NEWTON, Mass.--(BUSINESS WIRE)--Aug 2, 2018--Government Properties Income Trust (Nasdaq: GOV) today announced its financial results for the quarter and six months ended June 30, 2018.

David Blackman, President and Chief Executive Officer of GOV, made the following statement:

“GOV had a strong second quarter operationally as we grew same property cash basis NOI by 5% and executed over 396,000 square feet of new and renewal leases. We also continued to make progress on our property disposition plan. During the quarter, we sold two properties for $129 million in the aggregate, bringing our closed disposition total under the plan to approximately $149 million year to date. We also continue to market additional properties for sale as part of our property disposition plan.”

Results for the Quarter Ended June 30, 2018:

Net income available for common shareholders determined in accordance with U.S. generally accepted accounting principles, or GAAP, for the quarter ended June 30, 2018 was $29.6 million, or $0.30 per diluted share, compared to net income available for common shareholders of $11.7 million, or $0.16 per diluted share, for the quarter ended June 30, 2017. Net income available for common shareholders for the quarter ended June 30, 2018 includes a $17.3 million, or $0.17 per diluted share, gain on sale of real estate, a $10.3 million, or $0.10 per diluted share, unrealized gain on equity securities relating to GOV's investment in The RMR Group Inc., or RMR Inc., and the reversal of $2.2 million, or $0.02 per diluted share, of previously accrued business management incentive fee expense. The weighted average number of diluted common shares outstanding was 99.1 million for the quarter ended June 30, 2018 and 71.1 million for the quarter ended June 30, 2017.

Normalized funds from operations, or Normalized FFO, available for common shareholders for the quarter ended June 30, 2018 were $51.3 million, or $0.52 per diluted share, compared to Normalized FFO available for common shareholders for the quarter ended June 30, 2017 of $42.4 million, or $0.60 per diluted share.

Reconciliations of net income available for common shareholders determined in accordance with GAAP to funds from operations, or FFO, available for common shareholders and Normalized FFO available for common shareholders for the quarters ended June 30, 2018 and 2017 appear later in this press release.

Results for the Six Months Ended June 30, 2018:

Net income available for common shareholders determined in accordance with GAAP was $35.9 million, or $0.36 per diluted share, for the six months ended June 30, 2018, compared to net income available for common shareholders of $19.1 million, or $0.27 per diluted share, for the six months ended June 30, 2017. Net income available for common shareholders for the six months ended June 30, 2018 includes a $23.3 million, or $0.24 per diluted share, unrealized gain on equity securities relating to GOV's investment in RMR Inc. and a $17.3 million, or $0.17 per diluted share, gain on sale of real estate, partially offset by a $5.8 million, or $0.06 per diluted share, loss on impairment of real estate. The weighted average number of diluted common shares outstanding was 99.1 million for the six months ended June 30, 2018 and 71.1 million for the six months ended June 30, 2017.

Normalized FFO available for common shareholders for the six months ended June 30, 2018 were $105.4 million, or $1.06 per diluted share, compared to Normalized FFO available for common shareholders for the six months ended June 30, 2017 of $82.3 million, or $1.16 per diluted share.

Reconciliations of net income available for common shareholders determined in accordance with GAAP to FFO available for common shareholders and Normalized FFO available for common shareholders for the six months ended June 30, 2018 and 2017 appear later in this press release.

Leasing, Occupancy and Same Property Results:

During the quarter ended June 30, 2018, GOV entered new and renewal leases for an aggregate 396,359 rentable square feet at weighted (by rentable square feet) average rents that were 0.6% above prior rents for the same space. The weighted (by rentable square feet) average lease term for these leases was 6.2 years and leasing concessions and capital commitments for these leases were $6.8 million, or $2.79 per square foot, per lease year. These new and renewal leases include approximately 185,000 square feet with government tenants which have weighted (by rentable square feet) average rents that are 4.1% above prior rents for the same space, a weighted (by rentable square feet) average lease term of 8.6 years and leasing concessions and capital commitments of $3.0 million, or $1.87 per square foot per weighted (by square foot) average lease year.

