Author Topic: EQC - Equity Commonwealth  (Read 27147 times)

thepupil

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Re: EQC - Equity Commonwealth
« Reply #50 on: October 05, 2017, 07:53:22 AM »
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Item 7.01 Regulation FD Disclosure

Equity Commonwealth (the “Company”) currently has seven properties totaling 4.7 million square feet in various stages of the sale process. This includes the preliminary evaluation of the sales of 600 West Chicago Avenue in Chicago, Illinois and 1600 Market Street in Philadelphia, Pennsylvania. There is no assurance that any transactions will be completed.
The information disclosed in this Item 7.01 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. In addition, the information in this Item 7.01disclosure shall not be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing


EQC quietly dropping a reg FD 8-K with no press release that they are exploring selling their 1st and 5th largest building and 40% of the remaining square footage.

Pretty surprised to see that they'd sell their flagship (600 West Chicago Avenue). Selling that building would make this even more of an opportunity fund and liquidation rather than a company with earning assets (aren't there REIT rules about what % can be liquidated in a given year?).

Those 2 buildings are 1/4 of annualized rent.



thepupil

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Re: EQC - Equity Commonwealth
« Reply #51 on: November 13, 2017, 03:07:03 PM »
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After selling off nearly $5 billion in property, Sam Zell's office company may have found a deal that will make the company bigger—a lot bigger.

Equity Commonwealth, a Chicago-based landlord whose chairman is Zell, has approached Forest City Realty Trust to discuss a possible merger, according to Reuters. A tie-up would create a company worth more than $10 billion, with a portfolio of office and apartment buildings across the country.



Cleveland-based Forest City is considering an all-stock merger with Equity Commonwealth as part of a process to explore strategic alternatives, including a sale of the company, Reuters reported. Equity Commonwealth, meanwhile, has been on the prowl for a big, transformational deal after amassing a war chest through the sale of dozens of office buildings. The real estate investment trust isn't limiting its hunt to the office market.

Equity Commonwealth and Forest City executives did not immediately return phone calls.


Equity Commonwealth is pursuing a big acquisition about a decade after Zell's most famous real estate deal, the $39 billion sale of Equity Office Properties Trust, where he also was chairman. The company's timing was good: The real estate market and economy crashed about a year later.

Zell got back into the office market in a big way about three years ago when he and his longtime associate David Helfand teamed up with an investor group to take over Equity Commonwealth, then known as Commonwealth REIT. They changed the company's name and moved its headquarters from Newton, Mass. to the same Chicago office building where Zell's two other REITs, Equity Residential and Equity LifeStyle Properties, are based.

SHRINKING​ FIRM

The company has been shrinking since then, capitalizing on the strong office market by selling buildings to investors willing to pay up. Equity Commonwealth recently put its last two Chicago properties, the Groupon headquarters building at 600 W. Chicago Ave. and Triangle Plaza near O'Hare International Airport, up for sale. The REIT currently owns 20 properties totaling 11 million square feet and has a market capitalization of $3.8 billion.

Equity Commonwealth will sell off its entire portfolio if it can't find a good place to invest the cash from the sales. But that's not its preferred option.

"We have confidence in the team we've put together here. We have capacity," Helfand, the REIT's president and CEO, said on a recent conference call with analysts, according to a transcript. "The piece we can't control necessarily is the market and our ability to find a deal. But we are working hard, looking at a number of things and hopeful that we could find a deal that we think we can create value and drive opportunity and apply the team and the capital to it."

Equity Commonwealth shares were little changed in midday trading, at $30.43. Including dividends, the shares have returned 20.4 percent since Zell and Helfand took charge of the company in 2014, vs. 22.1 percent for the Bloomberg REIT Office Property Index.

Forest City is a bigger company, with a market capitalization of $6.7 billion. The REIT has been reshaping its portfolio, exiting hotel and retail markets and selling off military housing. It recently announced a deal to sell stakes in 10 regional malls around the country.

