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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 March 31, 2024
OR
☐         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)
Maryland04-6558834
(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 ClassTrading SymbolName of Each Exchange On Which Registered
Common Shares of Beneficial InterestEQCThe New York Stock Exchange
6.50% Series D Cumulative Convertible Preferred Shares of Beneficial InterestEQCpDThe 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 April 26, 2024:  107,296,601.

EQUITY COMMONWEALTH
 
FORM 10-Q
 
March 31, 2024
 
INDEX
 
  Page
 
 
 
 
 
 
 
 



 
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 March 31, 2024, unless the context indicates otherwise.

i
PART I.      Financial Information

Item 1.         Financial Statements.
EQUITY COMMONWEALTH
 CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)
March 31,
2024		December 31,
2023
(audited)
ASSETS
Real estate properties:
Land$44,060 $44,060 
Buildings and improvements371,550 367,827 
415,610 411,887 
Accumulated depreciation(180,266)(180,535)
235,344 231,352 
Cash and cash equivalents2,170,834 2,160,535 
Rents receivable16,593 15,737 
Other assets, net16,915 17,417 
Total assets$2,439,686 $2,425,041 
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other$20,833 $27,298 
Rent collected in advance2,166 1,990 
Distributions payable3,359 5,640 
Total liabilities26,358 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;
   107,223,284 and 106,847,438 shares issued and outstanding, respectively
1,072 1,068 
Additional paid in capital3,935,501 3,935,873 
Cumulative net income3,952,384 3,926,979 
Cumulative common distributions(4,864,195)(4,864,440)
Cumulative preferred distributions(735,673)(733,676)
Total shareholders’ equity2,408,352 2,385,067 
Noncontrolling interest4,976 5,046 
Total equity2,413,328 2,390,113 
Total liabilities and equity$2,439,686 $2,425,041 
See accompanying notes.
1
EQUITY COMMONWEALTH
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
20242023
Revenues:
Rental revenue$13,893 $14,226 
Other revenue1,297 1,350 
Total revenues15,190 15,576 
Expenses:
Operating expenses6,534 7,256 
Depreciation and amortization4,357 4,310 
General and administrative8,323 8,555 
Total expenses19,214 20,121 
Interest and other income, net29,512 28,376 
Income before income taxes
25,488 23,831 
Income tax expense(30)(1,080)
Net income25,458 22,751 
Net income attributable to noncontrolling interest(53)(66)
Net income attributable to Equity Commonwealth25,405 22,685 
Preferred distributions(1,997)(1,997)
Net income attributable to Equity Commonwealth common shareholders
$23,408 $20,688 
Weighted average common shares outstanding — basic107,216 109,720 
Weighted average common shares outstanding — diluted108,224 111,300 
Earnings per common share attributable to Equity Commonwealth common shareholders:
Basic$0.22 $0.19 
Diluted
$0.22 $0.19 
Distributions declared per common share$— $4.25 

See accompanying notes.
2
EQUITY COMMONWEALTH
 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(amounts in thousands, except share data)
(unaudited)
 Equity Commonwealth Shareholders
Number of Series D Preferred SharesSeries D Preferred
Shares		Number of Common SharesCommon
Shares		Additional
Paid
in
Capital		Cumulative
Net
Income		Cumulative
Common
Distributions		Cumulative
Preferred
Distributions		Noncontrolling InterestTotal
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— — — — — 25,405 — — 53 25,458 
Surrender of shares for tax withholding— — (161,837)(2)(3,054)— — — — (3,056)
Share-based compensation— — 533,207 6 2,509 — — — 50 2,565 
Distributions— — — — — — 245 (1,997)— (1,752)
OP Unit redemption— — 4,476 — 86 — — — (86)— 
Adjustment for noncontrolling interest
— — — — 87 — — — (87)— 
Balance at March 31, 2024
4,915,196 $119,263 107,223,284 $1,072 $3,935,501 $3,952,384 $(4,864,195)$(735,673)$4,976 $2,413,328 


























3


EQUITY COMMONWEALTH
 CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONTINUED)
(amounts in thousands, except share data)
(unaudited)
 Equity Commonwealth Shareholders
Number of Series D Preferred SharesSeries D Preferred
Shares		Number of Common
Shares		Common
Shares		Additional
Paid
in
Capital		Cumulative
Net
Income		Cumulative
Common
Distributions		Cumulative
Preferred
Distributions		Noncontrolling InterestTotal
Balance at January 1, 2023
4,915,196 $119,263 109,428,252 $1,094 $3,979,566 $3,835,815 $(4,393,522)$(725,688)$7,204 $2,823,732 
Net income— — — — — 22,685 — — 66 22,751 
Surrender of shares for tax withholding— — (134,193)(1)(3,394)— — — — (3,395)
Share-based compensation— — 407,533 4 2,654 — — — 330 2,988 
Distributions— — — — — — (472,879)(1,997)(2,128)(477,004)
Adjustment for noncontrolling interest— — — — (2,183)— — — 2,183 — 
Balance at March 31, 2023
4,915,196 $119,263 109,701,592 $1,097 $3,976,643 $3,858,500 $(4,866,401)$(727,685)$7,655 $2,369,072 

See accompanying notes.
4
EQUITY COMMONWEALTH
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$25,458 $22,751 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation3,626 3,719 
Straight-line rental income(223)279 
Other amortization731 591 
Share-based compensation2,565 2,988 
Change in assets and liabilities:
Rents receivable and other assets(793)(662)
Accounts payable, accrued expenses and other(9,097)(7,018)
Rent collected in advance176 460 
Net cash provided by operating activities22,443 23,108 
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate improvements(5,055)(1,175)
Cash used in investing activities(5,055)(1,175)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase and retirement of common shares(3,056)(3,395)
Distributions to common shareholders(2,036)(468,232)
Distributions to preferred shareholders(1,997)(1,997)
Distributions to holders of noncontrolling interest— (1,843)
Net cash used in financing activities(7,089)(475,467)
Increase (decrease) in cash and cash equivalents10,299 (453,534)
Cash and cash equivalents at beginning of period2,160,535 2,582,222 
Cash and cash equivalents at end of period$2,170,834 $2,128,688 
See accompanying notes.



















