing Trustee who was elected as a Managing Trustee that day. On May 16, 2018, in accordance with our Trustee compensation arrangements, we granted 3,000 of our common shares, valued at $20.21 per share, the closing price of our common shares on Nasdaq on that day, to each of our five Trustees as part of their annual compensation. On March 27, 2018, in accordance with ILPT's trustee compensation arrangements, ILPT granted 1,000 of its common shares, valued at $20.87 per share, the closing price of its common shares on Nasdaq on that day, to each of its five trustees as compensation for the period from the ILPT IPO to May 2018. On May 23, 2018, in accordance with ILPT's trustee compensation arrangements, ILPT granted 3,000 of its common shares, valued at $20.93 per share, the closing price of its common shares on Nasdaq on that day, to each of its five trustees as part of their annual compensation. On September 13, 2018, we granted an aggregate of 58,700 of our common shares to our officers and certain other employees of RMR LLC valued at $20.15 per share, the closing price of our common shares on Nasdaq on that day. On September 13, 2018, ILPT granted an aggregate of 54,400 of its common shares to ILPT's officers and certain other employees of RMR LLC valued at $23.33 per share, the closing price of its common shares on Nasdaq on that day. Share Purchases: On January 1, 2018, we purchased 617 of our common shares valued at $25.13 per common share, the closing price of our common shares on Nasdaq on December 29, 2017, from a former employee of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. On September 24, 2018, we purchased an aggregate of 12,446 of our common shares, valued at $21.46 per common share, the closing price of our common shares on Nasdaq on that day, from our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. On September 24, 2018, ILPT purchased an aggregate of 2,369 of its common shares, valued at $22.08 per common share, the closing price of ILPT common shares on Nasdaq on that day, from certain of ILPT's officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Distributions: On February 22, 2018, we paid a regular quarterly distribution of $0.51 per common share, or $45,639 , to shareholders of record on January 29, 2018. On May 17, 2018, we paid a regular quarterly distribution of $0.51 per common share, or $45,639 , to shareholders of record on April 30, 2018. On August 16, 2018, we paid a regular quarterly distribution of $ 0.51 per common share, or $45,648 , to shareholders of record on July 30, 2018. On October 18, 2018, we declared a regular quarterly distribution of $0.51 per common share, or approximately $45,700 , to shareholders of record on October 29, 2018. We expect to pay this distribution on or about November 15, 2018. On May 14, 2018, ILPT paid a prorated distribution of $0.27 per ILPT common share, or $17,551 , for the period from January 17, 2018 (the date ILPT completed the ILPT IPO) through March 31, 2018, to ILPT's shareholders of record on April 30, 2018. This distribution was based upon the then expected quarterly distribution by ILPT of $0.33 per ILPT common share ( $1.32 per ILPT common share per year). On August 13, 2018, ILPT paid a regular quarterly distribution of $0.33 per common share, or $21,457 , to shareholders of record on July 30, 2018. We received an aggregate of $27,000 from these two distributions by ILPT as a result of our ownership of 45,000,000 ILPT common shares. On October 18, 2018, ILPT declared a regular quarterly distribution of $0.33 per common share, or approximately $21,500 , to shareholders of record on October 29, 2018. We expect to receive $14,850 from ILPT as a result of our ownership of 45,000,000 ILPT common shares. |
Cumulative Other Comprehensive
Cumulative Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Cumulative Other Comprehensive Income | Cumulative Other Comprehensive Income The following tables present changes in the amounts we recognized in cumulative other comprehensive income by component for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Unrealized Equity in Gain Unrealized Gain on Derivative (Loss) of an Instruments (1) an Investee (2) Total Balance at June 30, 2018 $ 1,041 $ (354 ) $ 687 Other comprehensive income before reclassifications 71 172 243 Amounts reclassified from cumulative other comprehensive income to net income (68 ) 1 (67 ) Net current period other comprehensive income 3 173 176 Balance at September 30, 2018 $ 1,044 $ (181 ) $ 863 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Nine Months Ended September 30, 2018 Unrealized Gain Unrealized Equity in on Investment Gain Unrealized Gain in Available for on Derivative (Loss) of an Sale Securities Instruments (1) Investee (2) Total Balance at December 31, 2017 $ 51,413 $ 682 $ 570 $ 52,665 Amounts reclassified from cumulative other comprehensive income to cumulative net income (51,413 ) — (841 ) (52,254 ) Subtotal — 682 (271 ) 411 Other comprehensive income before reclassifications — 482 121 603 Amounts reclassified from cumulative other comprehensive income to net income — (120 ) (31 ) (151 ) Net current period other comprehensive income — 362 90 452 Balance at September 30, 2018 $ — $ 1,044 $ (181 ) $ 863 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. |
Weighted Average Common Shares
Weighted Average Common Shares | 9 Months Ended |
Sep. 30, 2018 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |
Weighted Average Common Shares | Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Weighted average common shares for basic earnings per share 89,410 89,355 89,395 89,341 Effect of dilutive securities: unvested share awards 27 24 16 23 Weighted average common shares for diluted earnings per share 89,437 89,379 89,411 89,364 |
Business and Property Managemen
Business and Property Management Agreements with RMR LLC | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Business and Property Management Agreements with RMR LLC | Business and Property Management Agreements with RMR LLC Neither we nor ILPT have any employees. The personnel and various services we and ILPT require to operate our respective businesses are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally; and (2) a property management agreement, which relates to our property level operations. ILPT also has similar agreements with RMR LLC under which RMR LLC provides management services to ILPT comparable to those provided to us. On January 17, 2018, simultaneously with ILPT entering into its agreements with RMR LLC in connection with the ILPT IPO, our agreements with RMR LLC were amended to avoid any payments by us for services rendered by RMR LLC to ILPT subsequent to that time; ILPT pays for those services directly. Pursuant to our business management agreement with RMR LLC and ILPT's business management agreement with RMR LLC, we recognized net business management fees of $ 12,573 and $ 61 for the three months ended September 30, 2018 and 2017, respectively, and $38,934 and $19,944 for the nine months ended September 30, 2018 and 2017, respectively, which amounts for the three and nine months ended September 30, 2018 include $ 1,923 and $ 5,229 , respectively, of estimated business management fees incurred and payable by ILPT for the three months ended September 30, 2018 and the period beginning on January 17, 2018, the date on which ILPT entered into its business management agreement with RMR LLC, through September 30, 2018 . The net business management fees payable to RMR LLC include $ 6,664 and $ 21,479 of estimated business management incentive fees for the three and nine months ended September 30, 2018, respectively, payable by us based on our common share total return, as defined, as of September 30, 2018 and do not include any estimated business management incentive fees that may be payable by ILPT under its business management agreement with RMR LLC because, as of September 30, 2018 , ILPT had not accrued any business management incentive fees payable by it for 2018. Although we recognized estimated business management incentive fees in accordance with GAAP, the actual amount of business management incentive fees payable by us to RMR LLC for 2018, if any, will be based on our common share total return, as defined, for the three year period ending December 31, 2018, and will be payable in 2019. Similarly, the actual amount of business management incentive fees payable by ILPT to RMR LLC for 2018, if any, will be based on ILPT’s common share total return, as defined, for the period beginning on January 12, 2018, the first day ILPT common shares began trading on Nasdaq, and ending on December 31, 2018, and will be payable in 2019. The net business management fees recognized for the three and nine months ended September 30, 2017 included $ (5,478) and $ 3,288 , respectively, of estimated business management incentive fees based on our common share total return, as defined in our business management agreement, as of September 30, 2017; the estimated business management incentive fees recognized for the three months ended September 30, 2017 reflect the reversal of previously accrued estimated business management incentive fees. In January 2018, we paid RMR LLC a business management incentive fee of $ 25,569 for 2017, which amount included $ 7,660 of business management incentive fees allocated to ILPT that we paid and which was based on the percentage of ILPT’s base management fees compared to the total base management fees paid by us, for the year ended