What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-10-28 compared with 2021-07-29 · 158 added, 132 removed, 425 unchanged (41% of the section changed)

3 unchanged sentences

We are a real estate investment trust, or REIT, organized under Maryland law.

As of June 30, 2021, our wholly owned properties were comprised of 181 properties and we had noncontrolling ownership interests of 51% and 50% in two unconsolidated joint ventures that own three properties containing a combined approximately 444,000 rentable square feet.

As of June 30, 2021, our properties are located in 34 states and the District of Columbia and contain approximately 24,091,000 rentable square feet.

As of June 30, 2021, our properties were leased to 345 different tenants with a weighted average remaining lease term (based on annualized rental income) of approximately 5.9 years.

government is our largest tenant, representing approximately 22.0% of our annualized rental income as of June 30, 2021.

The term annualized rental income as used herein is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of June 30, 2021, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

As of September 30, 2021, our wholly owned properties were comprised of 178 properties and we had noncontrolling ownership interests of 51% and 50% in two unconsolidated joint ventures that own three properties containing a combined approximately 444,000 rentable square feet.

As of September 30, 2021, our properties are located in 33 states and the District of Columbia and contain approximately 23,274,000 rentable square feet.

As of September 30, 2021, our properties were leased to 331 different tenants with a weighted average remaining lease term (based on annualized rental income) of approximately 6.0 years.

government is our largest tenant, representing approximately 19.7% of our annualized rental income as of September 30, 2021.

The term annualized rental income as used herein is defined as the annualized contractual base rents from our tenants pursuant to our lease agreements as of September 30, 2021, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.

COVID-19 Pandemic

2 unchanged sentences

We are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business.

To date, the COVID-19 pandemic has not had a significant impact on our business and we believe that our current financial resources, the characteristics of our portfolio, including the diversity of our tenant base, both geographically and by industry, and the financial strength and resources of our tenants, will enable us to withstand the COVID-19 pandemic.

To date, the COVID-19 pandemic has not had a significant impact on our business and we continue to believe that our financial resources, the characteristics of our portfolio, including the diversity of our tenant base, both geographically and by industry, and the financial strength and resources of our tenants, will enable us to withstand the COVID-19 pandemic.

However, we have received requests from some of our tenants for rent assistance.

As of July 27, 2021, we have granted temporary rent assistance totaling $2,483 to 18 tenants who represent approximately 3.1% of our annualized rental income as of June 30, 2021.

As of October 26, 2021, we have granted temporary rent assistance totaling $2,483 to 18 tenants who represent approximately 3.3% of our annualized rental income as of September 30, 2021.

This assistance generally entails a deferral of, in most cases, one month of rent pursuant to deferred payment plans which require the deferred rent amounts be payable over a 12-month period, all of which have commenced.

As of July 27, 2021, we have collected $2,259, or 91.0%, of our granted rent deferrals.

As of October 26, 2021, we have collected more than 95% of our granted rent deferrals.

There remains uncertainty as to the ultimate duration and severity of the COVID-19 pandemic, including risks that may arise from mutations or related strains of the virus, the ability to successfully administer vaccinations to a sufficient number of persons or attain immunity to the virus by natural or other means to achieve herd immunity, and the impact on the U.S.

3 unchanged sentences

Property Operations

Unless otherwise noted, the data presented in this section includes properties classified as held for sale as of June 30, 2021 and excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

information regarding our properties classified as held for sale and our two unconsolidated joint ventures, see Note 3 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Occupancy data for our properties as of June 30, 2021 and 2020 was as follows (square feet in thousands):

Unless otherwise noted, the data presented in this section includes properties classified as held for sale as of September 30, 2021 and excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

more information regarding our properties classified as held for sale and our two unconsolidated joint ventures, see Note 3 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Occupancy data for our properties as of September 30, 2021 and 2020 was as follows (square feet in thousands):

All Properties (1)

Comparable Properties (2)

June 30, June 30,

September 30,

2021 2020 2021 2020

5 unchanged sentences

89.0 % 91.2 % 91.2 % 93.4 %

(1) Based on properties we owned on June 30, 2021 and 2020, respectively.

(1) Based on properties we owned on September 30, 2021 and 2020, respectively.

(2) Based on properties we owned continuously since January 1, 2020;

3 unchanged sentences

(5) Percent leased includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date.

The average effective rental rate per square foot for our properties for the three and six months ended June 30, 2021 and 2020 are as follows:

Three Months Ended June 30, Six Months Ended June 30,

The average effective rental rate per square foot for our properties for the three and nine months ended September 30, 2021 and 2020 are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

(1) Average effective rental rate per square foot represents annualized total rental income during the period specified divided by the average rentable square feet leased during the period specified.

(2) Based on properties we owned on June 30, 2021 and 2020, respectively.

(3) Based on properties we owned continuously since April 1, 2020 and January 1, 2020, respectively, excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

During the three and six months ended June 30, 2021, changes in rentable square feet leased and available for lease at our properties were as follows (square feet in thousands):

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

(2) Based on properties we owned on September 30, 2021 and 2020, respectively.

(3) Based on properties we owned continuously since July 1, 2020 and January 1, 2020, respectively, excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

During the three and nine months ended September 30, 2021, changes in rentable square feet leased and available for lease at our properties were as follows (square feet in thousands):

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Leased Available for Lease Total Leased Available for Lease Total

11 unchanged sentences

End of period 20,705 2,569 23,274 20,705 2,569 23,274

(1) Based on leases entered during the three and six months ended June 30, 2021.

(1) Based on leases entered during the three and nine months ended September 30, 2021.

(2) Rentable square feet are subject to changes when space is remeasured or reconfigured for tenants.

Leases at our properties totaling approximately 810,000 and 1,468,000 rentable square feet expired during the three and six months ended June 30, 2021, respectively.

During the three and six months ended June 30, 2021, we entered into new and renewal leases as summarized in the following tables (square feet in thousands):

Three Months Ended June 30, 2021

Leases at our properties totaling approximately 738,000 and 2,206,000 rentable square feet expired during the three and nine months ended September 30, 2021, respectively.