Forest City aims to focus on just two property types—office and apartments—down from 11 in 2011. Under pressure from an activist investor, the REIT in September said it planned to review its strategic options, including a possible sale of the company.

Forest City may be best known in Chicago for its involvement in the massive Central Station development in the South Loop. The REIT's current local investments include apartment and senior housing buildings in the South Loop, and the Pavilion, an 1,114-unit multifamily complex near O'Hare International Airport. Forest City also owned the Illinois Science & Technology Park in Skokie, selling it in January for $77 million.

Rumors of merger with FCE. This merger (if it happens) makes a ton of sense, in my opinion.

thepupil

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Re: EQC - Equity Commonwealth
« Reply #52 on: December 17, 2017, 01:49:24 PM »
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As Sterling Bay vies to bring Amazon's second headquarters to a new campus it's planning for Chicago's North Side, it's closing in on a deal to buy a more established office hub downtown.

The developer is finalizing an agreement to buy the former Montgomery Ward catalog building at 600 W. Chicago Ave. from Chicago-based Equity Commonwealth, according to sources close to negotiations.

The deal has not been completed, but Sterling Bay is believed to have edged out other potential buyers including New York-based investor Blackstone Group to acquire the 1.65 million-square-foot building along the Chicago River for more than $500 million, a source said.

That price would be far more than the $390 million that Equity Commonwealth, the Chicago-based real estate investment trust run by real estate magnate Sam Zell, paid for the building in 2011.

The deal would be in line with the recent strategies for both the buyer and seller: Sterling Bay's continued expansion and Zell's exit from the Chicago office market.

In 600 W. Chicago, Sterling Bay would be taking over a stabilized, high-profile building 95 percent leased to companies including Groupon, Echo Global Logistics, Wm. Wrigley Jr. and venture fund Lightbank, among others.

It's a signal that the fast-growing developer is putting more of its chips on well-established trophy buildings rather than the office redevelopments on which it has built its reputation. Sterling Bay is also finalizing one of its largest acquisitions to date with a $680 million purchase of Prudential Plaza.

Buying such income-generating properties could provide reliable revenue streams for Sterling Bay as it works on putting the land and other pieces together for Lincoln Yards, the 30-acre mixed-use campus it is planning along the North Branch of the Chicago River. That project on the former Finkl steel site is one of 10 sites the city of Chicago submitted to Amazon as a potential destination for its proposed $5 billion second headquarters.

For Zell, selling 600 W. Chicago would add to the enormous war chest his Equity Commonwealth REIT has built from unloading properties in recent years.

Since he took over as chairman in 2014, the REIT has amassed close to $2 billion in cash primarily from selling off scores of properties, leading to rampant speculation about the timing and nature of its next move. The company has whittled its portfolio down to 20 properties as of the end of the third quarter from 156 it held three years ago.

Once it finalizes the sale of 600 W. Chicago, its lone remaining property in the city will be the Triangle Plaza complex near O'Hare Airport, which it's also planning to put on the market.

Spokeswomen for Sterling Bay and Equity Commonwealth could not be reached.

Selling Groupon's headquarters comes with the area around the building poised for a radical overhaul.

Across the river, a joint venture of developer John O'Donnell and Tribune Media recently unveiled plans to build a mixed-use complex including three office buildings and a 310-unit residential tower.

Those would fit into a larger development Tribune Media has planned for its 30-acre riverside parcel between Grand and Chicago avenues, where it has proposed the River District, a sprawling mixed-use plan featuring more than a dozen new buildings and 9 million square feet of commercial and residential space. That site, though also included in the city's Amazon bid, still has many major hurdles to clear before it could become reality.

https://www.chicagobusiness.com/realestate/20171212/CRED03/171219974/sam-zell-selling-groupon-headquarters-to-sterling-bay

This should take cash per share from ~$20 --> $24-$25 and gross levered (~51% LTV) real estate per share to $6-$7.

this is more and more becoming a Sam Zell SPAC, but it isn't really at a discount. Even if you thought everything else was worth 1.3x gross book that would only add ~$3 / share to NAV and get you to like $33/$34. So it's more or less trading at NAV, unless you are super bearish/bullish of CRE.

A stock for stock merger with FCE would be good for both in that it'd de-lever FCE immediately by about 3x, re-lever EQC and give the Equity team a big asset base to work with.
« Last Edit: December 17, 2017, 01:58:24 PM by thepupil »

CorpRaider

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Re: EQC - Equity Commonwealth
« Reply #53 on: December 18, 2017, 03:30:15 PM »
Thanks.  Agree.  Very meh around $30.

thepupil

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Re: EQC - Equity Commonwealth
« Reply #54 on: January 26, 2018, 11:09:08 AM »
this is a a bit like updating the speed at which the paint is drying, but EQC announced the sale of two big buildings: the groupon builidng (600 west chicago) and 1600 Market in Philly. In both cases, EQC spent lots of money and time improving the tenant roster and the lease profile and sold the buildings for substantial premiums to gross book value.

I calculate gross cash per share to be $26.30 and net cash to be $18.50.

If we put all the debt against the remaining buildings, they'd be about 68% LTV which is too high.

50% LTV gets you to $5.72 per share in levered buildings and $24.2 in net cash.

The price has fallen such that this trades at 99% of NAV. Note that I do not do a detailed building by building NAV, but rather use gross book as a proxy which has been right enough thus far.

To repeat, EQC represents a SPAC like security with low absolute downside and optionality to some sort of deal. Risks of underperformance and opportunity costs are high, but risk of permanent impairment of capital is low.

EDIT: With the redemption of the 5 3/4% of 2042 (which were callable), that brings the buildings LTV to 50%. So $24.2 (81% of market cap) in cash and $5.72 (19% of market cap) in 50% LTV buildings.


« Last Edit: January 31, 2018, 06:57:54 AM by thepupil »

CorpRaider

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Re: EQC - Equity Commonwealth
« Reply #55 on: May 09, 2018, 05:22:56 AM »
Did you listen to the call yet?  Seems like the speculation that some of the securities on the balance sheet were in another REIT with whom they were negotiating a potential transaction was correct.  They were buyers of EQC stock during the quarter at average price of ~29.60, if memory serves.
« Last Edit: May 09, 2018, 05:24:53 AM by CorpRaider »

thepupil

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Re: EQC - Equity Commonwealth
« Reply #56 on: May 09, 2018, 06:27:56 AM »
The fact pattern stated in the call, along with the rumor of a potential merger w/ Forest City, fits that they were buyers of FCE in 1Q 2017. FCE averaged $22 and hit as low as $20.4. It ended the year at $24.1 and then averaged $22.2 in Q1.

So my guess is, they bought some FCE in Q1 2017 as it dropped, and then exited in Q1 2018 when they wouldn't be moving forward with a sale upon conclusion of strategic review.

FCE announced they had a lot of bidders  and the winner was in the $25-$26 range with some contingincies. Brookfield was also a rumoured buyer and I'm sure BX was in the mix.

Just speculation on my part based on rumor and FCE stock moves in line with how the position moved on EQC's balance sheet.

As I said earlier, I wish that merger happened (since I own both and believe this would've been good for both). I view EQC's rumoured interest and the winning bidder being @ $25 (as well as the company's continued simplification/de-leveraging) as decent qualification for a small slug of FCE in my real estate basket.

thepupil

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Re: EQC - Equity Commonwealth
« Reply #57 on: January 30, 2019, 01:56:16 PM »
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CHICAGO--(BUSINESS WIRE)-- Equity Commonwealth (EQC) announced today it is under contract to sell 1735 Market Street, a 1.3 million square foot office property, in Philadelphia, Pennsylvania, for a gross sale price of $451.6 million. Proceeds after credits for capital costs, contractual lease costs, and rent abatements are expected to be approximately $435.6 million.