5
EQUITY COMMONWEALTH 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(amounts in thousands)
(unaudited)
Three Months Ended March 31,
20242023
SUPPLEMENTAL CASH FLOW INFORMATION:
Taxes refunded, net$— $(9)
NON-CASH INVESTING ACTIVITIES:
Accrued capital expenditures$5,433 $1,710 
NON-CASH FINANCING ACTIVITIES:
Distributions payable$3,359 $7,795 
OP Unit redemption86 — 
See accompanying notes.

6

EQUITY COMMONWEALTH
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Business
Equity Commonwealth, or the Company, is a real estate investment trust, or REIT, formed in 1986 under the laws of the State of Maryland. Our business is primarily the ownership and operation of office properties in the United States.
The Company operates in an umbrella partnership real estate investment trust, or UPREIT, and conducts substantially all of its activities through EQC Operating Trust, a Maryland real estate investment trust, or the Operating Trust. The Company beneficially owned 99.79% of the outstanding shares of beneficial interest, designated as units, in the Operating Trust, or OP Units, as of March 31, 2024, and the Company is the sole trustee of the Operating Trust.  As the sole trustee, the Company generally has the power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units.
At March 31, 2024, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet, and we had $2.2 billion of cash and cash equivalents.
Note 2.  Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements of EQC have been prepared without audit.  Certain information and footnote disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are appropriate.  The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K, or our Annual Report, for the year ended December 31, 2023.  Capitalized terms used, but not defined in this Quarterly Report, have the same meanings as in our Annual Report.
In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included.  All intercompany transactions and balances with or among our subsidiaries have been eliminated.  Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. 
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts.  Actual results could differ from those estimates.  Significant estimates in the condensed consolidated financial statements include the assessment of the collectability of rental revenue, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.
Dollar amounts presented may be approximate. Share amounts are presented in whole numbers, except where noted.
New Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves the disclosures about a public entity's reportable segments and addresses requests from investors for additional, more detailed information about a reportable segment's expenses. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect the adoption of ASU 2023-07 to have a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. This update is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. We do not expect the adoption of ASU 2023-09 to have a material impact on our consolidated financial statements.

Note 3.  Real Estate Properties
During the three months ended March 31, 2024 and 2023, we made improvements, excluding tenant-funded improvements, to our properties totaling $7.6 million and $2.0 million, respectively.
7

EQUITY COMMONWEALTH
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Lease Payments
Rental revenue consists of the following (in thousands):
Three Months Ended March 31,
20242023
Lease payments$8,816 $9,067 
Variable lease payments5,077 5,159 
Rental revenue$13,893 $14,226 

Note 4.  Shareholders’ Equity
 Common Share Issuances
See Note 7 for information regarding equity issuances related to share-based compensation.
Common Share Repurchases
We did not repurchase any common shares under our share repurchase program during the three months ended March 31, 2024. As of March 31, 2024, we had $93.3 million of remaining availability under our share repurchase program, which expires on June 30, 2024.
During the three months ended March 31, 2024 and 2023, certain of our employees and former employees surrendered 161,837 and 134,193 common shares owned by them, respectively, to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares pursuant to our equity compensation plans.
Common Share Distributions
In February 2024, the number of earned awards for recipients of the Company’s restricted stock units granted in January 2021 was determined. Pursuant to the terms of such awards, we paid one-time catch-up cash distributions to these recipients in the aggregate amount of $2.0 million, for distributions to common shareholders declared by our Board of Trustees during such awards’ performance measurement period.
Preferred Share Distributions
In 2024, our Board of Trustees declared distributions on our series D preferred shares to date as follows:
Declaration DateRecord DatePayment DateSeries D Dividend Per Share
January 16, 2024January 31, 2024February 15, 2024$0.40625 
April 16, 2024April 30, 2024May 15, 2024$0.40625 
Note 5.  Noncontrolling Interest
Noncontrolling interest represents the portion of the OP Units not beneficially owned by the Company. The ownership of an OP Unit and a common share of beneficial interest have essentially the same economic characteristics. Distributions with respect to OP Units will generally mirror distributions with respect to the Company’s common shares. Unitholders (other than the Company) generally have the right, commencing six months from the date of issuance of such OP Units, to cause the Operating Trust to redeem their OP Units in exchange for cash or, at the option of the Company, common shares of the Company on a one-for-one basis. As sole trustee, the Company has the sole discretion to elect whether the redemption right will be satisfied by the Company in cash or the Company’s common shares. As a result, the Noncontrolling interest is classified as permanent equity. As of March 31, 2024, the portion of the Operating Trust not beneficially owned by the Company is in the form of OP Units and LTIP Units (see Note 7 for a description of LTIP Units). LTIP Units may be subject to additional vesting requirements.
8