During the three and nine months ended September 30, 2021, we entered into new and renewal leases as summarized in the following tables (square feet in thousands):

Three Months Ended September 30, 2021

New Leases Renewals Total

8 unchanged sentences

$ 7.74 $ 5.11 $ 6.40

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

New Leases Renewals Total

11 unchanged sentences

These costs represent the estimated costs related to the planned hotel component of the property.

During the three and six months ended June 30, 2021, changes in effective rental rates per square foot achieved for new leases and lease renewals at our properties that commenced during the three and six months ended June 30, 2021, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands):

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

During the three and nine months ended September 30, 2021, changes in effective rental rates per square foot achieved for new leases and lease renewals at our properties that commenced during the three and nine months ended September 30, 2021, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands):

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

Old Effective Rent Per Square Foot (1)

7 unchanged sentences

(1) Effective rental rate includes contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and excludes lease value amortization.

During the three and six months ended June 30, 2021 and 2020, amounts capitalized at our properties for lease related costs, building improvements and development, redevelopment and other activities were as follows:

Three Months Ended June 30, Six Months Ended June 30,

During the three and nine months ended September 30, 2021 and 2020, amounts capitalized at our properties for lease related costs, building improvements and development, redevelopment and other activities were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

10 unchanged sentences

(3) Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenue.

As of June 30, 2021, we have estimated unspent leasing related obligations of $113,099, of which we expect to spend $67,272 over the next 12 months.

As of June 30, 2021, we had leases at our properties totaling approximately 1,897,000 rentable square feet that were scheduled to expire through June 30, 2022.

As of July 28, 2021, we expect tenants with leases totaling approximately 923,000 rentable square feet that are scheduled to expire through June 30, 2022, to not renew their leases upon expiration and we cannot be sure as to whether other tenants will renew their leases upon expiration.

Of the approximately 923,000 rentable square feet that are expiring and expected to not renew, properties containing approximately 532,000 rentable square feet have been sold, resulting in a net approximately 391,000 rentable square feet, or approximately 1.6% of our total rentable square feet as of June 30, 2021, that are expiring through June 30, 2022 which we expect to not renew.

As of September 30, 2021, we have estimated unspent leasing related obligations of $129,369, of which we expect to spend $69,248 over the next 12 months.

As of September 30, 2021, we had leases at our properties totaling approximately 2,317,000 rentable square feet that were scheduled to expire through December 31, 2022.

As of October 27, 2021, we expect tenants with leases totaling approximately 758,000 rentable square feet that are scheduled to expire through December 31, 2022, to not renew their leases upon expiration and we cannot be sure as to whether other tenants will renew their leases upon expiration.

As a result of the COVID-19 pandemic and its economic impact, overall leasing activity has been volatile during 2021 and may remain so until office property market conditions meaningfully improve and stabilize for a sustained period.

6 unchanged sentences

Additionally, we may incur significant costs to renew our leases with current tenants or lease our properties to new tenants.

As of June 30, 2021, our lease expirations by year are as follows (square feet in thousands):

As of September 30, 2021, our lease expirations by year are as follows (square feet in thousands):

Number of Leases Expiring Leased

15 unchanged sentences

Some of our leases allow the tenants to vacate the leased premises before the stated expirations of their leases with little or no liability.

As of June 30, 2021, tenants occupying approximately 7.2% of our rentable square feet and responsible for approximately 7.9% of our annualized rental income as of June 30, 2021 currently have exercisable rights to terminate their leases before the stated terms of their leases expire.

Also, in 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2029, and 2035, early termination rights become exercisable by other tenants who currently occupy an additional approximately 0.4%, 2.9%, 2.5%, 1.2%, 2.1%, 1.2%, 0.7%, 2.7%, 0.1%, and 0.3% of our rentable square feet, respectively, and contribute an additional approximately 0.4%, 3.0%, 3.5%, 1.7%, 3.3%, 1.4%, 1.1%, 4.9%, 0.2%, and 0.4% of our annualized rental income, respectively, as of June 30, 2021.

In addition, as of June 30, 2021, pursuant to leases with 13 of our tenants, these tenants have rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets.

These 13 tenants occupy approximately 5.2% of our rentable square feet and contribute approximately 5.7% of our annualized rental income as of June 30, 2021.

(2) Leased square feet is pursuant to leases existing as of June 30, 2021, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any.

As of September 30, 2021, tenants occupying approximately 5.6% of our rentable square feet and responsible for approximately 5.5% of our annualized rental income as of September 30, 2021 currently have exercisable rights to terminate their leases before the stated terms of their leases expire.

Also, in 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2029, 2035 and 2040, early termination rights become exercisable by other tenants who currently occupy an additional approximately 0.5%, 1.7%, 2.8%, 1.2%, 3.9%, 1.1%, 0.8%, 1.2%, 0.5%, 0.3%, and 0.3% of our rentable square feet, respectively, and contribute an additional approximately 0.6%, 2.0%, 3.9%, 1.7%, 7.0%, 1.4%, 1.3%, 1.3%, 0.9%, 0.4%, and 0.3% of our annualized rental income, respectively, as of September 30, 2021.

In addition, as of September 30, 2021, pursuant to leases with 14 of our tenants, these tenants have rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets.

These 14 tenants occupy approximately 6.0% of our rentable square feet and contribute approximately 6.6% of our annualized rental income as of September 30, 2021.

(2) Leased square feet is pursuant to leases existing as of September 30, 2021, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any.

Square feet measurements are subject to changes when space is remeasured or reconfigured for new tenants.

16 unchanged sentences

Given the significant uncertainties, including as to the COVID-19 pandemic, its economic impact and its aftermath and the new presidential administration, we are unable to reasonably project what the financial impact of market conditions or changing government circumstances will be on our financial results for future periods.

As of June 30, 2021, we derive 21.8% of our annualized rental income from our properties located in the metropolitan Washington, D.C.

As of September 30, 2021, we derive 21.5% of our annualized rental income from our properties located in the metropolitan Washington, D.C.

market area, which includes Washington, D.C., Northern Virginia and suburban Maryland.

11 unchanged sentences

and/or (c) tenants with investment grade rated parent entities that do not guarantee the tenant’s lease obligations.

As of June 30, 2021, tenants contributing 54.1% of annualized rental income were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 9.2% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities were not liable for the payment of rents).

