eqc-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-9317

EQUITY COMMONWEALTH

(Exact name of registrant as specified in its charter)


Maryland						04-6558834
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

Two North Riverside Plaza, Suite 2000, Chicago, IL						60606
(Address of principal executive offices)						(Zip Code)
(312) 646-2800
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title Of Each Class

Trading Symbol

Name of Each Exchange On Which Registered

Common Shares of Beneficial Interest

EQC

The New York Stock Exchange

6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest

EQCpD

The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Number of registrant’s common shares of beneficial interest, $0.01 par value per share, outstanding as of October 18, 2024: 107,334,031.

Table of Contents

EQUITY COMMONWEALTH

FORM 10-Q

September 30, 2024

INDEX


		Page

PART I	Financial Information

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations	2

	Condensed Consolidated Statements of Equity	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II	Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 1B.	Unresolved Staff Comments	27

Item 1C.	Cybersecurity	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

	Signatures	29

Table of Contents

EXPLANATORY NOTE

References in this Quarterly Report on Form 10-Q to the “Company,” “EQC,” “we,” “us” or “our,” refer to Equity Commonwealth and its consolidated subsidiaries as of September 30, 2024, unless the context indicates otherwise.

Table of Contents

PART I. Financial Information

Item 1. Financial Statements.

EQUITY COMMONWEALTH

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(unaudited)


	September 30, 2024		December 31, 2023
			(audited)
ASSETS
Real estate properties:
Land	$	22,400	$	44,060
Buildings and improvements	158,152		367,827
	180,552		411,887
Accumulated depreciation	(69,254)		(180,535)
	111,298		231,352
Assets held for sale	86,803		—

Cash and cash equivalents	2,225,150		2,160,535


Rents receivable	8,046		15,737
Other assets, net	9,833		17,417
Total assets	$	2,441,130	$	2,425,041

LIABILITIES AND EQUITY


Liabilities related to properties held for sale	$	6,200	$	—
Accounts payable, accrued expenses and other	17,621		27,298

Rent collected in advance	1,324		1,990

Distributions payable	2,803		5,640
Total liabilities	27,948		34,928

Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized;
Series D preferred shares; 6.50% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880	119,263		119,263
Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 107,327,691 and 106,847,438 shares issued and outstanding, respectively	1,073		1,068
Additional paid in capital	3,942,389		3,935,873
Cumulative net income	3,950,345		3,926,979

Cumulative common distributions	(4,863,688)		(4,864,440)
Cumulative preferred distributions	(739,667)		(733,676)
Total shareholders’ equity	2,409,715		2,385,067
Noncontrolling interest	3,467		5,046
Total equity	2,413,182		2,390,113
Total liabilities and equity	$	2,441,130	$	2,425,041

See accompanying notes.

Table of Contents

EQUITY COMMONWEALTH

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Rental revenue	$	12,782	$	13,928	$	39,491	$	41,512
Other revenue	1,206		1,284		3,796		3,866
Total revenues	13,988		15,212		43,287		45,378
Expenses:
Operating expenses	6,863		6,722		20,118		20,920
Depreciation and amortization	4,214		4,436		12,753		13,260
General and administrative	8,886		7,061		25,565		29,470
Loss on asset impairment	50,226		—		50,226		—
Total expenses	70,189		18,219		108,662		63,650
Interest and other income, net	29,996		29,269		89,278		84,997




(Loss) income before income taxes	(26,205)		26,262		23,903		66,725
Income tax expense	(22)		(30)		(486)		(1,906)
Net (loss) income	(26,227)		26,232		23,417		64,819
Net loss (income) attributable to noncontrolling interest	38		(86)		(51)		(204)
Net (loss) income attributable to Equity Commonwealth	(26,189)		26,146		23,366		64,615
Preferred distributions	(1,997)		(1,997)		(5,991)		(5,991)


Net (loss) income attributable to Equity Commonwealth common shareholders	$	(28,186)	$	24,149	$	17,375	$	58,624



Weighted average common shares outstanding — basic	107,456		108,931		107,363		109,494
Weighted average common shares outstanding — diluted	107,456		110,217		108,391		110,916
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic	$	(0.26)	$	0.22	$	0.16	$	0.54
Diluted	$	(0.26)	$	0.22	$	0.16	$	0.53

Distributions declared per common share	$	—	$	—	$	—	$	4.25

See accompanying notes.

Table of Contents

EQUITY COMMONWEALTH

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(amounts in thousands, except share data)

(unaudited)


	Equity Commonwealth Shareholders
	Number of Series D Preferred Shares	Series D Preferred Shares		Number of Common Shares	Common Shares		Additional Paid in Capital		Cumulative Net Income		Cumulative Common Distributions		Cumulative Preferred Distributions		Noncontrolling Interest		Total
Balance at July 1, 2024	4,915,196	$	119,263	107,327,691	$	1,073	$	3,939,583	$	3,976,534	$	(4,864,499)	$	(737,670)	$	3,503	$	2,437,787
Net loss	—	—		—	—		—		(26,189)		—		—		(38)		(26,227)


Share-based compensation	—	—		—	—		2,705		—		—		—		53		2,758

Distributions	—	—		—	—		—		—		811		(1,997)		50		(1,136)

Adjustment for noncontrolling interest	—	—		—	—		101		—		—		—		(101)		—
Balance at September 30, 2024	4,915,196	$	119,263	107,327,691	$	1,073	$	3,942,389	$	3,950,345	$	(4,863,688)	$	(739,667)	$	3,467	$	2,413,182

Balance at January 1, 2024	4,915,196	$	119,263	106,847,438	$	1,068	$	3,935,873	$	3,926,979	$	(4,864,440)	$	(733,676)	$	5,046	$	2,390,113

Net income	—	—		—	—		—		23,366		—		—		51		23,417



Surrender of shares for tax withholding	—	—		(161,837)	(2)		(3,054)		—		—		—		—		(3,056)
Share-based compensation	—	—		564,297	6		7,787		—		—		—		154		7,947

Distributions	—	—		—	—		—		—		752		(5,991)		—		(5,239)
OP Unit redemption	—	—		77,793	1		1,443		—		—		—		(1,444)		—
Adjustment for noncontrolling interest	—	—		—	—		340		—		—		—		(340)		—
Balance at September 30, 2024	4,915,196	$	119,263	107,327,691

SEC Form 10-Q filed by Equity Commonwealth