Equity Commonwealth(US:EQC)2022-08-01 16:00Leasing Activity - As of June 30, 2022, the overall portfolio was 84.8% leased, compared to 91.5% as of December 31, 2019, indicating a significant reduction in leasing activity due to COVID-19 impacts[87] - The company is experiencing a significant reduction in leasing interest compared to pre-pandemic levels, with the comparable property portfolio leased percentage dropping from 91.5% to 84.8%[87] - Approximately 4.7% of leased square feet and 5.6% of annualized rental revenue are scheduled to expire through December 31, 2022, with a total annualized rental revenue of $60.02 million[90] - The weighted average lease term for leases entered into during the three months ended June 30, 2022, was 6.0 years[89] - The weighted average remaining lease term for major tenants ranged from 1.5 to 9.9 years, indicating stability in rental agreements[93] Financial Performance - Rental revenue for the three months ended June 30, 2022, was $14,426 thousand, an increase of $312 thousand or 2.2% compared to the same period in 2021[98] - Net operating income (NOI) for the three months ended June 30, 2022, was $8,976 thousand, reflecting an increase of $667 thousand or 8.0% from the previous year[98] - The company reported a net income of $2,896 thousand for the three months ended June 30, 2022, compared to a net loss of $1,936 thousand in the same period of 2021[98] - Operating expenses were $6,565 thousand, showing a slight decrease compared to the previous year[98] - Rental revenue increased by $2.0 million, or 7.0%, in the 2022 period compared to 2021, with comparable properties showing an increase of $2.3 million, or 8.1%[110] - The company reported a total of $21,102,000 in NOI for the six months ended June 30, 2022, compared to $16,517,000 for the same period in 2021, marking a 27% increase[138] Cash and Liquidity - The company had $2.7 billion in cash and cash equivalents as of June 30, 2022, providing a strong liquidity position for potential investments[80] - As of June 30, 2022, the company had $2.7 billion in cash and cash equivalents, expected to fund operations and investments[118] - Future cash flows will depend on the ability to collect rent and maintain occupancy rates, which may be impacted by market disruptions[119] Expenses and Cost Management - General and administrative expenses increased by $256 thousand or 3.5% in the 2022 period, mainly due to higher legal expenses[103] - Operating expenses decreased by $2.1 million, or 15.8%, in the 2022 period, primarily due to a $1.8 million real estate tax refund[112] - General and administrative expenses fell by $7.5 million, or 32.3%, in the 2022 period, mainly due to a decrease in compensation expenses[113] Investment and Strategic Decisions - The company terminated a merger agreement with Monmouth Real Estate Investment Corporation on August 31, 2021, and is now focusing on capital allocation and evaluating investment opportunities[85] - The company may consider selling or liquidating its business if it believes such actions will maximize shareholder value[86] - The company plans to continue monitoring market conditions and tenant performance to optimize rental revenue and manage operating expenses effectively[96] Shareholder Returns - The company declared a dividend of $0.40625 per series D preferred share, payable on August 15, 2022[124] - The company repurchased 4,297,056 common shares at an average price of $25.86 per share, totaling $111.1 million[125] Other Revenue - Other revenue, primarily from parking, increased by $354 thousand or 46.5% in the 2022 period compared to 2021, driven by higher parking demand[101] - Other revenue, primarily from parking, rose by $0.5 million, or 35.9%, in the 2022 period compared to 2021 due to increased parking demand[111] Interest and Income - Interest and other income, net, rose by $4,337 thousand or 266.7% in the 2022 period, attributed to higher average interest rates[104] - Interest and other income for the six months ended June 30, 2022, was $7,537,000, compared to $3,469,000 for the same period in 2021, showing a substantial increase[138] Funds from Operations - Funds from Operations (FFO) attributable to common shareholders and unitholders for the three months ended June 30, 2022, was $5,179,000, up from $448,000 in the same period of 2021[134] - Normalized FFO for the three months ended June 30, 2022, was $5,079,000, compared to a loss of $113,000 for the same period in 2021[134] - The company emphasizes that FFO and Normalized FFO are useful for comparing operating performance across periods and with other REITs, despite not being cash generated by operating activities[132] - The company continues to utilize NOI as a key performance measure to evaluate property-level performance, which excludes certain expenses not incurred at the property level[135]