As of June 30, 2021, tenants representing 1% or more of our total annualized rental income were as follows:

As of September 30, 2021, tenants contributing 52.3% of annualized rental income were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 10.2% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities were not liable for the payment of rents).

As of September 30, 2021, tenants representing 1% or more of our total annualized rental income were as follows:

Tenant Credit Rating Sq.

18 unchanged sentences

Not Rated 230 1.1 % 10,745 1.8 %

13 Micro Focus International plc Non Investment Grade 406 1.9 % 8,710 1.5 %

13 CommScope Holding Company Inc Non Investment Grade 228 1.1 % 8,921 1.5 %

14 Micro Focus International plc Non Investment Grade 242 1.2 % 7,431 1.3 %

15 State of Georgia Investment Grade 308 1.5 % 7,248 1.2 %

15 unchanged sentences

Acquisition Activities

During the six months ended June 30, 2021, we acquired two properties containing a combined approximately 877,000 rentable square feet for an aggregate purchase price of $550,000, excluding purchase price adjustments and acquisition related costs.

As of July 28, 2021, we have entered into an agreement to acquire a property adjacent to a property we own in Boston, MA containing approximately 49,000 rentable square feet for $26,975, excluding acquisition related costs.

This acquisition is expected to occur before the end of the third quarter.

However, this acquisition is subject to conditions;

accordingly, we cannot be sure that we will complete this acquisition or that this acquisition will not be delayed or the terms will not change.

During the nine months ended September 30, 2021, we acquired three properties containing a combined approximately 926,000 rentable square feet for an aggregate purchase price of $576,975, excluding purchase price adjustments and acquisition related costs.

For more information about our acquisition activities, see Note 3 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Disposition Activities

During the six months ended June 30, 2021, we sold two properties and a warehouse facility adjacent to a property we own containing a combined approximately 1,692,000 rentable square feet for an aggregate sales price of $169,845, excluding closing costs.

In July 2021, we sold a property located in Fresno, CA containing approximately 532,000 rentable square feet for a sales price of $6,000, excluding closing costs.

Also in July 2021, we sold a property located in Liverpool, NY containing approximately 38,000 rentable square feet for a sales price of $650, excluding closing costs.

We also entered into an agreement in May 2021 to sell a property located in Memphis, TN containing approximately 205,000 rentable square feet for a sales price of $15,270, excluding closing costs.

This sale is expected to occur before the end of the third quarter.

However, this sale is subject to conditions;

During the nine months ended September 30, 2021, we sold six properties and a warehouse facility adjacent to a property we own containing a combined approximately 2,565,000 rentable square feet for an aggregate sales price of $198,415, excluding closing costs.

In October 2021, we sold two vacant land parcels adjacent to properties we own located in Sterling, VA for a sales price of $28,500, excluding closing costs.

As of October 27, 2021, we have also entered into an agreement to sell five properties located in Brookhaven, GA for a sales price of $56,000, excluding closing costs.

Also, we are currently marketing for sale 17 properties containing approximately 2,161,000 rentable square feet that we expect to generate approximately $200,000 of gross proceeds.

We expect to substantially complete these dispositions by mid-year 2022.

We cannot be sure we will sell any properties we are marketing for prices in excess of their carrying values or otherwise.

In addition, our pending sale is subject to conditions;

accordingly, we cannot be sure that we will complete this sale or that this sale will not be delayed or the terms will not change.

1 unchanged sentence

Financing Activities

In May 2021, we issued $300,000 of 2.650% senior unsecured notes due 2026 in an underwritten public offering, raising net proceeds of $296,758, after deducting underwriters' discounts and offering expenses.

Senior Unsecured Note Issuances

In May 2021, we issued $300,000 of 2.650% senior unsecured notes due 2026 in an underwritten public offering, raising net proceeds of $296,826, after deducting underwriters' discounts and offering expenses, which we used to redeem all $310,000 of our 5.875% senior unsecured notes due 2046.

In August 2021, we issued $350,000 of 2.400% senior unsecured notes due 2027 in an underwritten public offering, raising net proceeds of $346,630, after deducting underwriters' discounts and offering expenses, which we used to redeem all $300,000 of our 4.15% senior unsecured notes due 2022.

In September 2021, we issued $400,000 of 3.450% senior unsecured notes due 2031 in an underwritten public offering, raising net proceeds of $395,698, after deducting underwriters' discounts and offering expenses, which we used to repay amounts outstanding under our revolving credit facility.

Senior Unsecured Note Redemptions

In June 2021, we redeemed, at par plus accrued interest, all $310,000 of our 5.875% senior unsecured notes due 2046 using cash on hand and the net proceeds from the issuance of our 2.650% senior unsecured notes due 2026.

Also in June 2021, we prepaid, at a premium plus accrued interest, a mortgage note secured by three properties with an outstanding principal balance of $71,000, an annual interest rate of 3.55% and a maturity date in May 2023 using cash on hand and borrowings under our revolving credit facility.

In September 2021, we redeemed, at a premium plus accrued interest, all $300,000 of our 4.15% senior unsecured notes due 2022 using a portion of the net proceeds from the issuance of our 2.400% senior unsecured notes due 2027.

Mortgage Note Repayment

In June 2021, we prepaid, at a premium plus accrued interest, a mortgage note secured by three properties with an outstanding principal balance of $71,000, an annual interest rate of 3.55% and a maturity date in May 2023 using cash on hand and borrowings under our revolving credit facility.