EQUITY COMMONWEALTH
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table presents the changes in Equity Commonwealth’s issued and outstanding common shares and units for the three months ended March 31, 2024:
Common SharesOP Units and LTIP UnitsTotal
Outstanding at January 1, 2024
106,847,438 226,018 107,073,456 
Repurchase and surrender of shares(161,837)— (161,837)
OP Unit redemption4,476 (4,476)— 
Share-based compensation grants and vesting, net of forfeitures
533,207 — 533,207 
Outstanding at March 31, 2024
107,223,284 221,542 107,444,826 
Noncontrolling ownership interest in the Operating Trust0.21 %
The carrying value of the Noncontrolling interest is allocated based on the number of OP Units and LTIP Units in proportion to the number of OP Units and LTIP Units plus the number of common shares. We adjust the Noncontrolling interest balance at the end of each period to reflect the noncontrolling partners’ interest in the net assets of the Operating Trust. Net income is allocated to the Noncontrolling interest in the Operating Trust based on the weighted average ownership percentage during the period. Equity Commonwealth’s weighted average ownership interest in the Operating Trust was 99.79% for the three months ended March 31, 2024.
Note 6.  Income Taxes
We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, and are generally not subject to federal and state income taxes provided we distribute a sufficient amount of our taxable income to our shareholders and meet other requirements for qualifying as a REIT.  However, we are subject to certain state and local taxes without regard to our REIT status.
Our provision for income taxes consists of the following (in thousands):
Three Months Ended March 31,
20242023
Current:
State and local
$(30)$(30)
Federal
— (1,050)
Income tax expense$(30)$(1,080)

Federal income tax expense in the 2023 period relates to federal income taxes at our taxable REIT subsidiary.
Note 7. Share-Based Compensation
Recipients of the Company’s restricted shares have the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder.  The restricted shares are service based awards and vest over a service period determined by the Compensation Committee of our Board of Trustees, or the Compensation Committee.
Recipients of the Company’s restricted stock units, or RSUs, are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient’s earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market-based awards with a service condition and recipients may earn RSUs based on the Company’s total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards will be determined. The earned awards vest in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Compensation Committee determines the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient’s continued employment. Compensation expense for the RSUs is determined using a Monte Carlo simulation model and is recognized ratably from the grant date to the vesting date of each tranche.
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EQUITY COMMONWEALTH
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries. Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time.
2024 Equity Award Activity
During the three months ended March 31, 2024, 391,061 RSUs vested, and, as a result, we issued 391,061 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 4).
On January 29, 2024, the Compensation Committee approved grants in the aggregate amount of 142,146 restricted shares and 288,596 RSUs at target (719,326 RSUs at maximum) to the Company’s officers and certain employees, as part of their compensation for fiscal year 2023. The restricted shares were valued at $19.36 per share, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on the grant date. The assumptions and fair value for the RSUs granted during the three months ended March 31, 2024 are included in the following table on a per share basis.
 2024
Fair value of market-based awards granted$27.08
Expected term (years)4
Expected volatility15.46 %
Risk-free rate4.06 %

