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Government Properties Income Trust Announces 2012 Second Quarter Results

NEWTON, Mass.--(BUSINESS WIRE)-- Government Properties Income Trust (NYSE: GOV) today announced its financial results for the quarter and six months ended June 30, 2012.

Results for the Quarter Ended June 30, 2012:

Normalized funds from operations, or Normalized FFO, for the quarter ended June 30, 2012 were $24.4 million, or $0.52 per share, compared to Normalized FFO for the quarter ended June 30, 2011 of $21.0 million, or $0.52 per share.

Net income was $12.0 million, or $0.25 per share, for the quarter ended June 30, 2012 compared to $10.9 million, or $0.27 per share, for the same quarter last year.

GOV's weighted average number of common shares outstanding was 47.1 million and 40.5 million for the quarters ended June 30, 2012 and 2011, respectively.

A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended June 30, 2012 and 2011 appears later in this press release.

Results for the Six Months Ended June 30, 2012:

Normalized FFO for the six months ended June 30, 2012 were $49.5 million, or $1.05 per share, compared to Normalized FFO for the six months ended June 30, 2011 of $40.5 million, or $1.00 per share.

Net income was $25.0 million, or $0.53 per share, for the six months ended June 30, 2012 compared to $21.2 million, or $0.52 per share, for the same period last year.

GOV's weighted average number of common shares outstanding was 47.1 million and 40.5 million for the six months ended June 30, 2012 and 2011, respectively.

A reconciliation of net income determined according to GAAP to FFO and Normalized FFO for the six months ended June 30, 2012 and 2011 appears later in this press release.

Recent Investment Activities:

Since April 1, 2012, GOV has acquired seven properties for an aggregate purchase price of $125.2 million, excluding acquisition costs, as follows:

Conference Call:

On Thursday, August 2, 2012, at 1:00 p.m. Eastern Time, David Blackman, President and Chief Operating Officer, and Mark Kleifges, Treasurer and Chief Financial Officer, will host a conference call to discuss the second quarter 2012 results.

The conference call telephone number is (877) 260-8898. Participants calling from outside the United States and Canada should dial (612) 332-0634. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on August 9, 2012. To hear the replay, dial (320) 365-3844. The replay pass code is 252614.

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

Supplemental Data:

A copy of GOV's Second Quarter 2012 Supplemental Operating and Financial Data is available for download at GOV's website, www.govreit.com. GOV's website is not incorporated as part of this press release.

Government Properties Income Trust is a real estate investment trust, or REIT, which owns properties located throughout the United States which are majority leased to the U.S. Government and other government tenants. As of June 30, 2012, GOV owned 74 properties with approximately 9.1 million rentable square feet. GOV is headquartered in Newton, Massachusetts.

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

GOVERNMENT PROPERTIES INCOME TRUST
CONDENSED CONSOLIDATED STATEMENTS OF INCOME, FUNDS FROM OPERATIONS AND
NORMALIZED FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
       
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
 
Rental income $ 50,273   $ 42,107   $ 100,728   $ 81,335  
 
Expenses
Real estate taxes 5,949 4,637 11,482 9,094
Utility expenses 3,870 3,540 7,705 7,047
Other operating expenses 9,325 7,260 18,178 14,181
Depreciation and amortization 12,153 9,097 24,225 17,483
Acquisition related costs 245 1,009 294 1,838
General and administrative   2,719     2,566     5,758     4,909  
Total expenses   34,261     28,109     67,642     54,552  
 
Operating income 16,012 13,998 33,086 26,783
 
Interest and other income 6 20 14 35
Interest expense (including net amortization of debt premiums and deferred
financing fees of $335, $262, $659 and $521 respectively) (4,096 ) (3,076 ) (8,119 ) (5,613 )
Equity in earnings of an investee   76     46     121     83  
 
Income before income tax expense 11,998 10,988 25,102 21,288
 
Income tax expense   (44 )   (56 )   (89 )   (102 )
Net income $ 11,954   $ 10,932   $ 25,013   $ 21,186  
 
Calculation of Funds from Operations (FFO) and Normalized FFO(1)
Net income $ 11,954 $ 10,932 $ 25,013 $ 21,186
Plus: depreciation and amortization   12,153     9,097     24,225     17,483  
FFO 24,107 20,029 49,238 38,669
Plus: acquisition related costs   245     1,009     294     1,838  
Normalized FFO $ 24,352   $ 21,038   $ 49,532   $ 40,507  
 
Weighted average common shares outstanding   47,098     40,506     47,075     40,503  
 
Per common share
Net income $ 0.25 $ 0.27 $ 0.53 $ 0.52
FFO $ 0.51 $ 0.49 $ 1.05 $ 0.95
Normalized FFO $ 0.52 $ 0.52 $ 1.05 $ 1.00

(1) We calculate Funds from Operations, or FFO, and Normalized FFO as shown above. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, calculated in accordance with GAAP, plus real estate depreciation and amortization. Our calculation of Normalized FFO differs from NAREIT's definition of FFO because we exclude acquisition related costs. We consider FFO and Normalized FFO to be appropriate measures of performance for a REIT, along with net income, operating income and cash flow from operating, investing and financing activities. We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO can facilitate a comparison of operating performances between periods. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility agreement and term loan agreement, the availability of debt and equity capital to us and our expectation of our future capital requirements and operating performance. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. We believe that FFO and Normalized FFO may facilitate an understanding of our consolidated historical operating results. These measures should be considered in conjunction with net income, operating income and cash flow from operating activities as presented in our Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Cash Flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

GOVERNMENT PROPERTIES INCOME TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)
    June 30,   December 31,
2012 2011

ASSETS

 
Real estate properties:
Land $ 228,824 $ 224,674
Buildings and improvements   1,147,361     1,129,994  
1,376,185 1,354,668
Accumulated depreciation   (164,890 )   (156,618 )
1,211,295 1,198,050
 
Acquired real estate leases, net 110,805 117,596
Cash and cash equivalents 1,394 3,272
Restricted cash 3,970 1,736
Rents receivable, net 27,086 29,000
Deferred leasing costs, net 3,498 3,074
Deferred financing costs, net 6,624 5,550
Other assets, net   18,152   10,297  
Total assets $ 1,382,824   $ 1,368,575  

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 
Unsecured revolving credit facility $ 27,000 $ 345,500
Unsecured term loan 350,000 -
Mortgage notes payable 94,271 95,383
Accounts payable and accrued expenses 19,652 20,691
Due to related persons 2,878 4,071
Assumed real estate lease obligations, net   10,721     11,262  
Total liabilities   504,522     476,907  
 
Commitments and contingencies
 
Shareholders' equity:
Common shares of beneficial interest, $.01 par value:
70,000,000 shares authorized, 47,099,971 and 47,051,650
shares issued and outstanding, respectively 471 471
Additional paid in capital 936,603 935,438
Cumulative net income 112,346 87,333
Cumulative other comprehensive income 73 77
Cumulative common distributions   (171,191 ) (131,651 )
Total shareholders' equity   878,302     891,668  
 
Total liabilities and shareholders' equity $ 1,382,824   $ 1,368,575  

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

Source: Government Properties Income Trust

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