Segment Information

2 unchanged sentences

RESULTS OF OPERATIONS (amounts in thousands, except per share amounts)

Three Months Ended June 30, 2021, Compared to Three Months Ended June 30, 2020

Three Months Ended September 30, 2021, Compared to Three Months Ended September 30, 2020

Comparable Properties (1) Results

Three Months Ended June 30,

Three Months Ended September 30,

Non-Comparable

Properties Results

Three Months Ended June 30,

Three Months Ended September 30,

Consolidated Results

Three Months Ended June 30,

Three Months Ended September 30,

2021 2020 $ Change % Change 2021 2020 2021 2020 $ Change % Change

9 unchanged sentences

Depreciation and amortization 59,533 62,227 (2,694) (4.3 %)

Loss on impairment of real estate 48,197 — 48,197 n/m

Loss on impairment of real estate (3) 2,954 (2,957) (100.1 %)

General and administrative 448 7,059 (6,611) (93.7 %)

Total other expenses 59,978 72,240 (12,262) (17.0 %)

Gain on sale of real restate 114 66 48 72.7 %

Gain on sale of real restate 36 — 36 n/m

Interest and other income — 2 (2) (100.0 %)

4 unchanged sentences

Equity in net losses of investees (688) (279) (409) 146.6 %

Net income (loss) $ (66,697) $ 1,299 $ (67,996) n/m

Weighted average common shares outstanding (basic and diluted) 48,165 48,106 59 0.1 %

Net income (loss) $ 3,712 $ (3,797) $ 7,509 (197.8 %)

Weighted average common shares outstanding (basic) 48,211 48,132 79 0.2 %

Weighted average common shares outstanding (diluted) 48,244 48,132 112 0.2 %

Per common share amounts (basic and diluted):

Net income (loss) $ (1.38) $ 0.03 $ (1.41) n/m

Net income (loss) $ 0.08 $ (0.08) $ 0.16 (200.0 %)

n/m - not meaningful

(1) Comparable properties consists of 169 properties we owned on June 30, 2021 and which we owned continuously since April 1, 2020 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(1) Comparable properties consists of 164 properties we owned on September 30, 2021 and which we owned continuously since July 1, 2020 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(2) Our definition of net operating income, or NOI, and our reconciliation of net income (loss) to NOI are included below under the heading “Non-GAAP Financial Measures.”

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the three months ended September 30, 2021, compared to the three months ended September 30, 2020.

Rental income.

The decrease in rental income reflects decreases in rental income of $4,681 as a result of property disposition activities, $4,180 for properties undergoing significant redevelopment and $1,121 related to comparable properties, offset by an increase in rental income of $1,478 related to acquired properties.

The increase in rental income reflects an increase in rental income of $14,477 related to acquired properties, offset by decreases in rental income of $7,158 as a result of property disposition activities, $4,229 for properties undergoing significant redevelopment and $1,324 related to comparable properties.

The decrease in rental income for properties undergoing significant redevelopment is primarily due to the reduction in occupied space at a property located in Washington, D.C.

that began a redevelopment project during the 2021 period.

that began a redevelopment project during 2021.

The decrease in rental income for comparable properties is primarily due to reductions in occupied space at certain of our properties in the 2021 period.

1 unchanged sentence

Real estate taxes.

The increase in real estate taxes primarily reflects increases in real estate taxes of $436 for comparable properties, $139 related to acquired properties and $29 related to property disposition activities, offset by a decrease of $473 for properties undergoing significant redevelopment.

Real estate taxes for comparable properties increased primarily due to refunds received in the 2020 period at certain of our properties as a result of successful real estate tax appeals, as well as the effect of a higher valuation assessment at certain of our properties in the 2021 period.

The increase in real estate taxes primarily reflects an increase in real estate taxes of $5,844 related to acquired properties, offset by decreases of $932 related to property disposition activities, $543 for comparable properties and $415 for properties undergoing significant redevelopment.

Real estate taxes for comparable properties decreased primarily due to decreases in assessed values and refunds received in the 2021 period at certain of our properties as a result of successful real estate tax appeals.

Utility expenses.

The increase in utility expenses reflects increases in utility expenses of $308 for comparable properties and $11 for acquired properties, offset by a decrease in utility expenses of $163 for properties undergoing significant redevelopment and $47 related to property disposition activities.

The increase in utility expenses for comparable properties is primarily related to utility expenses previously being paid by one of our tenants that are now being paid by us pursuant to a lease amendment with that tenant effective in January 2021.

The decrease in utility expenses reflects decreases in utility expenses of $155 for properties undergoing significant redevelopment, $151 related to property disposition activities and $92 for comparable properties, offset by an increase in utility expenses of $223 for acquired properties.

The decrease in utility expenses for comparable properties is primarily due to a decrease in electricity and water usage as a result of reductions in occupied space at certain of our properties in the 2021 period, partially offset by an increase related to utility expenses in the 2021 period previously paid directly by one of our tenants that are now being paid by us pursuant to a lease amendment with that tenant effective in January 2021.

Other operating expenses.

Other operating expenses consist of salaries and benefit costs of property level personnel, repairs and maintenance expense, cleaning expense, other direct costs of operating our properties and property management fees.

The decrease in other operating expenses primarily reflects a decrease of $541 related to property disposition activities, $377 for properties undergoing significant redevelopment and $79 for comparable properties, offset by an increase in other operating expenses of $108 for acquired properties.

The increase in other operating expenses primarily reflects an increase of $1,910 for acquired properties, offset by decreases of $841 related to property disposition activities, $463 for comparable properties and $435 for properties undergoing significant redevelopment.

The decrease in other operating expenses for comparable properties is primarily due to a decrease in repairs and maintenance expenses at certain of our properties in the 2021 period.

Depreciation and amortization.

The decrease in depreciation and amortization primarily reflects decreases of $4,868 for comparable properties and $4,817 related to property disposition activities, offset by an increase of $6,991 for acquired properties.

Depreciation and amortization for comparable properties declined due to certain leasing related assets becoming fully depreciated after April 1, 2020.

Depreciation and amortization for comparable properties declined due to certain leasing related assets becoming fully depreciated after July 1, 2020.

Loss on impairment of real estate.

We recorded a $48,197 loss on impairment of real estate in the 2021 period to reduce the carrying value of five properties to their estimated fair values less costs to sell, which includes $33,917 related to a property in Fresno, CA containing approximately 532,000 square feet that was sold in July 2021 and $14,280 related to four properties containing approximately 546,000 rentable square feet that were classified as held for sale as of June 30, 2021.

We recorded a $2,954 loss on impairment of real estate in the 2020 period to reduce the carrying value of four properties to their estimated fair values less costs to sell.

General and administrative.

General and administrative expenses consist of fees pursuant to our business management agreement, equity compensation expense, legal and accounting fees, Trustees’ fees and expenses, securities listing and transfer agency fees and other costs relating to our status as a publicly traded company.

The increase in general and administrative expenses is primarily the result of $5,911 of estimated business management incentive fees recorded in the 2021 period and an increase in base business management fees resulting from an increase in average total market capitalization in the 2021 period compared to the 2020 period, partially offset by the expiration of an office lease in January 2021 for which we were the lessee.