2023 Equity Award Activity
During the three months ended March 31, 2023, 274,739 RSUs vested, and, as a result, we issued 274,739 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations.
On January 26, 2023, the Compensation Committee approved grants in the aggregate amount of 132,794 restricted shares and 269,609 RSUs at target (672,000 RSUs at maximum) to the Company’s officers, certain employees, and to Mr. Zell, the former Chairman of our Board of Trustees, as part of their compensation for fiscal year 2022. The restricted shares were valued at $25.61 per share, the closing price of our common shares on the NYSE on the grant date. The RSUs were valued at $36.51 per share, their fair value on the grant date.
Outstanding Equity Awards
As of March 31, 2024, the estimated future compensation expense for all unvested restricted shares and time-based LTIP Units was $6.3 million. Compensation expense for the restricted share and time-based LTIP Unit awards is being recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The weighted average period over which the future compensation expense will be recorded for the restricted shares and time-based LTIP Units is approximately 2.9 years.
As of March 31, 2024, the estimated future compensation expense for all unvested RSUs and market-based LTIP Units was $15.7 million. The weighted average period over which the future compensation expense will be recorded for the RSUs and market-based LTIP Units is approximately 2.6 years.
During the three months ended March 31, 2024 and 2023, we recorded $2.6 million and $3.0 million, respectively, of compensation expense, net of forfeitures, in general and administrative expense for grants to our trustees, employees and an eligible consultant related to our equity compensation plans. We did not record any accelerated vesting during the three months ended March 31, 2024 and 2023. Forfeitures are recognized as they occur. At March 31, 2024, 1,443,865 shares/units remain available for issuance under the Equity Commonwealth 2015 Omnibus Incentive Plan, as amended.
Note 8.  Fair Value of Assets and Liabilities
As of March 31, 2024, we do not have any assets or liabilities measured at fair value.
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EQUITY COMMONWEALTH
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Financial Instruments
Our financial instruments include our cash and cash equivalents.  At March 31, 2024 and December 31, 2023, the fair value of these financial instruments was not different from their carrying values.
Other financial instruments that potentially subject us to concentrations of credit risk consist principally of rents receivable. As of March 31, 2024, no single tenant of ours is responsible for more than 10% of our consolidated revenues.
Note 9.  Earnings Per Common Share
The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):
 Three Months Ended March 31,
 20242023
Numerator for earnings per common share - basic:
Net income$25,458 $22,751 
Net income attributable to noncontrolling interest(53)(66)
Preferred distributions(1,997)(1,997)
Numerator for net income per share - basic$23,408 $20,688 
Numerator for earnings per common share - diluted:
Net income
$25,458 $22,751 
Net income attributable to noncontrolling interest(53)(66)
Preferred distributions(1,997)(1,997)
Numerator for net income per share - diluted$23,408 $20,688 
Denominator for earnings per common share - basic and diluted:
Weighted average number of common shares outstanding - basic(1)
107,216 109,720 
RSUs(2)
898 1,433 
LTIP Units(3)
110 147 
Weighted average number of common shares outstanding - diluted108,224 111,300 
Net income per common share attributable to Equity Commonwealth common shareholders:
Basic
$0.22 $0.19 
Diluted
$0.22 $0.19 
Anti-dilutive securities(4):
Effect of Series D preferred shares; 6.50% cumulative convertible
4,032 4,032 
Effect of OP Units and time-based LTIP Units(5)
223 324 
(1) The three months ended March 31, 2024 and 2023, include 129 and 113 weighted-average, unvested, earned RSUs, respectively.
(2) Represents the weighted-average number of common shares that would have been issued if the quarter-end was the measurement date for unvested, unearned RSUs.
(3) Represents the weighted-average dilutive shares issuable from market-based LTIP Units if the quarter-end was the measurement date for the periods shown.
(4) These securities are excluded from the diluted earnings per share calculation for one or more of the periods presented because including them results in anti-dilution.
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EQUITY COMMONWEALTH
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(5) Beneficial interests in the Operating Trust.
Note 10.  Segment Information
Our primary business is the ownership and operation of office properties, and we currently have one reportable segment.  One hundred percent of our revenues for the three months ended March 31, 2024 were from office properties. 
Note 11.  Related Person Transactions 
The following discussion includes a description of our related person transactions for the three months ended March 31, 2024 and 2023.
We lease office space for our corporate headquarters from Two North Riverside Plaza Joint Venture Limited Partnership, an entity associated with Equity Group Investments (EGI), a private entrepreneurial investment firm founded by Sam Zell, our former Chairman who passed away on May 18, 2023. Messrs. Helfand and Weinberg continue to be advisors to EGI and certain other members of our team are expected to continue to have limited involvement in its activities.
In December 2022, we entered into a third amendment to our July 20, 2015 lease with Two North Riverside Plaza Joint Venture Limited Partnership to occupy office space on the twentieth and twenty-first floors of Two North Riverside Plaza in Chicago, Illinois. The amendment extended the lease term for one year, through December 31, 2023, with no renewal options, for a lease payment of $0.4 million per year. In August 2023, we entered into a fourth amendment to the lease extending the lease term for one year, through December 31, 2024, with no renewal options and contracting square feet to the existing space on the twentieth floor, for a lease payment of $0.4 million per year. In April 2024, we entered into a fifth amendment to the lease extending the lease term for two additional years, through December 31, 2026, with no renewal options (as amended by the first through fifth lease amendments, the Two North Office Lease), for a lease payment of $0.4 million per year. The Two North Office Lease allows EQC to terminate the lease early for a termination fee equal to three-months’ base rent.
During the three months ended March 31, 2024 and 2023, we recognized expenses of $0.1 million and $0.1 million, respectively, pursuant to the Two North Office Lease. As of March 31, 2024 and December 31, 2023, we did not have any amounts due to Two North Riverside Plaza Joint Venture Limited Partnership pursuant to the Two North Office Lease.
Note 12.  Subsequent Events
Preferred Share Distribution
On April 16, 2024, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on May 15, 2024 to shareholders of record on April 30, 2024.


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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, and in our Annual Report.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to our anticipated business strategies, goals, policies and objectives, capital resources and financing, portfolio performance, lease expiration schedules, results of operations or anticipated market conditions, including our statements regarding remote working trends and the overall impact of COVID-19, and changing laws, statutes, regulations, and the interpretations thereof, on the foregoing. Any forward-looking statements contained in this Quarterly Report on Form 10-Q are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. 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. You can identify forward-looking statements by the use of forward-looking terminology, including but not limited to, “may,” “will,” “should,” “could,” “would,” “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. 
Any forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our 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). 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 our future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in our most recent Annual Report and in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.
OVERVIEW
We are an internally managed and self-advised REIT primarily engaged in the ownership and operation of office properties in the United States. We were formed in 1986 under Maryland law. The Company operates as an UPREIT, conducting substantially all of its activities through the Operating Trust. As of March 31, 2024, the Company beneficially owned 99.79% of the outstanding OP Units.
At March 31, 2024, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet, and we had $2.2 billion of cash and cash equivalents.
We use leasing and occupancy metrics to evaluate the performance of our properties. We believe these metrics provide useful information to investors because they reflect the leasing activity and vacant space at the properties and may facilitate comparisons of our leasing and occupancy metrics with other REITs and real estate companies.
As of March 31, 2024, our overall portfolio was 75.4% leased. During the three months ended March 31, 2024, we entered into leases for 18,000 square feet, including lease renewals for 15,000 square feet and new leases for 3,000 square feet. The renewal leases entered into during the three months ended March 31, 2024 had cash and GAAP rental rates that were approximately 0.6% higher and 3.2% higher, respectively, compared to prior rental rates for the same space. The new leases entered into during the three months ended March 31, 2024 had cash and GAAP rental rates that were approximately 17.6% lower and 17.0% lower, respectively, compared to prior rental rates for the same space. The change in GAAP rents is different than the change in cash rents due to differences in the amount of rent abatements, the magnitude and timing of contractual rent increases over the lease term, and the length of term for the newly executed leases compared to the prior leases. Percent change in GAAP and cash rents is a comparison of current rent, including estimated tenant expense reimbursements, if any, to the rent, including actual/projected tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. Cash rent during the reporting period is calculated before deducting any initial period free rent.
We have engaged CBRE, Inc., or CBRE, to provide property management services. We pay CBRE a property-by-property management fee and may engage CBRE from time-to-time to perform project management services, such as coordinating and overseeing the completion of tenant improvements and other capital projects at the properties. We reimburse CBRE for certain expenses incurred in the performance of its duties, including certain personnel and equipment costs. For the three months ended March 31, 2024 and 2023, we incurred expenses of $0.8 million and $0.8 million, respectively, related to
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our property management agreement with CBRE, for property management fees, typically calculated as a percentage of the properties’ revenues, and salary and benefits reimbursements for property personnel, such as property managers, engineers and maintenance staff.  As of March 31, 2024 and December 31, 2023, we had amounts payable pursuant to these services of $0.3 million and $0.4 million, respectively.
Our business has been and is continuing to be impacted by economic uncertainty and an overall slowdown in the office leasing market following the COVID-19 pandemic due to a variety of factors, including tenant uncertainty regarding office space needs given the evolving remote and hybrid working trends and other factors impacting the demand for office space. Many of our employees and the majority of our tenants’ employees are currently working at least in part remotely, with many businesses reassessing their long-term demand for office space. Overall, our business has experienced a significant reduction in leasing interest and activity as well as parking revenue when compared to pre-pandemic levels. As of March 31, 2024 and December 31, 2019, our comparable property portfolio was 75.4% and 91.5% leased, respectively. The duration of these business disruptions continues to be unknown at this time, and we currently are not able to estimate the full impact of the overall slowdown in the office leasing market on our business.
We remain focused on evaluating potential investment opportunities in our pipeline where we can create long-term value for our shareholders. We intend to remain disciplined as we seek an investment in a high-quality business with a compelling risk-reward profile. We are concurrently taking steps to facilitate the potential wind down of our business. Before the end of this year, we expect to either announce a transaction or move forward with a plan to wind down our business as part of our continued efforts to maximize shareholder value.
Property Operations
Leased occupancy data for 2024 and 2023 are as follows (square feet in thousands):
All PropertiesComparable Properties(1)
As of March 31,As of March 31,
2024202320242023
Total properties4 4 4 4 
Total square feet1,521 1,507 1,521 1,507 
Percent leased(2)
75.4 %81.6 %75.4 %81.6 %

