Controls and Procedures
−Removed: As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer
−Removed: and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended.
+Added: As of the end of the period covered by this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended.
Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
−Removed: There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Warning Concerning Forward-Looking Statements
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• The duration and severity of the economic impact resulting from the COVID-19 pandemic and its impact on us and our tenants,
−Removed: The likelihood and extent to which our tenants will be negatively impacted by the COVID-19 pandemic and its aftermath and be able and willing to pay us rent,
+Added: • The likelihood and extent to which our tenants will be negatively impacted by the COVID-19 pandemic and its aftermath and will be able and willing to pay us rent,
• Our expectations about the financial strength of our tenants,
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• The likelihood that our rents will increase when we renew or extend our leases or enter new leases,
−Removed: The expectation that, as a result of the COVID-19 pandemic, leasing activity may continue to slow, but overall tenant retention levels may increase,
−Removed: Our belief that we are in a position to opportunistically recycle and deploy capital during 2020,
+Added: • The expectation that, as a result of the COVID-19 pandemic, leasing activity may continue to slow,
+Added: • Our belief that we are in a position to opportunistically recycle and deploy capital,
• Our ability to pay distributions to our shareholders and to increase the amount of such distributions,
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In addition, any properties we may acquire may not provide us with rents less property operating costs that exceed our capital costs or achieve our expected returns,
−Removed: We may fail to maintain, or we may elect to change, our target payout ratio for distributions to shareholders of 75% of cash available for distribution.
−Removed: Further, our Board of Trustees considers many factors when setting distribution rates including our historical and projected income, Normalized FFO, cash available for distribution, the then current and expected needs and availability of cash to pay our obligations and fund our investments, distributions which may be required to be paid to maintain our qualification for taxation as a REIT and other factors deemed relevant by our Board of Trustees.
+Added: • We may fail to maintain, or we may elect to change, our target payout ratio for distributions to shareholders of 75% of cash available for distribution or our distribution rate.
+Added: Further, our Board of Trustees considers many factors when setting distribution rates including our historical and projected income, Normalized FFO, cash available for distribution, the then current and expected needs and availability of cash to pay our obligations and fund our investments, distributions which may be required to be paid to maintain our qualification for taxation as a REIT and
+Added: other factors deemed relevant by our Board of Trustees.
Accordingly, future distribution rates may be increased or decreased and there is no assurance as to the rate at which future distributions will be paid,
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• Our belief that there is a likelihood that tenants may renew or extend our leases prior to their expirations whenever they have made significant investments in the leased properties, or because those properties may be of strategic importance to them, may not be realized,
−Removed: Our belief that our overall tenant retention levels may increase as a result of the COVID-19 pandemic may not be realized.
+Added: • Overall new leasing volume may decrease more than we currently expect.
In addition, if the COVID-19 pandemic and the current economic conditions continue for an extended period or worsen, our tenants may become unable to pay rent or they may elect to not renew their leases with us.
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To the extent those practices become permanent or increased, leasing demand for office space may decline.
−Removed: As a result of these factors, our tenant retention levels may not increase and they could decline,
−Removed: Our belief that we are well positioned to opportunistically recycle and deploy capital during 2020 may not be realized.
+Added: As a result of these factors, our tenant retention levels could decline,
+Added: • Our belief that we are well positioned to opportunistically recycle and deploy capital may not be realized.
We may fail to identify and execute on opportunities to deploy capital and any deployment of capital we may make may not result in the returns that we expect,
• Our belief that the reduction in government tenant space utilization and the consolidation of government tenants into government owned real estate is substantially complete may prove misplaced if these prior trends continue or do not moderate to the extent we expect, including in response to the COVID-19 pandemic and its aftermath,
−Removed: Our perception that recent activity suggests that the government has begun to shift its leasing strategy to include longer term leases and that the government is actively exploring 10 to 20 year lease terms at renewal, in some instances, may mistakenly imply that these activities are indicative of a trend or broader change in government leasing strategy or practices.
−Removed: Further, even if they may be indicative of such a trend or change, that trend or change may not be sustained by the government, including in response to the COVID-19 pandemic and its aftermath,
+Added: • Our perception that recent activity prior to the outbreak of the COVID-19 pandemic suggested that the government had begun to shift its leasing strategy to include longer term leases and that the government was actively exploring 10 to 20 year lease terms at renewal, in some instances, may mistakenly imply that these activities are indicative of a trend or broader change in government leasing strategy or practices that will recommence after the COVID-19 pandemic ends.
+Added: Further, even if such a trend or change were to recommence, that trend or change may not be sustained by the government,
• Contingencies in our acquisition and sale agreements may not be satisfied and any expected acquisitions and sales and any related lease arrangements we expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,
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Therefore, the impact we experience in the near term may be worse than we currently expect and our results of operations and financial position may be negatively affected,
−Removed: We have granted requests to some of our tenants to defer payments over, in most cases, a 12-month period commencing in September 2020.
+Added: • We have granted requests to some of our tenants to defer payments over, in most cases, a 12-month period, certain of which commenced in September 2020.
However, current market and economic conditions may deteriorate further and the rent assistance granted by us may not be sufficient to ensure that tenants will be able to meet their rent payment obligations under their leases with us, which may result in an increase in tenant defaults and terminations,
+Added: • One of our tenants that represents 1.0% of our annualized rental income as of September 30, 2020 has filed for Chapter 11 bankruptcy.
+Added: Although the tenant has paid its post-petition rental obligations due for September and October 2020, the tenant owes its August rental obligations, for which a proof of claim has been filed.
+Added: The tenant has not filed to reject its lease obligation with us, but that does not assure the tenant will pay its August 2020 or future rents or that the tenant will not file to reject its lease obligation and/or seek to renegotiate its lease obligation as part of its bankruptcy proceeding,
• The business and property management agreements between us and RMR LLC have continuing 20 year terms.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.