The decrease in general and administrative expenses is primarily the result of the reversal of $6,627 of previously accrued estimated business management incentive fees in the 2021 period and the expiration of an office lease in January 2021 for which we were the lessee, partially offset by an increase in base business management fees resulting from an increase in average total market capitalization in the 2021 period compared to the 2020 period.

Gain on sale of real estate.

Gain on sale of real estate reflects activity related to property sales during the 2021 and 2020 periods.

Gain on sale of real estate for the 2021 period represents a net gain on the sale of three properties.

Interest and other income.

The decrease in interest and other income is primarily due to the June 2020 payoff of a mortgage note receivable in connection with a property we sold in 2016 and lower returns on cash invested in the 2021 period compared to the 2020 period.

Interest and other income reflects interest earned, if any, on cash balances invested.

Interest expense.

The increase in interest expense is primarily due to the issuance of $162,000 of 6.375% senior unsecured notes in June and July 2020, the issuance of $250,000 of our 4.50% senior unsecured notes in September 2020 and the issuance of $300,000 of 2.650% senior unsecured notes in May 2021, partially offset by the redemption of all $310,000 of our 5.875% senior unsecured notes in June 2021, lower interest expense incurred as a result of having a lower average balance outstanding under our revolving credit facility during the 2021 period compared to the 2020 period and the repayment of one mortgage note with a principal balance of $39,635 in August 2020.

The decrease in interest expense is primarily due to lower weighted average interest expense incurred on balances outstanding in the 2021 period as a result of financing activities since July 1, 2020, which included the aggregate redemption or repayment of debt totaling $720,635 with a weighted average interest rate of 4.8% and the aggregate issuance of $1,312,000 of senior unsecured notes with a weighted average interest rate of 3.2%, partially offset by higher interest expense incurred as a result of a higher average outstanding balance under our revolving credit facility during the 2021 period compared to the 2020 period.

Loss on early extinguishment of debt.

We recorded a loss on early extinguishment of debt of $11,794 in the 2021 period from prepayment fees incurred and the write off of unamortized discounts and debt issuance costs associated with the prepayment of one mortgage note and the redemption of our senior unsecured notes due 2046.

In the 2020 period, we recorded a loss on early extinguishment of debt of $557 resulting from a loss on the settlement of a mortgage note receivable related to a property sold in 2016, partially offset by the write off of unamortized premiums associated with the prepayment of a mortgage note.

We recorded a loss on early extinguishment of debt of $2,274 in the 2021 period from prepayment fees incurred and the write off of unamortized discounts associated with the prepayment of our senior unsecured notes due 2022.

Income tax (expense) benefit.

3 unchanged sentences

Net income (loss).

Net income (loss) and net income (loss) per basic and diluted common share decreased in the 2021 period compared to the 2020 period primarily as a result of the changes noted above.

The change in net income (loss) and net income (loss) per basic and diluted common share from 2020 to 2021 is primarily a result of the changes noted above.

RESULTS OF OPERATIONS (amounts in thousands, except per share amounts)

Six Months Ended June 30, 2021, Compared to Six Months Ended June 30, 2020

Nine Months Ended September 30, 2021, Compared to Nine Months Ended September 30, 2020

Comparable Properties (1) Results

Six Months Ended June 30,

Nine Months Ended September 30,

Non-Comparable

Properties Results

Six Months Ended June 30,

Nine Months Ended September 30,

Consolidated Results

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 $ Change % Change 2021 2020 2021 2020 $ Change % Change

23 unchanged sentences

n/m - not meaningful

(1) Comparable properties consists of 168 properties we owned on June 30, 2021 and which we owned continuously since January 1, 2020 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(1) Comparable properties consists of 163 properties we owned on September 30, 2021 and which we owned continuously since January 1, 2020 and excludes properties classified as held for sale and properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests.

(2) Our definition of NOI and our reconciliation of net income (loss) to NOI are included below under the heading “Non-GAAP Financial Measures.”

References to changes in the income and expense categories below relate to the comparison of consolidated results for the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

References to changes in the income and expense categories below relate to the comparison of consolidated results for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020.

Rental income.

The decrease in rental income reflects decreases in rental income of $10,920 related to property disposition activities, $4,242 for properties undergoing significant redevelopment and $1,068 for comparable properties, offset by an increase in rental income of $2,365 for acquired properties.

The decrease in rental income reflects decreases in rental income of $17,798 related to property disposition activities, $8,472 for properties undergoing significant redevelopment and $2,716 for comparable properties, offset by an

increase in rental income of $16,887 for acquired properties.

The decrease in rental income for properties undergoing significant redevelopment is primarily due to the reduction in occupied space at a property located in Washington, D.C.

that began a redevelopment project during the 2021 period.

The decrease in rental income for comparable properties is primarily due to

decreased parking revenue at certain of our properties in the 2021 period due to lower parking activity resulting from the COVID-19 pandemic and reductions in occupied space at certain of our properties in the 2021 period.

Rental income includes non-cash straight line rent adjustments totaling $9,204 in the 2021 period and $9,051 in the 2020 period, and amortization of acquired leases and assumed lease obligations totaling $(1,389) in the 2021 period and $(2,837) in the 2020 period.

The decrease in rental income for comparable properties is primarily due to reductions in occupied space at certain of our properties in the 2021 period.

Rental income includes non-cash straight line rent adjustments totaling $13,128 in the 2021 period and $12,963 in the 2020 period, and amortization of acquired real estate leases and assumed real estate lease obligations totaling $(1,836) in the 2021 period and $(4,149) in the 2020 period.

Real estate taxes.

The decrease in real estate taxes primarily reflects decreases in real estate taxes of $664 related to property disposition activities and $635 for properties undergoing significant redevelopment, offset by increases in real estate taxes of $630 for comparable properties and $147 for acquired properties.

Real estate taxes for comparable properties increased primarily due to refunds received in the 2020 period at certain of our properties as a result of successful real estate tax appeals, as well as the effect of higher real estate tax rates and valuation assessments at certain of our properties in the 2021 period.

The increase in real estate taxes primarily reflects an increase in real estate taxes of $5,992 for acquired properties, offset by decreases in real estate taxes of $1,478 related to property disposition activities, $1,050 for properties undergoing significant redevelopment and $32 for comparable properties.