Pursuant to the sale agreement, including the buyer’s extension right, the closing is expected to occur on or before March 27, 2019, unless another date is mutually agreed by the parties. This transaction is subject to various customary closing conditions, and there is no certainty that this transaction will close.

During the quarter ended December 31, 2018, the company sold 97 Newberry, a 289,000 square foot industrial property, in East Windsor, Connecticut, for a gross sale price of $7.1 million.

About Equity Commonwealth

Equity Commonwealth is a Chicago based, internally managed and self-advised real estate investment trust (REIT) with commercial office properties throughout the United States. As of December 31, 2018, EQC’s portfolio comprised 10 properties and 5.1 million square feet.

Regulation FD Disclosures

We intend to use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the company to monitor these distribution channels for material disclosures.

Forward-Looking Statements

Some of the statements contained in this press release constitute forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding consummating asset sales. Any forward-looking statements contained in this press release are intended to be made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

The forward-looking statements contained in this press release reflect the company’s current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause the company’s actual results to differ significantly from those expressed in any forward-looking statement. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all).

While forward-looking statements reflect the company’s good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company’s most recent Annual Report on Form 10-K and in the company’s Quarterly Reports on Form 10-Q for subsequent quarters.

https://cts.businesswire.com/ct/CT?id=bwnews&sty=20190130005766r1&sid=acqr7&distro=nx&lang=en

View source version on businesswire.com: https://www.businesswire.com/news/home/20190130005766/en/

Sarah Byrnes, Investor Relations
(312) 646-2801
www.eqcre.com

Source: Equity Commonwealth

Copyright Business Wire 201

Another major de-risking event. Equity Commonwealth sells its largest building and last building in Philly for $430 million. Gross book of $327 million, net book of $194 million.

REIT rules will require the gain (from their tax basis, not the GAAP book or undepreciated book) to be distributed as a dividend since EQC ran out of NOL's, probably will be like 3-5% or so of market cap.

Here's a recent VIC thesis that gets to NAV of $34.5 - $36 w/ some optionality. Seems like he was plugging in the rumoured $500mm for Philly building, so maybe chop off 50 cents.

https://www.valueinvestorsclub.com/idea/EQUITY_COMMONWEALTH/1215679567

it hasn't been exciting for a while but just updating on the sale of the biggest asset.

Been about 5 yrs from beginning of thread
5 yr: 7.2% / year versus REIT index (8.6%) and S&P (8.5%)
3 yr: 5.5% / year versus REIT index (4.3%) and S&P (9.3%)
1 yr: 6.7% / year versys REIT indec (-4.6%) and S&P (-4.4%)

Overall, I think this has been a safe way to make an okay rate of return, but has been longer in duration than expected. If one cash-adjusted (risk adjusted) the above, the results would be far better. As non-volatile as the stock has been, it has offered great trading opportunities with the huge portion of the market cap that is cash (like when the VIC article was written). In the end though, it hasn't killed it.



« Last Edit: January 30, 2019, 02:05:04 PM by thepupil »

thepupil

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Re: EQC - Equity Commonwealth
« Reply #58 on: September 24, 2019, 01:32:36 PM »
sold this a while back.

Just updating for the recent distribution.

world's most boring stock. thread started almost 6 years ago at $23, has since paid out an updated $6 of divvies and will have a pro-forma stock price of $30 with NAV a couple bucks higher.



Equity Commonwealth Declares Special Cash Distribution of $3.50 Per Common Share
Business Wire
CHICAGO -- September 24, 2019
Equity Commonwealth (NYSE: EQC) announced today that its Board of Trustees has declared a special, one-time cash distribution of $3.50 per common share which will be paid on October 23, 2019 to shareholders of record on October 7, 2019.
The company currently expects the tax character of the distribution on the common shares during 2019 to be approximately half ordinary income and approximately half capital gain dividend. The company cannot provide any assurances that its current expectations will prove to be accurate. The actual tax characterization will be based on the company’s results of operations for the full year 2019. The company currently expects to announce the tax characterization of the 2019 distribution with its normal tax reporting in January 2020.