(1)Based on properties owned continuously from January 1, 2023 through March 31, 2024.
(2)Percent leased is the percent of space subject to signed leases. Percent leased is disclosed to quantify the ratio of leased square feet to rentable square feet and we believe it provides useful information as to the proportion of rentable square feet subject to a lease.
The weighted average lease term based on square feet for leases entered into during the three months ended March 31, 2024 was 4.1 years.  Commitments made for leasing expenditures and concessions, such as tenant improvements and leasing commissions, for the leases entered into during the three months ended March 31, 2024 totaled $1.1 million, or $58.93 per square foot on average (approximately $14.39 per square foot per year of the lease term).
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As of March 31, 2024, approximately 10.4% of our leased square feet and 10.7% of our annualized rental revenue, determined as set forth below, are included in leases scheduled to expire through December 31, 2024.  Renewal and new leases and rental rates at which available space may be relet in the future will depend on prevailing market conditions at the times these leases are negotiated.  We believe that the in-place cash rents for leases expiring for the remainder of 2024, that have not been backfilled, are approximately market. Lease expirations by year, as of March 31, 2024, are as follows (square feet and dollars in thousands):
YearNumber
of Tenants Expiring(1)		Leased Square
 Feet Expiring(2)		% of Leased
Square Feet Expiring(2)		Cumulative
% of Leased Square
Feet Expiring(2)		Annualized Rental
Revenue Expiring(3)		% of
Annualized Rental
Revenue Expiring		Cumulative
% of
Annualized Rental Revenue Expiring
202417 119 10.4 %10.4 %$5,849 10.7 %10.7 %
20257 130 11.3 %21.7 %6,018 11.0 %21.7 %
202611 69 6.0 %27.7 %3,241 5.9 %27.6 %
202718 231 20.1 %47.8 %11,027 20.1 %47.7 %
202811 123 10.7 %58.5 %5,400 9.9 %57.6 %
202910 149 13.0 %71.5 %6,729 12.3 %69.9 %
203010 159 13.9 %85.4 %7,664 14.0 %83.9 %
20314 58 5.1 %90.5 %2,661 4.9 %88.8 %
20321 32 2.8 %93.3 %1,942 3.5 %92.3 %
20333 23 2.0 %95.3 %1,392 2.5 %94.8 %
Thereafter4 54 4.7 %100.0 %2,875 5.2 %100.0 %
96 1,147 100.0 %$54,798 100.0 %
Weighted average remaining lease term (in years):
4.2 4.3 

(1)Tenants with leases expiring in multiple years are counted in each year they expire.
(2)Leased Square Feet as of March 31, 2024 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. The Leased Square Feet Expiring corresponds to the latest-expiring signed lease for a given suite. Thus, backfilled suites expire in the year stipulated by the new lease. 
(3)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2024, plus estimated recurring expense reimbursements; excludes lease value amortization, straight-line rent adjustments, abated (free) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues.  Annualized rental revenue is a forward-looking non-GAAP measure.  Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.
 