Utility expenses.

The decrease in utility expenses reflects decreases in utility expenses of $439 related to property disposition activities, $290 for properties undergoing significant redevelopment and $156 for comparable properties, offset by an increase in utility expenses of $239 for acquired properties.

Utility expenses for comparable properties declined primarily due to a decrease in electricity and water usage resulting from cost savings initiatives implemented by our manager, RMR LLC, in response to decreased space utilization at our properties as a result of the COVID-19 pandemic, partially offset by an increase related to utility expenses in the 2021 period previously paid directly by one of our tenants that are now being paid by us pursuant to a lease amendment with that tenant effective in January 2021.

Utility expenses for comparable properties declined primarily due to a decrease in electricity and water usage resulting from cost savings initiatives implemented by our manager, RMR LLC, in response to decreased space utilization at our properties as a result of the COVID-19 pandemic and reductions in occupied space at certain of our properties in the 2021 period, partially offset by an increase related to utility expenses in the 2021 period previously paid directly by one of our tenants that are now being paid by us pursuant to a lease amendment with that tenant effective in January 2021.

Other operating expenses.

The decrease in other operating expenses primarily reflects decreases in other operating expenses of $1,517 related to property disposition activities and $449 for properties undergoing significant redevelopment, offset by increases in other operating expenses of $453 for comparable properties and $183 for acquired properties.

Other operating expenses for comparable properties increased primarily due to higher snow removal and insurance costs in the 2021 period, partially offset by lower parking garage costs due to lower parking activity at certain of our properties resulting from the COVID-19 pandemic and lower cleaning costs resulting from cost savings initiatives implemented by our manager, RMR LLC, in response to decreased space utilization at our properties as a result of the COVID-19 pandemic.

The decrease in other operating expenses primarily reflects decreases in other operating expenses of $2,557 related to property disposition activities and $885 for properties undergoing significant redevelopment, offset by increases in other operating expenses of $2,083 for acquired properties and $200 for comparable properties.

Depreciation and amortization.

2 unchanged sentences

Loss on impairment of real estate.

We recorded a $55,857 loss on impairment of real estate in the 2021 period to reduce the carrying value of six properties to their estimated fair values less costs to sell, which includes $5,371 related to a property in Huntsville, AL containing approximately 1,371,000 rentable square feet that was sold in April 2021, $33,917 related to a property in Fresno, CA containing approximately 532,000 rentable square feet that was sold in July 2021 and $16,569 related to four properties containing approximately 546,000 rentable square feet that were classified as held for sale as of June 30, 2021.

We recorded a $55,854 loss on impairment of real estate in the 2021 period to reduce the carrying value of six properties to their estimated fair values less costs to sell, which includes $45,196 related to three properties containing approximately 2,001 rentable square feet that were sold during the nine months ended September 30, 2021, as well as $10,658 related to three properties containing approximately 448 rentable square feet that were classified as held for sale as of September 30, 2021.

We recorded a $2,954 loss on impairment of real estate in the 2020 period to reduce the carrying value of four properties to their estimated fair values less costs to sell.

General and administrative .

The increase in general and administrative expenses is primarily the result of $11,111 of estimated business management incentive fees recorded in the 2021 period, partially offset by the expiration of an office lease in January 2021 for which we were the lessee, lower accounting and legal costs and a decrease in base business management fees resulting from decreases in our share price in the 2021 period compared to the 2020 period.

The increase in general and administrative expenses is primarily the result of $4,484 of estimated business management incentive fees recorded in the 2021 period and an increase in base business management fees resulting from an increase in average total market capitalization in the 2021 period compared to the 2020 period, partially offset by the expiration of an office lease in January 2021 for which we were the lessee and lower accounting and legal costs.

Gain on sale of real estate.

We recorded a $54,118 net gain on sale of real estate resulting from the sale of two properties during the 2021 period.

We recorded a $54,154 net gain on sale of real estate resulting from the sale of four properties and a warehouse facility adjacent to a property we own during the 2021 period.

We recorded a $10,822 net gain on sale of real estate resulting from the sale of six properties during the 2020 period.

2 unchanged sentences

Interest expense.

The increase in interest expense is primarily due to the issuance of $162,000 of 6.375% senior unsecured notes in June and July 2020, the issuance of $250,000 of our 4.50% senior unsecured notes in September 2020 and the issuance of $300,000 of 2.650% senior unsecured notes in May 2021, partially offset by the redemption of all $310,000 of our 5.875% senior unsecured notes in June 2021, lower interest expense incurred as a result of having a lower average balance outstanding under our revolving credit facility during the 2021 period compared to the 2020 period, lower average interest rates on amounts outstanding and the repayment of four mortgage notes with an aggregate principal balance of $152,187 in 2020.

The increase in interest expense is primarily due to higher average outstanding debt balances in the 2021 period resulting from the aggregate issuance of $1,462,000 of senior unsecured notes with a weighted average interest rate of 3.5% since January 1, 2020, partially offset by the aggregate redemption or repayment of debt totaling $833,187 with a weighted average interest rate of 4.8% since January 1, 2020 and lower interest expense incurred as a result of having a lower average balance outstanding under our revolving credit facility during the 2021 period compared to the 2020 period and lower average interest rates on amounts outstanding.

Loss on early extinguishment of debt.

In the 2020 period, we recorded a loss on early extinguishment of debt of $3,839 from prepayment fees incurred, the write off of unamortized discounts, premiums and debt issuance costs associated with the prepayment of three mortgage notes and a loss on the settlement of a mortgage note receivable related to a property sold in 2016.

We recorded a loss on early extinguishment of debt of $14,068 in the 2021 period from prepayment fees incurred and the write off of unamortized discounts and debt issuance costs associated with the prepayment of one mortgage note and the redemption of our senior unsecured notes due 2022 and 2046.

In the 2020 period, we

recorded a loss on early extinguishment of debt of $3,839 from prepayment fees incurred, the write off of unamortized discounts, premiums and debt issuance costs associated with the prepayment of three mortgage notes and a loss on the settlement of a mortgage note receivable related to a property sold in 2016.

Income tax expense.

17 unchanged sentences

Other real estate companies and REITs may calculate NOI differently than we do.

