Q4 2024 Equity Commonwealth Earnings Call

Operator: Good afternoon and thanks for joining this call to discuss Equity Commonwealth's progress for the year ended December 31st, 2024, and an update on the wind down process. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If you'd like to ask a question, please press star 1 on your telephone. Any confirmation, tell them to indicate your line is in the question. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing.

Good afternoon, and thanks for joining this call to discuss equity Commonwealth's progress for the year ended December 31st 2024, and an update on the wind down process.

Speaker Change: At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

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Speaker Change: Yeah.

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Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone.

Operator: As a reminder, this conference is being Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the Federal Security Law. Please refer to the section titled Forward Look and Statements in the press release issued yesterday as well as the section titled Risk Factors in the Company's Annual Report on Form 1010. quarterly reports on Form 10-2 for subsequent quarters, and in our definitive process statement on Schedule 14-A, filed on October 2nd, 2024, for a discussion of factors that could cause the company's actual results to materially differ from any forward-looking statements.

Speaker Change: Please be advised that certain matters discussed during this conference call may constitute forward looking statements within the meaning of the federal security laws. Please.

Please refer to the section titled forward looking statements in the press release issued yesterday as well as the section titled risk factors in the company.

Speaker Change: On Form 10-K quarterly parts on Form 10-Q for subsequent quarters and in our definitive proxy.

On schedule 14, a filed on October 2nd 'twenty 'twenty four for a discussion of factors that could cause the company's actual results to materially differ from any forward looking statements.

Operator: The company assumes no obligation to update or supplement any forward-looking statements made.

Speaker Change: The company assumes no obligation to update or supplement any forward looking statements made today.

Operator: The company posts important information on its website at www.eqdre.com, including information that may be helpful.

Speaker Change: The company post important information on its website at W. W. W. E. Q D. R E dot com, including information that may be material.

Operator: On the call today are David Helfand, President and CEO, David Weinberg, COO, and Bill Griffiths, CFO. With that, I'll turn the call over to Bill. Thanks. Good morning, everyone. Good afternoon, everyone. Thanks for joining us.

Speaker Change: On the call today are David Helfand, President and CEO, David Weinberg, COO and Bill Griffith CFO with that I'll turn the call over to Bill Griffiths.

Bill Griffith: Thanks, Good morning, everyone.

Bill Griffith: Good afternoon, everyone. Thanks for joining us I'll review, the company's progress for the year as well as provide an update on our wind down process. We are excited to announce that the sale of 12 25, 17th Street Plaza in Denver closed this past Tuesday February 25th the.

Bill Griffiths: I'll review the company's progress for the year, as well as provide an update on our wind-down process. We are excited to announce that the sale of 1225 17th Street Plaza in Denver closed this past Tuesday, February 25th. The gross sale price was $132.5 million and the net purchase price was approximately $124.4 million after credits primarily for contractual lease costs. With this sale completed, we have successfully executed on the sale of all of the company's real estate assets. Since taking responsibility for EQC in 2014, we have sold over $7.9 billion in assets. disposing of 168 properties and 3 land parcels totaling 45.8 million square feet for an aggregate gross sales price of $7.2 billion, as well as $704.8 million of common shares of select income REITs.

Bill Griffith: The gross sale price was $132 $5 million and the net purchase price was approximately $124 4 million after credits primarily for contractual lease costs.

With this sale completed we have successfully executed on the sale of all of the company's real estate assets.

Taking responsibility for EQT in 2014, we have sold over seven $9 billion in assets disposing of 168 properties and three land parcels totaling $45 8 million square feet for an aggregate gross sales price of 7.2.

Bill Griffith: $1 billion as well as $704 $8 million of common shares of select income REIT.

Bill Griffiths: In addition, we have retired $3.4 billion of debt and preferred shares, repurchased $652 million of our common shares, and paid $3.8 billion in distributions to our common shareholders.

Bill Griffith: In addition, we have retired $3 4 billion of debt and preferred shares repurchased $652 million of our common shares and paid $3 8 billion in distributions to our common shareholders.

Bill Griffiths: We also would like to update you on what we've accomplished since our last call in late October. At our November 12th special shareholder meeting, our shareholders approved the plan of sale with 99% of votes cast in favor of the plan. In December, we paid the liquidation preference and retired the Series D preferred shares for $123.3 million. Also in December, we paid our common shareholders an initial liquidating distribution of $19 per share. And finally, we sold our four remaining properties, 1250 H Street in Washington, DC, 206 East 9th Street, and Bridgepoint Square in Austin, Texas, and 1225 17th Street Plaza in Denver, Colorado.

Bill Griffith: We also would like to update you on what we've accomplished since our last call in late October.

Bill Griffith: At our November 12 special shareholder meeting our shareholders approved the plan of sale with 99% of votes cast in favor of the plan.

Bill Griffith: In December we paid the liquidation preference and retired the series D preferred shares for $123 $3 million.

Bill Griffith: Also in December we paid our common shareholders and initial liquidating distributions of $19 per share.

Bill Griffith: And finally, we sold our four remaining properties $12 50, H Street in Washington D. C 206, East Ninth Street, and Bridgepoint Square in Austin, Texas, and 12, 25, 17th Street Plaza in Denver, Colorado.