As of June 30, 2018, 94.0% of GOV’s total rentable square feet was leased, compared to 94.4% as of March 31, 2018 and 95.0% as of June 30, 2017. Occupancy for properties owned continuously since April 1, 2017, or same properties, was 94.6% as of June 30, 2018, compared to 95.3% as of March 31, 2018 and 95.4% as of June 30, 2017. Same properties net operating income, or NOI, increased 4.2% and same properties cash basis NOI, or Cash Basis NOI, increased 5.0% for the quarter ended June 30, 2018 compared to the same period in 2017.

Reconciliations of net income available for common shareholders determined in accordance with GAAP to Consolidated Property NOI and to Consolidated Property Cash Basis NOI for the quarters ended June 30, 2018 and 2017 appear later in this press release.

Recent Disposition Activities:

In May 2018, GOV sold an office property (one building) located in New York, NY with 187,060 rentable square feet for $118.5 million, excluding closing costs.

In May 2018, GOV sold an office property (one building) located in Sacramento, CA with 110,500 rentable square feet for $10.8 million, excluding closing costs.

Recent Financing Activities:

On May 1, 2018, one of GOV's subsidiaries redeemed all of its 1.8 million outstanding 5.5% Series A Cumulative Preferred Units for $11.15 per unit, plus accrued and unpaid distributions (an aggregate of $20.3 million).

Conference Call:

At 11:00 a.m. Eastern Time this morning, President and Chief Executive Officer, David Blackman, and Chief Financial Officer and Treasurer, Mark Kleifges, will host a conference call to discuss GOV’s second quarter 2018 financial results.

The conference call telephone number is (877) 328-1172. Participants calling from outside the United States and Canada should dial (412) 317-5418. 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. on Thursday, August 9, 2018. To access the replay, dial (412) 317-0088. The replay pass code is 10121842.

A live audio webcast of the conference call will also be available in a listen only mode on GOV’s website, 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 following the call for about one week. The transcription, recording and retransmission in any way of GOV’s second quarter conference call are strictly prohibited without the prior written consent of GOV.

Supplemental Data:

A copy of GOV’s Second Quarter 2018 Supplemental Operating and Financial Data is available for download at GOV’s website, which is located at www.govreit.com. GOV’s website is not incorporated as part of this press release.

GOV is a real estate investment trust, or REIT, which primarily owns properties located throughout the United States that are majority leased to government tenants and office properties in the metropolitan Washington, D.C. market area that are leased to government and private sector tenants. GOV is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.

Please see the pages attached hereto for a more detailed statement of GOV’s operating results and financial condition and for an explanation of GOV’s calculation of FFO available for common shareholders, Normalized FFO available for common shareholders, NOI and Cash Basis NOI and a reconciliation of those amounts to amounts determined in accordance with GAAP.

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER GOV USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, GOV IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON GOV’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY GOV’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

MR. BLACKMAN'S STATEMENTS REGARDING GOV'S QUARTERLY OPERATING AND LEASING RESULTS MAY IMPLY THAT SIMILAR OR BETTER RESULTS WILL BE ACHIEVED IN THE FUTURE. HOWEVER, GOV CANNOT BE SURE THAT IT WILL REALIZE SIMILAR OR BETTER OPERATING OR LEASING RESULTS IN THE FUTURE. MR. BLACKMAN'S STATEMENTS THAT GOV CONTINUED TO MAKE PROGRESS ON ITS PROPERTY DISPOSITION PLAN AND THAT GOV CONTINUES TO MARKET ADDITIONAL PROPERTIES FOR SALE MAY IMPLY THAT GOV WILL CONTINUE TO SELL ADDITIONAL PROPERTIES IN THE FUTURE. HOWEVER, GOV MAY NOT BE ABLE TO SUCCESSFULLY SELL ADDITIONAL PROPERTIES IN THE FUTURE. ALSO, GOV MAY SELL ADDITIONAL PROPERTIES AT PRICES THAT ARE LESS THAN THEIR CARRYING VALUES AND GOV MAY INCUR FUTURE LOSSES AS A RESULT.

THE INFORMATION CONTAINED IN GOV’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN GOV’S PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE GOV’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY GOV’S FORWARD LOOKING STATEMENTS. GOV’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, GOV DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

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