December 31, 2017. The net business management fees we recognize are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. Pursuant to our property management agreement with RMR LLC and ILPT’s property management agreement with RMR LLC, we recognized aggregate net property management and construction supervision fees of $ 3,626 and $ 3,340 for the three months ended September 30, 2018 and 2017, respectively, and $10,598 and $9,766 for the nine months ended September 30, 2018 and 2017, respectively, which amounts for the three and nine months ended September 30, 2018 include $ 1,205 and $ 3,327 , respectively, of property management fees incurred and payable by ILPT for the three months ended September 30, 2018 and the period beginning on January 17, 2018, the date on which ILPT entered into its property management agreement with RMR LLC, through September 30, 2018 . These amounts are included in other operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. Pursuant to the RMR LLC Letter Agreement, on the terms and subject to conditions contained therein, we and RMR LLC agreed that, effective upon consummation of the Merger, we shall have terminated our business and property management agreements with RMR LLC for convenience, and RMR LLC shall have waived its right to receive payment of the termination fee due on account thereof. Following termination of the management agreements in accordance with the RMR LLC Letter Agreement, pro rata base management fees and incentive management fees will continue to be payable under the terms of the management agreements. See Note 1 for further information regarding the RMR LLC Letter Agreement and the Merger. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. Our property level operating expenses, including certain payroll and related costs incurred by RMR LLC, are generally incorporated into rents charged to our tenants. We reimbursed RMR LLC $ 2,145 and $ 2,162 for property management related expenses, including with respect to properties owned by ILPT, for the three months ended September 30, 2018 and 2017, respectively, and $ 6,460 and $ 6,105 for the nine months ended September 30, 2018 and 2017, respectively, which amounts for the three and nine months ended September 30, 2018 include $ 757 and $ 1,943 , respectively, of expenses incurred and paid by ILPT for the three months ended September 30, 2018 and the period beginning on January 17, 2018 through September 30, 2018 . These amounts are included in other operating expenses in our condensed consolidated statements of comprehensive income. In addition, we and ILPT are each responsible for our respective share of RMR LLC’s costs for providing our respective internal audit functions. The amounts we recognized as expense for internal audit costs, including amounts allocated to ILPT, were $ 102 and $ 67 for the three months ended September 30, 2018 and 2017, respectively, and $ 346 and $ 201 for the nine months ended September 30, 2018 and 2017, respectively, which amounts for the three and nine months ended September 30, 2018 include $ 52 and $ 173 , respectively, of expense recognized and payable by ILPT for the three months ended September 30, 2018 and the period beginning on January 17, 2018 through September 30, 2018 . These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. |
Related Person Transactions
Related Person Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., ILPT, GOV, Affiliates Insurance Company, or AIC, and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and which have trustees, directors and officers who are also our Trustees or officers. Our Manager, RMR LLC. We and ILPT each have two agreements with RMR LLC to provide management services to us. See Notes 1 and 12 for further information regarding our and ILPT’s management agreements with RMR LLC. We have historically granted share awards to our officers and other RMR LLC employees under our equity compensation plans. In September 2018 and 2017, we granted annual awards of 58,700 and 57,850 of our common shares, respectively, to our officers and other employees of RMR LLC. In September 2018 and 2017, we purchased 12,446 and 13,126 of our common shares, respectively, valued at the closing price of our common shares on Nasdaq on the applicable date of purchase, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares to our officers and other employees of RMR LLC. We include amounts recognized as expense for share awards to our officers and other RMR LLC employees in general and administrative expenses in our condensed consolidated statements of comprehensive income. In September 2018, ILPT granted annual awards of 54,400 of its common shares to its officers and other employees of RMR LLC under ILPT’s equity compensation plan. In September 2018, ILPT purchased 2,369 of its common shares, valued at the closing price of its common shares on Nasdaq on the applicable date of purchase, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of ILPT’s common shares to certain of its officers and other employees of RMR LLC. We include amounts recognized as expense for share awards to ILPT’s officers and other RMR LLC employees in general and administrative expenses in our condensed consolidated statements of comprehensive income. RMR Inc. RMR LLC is a majority owned subsidiary of RMR Inc. and RMR Inc. is the managing member of RMR LLC. Adam D. Portnoy, one of our Managing Trustees, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., a managing director, president and chief executive officer of RMR Inc. and an officer of RMR LLC. David M. Blackman, our other Managing Trustee and our President and Chief Executive Officer, and John C. Popeo, our Chief Financial Officer and Treasurer, also serve as executive officers of RMR LLC. As of September 30, 2018, we owned 1,586,836 shares of class A common stock of RMR Inc. See Note 8 for further information regarding our investment in RMR Inc. ILPT . We are ILPT’s largest shareholder. As of September 30, 2018, we owned 45,000,000 ILPT common shares, or approximately 69.2% of the outstanding ILPT common shares. ILPT was our wholly owned subsidiary until it completed the ILPT IPO on January 17, 2018. Adam D. Portnoy, one of our Managing Trustees, is also a managing trustee of ILPT. John C. Popeo, our Chief Financial Officer and Treasurer, also serves as the other managing trustee and the president and chief executive officer of ILPT. Mr. Popeo has announced his retirement from his positions with each of us and ILPT, effective November 30, 2018. RMR LLC provides management services to ILPT and us. In connection with the ILPT IPO, ILPT reimbursed us for approximately $7,271 of the costs that we incurred in connection with ILPT’s formation and preparation for the ILPT IPO. Also, in connection with the ILPT IPO, we entered a transaction agreement with ILPT that governs ILPT’s separation from and relationship with us. The transaction agreement provides that, among other things, (1) the current assets and current liabilities of ILPT, as of the time of closing of the ILPT IPO, were settled so that we retain all pre-closing current assets and pre-closing current liabilities and ILPT assumes all post-closing current assets and post-closing current liabilities, (2) ILPT will indemnify us with respect to any of ILPT’s liabilities, and we will indemnify ILPT with respect to any of our liabilities, after giving effect to the settlement between us and ILPT of ILPT’s current assets and current liabilities and (3) we and ILPT will cooperate to enforce the ownership limitations in our and ILPT’s respective declaration of trust as may be appropriate to qualify for and maintain qualification for taxation as a REIT under the IRC, and otherwise to ensure each receives the economics of its assets and liabilities and to file future tax returns, including appropriate allocations of taxable income, expenses and other tax attributes. See Notes 1 and 12 for further information regarding ILPT and the ILPT IPO. Pursuant to the Merger Agreement, we and GOV agreed that we will declare and, at least one business day prior to the closing date of the Merger, pay a pro rata distribution to our shareholders of all 45,000,000 ILPT common shares we own, subject to the satisfaction or waiver of certain conditions. See Note 1 for further information regarding the Merger Agreement, the Merger and the ILPT Distribution. GOV. As of September 30, 2018 , GOV owned 24,918,421 of our common shares, or approximately 27.8% of our outstanding common shares. As described further in Note 1, on September 14, 2018, we, GOV and Merger Sub entered into the Merger Agreement and, on October 9, 2018, GOV completed the Secondary Sale, pursuant to which GOV sold all 24,918,421 of our common shares which GOV then owned. Adam D. Portnoy, one of our Managing Trustees, also serves as a managing trustee of GOV and our other Managing Trustee and President and Chief Executive Officer also serves as the president and chief executive officer of GOV. RMR LLC provides management services to GOV and us. See Note 1 for further information regarding the Merger Agreement and the Secondary Sale. AIC. We, ABP Trust, GOV and four other companies to which RMR LLC provides management services currently own AIC in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $ 1,666 in connection with the renewal of this insurance program for the policy year ending June 30, 2019. ILPT’s properties are included in this program and ILPT reimburses us for the part of the premium we pay that is allocated to ILPT’s properties. The amount of premiums under this program may be adjusted from time to time as we and ILPT acquire and dispose of properties that are included in this insurance program. As of September 30, 2018 and December 31, 2017, our investment in AIC had a carrying value of $ 9,157 and $ 8,185 , respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income related to our investment in AIC, which is presented as equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Our other comprehensive income includes our proportionate part of unrealized gains (losses) on securities that are owned by AIC related to our investment in AIC. For further information about these and other such relationships and certain other related person transactions, refer to our 2017 Annual Report. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies We believe some of our properties may contain asbestos. We believe any asbestos on our properties is contained in accordance with applicable laws and regulations and we have no current plans to remove it. If we removed the asbestos or demolished the affected properties, certain environmental regulations govern the manner in which the asbestos must be handled and removed, and we could incur substantial costs complying with such regulations. Due to the uncertainty of the timing and amount of costs we may incur, we cannot reasonably estimate the fair value and we have not recognized a liability in our financial statements for these costs. Certain of our industrial lands in Hawaii may require environmental remediation, especially if the use of those lands is changed; however, we do not have any present plans to change the use of those lands or to undertake this environmental cleanup. In general, we do not have any insurance to limit losses that we may incur as a result of known or unknown environmental conditions, although some of our tenants may maintain such insurance. As of both September 30, 2018 and December 31, 2017 , we had accrued environmental remediation costs of $7,987 and $8,112 , respectively, which were included in accounts payable and other liabilities in our condensed consolidated balance sheets, including $7,002 , for both periods, related to the ILPT Properties. These accrued environmental remediation costs relate to maintenance of our properties for current uses, and, because of the indeterminable timing of the remediation, these amounts have not been discounted to present value. Although we do not believe that there are environmental conditions at any of our properties that will have a material adverse effect on us, we cannot be sure that such conditions or costs are not present in our properties or that other costs we incur to remediate contamination will not have a material adverse effect on our business or financial condition. Charges for environmental remediation costs, if any, are included in other operating expenses in our condensed consolidated statements of comprehensive income. In May 2018, one of our tenants defaulted on its lease for a property located in Naperville, IL with approximately 820,000 rentable square feet and an original lease expiration date of March 31, 2029. During the three months ended June 30, 2018, we recorded a non-cash charge of $10,626 to write off straight line rents receivable related to this lease. The lease with the tenant that defaulted was amended effective October 1, 2018. Under the terms of such lease amendment, the tenant paid amounts outstanding under the original lease for the period through September 30, 2018 and made a partial payment for unpaid real estate taxes. In addition, the tenant made a one time payment of $2,000 for deferred capital costs, and its first monthly payment of $250 to offset building expenses that were previously paid directly by the tenant but that are currently paid by us. The tenant assigned its subleases at the property to us and continues to occupy and pay rent on 147,045 square feet and has agreed to do so for 30 months from the date of the amendment. On June 29, 2016, we received an assessment from the State of Washington for real estate excise tax, interest and penalties of $2,837 on certain properties we acquired in connection with our acquisition of Cole Corporate Income Trust, Inc. in January 2015. We believe we are not liable for this tax and are disputing the assessment. As of September 30, 2018 , we have not recorded a loss reserve related to this matter. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, we adopted the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers , which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” A substantial portion of our revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. The adoption of ASU No. 2014-09 did not have a material impact on the amount or timing of our revenue recognition in our condensed consolidated financial statements. On January 1, 2018, we adopted FASB ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $51,413 from cumulative other comprehensive income to cumulative net income. We also reclassified $ 841 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of our equity method investee. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash , which requires companies to show the changes in the total of cash and cash equivalents and restricted cash in the statements of cash flows. This update also requires a reconciliation of the totals in the statements of cash flows to the related captions in the balance sheets. As a result, amounts included in restricted cash in our condensed consolidated balance sheets are presented with cash and cash equivalents in the condensed consolidated statements of cash flows. We have also included a reconciliation of the totals in the condensed consolidated statements of cash flows to the related captions in the condensed consolidated balance sheets. The adoption of this update did not change our balance sheet presentation. In February 2016, the FASB issued ASU No. 2016-02, Leases , which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. We currently expect to adopt the standard using the modified retrospective approach. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. ASU No. 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently assessing the potential impact the adoption of ASU No. 2018-07 will have in our condensed consolidated financial statements. |
Real Estate Properties (Tables)
Real Estate Properties (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate [Abstract] | |
Schedule of real estate properties | We allocated the purchase prices of these acquisitions based on the estimated fair values of the acquired assets as follows: Rentable Acquired Number of Square Purchase Buildings and Real Estate Date Location Properties Feet Price Land Improvements Leases June 27, 2018 Doral, FL (1) 1 240,283 $ 43,326 $ 15,225 $ 28,101 $ — September 20, 2018 Carlisle, PA 1 205,090 20,451 3,299 15,515 1,637 September 28, 2018 Upper Marlboro, MD 1 220,800 29,801 5,296 21,833 2,672 3 666,173 $ 93,578 $ 23,820 $ 65,449 $ 4,309 (1) This property was acquired and simultaneously leased back to the seller. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment information | We have restated the 2017 segment tables below to present our segment information retrospectively. For the Three Months Ended September 30, 2018 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 67,052 $ 34,781 $ — $ 101,833 Tenant reimbursements and other income 14,398 5,650 — 20,048 Total revenues 81,450 40,431 — 121,881 EXPENSES: Real estate taxes 7,576 4,942 — 12,518 Other operating expenses 11,533 3,281 — 14,814 Depreciation and amortization 28,219 7,152 — 35,371 Acquisition and transaction related costs — — 3,796 3,796 General and administrative — — 15,331 15,331 Loss on impairment of real estate assets 9,706 — — 9,706 Total expenses 57,034 15,375 19,127 91,536 Operating income 24,416 25,056 (19,127 ) 30,345 Dividend income — — 397 397 Unrealized gain on equity securities — — 22,771 22,771 Interest income — — 133 133 Interest expense (1,479 ) (437 ) (21,371 ) (23,287 ) Income before income tax expense, equity in earnings of an investee and gain on sale of real estate 22,937 24,619 (17,197 ) 30,359 Income tax expense — — (185 ) (185 ) Equity in earnings of an investee — — 831 831 Income before gain on sale of real estate 22,937 24,619 (16,551 ) 31,005 Gain on sale of real estate 4,075 — — 4,075 Net income 27,012 24,619 (16,551 ) 35,080 Net income allocated to noncontrolling interest — — (5,597 ) (5,597 ) Net income attributed to SIR $ 27,012 $ 24,619 $ (22,148 ) $ 29,483 At September 30, 2018 SIR ILPT Corporate Consolidated Total assets $ 3,042,049 $ 1,489,094 $ 190,356 $ 4,721,499 For the Three Months Ended September 30, 2017 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 65,011 $ 33,624 $ — $ 98,635 Tenant reimbursements and other income 13,937 5,442 — 19,379 Total revenues 78,948 39,066 — 118,014 EXPENSES: Real estate taxes 6,910 4,579 — 11,489 Other operating expenses 11,922 2,727 — 14,649 Depreciation and amortization 27,903 6,810 — 34,713 General and administrative — — 1,608 1,608 Total expenses 46,735 14,116 1,608 62,459 Operating income 32,213 24,950 (1,608 ) 55,555 Dividend income — — 397 397 Interest income — — 19 19 Interest expense (1,480 ) (565 ) (22,338 ) (24,383 ) Income before income tax expense and equity in earnings of an investee 30,733 24,385 (23,530 ) 31,588 Income tax expense — — (177 ) (177 ) Equity in earnings of an investee — — 31 31 Net income 30,733 