Bill Griffiths: As a result of our plan of sale, we have adopted liquidation basis of accounting for our 2024-10-K in accordance with GAAP. Under this accounting method, assets are recognized at the amount expected to be collected and our estimated expenses, including wind-down costs, are accrued in full as of December 31, 2024. Future quarters financials will outline changes to the estimates in a statement of changes in net assets. As of December 31st, our net assets in liquidation are approximately $179 million, which are estimated based on projected expenses to be incurred during the period required to complete the plan of sale.

Bill Griffith: As a result of our plan of sale, we have adopted liquidation basis of accounting for our 2024 10-K in accordance with GAAP.

Bill Griffith: Under this accounting method assets are recognized at the amount expected to be collected and our estimated expense estimated expenses, including wind down costs are accrued in full as of December 31, 2020 four.

Bill Griffith: Future quarters financials will outline changes to the estimates in our statement of changes in net assets.

Bill Griffith: As of December 31.

Bill Griffith: Our net assets and liquidation or approximately $179 million, which are estimated based on projected expenses to be incurred during the period required to complete the plan of sale.

Bill Griffiths: As a result, we are updating the estimated aggregate shareholder liquidating distribution range from $20 to $21 per common share previously announced in November to an estimated range of $20.55 to $20.70 per common share, inclusive of the $19 per share distribution paid in Looking ahead, we anticipate making our final distribution in mid-April. Given the execution on the sale of all of our assets and the reasonable certainty of our remaining liabilities, this will be the last distribution made while we are a public company and we do not anticipate any future distributions from the liquidating trust. We expect that the company's common shares will be delisted from the New York Stock Exchange the day before the final distribution payment date.

Bill Griffith: As a result, we are updating the estimated aggregate shareholder liquidating distribution range from $20 to $21 per common share previously announced in November to an estimated range of $20 55 to $20 70 per common share inclusive.

Bill Griffith: Of the $19 per share distribution paid in December.

Bill Griffith: Looking ahead, we anticipate making our final distribution in mid April.

Bill Griffith: Given the execution on the sale of all of our assets and the reasonable certainty of our remaining liabilities. This will be the last distribution made while we are a public company and we do not anticipate any future distributions from a liquidating trust.

Bill Griffith: We expect that the company's common shares will be delisted from the New York stock exchange the day before the final distribution payment date.

Bill Griffiths: Following that payment, we plan to move forward and transfer the remaining assets and liabilities to a Maryland Liquidating Trust, and the common shares will be converted into beneficial interest units in the trust on a one-for-one basis. Concurrently with the transfer, we expect that the company will be deregistered with the SEC. We expect to qualify as a REIT in 2025 until the transfer to the liquidating trust.

Following that payment we plan to move forward and transfer of the remaining assets and liabilities to a Maryland Liquidating trust and the common shares will be converted into beneficial interest units in the trust on a one for one basis.

Bill Griffith: Concurrently with the transfer we expect that the company will be do you registered with the SEC.

Bill Griffith: We expect to qualify as a REIT in 2025 until the transfer to the Liquidating Trust.

Bill Griffiths: We've been focused on executing the wind-down process prudently and efficiently. We are proud of the progress to date, particularly with the sales of the four remaining assets over the last few months. We appreciate the support we've received from our shareholders and want to acknowledge the continued hard work and dedication of the EQC team.

Bill Griffith: We've been focused on executing the wind down process prudently and efficiently. We are proud of the progress to date, particularly with the sales of the four remaining assets over the last few months.

We appreciate the support we've received from our shareholders and want to acknowledge the continued hard work and dedication of the EQT team.

Bill Griffiths: With that, David, David and I are happy to take your questions. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone. Confirmation Tone will indicate your line is in the question. You may press star two if you'd like to remove your question from. For participants using speaker equipment, it may be necessary to the headset before. One moment, please, while we poll for questions. As a reminder, if you'd like to ask a question, please press star 1 on your telephone. One moment while we pull.

Speaker Change: With that David David and I are happy to take your questions.

Bill Griffith: Yeah.

Bill Griffith: At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Bill Griffith: Confirmation tone will indicate your life. Your line is in the question queue. You May Press Star two if you like to remove your question from the queue.

Bill Griffith: For participants using speaker equipment, it may be necessary to pick up.

Bill Griffith: Before pressing the star keys.

Bill Griffith: One moment, please while we poll for questions.

Bill Griffith: Yeah.

Bill Griffith: Yeah.

Speaker Change: I can remind you if you'd like to ask a question. Please press star one on your telephone keypad.

Bill Griffith: One moment, while we poll for questions.

Operator: There are no questions at this time.

Speaker Change: There are no questions at this time at this point I'd like to turn the call back over to management for closing comments.

Operator: At this point, I'd like to turn the call back over to management for closing. Thanks again for joining us. This concludes today's conference.

Bill Griffith: Thanks again for joining us.

Bill Griffith: Yeah.

Bill Griffith: Yeah.

Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.

Operator: You may disconnect your lines at this time, and we thank you for your participation.