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The principal source of funds for our operations is rents from tenants at our properties.  Rents are generally received from our tenants monthly in advance.  As of March 31, 2024, tenants representing 2.5% or more of our total annualized rental revenue were as follows (square feet in thousands):
TenantSquare Feet(1)% of Total Leased Square Feet(1)% of Annualized Rental Revenue(2)Weighted Average Remaining Lease Term
1.Salesforce.com, Inc.66 5.8 %5.7 %1.7 
2.KPMG, LLP66 5.8 %5.2 %5.2 
3.Crowdstrike, Inc.48 4.2 %5.2 %5.9 
4.CBRE, Inc.41 3.6 %3.9 %4.0 
5.Jones Lang LaSalle Americas, Inc.42 3.7 %3.6 %6.3 
6.RSM US LLP32 2.8 %3.5 %8.2 
7.SonarSource US, Inc.28 2.4 %3.0 %3.4 
8.Alden Torch Financial, LLC35 3.1 %2.9 %2.9 
9.Ballard Spahr LLP30 2.6 %2.6 %1.4 
10.Simply Good Foods USA, Inc29 2.5 %2.6 %3.7 
11.Wunderman Thompson, LLC24 2.1 %2.5 %3.3 
12.Shiseido Americas Corporation21 1.8 %2.5 %5.6 
Total462 40.4 %43.2 %4.3 

(1)Total Leased Square Feet as of March 31, 2024 includes space subject to leases that have commenced, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. 
(2)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of March 31, 2024, plus estimated recurring expense reimbursements; excludes lease value amortization, straight-line rent adjustments, abated (free) rent periods and parking revenue. We calculate annualized rental revenue by aggregating the recurring billings outlined above for the most recent month during the quarter reported, adding abated rent, and multiplying the sum by 12 to provide an estimation of near-term potentially-recurring revenues.  Annualized rental revenue is a forward-looking non-GAAP measure.  Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.
Regulation FD Disclosures
We 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. Our website address is included in this Quarterly Report as a textual reference only and the information on the website is not incorporated by reference into this Quarterly Report.
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RESULTS OF OPERATIONS 
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
Comparable Properties Results(1)Other Properties Results(2)Consolidated Results
Three Months Ended March 31,
20242023$ Change% Change2024202320242023$ Change% Change
(dollars in thousands)
Rental revenue$13,893 $14,226 $(333)(2.3)%$— $— $13,893 $14,226 $(333)(2.3)%
Other revenue
1,297 1,343 (46)(3.4)%— 7 1,297 1,350 (53)(3.9)%
Operating expenses(6,518)(7,253)735 (10.1)%(16)(3)(6,534)(7,256)722 (10.0)%
Net operating income(3)
$8,672 $8,316 $356 4.3 %$(16)$4 8,656 8,320 336 4.0 %
Other expenses:
Depreciation and amortization4,357 4,310 47 1.1 %
General and administrative8,323 8,555 (232)(2.7)%
Total other expenses12,680 12,865 (185)(1.4)%
Interest and other income, net29,512 28,376 1,136 4.0 %
Income before income taxes
25,488 23,831 1,657 7.0 %
Income tax expense(30)(1,080)1,050 (97.2)%
Net income25,458 22,751 2,707 11.9 %
Net income attributable to noncontrolling interest(53)(66)13 (19.7)%
Net income attributable to Equity Commonwealth25,405 22,685 2,720 12.0 %
Preferred distributions(1,997)(1,997)— — %
Net income attributable to Equity Commonwealth common shareholders
$23,408 $20,688 $2,720 13.1 %
(1)Comparable properties consist of four properties we owned continuously from January 1, 2023 to March 31, 2024.
(2)Other properties consist of properties sold.
(3)We define net operating income, or NOI, as income from our real estate including lease termination fees received from tenants less our property operating expenses.  NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses.  For a discussion of why we consider NOI to be an appropriate supplemental measure to net income as well as a reconciliation of NOI to net income, the most directly comparable financial measure under GAAP reported on our consolidated financial statements, please see the section entitled “- Liquidity and Capital Resources - Property Net Operating Income (NOI).”
Rental revenue. Rental revenue at the comparable properties decreased $0.3 million, or 2.3%, in the 2024 period, compared to the 2023 period, primarily due to a $0.3 million decrease in escalations, a $0.2 million decrease in real estate tax recoveries and a $0.2 million decrease in base rent, partially offset by a $0.4 million increase in lease termination fees.
Operating expenses. Operating expenses at the comparable properties decreased $0.7 million, or 10.1%, in the 2024 period, compared to the 2023 period primarily due to a $0.5 million decrease in pre-leasing demolition costs and a $0.2 million decrease in real estate tax expense.
General and administrative. General and administrative expenses decreased $0.2 million, or 2.7%, in the 2024 period, compared to the 2023 period, primarily due to a $0.4 million decrease in share-based compensation expenses and a $0.1 million decrease in legal expense, partially offset by a $0.2 million increase in professional fees and a $0.1 million increase in payroll expense.
Interest and other income, net. Interest and other income, net increased $1.1 million, or 4.0%, in the 2024 period, compared to the 2023 period, primarily due to more interest received from higher average interest rates, partially offset by lower average cash balances.
Income tax expense. Income tax expense decreased $1.1 million in the 2024 period, compared to the 2023 period, primarily due to a decrease in federal income taxes at our taxable REIT subsidiary.
Net income attributable to noncontrolling interest. From 2017 through 2022, we granted LTIP Units to certain of our trustees and employees. Net income attributable to noncontrolling interest of $0.1 million in the 2024 period and $0.1 million in the 2023 period relates to the allocation of income to the LTIP/OP Unit holders.

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LIQUIDITY AND CAPITAL RESOURCES
Our Operating Liquidity and Resources
As of March 31, 2024, we had $2.2 billion of cash and cash equivalents.  We expect to use our cash balances, cash flow from our operations and proceeds of any future property sales to fund our operations, make distributions, repurchase our common shares, make investments in properties or businesses, fund tenant improvements and leasing costs and for other general business purposes.  We believe our cash balances and the cash flow from our operations will be sufficient to fund our ordinary course activities.
Our future cash flows from operating activities will depend on our ability to collect rent from our current tenants under their leases. Our ability to collect rent and generate parking revenue in the near term may continue to be adversely impacted by the market disruption caused by economic uncertainty and an overall slowdown in the office leasing market following the COVID-19 pandemic, including remote and hybrid working trends and other factors impacting the demand for office space. We cannot predict the ultimate impact of the overall slowdown in the office leasing market on our results of operations.
Our future cash flows from operating activities will also depend upon our:
•ability to maintain or improve the occupancy of, and the rental rates at, our properties;
•ability to control operating and financing expense increases at our properties; and
•ability to purchase additional properties, which produce rents, less property operating expenses, in excess of our costs of acquisition capital.
In addition, our future cash flows will also depend in part on interest income earned on our invested cash balances.
Volatility in energy costs and real estate taxes may cause our future operating expenses to fluctuate; however, the impact of these fluctuations is expected to be partially offset by the pass through of operating expenses to our tenants pursuant to lease terms, although there can be no assurance that we will be able to successfully offset these expenses or that doing so would not negatively impact our competitive position or business. 
Net cash flows provided by (used in) operating, investing and financing activities were $22.4 million, $(5.1) million and $(7.1) million, respectively, for the three months ended March 31, 2024, and $23.1 million, $(1.2) million and $(475.5) million, respectively, for the three months ended March 31, 2023.  Changes in our cash flows between 2024 and 2023 are primarily related to distributions to common shareholders. 
Our Investment and Financing Liquidity and Resources
During the three months ended March 31, 2024, we paid an aggregate of $2.0 million of distributions on our series D preferred shares.  On April 16, 2024, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on May 15, 2024 to shareholders of record on April 30, 2024.
We did not repurchase any common shares under our share repurchase program during the three months ended March 31, 2024. As of March 31, 2024, we had $93.3 million of remaining availability under our share repurchase program, which expires on June 30, 2024.
We may utilize various types of financings, including debt or equity, to fund future investments and to pay any debt we may incur and other obligations as they become due. Although we are not currently rated by the debt rating agencies, the completion and the costs of any future debt transactions will depend primarily upon market conditions and our credit ratings at such time, if any. We have no control over market conditions. Any credit ratings will depend upon evaluations by credit rating agencies of our business practices and plans and, in particular, whether we appear to have the ability to maintain our earnings, to space any debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably foreseeable adverse changes. We intend to conduct our business activities in a manner which will continue to afford us reasonable access to capital for investment and financing activities. However, there can be no assurance regarding our ability to complete any debt or equity offerings or that our cost of any future public or private financings will not increase.
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During the three months ended March 31, 2024 and 2023, amounts capitalized at our properties for tenant improvements, leasing costs and building improvements were as follows (amounts in thousands):
Three Months Ended March 31,
20242023
Tenant improvements(1)
$5,752 $1,757 
Leasing costs(2)
174 1,162 
Building improvements(3)
1,855 195 
(1)Tenant improvements include capital expenditures to improve tenants’ spaces.
(2)Leasing costs include leasing commissions and related legal expenses.
(3)Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. Tenant-funded capital expenditures are excluded.
During the three months ended March 31, 2024, commitments made for expenditures in connection with leasing space at our properties were as follows (dollar and square foot measures in thousands):
New
Leases		RenewalsTotal
Square feet leased during the period3 15 18 
Tenant improvements and leasing commissions$103 $965 $1,068 
Tenant improvements and leasing commissions per square foot$34.43 $64.35 $58.93 
Weighted average lease term by square foot (years)(1)
4.4 4.0 4.1 
Tenant improvements and leasing commissions per square foot per year of lease term$7.88 $15.95 $14.39 
(1)For renewal lease terms, if the existing rents of an original lease term are modified, the new term starts at the rent modification date. Weighted average lease term generally excludes renewal options.
NON-GAAP MEASURES
Funds from Operations (FFO) and Normalized FFO
We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or Nareit. Nareit defines FFO as net income, calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate, and our portion of these items related to equity investees and noncontrolling interests.  Our calculation of Normalized FFO differs from Nareit’s definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period.  We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income attributable to Equity Commonwealth common shareholders and cash flow from operating activities.
We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs.  FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income (loss) attributable to Equity Commonwealth common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  These measures should be considered in conjunction with net income, net income (loss) attributable to Equity Commonwealth common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of operations and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.
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The following table provides a reconciliation of net income to FFO attributable to Equity Commonwealth common shareholders and unitholders and a reconciliation to Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders (in thousands):
Three Months Ended March 31,
20242023
Reconciliation to FFO:
Net income$25,458 $22,751 
Real estate depreciation and amortization4,346 4,299 
FFO attributable to Equity Commonwealth29,804 27,050 
Preferred distributions(1,997)(1,997)
FFO attributable to Equity Commonwealth common shareholders and unitholders
$27,807 $25,053 
Reconciliation to Normalized FFO:  
FFO attributable to Equity Commonwealth common shareholders and unitholders
$27,807 $25,053 
Straight-line rent adjustments(223)279 
Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders
$27,584 $25,332 
Property Net Operating Income (NOI)
We use another non-GAAP measure, property net operating income, or NOI, to evaluate the performance of our properties. We define NOI as income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses.
The following table includes the reconciliation of NOI to net income, the most directly comparable financial measure under GAAP reported in our consolidated financial statements.  We consider NOI to be an appropriate supplemental measure to net income because it may help to understand the operations of our properties.  We use NOI internally to evaluate property level performance, and we believe that NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs.  NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, net income attributable to Equity Commonwealth common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as an indicator of our financial performance or liquidity, nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs.  This measure should be considered in conjunction with net income, net income (loss) attributable to Equity Commonwealth common shareholders and cash flow from operating activities as presented in our consolidated statements of operations and consolidated statements of cash flows.  Other REITs and real estate companies may calculate NOI differently than we do. 
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A reconciliation of NOI to net income for the three months ended March 31, 2024 and 2023, is as follows (in thousands):
 Three Months Ended March 31,
 20242023
Rental revenue$13,893 $14,226 
Other revenue1,297 1,350 
Operating expenses(6,534)(7,256)
NOI$8,656 $8,320 
NOI$8,656 $8,320 
Depreciation and amortization(4,357)(4,310)
General and administrative(8,323)(8,555)
Interest and other income, net29,512 28,376 
Income before income taxes
25,488 23,831 
Income tax expense(30)(1,080)
Net income$25,458 $22,751 
Related Person Transactions
For information about our related person transactions, see Note 11 to the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
The Company’s market risk has not changed materially from the amounts and information reported in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report.
Item 4.  Controls and Procedures.
As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chair of the Board, President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to the Exchange Act Rule 13a-15 and Rule 15d-15. Based upon that evaluation, our Chair of the Board, President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.  Other Information
Item 1. Legal Proceedings.
We are or may become a party to various legal proceedings. We are not currently involved in any litigation nor, to our knowledge, is any litigation threatened against us where the outcome would, in our judgment based on information currently available to us, have a material adverse effect on the Company.
Item 1A. Risk Factors.
The following risk factor previously disclosed in our Annual Report is updated as follows:
If we are unsuccessful in identifying and completing investments that we believe are strategically compelling, we may decide to sell, liquidate or otherwise exit our business in one or more transactions, which could materially and adversely impact us, including our stock price.
We remain focused on evaluating potential acquisition and/or investment opportunities where we can create long-term value for our shareholders. We intend to remain disciplined as we seek an investment in a high-quality business with a compelling risk-reward profile. We cannot provide any assurances that we will be successful in identifying investments that we believe are strategically compelling and completing such transactions on favorable terms or at all. Our ability to identify and consummate investments is subject to significant risks, including the following:
•we may be unable to identify attractive investment opportunities;
•we may be unable to make an acquisition and/or investment because of competition from other real estate investors, such as private real estate companies, publicly traded REITs, non-traded REITs and institutional investment funds; and
•we may be unable to finance investments on favorable terms or at all.
We are concurrently taking steps to facilitate the potential wind down of our business. Before the end of this year, we expect to either announce a transaction or move forward with a plan to wind down our business as part of our continued efforts to maximize shareholder value. We cannot, however, provide any assurances that we will achieve this timeline. If we do not announce a transaction or a decision to move forward with a plan to wind down within the time frame we have identified, our stock price could be negatively impacted.
Other than as set forth above, there have been no material changes to the risk factors previously disclosed in our Annual Report.
Item 1B. Unresolved Staff Comments.
There are no unresolved staff comments.
Item 1C. Cybersecurity.
There have been no material changes for cybersecurity previously disclosed in our Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Surrender of Common Shares for Tax Withholding
During the three months ended March 31, 2024, certain of our employees surrendered common shares to satisfy their statutory tax withholding obligations in connection with the vesting of restricted common shares and restricted stock units.
PeriodTotal Number of Shares Purchased(1)Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number or Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
January 2024— $— N/AN/A
February 2024161,837 $18.88 N/AN/A
March 2024— $— N/AN/A
Total161,837 $18.88 

(1) The number of shares repurchased represents common shares surrendered by certain of our employees to satisfy their statutory federal and state tax obligations associated with the vesting of restricted common shares and restricted stock units
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of beneficial interest. With respect to these shares, the price paid per share is based on the closing price of our common shares as of the date of the determination of the statutory minimum federal and state tax obligations.
 
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense condition of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

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Item 6.  Exhibits.
Exhibit 
Number		Description
3.1
Articles of Amendment and Restatement of Declaration of Trust of the Company, dated July 1, 1994, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K filed August 1, 2014.)
3.2
Articles Supplementary, dated October 10, 2006. (Incorporated by reference to the Company’s Current Report on Form 8-K filed October 11, 2006.)
3.3
Articles Supplementary, dated May 31, 2011. (Incorporated by reference to the Company’s Current Report on Form 8-K filed May 31, 2011.)
3.4
Articles Supplementary, dated March 14, 2018. (Incorporated by reference to the Company’s Current Report on Form 8-K filed March 15, 2018.)
3.5
Fourth Amended and Restated Bylaws of the Company, adopted April 2, 2020. (Incorporated by reference to the Company’s Current Report on Form 8-K filed April 3, 2020.)
4.1
Form of Common Share Certificate. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)
4.2
Form of 6.50% Series D Cumulative Convertible Preferred Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.)
31.1
31.2
32.1
Section 1350 Certification. (Furnished herewith.)
101The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) related notes to these condensed consolidated financial statements, tagged as blocks of text and in detail. (Filed herewith.)
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).






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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
EQUITY COMMONWEALTH
By:/s/ David A. Helfand
David A. Helfand
Chair of the Board, President and Chief Executive Officer
Dated:May 2, 2024
By:/s/ William H. Griffiths
William H. Griffiths
Executive Vice President, Chief Financial Officer and Treasurer
Dated:May 2, 2024

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