24,385 (23,676 ) 31,442 Net income allocated to noncontrolling interest — — — — Net income attributed to SIR $ 30,733 $ 24,385 $ (23,676 ) $ 31,442 At December 31, 2017 SIR ILPT Corporate Consolidated Total assets $ 3,128,182 $ 1,405,592 $ 769,256 $ 5,303,030 For the Nine Months Ended September 30, 2018 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 194,533 $ 103,470 $ — $ 298,003 Tenant reimbursements and other income 43,528 16,986 — 60,514 Total revenues 238,061 120,456 — 358,517 EXPENSES: Real estate taxes 22,639 14,109 — 36,748 Other operating expenses 34,064 9,650 — 43,714 Depreciation and amortization 84,411 20,915 — 105,326 Acquisition and transaction related costs — — 3,796 3,796 General and administrative — — 47,353 47,353 Write-off of straight line rents receivable, net 10,626 — — 10,626 Loss on impairment of real estate assets 9,706 — — 9,706 Total expenses 161,446 44,674 51,149 257,269 Operating income 76,615 75,782 (51,149 ) 101,248 Dividend income — — 1,190 1,190 Unrealized gain on equity securities — — 53,159 53,159 Interest income — — 753 753 Interest expense (4,393 ) (1,251 ) (63,802 ) (69,446 ) Loss on early extinguishment of debt — — (1,192 ) (1,192 ) Income before income tax expense, equity in earnings of an investee and gain on sale of real estate 72,222 74,531 (61,041 ) 85,712 Income tax expense — — (446 ) (446 ) Equity in earnings of an investee — — 882 882 Income before gain on sale of real estate 72,222 74,531 (60,605 ) 86,148 Gain on sale of real estate 4,075 — — 4,075 Net income 76,297 74,531 (60,605 ) 90,223 Net income allocated to noncontrolling interest — — (15,841 ) (15,841 ) Net income attributed to SIR $ 76,297 $ 74,531 $ (76,446 ) $ 74,382 For the Nine Months Ended September 30, 2017 SIR ILPT Corporate Consolidated REVENUES: Rental income $ 192,099 $ 100,921 $ — $ 293,020 Tenant reimbursements and other income 40,968 16,190 — 57,158 Total revenues 233,067 117,111 — 350,178 EXPENSES: Real estate taxes 19,911 13,257 — 33,168 Other operating expenses 32,879 8,160 — 41,039 Depreciation and amortization 82,294 20,476 — 102,770 General and administrative — — 24,697 24,697 Write-off of straight line rents receivable, net 12,517 — — 12,517 Loss on asset impairment 4,047 — — 4,047 Loss on impairment of real estate assets 229 — — 229 Total expenses 151,877 41,893 24,697 218,467 Operating income 81,190 75,218 (24,697 ) 131,711 Dividend income — — 1,190 1,190 Interest income — — 39 39 Interest expense (4,845 ) (1,680 ) (61,753 ) (68,278 ) Income before income tax expense and equity in earnings of an investee 76,345 73,538 (85,221 ) 64,662 Income tax expense — — (364 ) (364 ) Equity in earnings of an investee — — 533 533 Net income 76,345 73,538 (85,052 ) 64,831 Net income allocated to noncontrolling interest — — — — Net income attributed to SIR $ 76,345 $ 73,538 $ (85,052 ) $ 64,831 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of interest rate swap derivatives | We record all derivatives on our balance sheet at fair value. The following table summarizes the terms of our outstanding interest rate swap agreement, which we designate as a cash flow hedge: Fair Value Notional of Asset Amount as of Interest Effective Maturity as of Balance Sheet Location September 30, 2018 Rate (1) Date Date September 30, 2018 Interest rate swap Other assets $ 40,946 4.16 % 1/29/2015 8/3/2020 $ 458 (1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. |
Schedule of effects on consolidated statements of income and comprehensive income | The table below presents the effects of our interest rate derivative on our condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) $ 71 $ 2 $ 482 $ (85 ) Amount of gain (loss) reclassified from cumulative other comprehensive income into interest expense (effective portion) $ (68 ) $ 25 $ (120 ) $ 146 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value measurements of assets and liabilities | The table below presents certain of our assets measured at fair value at September 30, 2018 , categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset: Fair Value at Reporting Date Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs Description Total (Level 1) (Level 2) (Level 3) Recurring Fair Value Measurements: Assets: Investment in RMR Inc. (1) $ 147,258 $ 147,258 $ — $ — Interest rate swap (2) 458 — 458 — $ 147,716 $ 147,258 $ 458 $ — Non-Recurring Fair Value Measurements: Assets: Properties held for sale (3) $ 11,744 $ — $ 11,744 $ — (1) Our 1,586,836 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $42,686 . During the three and nine months ended September 30, 2018 , we recorded an unrealized gain of $22,771 and $53,159 , respectively, to adjust our investment in RMR Inc. to its fair value. (2) As discussed in Note 6, we have an interest rate swap agreement in connection with a $40,946 mortgage note. This interest rate swap agreement is carried at fair value, and is included in other assets in our condensed consolidated balance sheet as of September 30, 2018 and is valued using Level 2 inputs. The fair value of this instrument is determined using interest rate pricing models. Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimate presented in the table above is not necessarily indicative of the amount we could receive upon extinguishment of the related liability. (3) As of September 30, 2018, we recorded a loss on impairment of real estate assets of $ 9,706 to reduce the carrying value of a property located in Hanover, PA from $ 21,450 to its estimate fair value less costs to sell of $ 11,744 . We estimated the fair value of this property based on an offer we accepted to sell this property |
Schedule of carrying value and the estimated fair market value of mortgage notes payable | At September 30, 2018 and December 31, 2017 , the fair value of these financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or variable interest rates, except as follows: At September 30, 2018 At December 31, 2017 Carrying Estimated Carrying Estimated Value (1) Fair Value Value (1) Fair Value Senior unsecured notes, due 2018 at 2.85% (2) $ — $ — $ 349,896 $ 349,731 Senior unsecured notes, due 2020 at 3.60% $ 398,192 $ 397,406 $ 397,214 $ 404,050 Senior unsecured notes, due 2022 at 4.15% $ 296,801 $ 298,581 $ 296,143 $ 304,199 Senior unsecured notes, due 2024 at 4.25% $ 343,539 $ 335,375 $ 342,797 $ 347,877 Senior unsecured notes, due 2025 at 4.50% $ 392,156 $ 384,468 $ 391,375 $ 403,998 Mortgage notes payable $ 210,624 $ 205,278 $ 210,785 $ 209,200 (1) Includes unamortized debt issuance costs, premiums and discounts. (2) On January 2, 2018, we redeemed at par plus accrued interest all of these senior unsecured notes. |
Cumulative Other Comprehensiv_2
Cumulative Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Cumulative other comprehensive income (loss) | The following tables present changes in the amounts we recognized in cumulative other comprehensive income by component for the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Unrealized Equity in Gain Unrealized Gain on Derivative (Loss) of an Instruments (1) an Investee (2) Total Balance at June 30, 2018 $ 1,041 $ (354 ) $ 687 Other comprehensive income before reclassifications 71 172 243 Amounts reclassified from cumulative other comprehensive income to net income (68 ) 1 (67 ) Net current period other comprehensive income 3 173 176 Balance at September 30, 2018 $ 1,044 $ (181 ) $ 863 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. Nine Months Ended September 30, 2018 Unrealized Gain Unrealized Equity in on Investment Gain Unrealized Gain in Available for on Derivative (Loss) of an Sale Securities Instruments (1) Investee (2) Total Balance at December 31, 2017 $ 51,413 $ 682 $ 570 $ 52,665 Amounts reclassified from cumulative other comprehensive income to cumulative net income (51,413 ) — (841 ) (52,254 ) Subtotal — 682 (271 ) 411 Other comprehensive income before reclassifications — 482 121 603 Amounts reclassified from cumulative other comprehensive income to net income — (120 ) (31 ) (151 ) Net current period other comprehensive income — 362 90 452 Balance at September 30, 2018 $ — $ 1,044 $ (181 ) $ 863 (1) Amounts reclassified from cumulative other comprehensive income are included in interest expense in our condensed consolidated statements of comprehensive income. (2) Amounts reclassified from cumulative other comprehensive income are included in equity in earnings of an investee in our condensed consolidated statements of comprehensive income. |
Weighted Average Common Shares
Weighted Average Common Shares (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |
Schedule of weighted average common shares, basic and diluted | The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Weighted average common shares for basic earnings per share 89,410 89,355 89,395 89,341 Effect of dilutive securities: unvested share awards 27 24 16 23 Weighted average common shares for diluted earnings per share 89,437 89,379 89,411 89,364 |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) $ / shares in Units, ft² in Thousands, $ in Thousands | Oct. 09, 2018USD ($)$ / sharesshares | Sep. 14, 2018 | Jan. 17, 2018buildingshares | Sep. 30, 2018USD ($)ft²buildingshares | Sep. 30, 2017USD ($) | Jan. 17, 2018ft² | Jan. 17, 2018property | Jan. 17, 2018state |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net rentable area (sq ft) | 45,754 | |||||||
Number of buildings, leasable land parcels easements | building | 368 | |||||||
Proceeds from issuance of common shares in subsidiary, net | $ | $ 444,309 | $ 0 | ||||||
ILPT | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Number of properties owned | 40 | 266 | ||||||
Net rentable area (sq ft) | 28,540 | |||||||
ILPT | IPO | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common shares issued (in shares) | shares | 20,000,000 | |||||||
ILPT | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Shares owned by parent (in shares) | shares | 45,000,000 | |||||||
Ownership percentage by noncontrolling interest | 30.80% | |||||||
Hawaii | ILPT | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net rentable area (sq ft) | 16,834 | |||||||
Number of buildings, leasable land parcels easements | building | 226 | |||||||
Other States | ILPT | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net rentable area (sq ft) | 11,706 | |||||||
Number of states where real estate is located | state | 24 | |||||||
Merger Agreement Government Properties Income Trust | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Business combination, exchange ratio | 1.04 | |||||||
Agreement covenant, proposals assets effected limit, maximum | 20.00% | |||||||
Subsequent Event | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Business combination, exchange ratio | 4 | |||||||
Subsequent Event | Merger Agreement Government Properties Income Trust | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Agreement covenant, proposals assets effected limit, maximum | 75.00% | |||||||
SIR | Subsequent Event | Government Properties Income Trust (GOV) | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Common shares issued (in shares) | shares | 24,918,421 | |||||||
Share price (in dollars per share) | $ / shares | $ 18.25 | |||||||
Proceeds from issuance of common shares in subsidiary, net | $ | $ 434,700 | |||||||
ILPT | Affiliated Entity | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Ownership percentage by parent | 69.20% |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 |
Cumulative Other Comprehensive Income | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment upon adoption of ASU No. 2016-01 | $ (52,254) | |
Cumulative Other Comprehensive Income | Accounting Standards Update 2016-01 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment upon adoption of ASU No. 2016-01 | $ (51,413) | |
Retained Earnings | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment upon adoption of ASU No. 2016-01 | $ 52,254 | |
Retained Earnings | Accounting Standards Update 2016-01 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment upon adoption of ASU No. 2016-01 | 51,413 | |
Equity Method Investee | Cumulative Other Comprehensive Income | Accounting Standards Update 2016-01 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment upon adoption of ASU No. 2016-01 | (841) | |
Equity Method Investee | Retained Earnings | Accounting Standards Update 2016-01 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment upon adoption of ASU No. 2016-01 | $ 841 |
Real Estate Properties (Details
Real Estate Properties (Details) $ in Thousands | Sep. 30, 2018USD ($)ft²building | Oct. 29, 2018USD ($)ft² | Sep. 30, 2018USD ($)ft²building | Aug. 31, 2018USD ($)ft² | Sep. 30, 2018USD ($)ft²building | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)ft²building | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Real Estate [Line Items] | |||||||||
Number of buildings, leasable land parcels easements | building | 368 | 368 | 368 | 368 | |||||
Net rentable area (sq ft) | ft² | 45,754,000 | 45,754,000 | 45,754,000 | 45,754,000 | |||||
Gain on sale of property | $ 4,075 | $ 0 | $ 4,075 | $ 0 | |||||
Loss on impairment of real estate assets | 9,706 | $ 0 | 9,706 | $ 229 | |||||
Real estate fair value | $ 3,926,606 | $ 3,926,606 | 3,926,606 | 3,926,606 | $ 3,905,616 | ||||
Operating leases committed expenditures on leases executed in period | $ 1,533 | ||||||||
Square feet committed expenditures related to tenant improvements and leasing costs | ft² | 967,000 | ||||||||
Committed bus unspent tenant related obligations | $ 23,814 | $ 23,814 | $ 23,814 | $ 23,814 | |||||
Kapolei, HI | |||||||||
Real Estate [Line Items] | |||||||||
Net rentable area (sq ft) | ft² | 416,956 | 416,956 | 417,610 | 416,956 | 416,956 | ||||
Ownership percent | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | ||||
Sale price, net of closing costs | $ 10,300 | ||||||||
Gain on sale of property | 4,075 | ||||||||
Hanover, PA | |||||||||
Real Estate [Line Items] | |||||||||
Net rentable area (sq ft) | ft² | 502,300 | 502,300 | 502,300 | 502,300 | |||||
Ownership percent | 100.00% | 100.00% | 100.00% | 100.00% | |||||
Loss on impairment of real estate assets | $ 9,706 | $ 9,706 | $ 9,706 | ||||||
Real estate fair value | $ 11,744 | $ 11,744 | $ 21,450 | $ 11,744 | $ 11,744 | ||||
Office and Industrial Properties | ILPT | |||||||||
Real Estate [Line Items] | |||||||||
Net rentable area (sq ft) | ft² | 666,173 | 666,173 | 666,173 | 666,173 | |||||
Number of buildings | building | 3 | ||||||||
Purchase price | $ 93,578 | ||||||||
Acquisition related costs | $ 1,253 | ||||||||
Subsequent Event | Office and Industrial Properties | ILPT | Ankeny, IA | |||||||||
Real Estate [Line Items] | |||||||||
Net rentable area (sq ft) | ft² | 194,000 | ||||||||
Purchase price | $ 450 | ||||||||
Subsequent Event | Office and Industrial Properties | ILPT | Maple Grove, MN | |||||||||
Real Estate [Line Items] | |||||||||
Net rentable area (sq ft) | ft² | 319,000 | ||||||||
Purchase price | $ 27,700 |
Real Estate Properties - Acquis
Real Estate Properties - Acquisitions (Details) $ in Thousands | Sep. 28, 2018USD ($)ft²building | Sep. 20, 2018USD ($)ft²building | Jun. 27, 2018USD ($)ft²building | Sep. 30, 2018USD ($)ft²building | Dec. 31, 2017USD ($) |
Real Estate [Line Items] | |||||
Rentable Square Feet | ft² | 45,754,000 | ||||
Land | $ 1,057,197 | $ 1,041,767 | |||
Buildings and Improvements | 3,238,661 | 3,178,098 | |||
Acquired Real Estate Leases | $ 433,947 | $ 477,577 | |||
Office and Industrial Properties | ILPT | |||||
Real Estate [Line Items] | |||||
Number of Properties | building | 3 | ||||
Rentable Square Feet | ft² | 666,173 | ||||
Purchase Price | $ 93,578 | ||||
Land | 23,820 | ||||
Buildings and Improvements | 65,449 | ||||
Office and Industrial Properties | ILPT | Doral, FL (1) | |||||
Real Estate [Line Items] | |||||
Number of Properties | building | 1 | ||||
Rentable Square Feet | ft² | 240,283 | ||||
Purchase Price | $ 43,326 | ||||
Land | 15,225 | ||||
Buildings and Improvements | 28,101 | ||||
Office and Industrial Properties | ILPT | Upper Marlboro, MD | |||||
Real Estate [Line Items] | |||||
Number of Properties | building | 1 | ||||
Rentable Square Feet | ft² | 205,090 | ||||
Purchase Price | $ 20,451 | ||||
Land | 3,299 | ||||
Buildings and Improvements | 15,515 | ||||
Office and Industrial Properties | ILPT | Carlisle, PA | |||||
Real Estate [Line Items] | |||||
Number of Properties | building | 1 | ||||
Rentable Square Feet | ft² | 220,800 | ||||
Purchase Price | $ 29,801 | ||||
Land | 5,296 | ||||
Buildings and Improvements | 21,833 | ||||
Leases, Acquired-in-Place | Office and Industrial Properties | ILPT | |||||
Real Estate [Line Items] | |||||
Acquired Real Estate Leases | $ 4,309 | ||||
Leases, Acquired-in-Place | Office and Industrial Properties | ILPT | Doral, FL (1) | |||||
Real Estate [Line Items] | |||||
Acquired Real Estate Leases | $ 0 | ||||
Leases, Acquired-in-Place | Office and Industrial Properties | ILPT | Upper Marlboro, MD | |||||
Real Estate [Line Items] | |||||
Acquired Real Estate Leases | $ 1,637 | ||||
Leases, Acquired-in-Place | Office and Industrial Properties | ILPT | Carlisle, PA | |||||
Real Estate [Line Items] | |||||
Acquired Real Estate Leases | $ 2,672 |
Tenant Concentration (Details)
Tenant Concentration (Details) | 9 Months Ended |
Sep. 30, 2018buildingtenant | |
Real Estate [Line Items] | |
Minimum percentage of rentable square feet of a building or land leased as a building or land parcel to single tenant (at least) | 90.00% |
Number of tenants under single tenant leased buildings and lands | tenant | 1 |
Multi-tenant Office Property | |
Real Estate [Line Items] | |
Number of real estate properties | building | 1 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 2 | ||||
REVENUES: | |||||
Rental income | $ 101,833 | $ 98,635 | $ 298,003 | $ 293,020 | |
Tenant reimbursements and other income | 20,048 | 19,379 | 60,514 | 57,158 | |
Total revenues | 121,881 | 118,014 | 358,517 | 350,178 | |
EXPENSES: | |||||
Real estate taxes | 12,518 | 11,489 | 36,748 | 33,168 | |
Other operating expenses | 14,814 | 14,649 | 43,714 | 41,039 | |
Depreciation and amortization | 35,371 | 34,713 | 105,326 | 102,770 | |
Acquisition and transaction related costs | 3,796 | 0 | 3,796 | 0 | |
General and administrative | 15,331 | 1,608 | 47,353 | 24,697 | |
Write-off of straight line rents receivable, net | 0 | 0 | 10,626 | 12,517 | |
Loss on asset impairment | 0 | 0 | 0 | 4,047 | |
Loss on impairment of real estate assets | 9,706 | 0 | 9,706 | 229 | |
Total expenses | 91,536 | 62,459 | 257,269 | 218,467 | |
Operating income | 30,345 | 55,555 | 101,248 | 131,711 | |
Dividend income | 397 | 397 | 1,190 | 1,190 | |
Unrealized gain on equity securities | 22,771 | 0 | 53,159 | 0 | |
Interest income | 133 | 19 | 753 | 39 | |
Interest expense | (23,287) | (24,383) | (69,446) | (68,278) | |
Loss on early extinguishment of debt | 0 | 0 | (1,192) | 0 | |
Income before income tax expense, equity in earnings of an investee and gain on sale of real estate | 30,359 | 31,588 | 85,712 | 64,662 | |
Income tax expense | (185) | (177) | (446) | (364) | |
Equity in earnings of an investee | 831 | 31 | 882 | 533 | |
Income before gain on sale of real estate | 31,005 | 31,442 | 86,148 | 64,831 | |
Gain on sale of real estate | 4,075 | 0 | 4,075 | 0 | |
Net income | 35,080 | 31,442 | 90,223 | 64,831 | |
Net income allocated to noncontrolling interest | (5,597) | 0 | (15,841) | 0 | |
Net income attributed to SIR | 29,483 | 31,442 | 74,382 | 64,831 | |
Total assets | 4,721,499 | 4,721,499 | $ 5,303,030 | ||
Operating Segments | SIR | |||||
REVENUES: | |||||
Rental income | 67,052 | 65,011 | 194,533 | 192,099 | |
Tenant reimbursements and other income | 14,398 | 13,937 | 43,528 | 40,968 | |
Total revenues | 81,450 | 78,948 | 238,061 | 233,067 | |
EXPENSES: | |||||
Real estate taxes | 7,576 | 6,910 | 22,639 | 19,911 | |
Other operating expenses | 11,533 | 11,922 | 34,064 | 32,879 | |
Depreciation and amortization | 28,219 | 27,903 | 84,411 | 82,294 | |
Acquisition and transaction related costs | 0 | 0 | |||
General and administrative | 0 | 0 | 0 | 0 | |
Write-off of straight line rents receivable, net | 10,626 | 12,517 | |||
Loss on asset impairment | 4,047 | ||||
Loss on impairment of real estate assets | 9,706 | 9,706 | 229 | ||
Total expenses | 57,034 | 46,735 | 161,446 | 151,877 | |
Operating income | 24,416 | 32,213 | 76,615 | 81,190 | |
Dividend income | 0 | 0 | 0 | 0 | |
Unrealized gain on equity securities | 0 | 0 | |||
Interest income | 0 | 0 | 0 | 0 | |
Interest expense | (1,479) | (1,480) | (4,393) | (4,845) | |
Loss on early extinguishment of debt | 0 | ||||
Income before income tax expense, equity in earnings of an investee and gain on sale of real estate | 22,937 | 30,733 | 72,222 | 76,345 | |
Income tax expense | 0 | 0 | 0 | 0 | |
Equity in earnings of an investee | 0 | 0 | 0 | 0 | |
Income before gain on sale of real estate | 22,937 | 72,222 | |||
Gain on sale of real estate | 4,075 | 4,075 | |||
Net income | 27,012 | 30,733 | 76,297 | 76,345 | |
Net income allocated to noncontrolling interest | 0 | 0 | 0 | 0 | |
Net income attributed to SIR | 27,012 | 30,733 | 76,297 | 76,345 | |
Total assets | 3,042,049 | 3,042,049 | 3,128,182 | ||
Operating Segments | ILPT | |||||
REVENUES: | |||||
Rental income | 34,781 | 33,624 | 103,470 | 100,921 | |
Tenant reimbursements and other income | 5,650 | 5,442 | 16,986 | 16,190 | |
Total revenues | 40,431 | 39,066 | 120,456 | 117,111 | |
EXPENSES: | |||||
Real estate taxes | 4,942 | 4,579 | 14,109 | 13,257 | |
Other operating expenses | 3,281 | 2,727 | 9,650 | 8,160 | |
Depreciation and amortization | 7,152 | 6,810 | 20,915 | 20,476 | |
Acquisition and transaction related costs | 0 | 0 | |||
General and administrative | 0 | 0 | 0 | 0 | |
Write-off of straight line rents receivable, net | 0 | 0 | |||
Loss on asset impairment | 0 | ||||
Loss on impairment of real estate assets | 0 | 0 | 0 | ||
Total expenses | 15,375 | 14,116 | 44,674 | 41,893 | |
Operating income | 25,056 | 24,950 | 75,782 | 75,218 | |
Dividend income | 0 | 0 | 0 | 0 | |
Unrealized gain on equity securities | 0 | 0 | |||
Interest income | 0 | 0 | 0 | 0 | |
Interest expense | (437) | (565) | (1,251) | (1,680) | |
Loss on early extinguishment of debt | 0 | ||||
Income before income tax expense, equity in earnings of an investee and gain on sale of real estate | 24,619 | 24,385 | 74,531 | 73,538 | |
Income tax expense | 0 | 0 | 0 | 0 | |
Equity in earnings of an investee | 0 | 0 | 0 | 0 | |
Income before gain on sale of real estate | 24,619 | 74,531 | |||
Gain on sale of real estate | 0 | 0 | |||
Net income | 24,619 | 24,385 | 74,531 | 73,538 | |
Net income allocated to noncontrolling interest | 0 | 0 | 0 | 0 | |
Net income attributed to SIR | 24,619 | 24,385 | 74,531 | 73,538 | |
Total assets | 1,489,094 | 1,489,094 | 1,405,592 | ||
Corporate | |||||
REVENUES: | |||||
Rental income | 0 | 0 | 0 | 0 | |
Tenant reimbursements and other income | 0 | 0 | 0 | 0 | |
Total revenues | 0 | 0 | 0 | 0 | |
EXPENSES: | |||||
Real estate taxes | 0 | 0 | 0 | 0 | |
Other operating expenses | 0 | 0 | 0 | 0 | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Acquisition and transaction related costs | 3,796 | 3,796 | |||
General and administrative | 15,331 | 1,608 | 47,353 | 24,697 | |
Write-off of straight line rents receivable, net | 0 | 0 | |||
Loss on asset impairment | 0 | ||||
Loss on impairment of real estate assets | 0 | 0 | 0 | ||
Total expenses | 19,127 | 1,608 | 51,149 | 24,697 | |
Operating income | (19,127) | (1,608) | (51,149) | (24,697) | |
Dividend income | 397 | 397 | 1,190 | 1,190 | |
Unrealized gain on equity securities | 22,771 | 53,159 | |||
Interest income | 133 | 19 | 753 | 39 | |
Interest expense | (21,371) | (22,338) | (63,802) | (61,753) | |
Loss on early extinguishment of debt | (1,192) | ||||
Income before income tax expense, equity in earnings of an investee and gain on sale of real estate | (17,197) | (23,530) | (61,041) | (85,221) | |
Income tax expense | (185) | (177) | (446) | (364) | |
Equity in earnings of an investee | 831 | 31 | 882 | 533 | |
Income before gain on sale of real estate | (16,551) | (60,605) | |||
Gain on sale of real estate | 0 | 0 | |||
Net income | (16,551) | (23,676) | (60,605) | (85,052) | |
Net income allocated to noncontrolling interest | (5,597) | 0 | (15,841) | 0 | |
Net income attributed to SIR | (22,148) | $ (23,676) | (76,446) | $ (85,052) | |
Total assets | $ 190,356 | $ 190,356 | $ 769,256 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Designated Cash Flow Hedge | ||||
Amount of gain (loss) recognized in cumulative other comprehensive income (effective portion) | $ 71 | $ 2 | $ 482 | $ (85) |
Amount of gain (loss) reclassified from cumulative other comprehensive income into interest expense (effective portion) | (68) | $ 25 | (120) | $ 146 |
Other assets | Interest rate swap | Cash Flow Hedging | Designated as Hedging Instrument | Cole Corporate Income Trust, Inc. (CCIT) | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Notional Amount | $ 40,946 | $ 40,946 | ||
Interest Rate | 4.16% | 4.16% | ||
Effective Date | Jan. 29, 2015 | |||
Maturity Date | Aug. 3, 2020 | |||
Fair Value of Assets | $ 458 | $ 458 |
Indebtedness (Details)
Indebtedness (Details) $ in Thousands | Jan. 31, 2018USD ($) | Sep. 30, 2018USD ($)building | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)buildingoption | Sep. 30, 2017USD ($) | Oct. 26, 2018USD ($) | Jan. 02, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 29, 2017USD ($) |
Indebtedness | |||||||||
Unsecured revolving credit facility | $ 108,000 | $ 108,000 | $ 0 | ||||||
Maximum borrowing capacity of revolving credit facility and term loan | 1,850,000 | 1,850,000 | |||||||
Repayment of term loan | 350,000 | $ 0 | |||||||
Loss on early extinguishment of debt | $ 0 | $ 0 | $ 1,192 | $ 0 | |||||
Number of buildings collateralized | building | 6 | 6 | |||||||
Aggregate net book value of secured properties | $ 336,329 | $ 336,329 | |||||||
ILPT | |||||||||
Indebtedness | |||||||||
Number of buildings collateralized | building | 1 | 1 | |||||||
Aggregate net book value of secured properties | $ 65,323 | $ 65,323 | |||||||
Revolving credit facility, due in 2018 | |||||||||
Indebtedness | |||||||||
Maximum borrowing capacity of revolving credit facility and term loan | 750,000 | 750,000 | |||||||
Revolving credit facility, due in 2018 | LIBOR | |||||||||
Indebtedness | |||||||||
Unsecured revolving credit facility | $ 108,000 | $ 108,000 | |||||||
Interest rate payable on borrowings (as a percent) | 1.25% | ||||||||
Facility fee per annum (as a percent) | 0.25% | ||||||||
Interest rate at period end | 3.34% | 3.34% | 2.53% | ||||||
Weighted average annual interest rate (as a percent) | 3.22% | 2.25% | 3.04% | 1.95% | |||||
Principal repayment due until maturity | $ 0 | ||||||||
Remaining borrowing capacity | $ 642,000 | 642,000 | |||||||
Senior unsecured notes | |||||||||
Indebtedness | |||||||||
Aggregate principal amount | 1,450,000 | 1,450,000 | |||||||
Mortgage note payable | |||||||||
Indebtedness | |||||||||
Assumed mortgage principal | 210,696 | 210,696 | |||||||
Mortgage note payable | ILPT | |||||||||
Indebtedness | |||||||||
Assumed mortgage principal | 48,750 | 48,750 | |||||||
Subsequent Event | Revolving credit facility, due in 2018 | LIBOR | |||||||||
Indebtedness | |||||||||
Unsecured revolving credit facility | $ 88,000 | ||||||||
Remaining borrowing capacity | 662,000 | ||||||||
ILPT Revolving Credit Facility Due in 2018 | Revolving credit facility, due in 2018 | |||||||||
Indebtedness | |||||||||
Unsecured revolving credit facility | 380,000 | 380,000 | |||||||
Maximum borrowing capacity of revolving credit facility and term loan | 750,000 | 750,000 | |||||||
Remaining borrowing capacity | 370,000 | 370,000 | |||||||
ILPT Revolving Credit Facility Due in 2018 | Subsequent Event | Revolving credit facility, due in 2018 | |||||||||
Indebtedness | |||||||||
Unsecured revolving credit facility | 405,000 | ||||||||
Remaining borrowing capacity | $ 345,000 | ||||||||
ILPT Revolving Credit Facility Due in 2019 | Revolving credit facility, due in 2018 | |||||||||
Indebtedness | |||||||||
Maximum borrowing capacity of revolving credit facility and term loan | $ 750,000 | $ 750,000 | |||||||
Interest rate at period end | 3.50% | 3.50% | 2.89% | ||||||
Number of options to extend maturity date | option | 2 | ||||||||
Period of extension of maturity date | 6 months | ||||||||
Option to increase maximum borrowing capacity | $ 1,500,000 | ||||||||
Weighted average interest rate (as percent) | 3.39% | 3.21% | |||||||
Senior unsecured notes, due 2018 at 2.85% | |||||||||
Indebtedness | |||||||||
Stated interest rate | 2.85% | 2.85% | |||||||
Senior unsecured notes, due 2018 at 2.85% | Senior unsecured notes | |||||||||
Indebtedness | |||||||||
Redemption of debt | $ 350,000 | ||||||||
Stated interest rate | 2.85% | ||||||||
Loss on early extinguishment of debt | $ 1,192 | ||||||||
Term Loan Due in 2020 | Unsecured debt | |||||||||
Indebtedness | |||||||||
Repayment of term loan | $ 350,000 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Aug. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Unrealized gain (loss) on investment in available for sale securities | $ 0 | $ 4,284 | $ 0 | $ 18,804 | ||||
Senior unsecured notes | $ 1,430,688 | $ 1,430,688 | 1,430,688 | 1,430,688 | $ 1,777,425 | |||
Mortgage notes payable | 210,624 | 210,624 | 210,624 | 210,624 | 210,785 | |||
Loss on impairment of real estate assets | 9,706 | $ 0 | 9,706 | $ 229 | ||||
Real estate fair value | 3,926,606 | 3,926,606 | 3,926,606 | 3,926,606 | 3,905,616 | |||
Carrying Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Mortgage notes payable | 210,624 | 210,624 | 210,624 | 210,624 | 210,785 | |||
Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Mortgage notes payable | $ 205,278 | $ 205,278 | $ 205,278 | $ 205,278 | 209,200 | |||
Senior unsecured notes, due 2018 at 2.85% | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Stated interest rate | 2.85% | 2.85% | 2.85% | 2.85% | ||||
Senior unsecured notes, due 2018 at 2.85% | Carrying Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 0 | $ 0 | $ 0 | $ 0 | 349,896 | |||
Senior unsecured notes, due 2018 at 2.85% | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 0 | $ 0 | $ 0 | $ 0 | 349,731 | |||
Senior unsecured notes, due 2020 at 3.60% | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Stated interest rate | 3.60% | 3.60% | 3.60% | 3.60% | ||||
Senior unsecured notes, due 2020 at 3.60% | Carrying Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 398,192 | $ 398,192 | $ 398,192 | $ 398,192 | 397,214 | |||
Senior unsecured notes, due 2020 at 3.60% | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 397,406 | $ 397,406 | $ 397,406 | $ 397,406 | 404,050 | |||
Senior unsecured notes, due 2022 at 4.15% | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Stated interest rate | 4.15% | 4.15% | 4.15% | 4.15% | ||||
Senior unsecured notes, due 2022 at 4.15% | Carrying Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 296,801 | $ 296,801 | $ 296,801 | $ 296,801 | 296,143 | |||
Senior unsecured notes, due 2022 at 4.15% | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 298,581 | $ 298,581 | $ 298,581 | $ 298,581 | 304,199 | |||
Senior unsecured notes, due 2024 at 4.25% | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Stated interest rate | 4.25% | 4.25% | 4.25% | 4.25% | ||||
Senior unsecured notes, due 2024 at 4.25% | Carrying Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 343,539 | $ 343,539 | $ 343,539 | $ 343,539 | 342,797 | |||
Senior unsecured notes, due 2024 at 4.25% | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 335,375 | $ 335,375 | $ 335,375 | $ 335,375 | 347,877 | |||
Senior unsecured notes, due 2025 at 4.50% | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Stated interest rate | 4.50% | 4.50% | 4.50% | 4.50% | ||||
Senior unsecured notes, due 2025 at 4.50% | Carrying Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 392,156 | $ 392,156 | $ 392,156 | $ 392,156 | 391,375 | |||
Senior unsecured notes, due 2025 at 4.50% | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Senior unsecured notes | $ 384,468 | $ 384,468 | $ 384,468 | $ 384,468 | $ 403,998 | |||
Class A common shares | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Shares holding (in shares) | 1,586,836 | 1,586,836 | 1,586,836 | 1,586,836 | ||||
Historical cost | $ 42,686 | |||||||
Unrealized gain (loss) on investment in available for sale securities | $ 22,771 | 53,159 | ||||||
Recurring Fair Value Measurements | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | $ 147,716 | $ 147,716 | 147,716 | 147,716 | ||||
Recurring Fair Value Measurements | Level 1 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 147,258 | 147,258 | 147,258 | 147,258 | ||||
Recurring Fair Value Measurements | Level 2 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 458 | 458 | 458 | 458 | ||||
Recurring Fair Value Measurements | Level 3 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 0 | 0 | 0 | 0 | ||||
Non-Recurring Fair Value Measurements | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 11,744 | 11,744 | 11,744 | 11,744 | ||||
Non-Recurring Fair Value Measurements | Level 1 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 0 | 0 | 0 | 0 | ||||
Non-Recurring Fair Value Measurements | Level 2 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 11,744 | 11,744 | 11,744 | 11,744 | ||||
Non-Recurring Fair Value Measurements | Level 3 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Assets: | 0 | 0 | 0 | 0 | ||||
Interest rate swap | Recurring Fair Value Measurements | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Interest rate swap | 458 | 458 | 458 | 458 | ||||
Interest rate swap | Recurring Fair Value Measurements | Level 1 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Interest rate swap | 0 | 0 | 0 | 0 | ||||
Interest rate swap | Recurring Fair Value Measurements | Level 2 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Interest rate swap | 458 | 458 | 458 | 458 | ||||
Interest rate swap | Recurring Fair Value Measurements | Level 3 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Interest rate swap | 0 | 0 | 0 | 0 | ||||
RMR Inc. | Recurring Fair Value Measurements | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Investment in RMR Inc. | 147,258 | 147,258 | 147,258 | 147,258 | ||||
RMR Inc. | Recurring Fair Value Measurements | Level 1 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Investment in RMR Inc. | 147,258 | 147,258 | 147,258 | 147,258 | ||||
RMR Inc. | Recurring Fair Value Measurements | Level 2 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Investment in RMR Inc. | 0 | 0 | 0 | 0 | ||||
RMR Inc. | Recurring Fair Value Measurements | Level 3 | Estimated Fair Value | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Investment in RMR Inc. | 0 | 0 | 0 | 0 | ||||
Hanover, PA | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Loss on impairment of real estate assets | 9,706 | 9,706 | 9,706 | |||||
Real estate fair value | 11,744 | 11,744 | 11,744 | 11,744 | $ 21,450 | |||
Cash Flow Hedging | Designated as Hedging Instrument | Other assets | Interest rate swap | Cole Corporate Income Trust, Inc. (CCIT) | ||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||||||
Interest rate swap | 458 | 458 | 458 | 458 | ||||
Mortgage notes payable with related interest rate swap | $ 40,946 | $ 40,946 | $ 40,946 | $ 40,946 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ / shares in Units, $ in Thousands | Oct. 18, 2018USD ($)$ / shares | Sep. 24, 2018$ / sharesshares | Sep. 13, 2018$ / sharesshares | Aug. 16, 2018USD ($)$ / shares | Aug. 13, 2018USD ($)$ / sharesshares | May 23, 2018trustee$ / sharesshares | May 17, 2018USD ($)$ / shares | May 16, 2018trustee$ / sharesshares | May 14, 2018USD ($)$ / shares | Apr. 02, 2018$ / sharesshares | Mar. 27, 2018trustee$ / sharesshares | Feb. 22, 2018USD ($)$ / shares | Jan. 01, 2018$ / sharesshares | Sep. 30, 2018shares | Sep. 30, 2017shares | Sep. 30, 2018USD ($) | Oct. 29, 2018USD ($)shares |
Shareholders' Equity | |||||||||||||||||
Stock repurchased during period (in shares) | shares | 617 | 12,446 | 13,126 | ||||||||||||||
Share price of repurchased shares (in dollars per share) | $ 21.46 | $ 25.13 | |||||||||||||||
Distributions | |||||||||||||||||
Distribution to common shareholders | $ | $ 136,926 | ||||||||||||||||
Dividend paid | |||||||||||||||||
Distributions | |||||||||||||||||
Distribution paid on common shares (in dollars per share) | $ 0.51 | $ 0.51 | $ 0.51 | ||||||||||||||
Distribution to common shareholders | $ | $ 45,648 | $ 45,639 | $ 45,639 | ||||||||||||||
Affiliated Entity | |||||||||||||||||
Distributions | |||||||||||||||||
Proceeds from dividends received | $ | $ 27,000 | ||||||||||||||||
Subsequent Event | Dividend declared | |||||||||||||||||
Distributions | |||||||||||||||||
Distribution to common shareholders | $ | $ 45,700 | ||||||||||||||||
Dividends declared (in dollars per share) | $ 0.51 | ||||||||||||||||
Subsequent Event | Affiliated Entity | |||||||||||||||||
Distributions | |||||||||||||||||
Dividends receivable | $ | $ 14,850 | ||||||||||||||||
Common shares | Trustees | |||||||||||||||||
Shareholders' Equity | |||||||||||||||||
Shares granted (in shares) | shares | 3,000 | 3,000 | |||||||||||||||
Shares granted (in dollars per share) | $ 20.21 | $ 19.15 | |||||||||||||||
Number of trustees | trustee | 5 | ||||||||||||||||
Common shares | Officers And Employees | |||||||||||||||||
Shareholders' Equity | |||||||||||||||||
Shares granted (in shares) | shares | 58,700 | 57,850 | |||||||||||||||
Shares granted (in dollars per share) | $ 20.15 | ||||||||||||||||
ILPT | |||||||||||||||||
Shareholders' Equity | |||||||||||||||||
Stock repurchased during period (in shares) | shares | 2,369 | ||||||||||||||||
Share price of repurchased shares (in dollars per share) | $ 22.08 | ||||||||||||||||
Distributions | |||||||||||||||||
Distribution paid on common shares (in dollars per share) | $ 0.33 | $ 0.27 | |||||||||||||||
Distribution to common shareholders | $ | $ 21,457 | $ 17,551 | |||||||||||||||
Quarterly dividend distributions (in dollars per share) | $ 0.33 | ||||||||||||||||
Annual dividend distribution (in dollars per share) | $ 1.32 | ||||||||||||||||
ILPT | Affiliated Entity | |||||||||||||||||
Distributions | |||||||||||||||||
Shares holding (in shares) | shares | 45,000,000 | ||||||||||||||||
ILPT | Affiliated Entity | Dividend paid | |||||||||||||||||
Shareholders' Equity | |||||||||||||||||
Stock repurchased during period (in shares) | shares | 12,446 | ||||||||||||||||
ILPT | Subsequent Event | |||||||||||||||||
Distributions | |||||||||||||||||
Distribution to common shareholders | $ | $ 21,500 | ||||||||||||||||
Dividends declared (in dollars per share) | $ 0.33 | ||||||||||||||||
ILPT | Subsequent Event | Affiliated Entity | |||||||||||||||||
Distributions | |||||||||||||||||
Shares holding (in shares) | shares | 45,000,000 | ||||||||||||||||
ILPT | Common shares | Trustees | |||||||||||||||||
Shareholders' Equity | |||||||||||||||||
Shares granted (in shares) | shares | 3,000 | 1,000 | |||||||||||||||
Shares granted (in dollars per share) | $ 20.93 | $ 20.87 | |||||||||||||||
Number of trustees | trustee | 5 | 5 | |||||||||||||||
ILPT | Common shares | Officers And Employees | |||||||||||||||||
Shareholders' Equity | |||||||||||||||||
Shares granted (in shares) | shares | 54,400 | ||||||||||||||||
Shares granted (in dollars per share) | $ 23.33 |
Cumulative Other Comprehensiv_3
Cumulative Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at the beginning of the period | $ 1,991,819 | ||
Subtotal | $ 1,991,819 | ||
Other comprehensive income before reclassifications | $ 243 | 603 | |
Amounts reclassified from cumulative other comprehensive income to net income | (67) | (151) | |
Net current period other comprehensive income | 176 | 452 | |
Balance at the end of the period | 2,379,640 | 2,379,640 | |
Unrealized Gain on Investment in Available for Sale Securities | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at the beginning of the period | 51,413 | ||
Amounts reclassified from cumulative other comprehensive income to cumulative net income | (51,413) | ||
Subtotal | 0 | ||
Other comprehensive income before reclassifications | 0 | ||
Amounts reclassified from cumulative other comprehensive income to net income | 0 | ||
Net current period other comprehensive income | 0 | ||
Balance at the end of the period | 0 | 0 | |
Unrealized Gain on Derivative Instruments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at the beginning of the period | 1,041 | 682 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | 0 | ||
Subtotal | 682 | ||
Other comprehensive income before reclassifications | 71 | 482 | |
Amounts reclassified from cumulative other comprehensive income to net income | (68) | (120) | |
Net current period other comprehensive income | 3 | 362 | |
Balance at the end of the period | 1,044 | 1,044 | |
Equity in Unrealized Gain (Loss) of an Investee | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at the beginning of the period | (354) | 570 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | (841) | ||
Subtotal | (271) | ||
Other comprehensive income before reclassifications | 172 | 121 | |
Amounts reclassified from cumulative other comprehensive income to net income | 1 | (31) | |
Net current period other comprehensive income | 173 | 90 | |
Balance at the end of the period | (181) | (181) | |
Cumulative Other Comprehensive Income | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at the beginning of the period | 687 | 52,665 | |
Amounts reclassified from cumulative other comprehensive income to cumulative net income | (52,254) | ||
Subtotal | $ 411 | ||
Balance at the end of the period | $ 863 | $ 863 |
Weighted Average Common Share_2
Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | ||||
Weighted average common shares for basic earnings per share (in shares) | 89,410 | 89,355 | 89,395 | 89,341 |
Effect of dilutive securities: unvested share awards (in shares) | 27 | 24 | 16 | 23 |
Weighted average common shares for diluted earnings per share (in shares) | 89,437 | 89,379 | 89,411 | 89,364 |
Business and Property Managem_2
Business and Property Management Agreements with RMR LLC (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2018USD ($) | Sep. 30, 2018USD ($)agreement | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)agreement | Sep. 30, 2017USD ($) | |
Related Party Transaction [Line Items] | |||||
Management fee, measurement period | 3 years | ||||
RMR LLC | |||||
Related Party Transaction [Line Items] | |||||
Number of management service agreements | agreement | 2 | 2 | |||
Business management fees | $ 12,573 | $ 61 | $ 38,934 | $ 19,944 | |
Incentive fee expense | $ 25,569 | 21,479 | |||
Business management fees, prior period estimate accrual (reversal) | (5,478) | 3,288 | |||
Construction supervision fees | 3,626 | 3,340 | 10,598 | 9,766 | |
Related party reimbursement expenses | 2,145 | 2,162 | 6,460 | 6,105 | |
Internal audit expense | 102 | $ 67 | 346 | $ 201 | |
Accrual reversal | RMR LLC | |||||
Related Party Transaction [Line Items] | |||||
Business management fees | 6,664 | ||||
ILPT | RMR LLC | |||||
Related Party Transaction [Line Items] | |||||
Business management fees | 1,923 | 5,229 | |||
Incentive fee expense | $ 7,660 | ||||
Construction supervision fees | 1,205 | 3,327 | |||
Related party reimbursement expenses | 757 | 1,943 | |||
Internal audit expense | $ 52 | $ 173 |
Related Person Transactions - N
Related Person Transactions - Narrative (Details) $ in Thousands | Sep. 30, 2018USD ($)agreementshares | Sep. 24, 2018shares | Sep. 13, 2018shares | Jan. 01, 2018shares | Sep. 30, 2018USD ($)agreementshares | Sep. 30, 2017shares | Sep. 30, 2018USD ($)agreementshares | Aug. 13, 2018shares | Dec. 31, 2017USD ($) |
Related Party Transaction [Line Items] | |||||||||
Stock repurchased during period (in shares) | 617 | 12,446 | 13,126 | ||||||
Reit Management And Research Inc | Common Class A | |||||||||
Related Party Transaction [Line Items] | |||||||||
Cumulative number of shares issued for all transactions (in shares) | 1,586,836 | ||||||||
RMR LLC | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of management service agreements | agreement | 2 | 2 | 2 | ||||||
ILPT | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares holding (in shares) | 45,000,000 | 45,000,000 | 45,000,000 | ||||||
Ownership percentage, equity method | 69.20% | 69.20% | 69.20% | ||||||
Affiliates Insurance Company | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue from related parties | $ | $ 1,666 | ||||||||
Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Equity method investments | $ | $ 9,157 | $ 9,157 | $ 9,157 | $ 8,185 | |||||
ILPT | |||||||||
Related Party Transaction [Line Items] | |||||||||
Stock repurchased during period (in shares) | 2,369 | ||||||||
ILPT | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares holding (in shares) | 45,000,000 | ||||||||
Government Properties Income Trust | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownership percentage, equity method | 27.80% | 27.80% | 27.80% | ||||||
Government Properties Income Trust | Shareholder | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares holding (in shares) | 24,918,421 | 24,918,421 | 24,918,421 | ||||||
IPO | ILPT | |||||||||
Related Party Transaction [Line Items] | |||||||||
Reimbursement for share issuance costs | $ | $ 7,271 | ||||||||
Common Shares | |||||||||
Related Party Transaction [Line Items] | |||||||||
Stock repurchased during period (in shares) | 13,063 | ||||||||
Common Shares | Officers And Employees | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares granted (in shares) | 58,700 | ||||||||
Common Shares | Officers And Employees | ILPT | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares granted (in shares) | 54,400 | ||||||||
Stock repurchased during period (in shares) | 2,369 | ||||||||
Common Shares | Officers And Employees | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares granted (in shares) | 58,700 | 57,850 | |||||||
Common Shares | Officers And Employees | ILPT | |||||||||
Related Party Transaction [Line Items] | |||||||||
Shares granted (in shares) | 54,400 |
Contingencies (Details)
Contingencies (Details) $ in Thousands | Oct. 01, 2018USD ($)ft² | Jun. 29, 2016USD ($) | May 31, 2018ft²tenant | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Loss Contingencies [Line Items] | |||||||||
Accrued environmental remediation costs | $ 7,987 | $ 7,987 | $ 8,112 | ||||||
Write-off of straight line rents receivable, net | 0 | $ 0 | 10,626 | $ 12,517 | |||||
Real estate taxes | 12,518 | $ 11,489 | 36,748 | $ 33,168 | |||||
Cole Corporate Income Trust, Inc. (CCIT) | |||||||||
Loss Contingencies [Line Items] | |||||||||
Real estate taxes | $ 2,837 | ||||||||
Naperville, Illinois | |||||||||
Loss Contingencies [Line Items] | |||||||||
Number of non paying tenants | tenant | 1 | ||||||||
Area of real estate property | ft² | 820,000 | ||||||||
Write-off of straight line rents receivable, net | $ 10,626 | ||||||||
ILPT | |||||||||
Loss Contingencies [Line Items] | |||||||||
Accrued environmental remediation costs | $ 7,002 | $ 7,002 | $ 7,002 | ||||||
Subsequent Event | Naperville, Illinois | |||||||||
Loss Contingencies [Line Items] | |||||||||
Area of real estate property | ft² | 147,045 | ||||||||
Tenant one time payment of deferred capital costs | $ 2,000 | ||||||||
Monthly payment | $ 250 | ||||||||
Lease amendment term | 30 months |