The following table presents the reconciliation of net income (loss) to NOI for the three and six months ended June 30, 2021 and 2020.

Three Months Ended June 30, Six Months Ended June 30,

The following table presents the reconciliation of net income (loss) to NOI for the three and nine months ended September 30, 2021 and 2020.

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

2 unchanged sentences

Income tax expense (benefit) 34 (54) 348 220

Income before income tax expense (benefit) and equity in net losses of investees (66,238) 1,794 (27,547) 12,949

Income (loss) before income tax expense (benefit) and equity in net losses of investees 4,434 (3,572) (23,113) 9,377

Loss on early extinguishment of debt 2,274 — 14,068 3,839

13 unchanged sentences

Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do.

The following table presents the reconciliation of net income (loss) to FFO and Normalized FFO for the three and six months ended June 30, 2021 and 2020.

Three Months Ended June 30, Six Months Ended June 30,

The following table presents the reconciliation of net income (loss) to FFO and Normalized FFO for the three and nine months ended September 30, 2021 and 2020.

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

9 unchanged sentences

Normalized FFO $ 59,598 $ 62,628 $ 176,792 $ 197,375

Weighted average common shares outstanding (basic and diluted) 48,165 48,106 48,163 48,101

Weighted average common shares outstanding (basic) 48,211 48,132 48,179 48,111

Weighted average common shares outstanding (diluted) 48,244 48,132 48,179 48,111

FFO per common share (basic and diluted) $ 1.33 $ 1.30 $ 3.28 $ 4.02

12 unchanged sentences

• our ability to purchase additional properties which produce cash flows from operations in excess of our cost of acquisition capital and property operating and capital expenses.

On July 15, 2021, we announced a regular quarterly cash distribution of $0.55 per common share ($2.20 per common share per year).

On October 14, 2021, we announced a regular quarterly cash distribution of $0.55 per common share ($2.20 per common share per year).

We determine our distribution payout ratio with consideration for our expected capital expenditures as well as cash flows from operations and debt obligations.

We expect to accretively grow our property portfolio through our capital recycling program, pursuant to which we plan to sell certain properties from time to time to fund future acquisitions and to maintain leverage consistent with our current investment grade ratings with a goal of (1) improving the asset quality of our portfolio by reducing the average age of our properties, lengthening the weighted average term of our leases and increasing the likelihood of retaining our tenants and (2) increasing our cash available for distribution.

During the six months ended June 30, 2021 , we acquired two properties for an aggregate purchase price of $550,000, excluding purchase price adjustments and acquisition related costs, and we sold two properties and a warehouse facility adjacent to a property we own for an aggregate sales price of $169,845, excluding closing costs.

Since July 1, 2021, we have sold two properties for an aggregate sales price of $6,650 , excluding closing costs.

In addition, we have entered into an agreement to sell one property for a sales price of $15,270, excluding closing costs, and entered into an agreement to acquire a property adjacent to a property we own in Boston, MA for $26,975, excluding acquisition related costs.

During the nine months ended September 30, 2021, we acquired three properties for an aggregate purchase price of $576,975, excluding purchase price adjustments and acquisition related costs, and we sold six properties and a warehouse facility adjacent to a property we own for an aggregate sales price of $198,415, excluding closing costs.

In October 2021, we sold two vacant land parcels adjacent to properties we own located in Sterling, VA for a sales price of $28,500, excluding closing costs.

As of October 27, 2021, we have also entered into an agreement to sell five properties located in Brookhaven, GA for a sales price of $56,000, excluding closing costs.

In addition, we are currently marketing for sale 17 properties containing approximately 2,161,000 rentable square feet that we expect to generate approximately $200,000 of gross proceeds.

We expect to substantially complete these dispositions by mid-year 2022.

Given the current economic conditions, we continue to carefully consider our capital allocation strategy and believe we are well positioned to opportunistically recycle and deploy capital.

2 unchanged sentences

The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our condensed consolidated statements of cash flows:

Six Months Ended June 30,

Nine Months Ended September 30,

Cash, cash equivalents and restricted cash at beginning of period $ 56,855 $ 100,696

4 unchanged sentences

Cash, cash equivalents and restricted cash at end of period $ 56,020 $ 57,639

The increase in cash provided by operating activities for the 2021 period compared to the 2020 period was a result of favorable changes in working capital in the 2021 period compared to the 2020 period, partially offset by a decline in NOI as a result of property sales.

The decrease in cash provided by operating activities for the 2021 period compared to the 2020 period was primarily a result of a decline in NOI as a result of property sales in the 2021 period compared to the 2020 period.

The increase in cash used in investing activities in the 2021 period compared to the 2020 period is primarily due to higher acquisition activity in the 2021 period compared to the 2020 period, partially offset by higher cash proceeds from our sales of properties.

The increase in cash provided by financing activities in the 2021 period compared to the 2020 period is primarily due to the issuance of $300,000 of 2.650% senior unsecured notes due 2026 and net borrowing activity under our revolving credit facility to fund acquisition activity in the 2021 period, partially offset by the redemption of our 5.875% senior unsecured notes due 2046, compared to net debt repayment activity in the 2020 period that included the redemption of all $400,000 of our 3.60% senior unsecured notes due 2020 and the repayment of mortgage notes totaling approximately $113,000, which was partially offset by the issuance of $162,000 of 6.375% senior unsecured notes due 2050 and borrowings under our revolving credit facility to facilitate certain of these repayments.

The increase in cash provided by financing activities in the 2021 period compared to the 2020 period is primarily due to the aggregate issuance of $1,050,000 of senior unsecured notes in the 2021 period compared to $412,000 of such issuances in the 2020 period, partially offset by higher debt repayment activity in the 2021 period, which included the aggregate redemption of $610,000 of senior unsecured notes and the repayment of $71,000 of mortgage debt.

Our Investment and Financing Liquidity and Resources (dollar amounts in thousands, except per share amounts)

2 unchanged sentences

We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity.

We are required to pay interest at a rate of LIBOR plus a premium, which was 110 basis points per annum at June 30, 2021, on the amount outstanding under our revolving credit facility, if any.

We also pay a facility fee on the total amount of

lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2021.

We are required to pay interest at a rate of LIBOR plus a premium, which was 110 basis points per annum at September 30, 2021, on the amount outstanding under our revolving credit facility, if any.

We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at September 30,

Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings.

As of June 30, 2021, the annual interest rate payable on borrowings under our revolving credit facility was 1.2%.

As of June 30, 2021 and July 28, 2021, we had $385,000 and $380,000, respectively, outstanding under our revolving credit facility, and $365,000 and $370,000, respectively, available for borrowing.

As of September 30, 2021, the annual interest rate payable on borrowings under our revolving credit facility was 1.2%.

As of September 30, 2021 and October 27, 2021, we had no amounts outstanding under our revolving credit facility and $750,000 available for borrowing.

Our credit agreement includes a feature under which the maximum borrowing availability may be increased to up to $1,950,000 in certain circumstances.

Our credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under our $750,000 revolving credit facility only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in our credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Senior Unsecured Note Issuances

In May 2021, we issued $300,000 of 2.650% senior unsecured notes due 2026 in an underwritten public offering, raising net proceeds of $296,826, after deducting underwriters’ discounts and offering expenses.

We used the net proceeds from this offering to redeem all $310,000 of our 5.875% senior unsecured notes due 2046.

These notes require semi-annual payments of interest only through maturity on June 15, 2026 and may be repaid at par plus accrued and unpaid interest on or after May 15, 2026.

We used the net proceeds from this offering to redeem all $300,000 of our 4.15% senior unsecured notes due 2022, repay amounts outstanding under our revolving credit facility and for general business purposes.

These notes require semi-annual payments of interest only through maturity on February 1, 2027 and may be repaid at par plus accrued and unpaid interest on or after January 1, 2027.

We used the net proceeds of this offering to repay amounts outstanding under our revolving credit facility and for general business purposes.

These notes require semi-annual payments of interest only through maturity on October 15, 2031 and may be repaid at par plus accrued and unpaid interest on or after July 15, 2031.

Senior Unsecured Note Redemptions

As of June 30, 2021, our debt maturities (other than our revolving credit facility), consisting of senior unsecured notes and mortgage notes, are as follows:

Mortgage Note Repayment

As of September 30, 2021, our debt maturities (other than our revolving credit facility), consisting of senior unsecured notes and mortgage notes, are as follows:

Year Debt Maturities

3 unchanged sentences

Our $98,604 in mortgage debts generally require monthly payments of principal and interest through maturity.

In addition to our debt obligations, as of June 30, 2021, we have estimated unspent leasing related obligations of $113,099, of which we expect to spend $67,272 over the next 12 months.

In addition to our debt obligations, as of September 30, 2021, we have estimated unspent leasing related obligations of $129,369, of which we expect to spend $69,248 over the next 12 months.

We are currently in the process of redeveloping a property located in Washington, D.C.

We currently estimate the total project costs associated with this redevelopment will be approximately $200,000 and completion of the redevelopment in the first quarter of 2023.

As of June 30, 2021, we have incurred approximately $14,700 related to this project.

As of September 30, 2021, we have incurred approximately $25,800 related to this project.

In June 2021, we entered into a 30-year lease for approximately 230,000 rentable square feet at this property that is approximately 25.1% higher than the prior rental rate for the same space, making the redevelopment project 54% pre-leased.

14 unchanged sentences

Further, such conditions could also disrupt capital markets and limit our access to financing from public sources.

During the six months ended June 30, 2021, we paid quarterly distributions to our shareholders totaling $53,150 using cash on hand.

On July 15, 2021, we declared a regular quarterly distribution payable to shareholders of record on July 26, 2021 of $0.55 per share, or approximately $26,600.

We expect to pay this distribution on or about August 19, 2021 using cash on hand and borrowings under our revolving credit facility.

During the nine months ended September 30, 2021, we paid quarterly distributions to our shareholders totaling $79,734 using cash on hand.

On October 14, 2021, we declared a regular quarterly distribution payable to shareholders of record on October 25, 2021 of $0.55 per share, or approximately $26,600.

We expect to pay this distribution on or about November 18, 2021 using cash on hand.

For more information regarding the distributions we paid and declared during 2021, see Note 8 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

1 unchanged sentence

The properties owned by these joint ventures are encumbered by an aggregate $82,000 principal amount of mortgage indebtedness, none of which is recourse to us.

We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investments in these joint ventures under the equity method of accounting.

We do not control the activities that are most significant to these joint ventures and, as a result, we account for

our investments in these joint ventures under the equity method of accounting.

For more information on the financial condition and results of operations of these joint ventures, see Note 3 to the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Other than these joint ventures, as of June 30, 2021, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Other than these joint ventures, as of September 30, 2021, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Government Funding

government recently increased its debt ceiling, which the U.S.

Department of the Treasury has stated will provide the U.S.

Government with sufficient funding to pay its obligations through December 3, 2021.

It is uncertain whether the U.S.

government will further increase its debt ceiling.

If it does not, and does not find other means to sufficiently fund its obligations, the U.S.

government could default on its debts or other obligations, which could potentially include its rent owed to us.

Debt Covenants (dollars in thousands)

Our principal debt obligations at June 30, 2021 consisted of $385,000 of outstanding borrowings under our $750,000 unsecured revolving credit facility, an aggregate outstanding principal balance of $2,062,000 of public issuances of senior unsecured notes and mortgage notes with an aggregate outstanding principal balance of $98,903, that were assumed in connection with certain of our acquisitions.

Our principal debt obligations at September 30, 2021 consisted of an aggregate outstanding principal balance of $2,512,000 of public issuances of senior unsecured notes and mortgage notes with an aggregate outstanding principal balance of $98,604, that were assumed in connection with certain of our acquisitions.

Also, the three properties owned by two joint ventures in which we own 51% and 50% interests secure two additional mortgage notes.

2 unchanged sentences

Our credit agreement and our senior unsecured notes indentures and their supplements also contain a number of covenants, including those that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to make distributions to our shareholders under certain circumstances.

As of June 30, 2021, we believe we were in compliance with the terms and conditions of our respective covenants under our credit agreement and senior unsecured notes indentures and their supplements.

As of September 30, 2021, we believe we were in compliance with the terms and conditions of our respective covenants under our credit agreement and senior unsecured notes indentures and their supplements.

Our mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants.

11 unchanged sentences

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis