CommonWealth REIT Announces 2013 Fourth Quarter and Year End Results

  CommonWealth REIT Announces 2013 Fourth Quarter and Year End Results

$0.63 of Normalized FFO Per Share for the 2013 Fourth Quarter; +8.4% Increase
         in Same Property Cash Basis NOI for the 2013 Fourth Quarter

5.2 Million Square Feet of Leasing Activity in 2013; 89.6% Leased Portfolio at
                                Year End 2013

   $249.1 Million of Gross Proceeds from Sale of 43 Properties in 2013; 45
Properties With $536.6 Million of Net Asset Value Currently Being Marketed For
                     Sale and Expected to be Sold in 2014

Business Wire

NEWTON, Mass. -- February 27, 2014

CommonWealth REIT (NYSE: CWH) today announced financial results for the
quarter and year ended December 31, 2013.

Highlights for the Fourth Quarter and Year Ended December 31, 2013:

  *$0.63 per share and $2.67 per share of normalized funds from operations,
    or Normalized FFO, for the quarter and year ended December 31, 2013,
    respectively.
  *81.4% ratio of common share dividends paid to cash available for
    distribution, or CAD, for the trailing four quarters ended December 31,
    2013.
  *89.6% of CWH’s total square feet from continuing operations leased as of
    December 31, 2013, compared to 89.6% as of September 30, 2013.
  *1.1 million square feet of leasing activity during the fourth quarter of
    2013, bringing total leasing activity for the year ended December 31, 2013
    to approximately 5.2 million square feet.
  *+3.1% higher weighted average cash rental rates than prior cash rental
    rates for the same space for leases entered into during the fourth quarter
    of 2013. +8.5% higher weighted average GAAP rental rates than prior GAAP
    rental rates for the same space for leases entered into during the fourth
    quarter of 2013.

  *+8.4% increase in same property cash basis net operating income, or Cash
    Basis NOI, during the fourth quarter of 2013 for properties owned
    continuously since October 1, 2012. +3.6% increase in same property GAAP
    net operating income, or NOI, during the fourth quarter of 2013 for
    properties owned continuously since October 1, 2012.
  *$249.1 million of gross proceeds from the sale of 43 suburban office and
    industrial properties with approximately 8.3 million square feet during
    the year ended December 31, 2013. As of December 31, 2013, 45 properties
    with approximately 8.4 million square feet are classified as held for sale
    with a net book value of $536.6 million.
  *66.2% of CWH’s total Cash Basis NOI from continuing operations during the
    fourth quarter of 2013 was generated from 38 properties with approximately
    21.0 million square feet located in central business district, or CBD,
    locations.

Adam Portnoy, Managing Trustee and President of CWH, made the following
statement regarding today’s announcement:

“The portfolio repositioning, which began several years ago to focus on high
quality CBD office properties, delivered positive results and meaningful value
to shareholders in the fourth quarter of 2013. On most financial and operating
metrics, the fourth quarter exceeded expectations, with improving Normalized
FFO per share, leasing activity and same property results. We believe that our
strong fourth quarter results can be attributed to the successful execution of
our strategy, as CWH’s portfolio now primarily consists of high quality office
properties located in top performing market areas. We expect to sell all of
the remaining 45 non-core properties in 2014, which will successfully complete
CWH’s portfolio repositioning.”

Results for the Quarter Ended December 31, 2013:

Normalized FFO available for CommonWealth REIT common shareholders for the
quarter ended December 31, 2013 was $74.8 million, or $0.63 per share basic
and diluted, compared to Normalized FFO available for CommonWealth REIT common
shareholders for the quarter ended December 31, 2012 of $68.7 million, or
$0.82 per share basic and diluted.

CAD for the quarter ended December 31, 2013 was $18.6 million, or $0.16 per
share, compared to CAD for the quarter ended December 31, 2012 of $15.5
million, or $0.19 per share.

Both Normalized FFO and CAD excludes shareholder litigation costs and related
expenses totaling $6.5 million, or $0.05 per share, for the quarter ended
December 31, 2013.

Net loss available for CommonWealth REIT common shareholders was $16.5 million
for the quarter ended December 31, 2013, compared to a net loss of $163.9
million for the same period last year. Net loss available for CommonWealth
REIT common shareholders per share, basic and diluted (EPS), for the quarters
ended December 31, 2013 and 2012 was $0.14 and $1.96, respectively. Net loss
for the quarter ended December 31, 2013 includes a net loss from property
sales of $25.5 million, or $0.22 per share, and $6.5 million, or $0.05 per
share, of shareholder litigation costs and related expenses. Net loss for the
quarter ended December 31, 2012 includes a loss on asset impairment of $168.6
million, or $2.01 per share.

The weighted average number of basic and diluted common shares outstanding for
the quarters ended December 31, 2013 and 2012, was 118,387,388 and 83,804,068,
respectively.

A reconciliation of net loss attributable to CommonWealth REIT, determined
according to U.S. generally accepted accounting principles, or GAAP, to FFO
available for CommonWealth REIT common shareholders and Normalized FFO
available for CommonWealth REIT common shareholders, and a reconciliation of
Normalized FFO available for CommonWealth REIT common shareholders to CAD for
the quarters ended December 31, 2013 and 2012 appears later in this press
release.

Results for the Year Ended December 31, 2013:

Normalized FFO available for CommonWealth REIT common shareholders for the
year ended December 31, 2013 was $300.6 million, or $2.67 per share basic and
diluted, compared to Normalized FFO available for CommonWealth REIT common
shareholders for the year ended December 31, 2012 of $283.8 million, or $3.39
per share basic and diluted.

CAD for the year ended December 31, 2013 was $134.8 million, or $1.20 per
share, compared to CAD for the year ended December 31, 2012 of $131.4 million,
or $1.57 per share.

Both Normalized FFO and CAD excludes shareholder litigation costs and related
expenses totaling $30.4 million, or $0.27 per share, for the year ended
December 31, 2013.

Net loss available for CommonWealth REIT common shareholders was $221.7
million for the year ended December 31, 2013, compared to a net loss of $152.0
million for the same period last year. Net loss available for CommonWealth
REIT common shareholders per share, basic and diluted (EPS), for the years
ended December 31, 2013 and 2012 was $1.97 and $1.81, respectively. Net loss
for the year ended December 31, 2013 includes a loss on asset impairment of
$227.1 million, or $2.02 per share, losses on early extinguishment of debt
totaling $61.1 million, or $0.54 per share, and shareholder litigation costs
and related expenses of $30.4 million, or $0.27 per share, partially offset by
a gain of $66.3 million, or $0.59 per share, from the sale of an equity
investment. Net loss for the year ended December 31, 2012 includes a loss on
asset impairment of $168.6 million, or $2.01 per share.

The weighted average number of basic and diluted common shares outstanding for
the years ended December 31, 2013 and 2012, was 112,377,732 and 83,749,644,
respectively.

A reconciliation of net loss attributable to CommonWealth REIT, determined
according to GAAP, to FFO available for CommonWealth REIT common shareholders
and Normalized FFO available for CommonWealth REIT common shareholders, and a
reconciliation of Normalized FFO available for CommonWealth REIT common
shareholders to CAD for the years ended December 31, 2013 and 2012 appears
later in this press release.

Operating Results (excluding CWH’s former consolidated subsidiary, Select
Income REIT, or SIR):

As of December 31, 2013, 89.6% of CWH’s total square feet included within
continuing operations was leased, compared to 89.6% as of September 30, 2013.
During the quarter ended December 31, 2013, CWH entered into 1,084,000 square
feet of leases, including lease renewals for 887,000 square feet and new
leases for 197,000 square feet, and 1,029,000 square feet expired. Leases
entered into during the fourth quarter of 2013 had weighted average cash and
GAAP rental rates that were approximately +3.1% and +8.5% higher than prior
rental rates for the same space, respectively. The increases in both cash and
GAAP rental rates during the fourth quarter of 2013 were primarily driven by
388,000 square feet of leases signed in CBD properties which had weighted
average cash and GAAP rental rates that were approximately +12.6% and +19.7%
higher than prior rental rates for the same space, respectively.

The weighted average lease term based on square feet for leases entered into
during the fourth quarter of 2013 was 7.3 years. Commitments for tenant
improvements, leasing commission costs and concessions for leases entered into
during the fourth quarter of 2013 totaled approximately $19.3 million, or
$2.44 per square foot per year of the lease term.

Same property occupancy for properties owned continuously since October 1,
2012 decreased -0.3 percentage points from 89.9% as of December 31, 2012, to
89.6% as of December 31, 2013. Same property occupancy for CBD properties
increased +0.1 percentage points from 88.0% as of December 31, 2012 to 88.1%
as of December 31, 2013; same property occupancy for suburban properties
decreased -0.8 percentage points from 92.2% as of December 31, 2012 to 91.4%
as of December 31, 2013.

Same property Cash Basis NOI increased by +8.4% during the quarter ended
December 31, 2013, which was driven by a +6.0% increase in Cash Basis NOI at
CBD properties and a +13.4% increase in Cash Basis NOI at suburban properties.
Same property NOI increased by +3.6% during the quarter ended December 31,
2013, which was driven by a +3.1% increase in NOI at CBD properties and a
+4.4% increase in NOI at suburban properties.

A reconciliation of NOI and Cash Basis NOI to net loss, determined according
to GAAP, for the quarters and years ended December 31, 2013 and 2012 appears
later in this press release.

Recent Acquisitions and Sales Activities (excluding activities of SIR):

Since January 1, 2013, CWH has not acquired or entered into any agreements to
purchase properties.

As previously disclosed, CWH’s business plan has been focused on repositioning
its portfolio towards high quality CBD office properties and away from
suburban office and industrial properties. In early 2013, CWH announced that
it would offer for sale 40 primarily suburban properties with a combined 6.7
million square feet. All of these properties were sold during 2013 for an
aggregate sale price of $158.3 million, excluding closing costs. In addition,
CWH also sold a land parcel and three suburban properties with a combined 1.7
million square feet during 2013, for an aggregate sale price of $90.8 million,
excluding closing costs and other adjustments.

As of December 31, 2013, CWH had 45 properties with a combined 8.4 million
square feet classified as held for sale. CWH expects to sell these properties
during 2014; however, no assurance can be given that any of these properties
will be sold in that time period or at all.

Recent Financing Activities (excluding activities of SIR):

In October 2013, CWH prepaid, at par, all $99.0 million of its 5.75% unsecured
senior notes due in 2014, using borrowings under its revolving credit
facility.

Presentation:

As of December 31, 2013, CWH owned approximately 44.2% of the common shares of
SIR, a publicly traded real estate investment trust, or REIT, that primarily
owns net leased, single tenant office and industrial properties. On July 2,
2013, SIR issued and sold to the public 10.5 million common shares in an
underwritten public offering. Prior to this offering, CWH’s 22.0 million
common shares of SIR represented more than 50% of SIR's outstanding common
shares and SIR’s financial position and results of operations were
consolidated in CWH’s financial statements. Beginning on July 2, 2013, CWH no
longer consolidates its investment in SIR, but instead accounts for its
investment in SIR under the equity method. Unless the context indicates
otherwise, the amounts reported in this press release include SIR’s financial
position and results of operations on a consolidated basis with CWH for
periods prior to July 2, 2013, when SIR was CWH’s consolidated subsidiary.

For further information about SIR and its subsidiaries, please see SIR’s
periodic reports and other filings with the Securities and Exchange
Commission, or the SEC, which are available at the SEC’s website at
www.sec.gov. References in this press release to SIR’s filings with the SEC
are included to identify the source of SIR information only, and the
information in SIR’s filings with the SEC is not incorporated by reference
into this press release.

Conference Call:

Later today, at 1:00 p.m. Eastern Time, Adam Portnoy, President and Managing
Trustee, and John Popeo, Chief Financial Officer, will host a conference call
to discuss the financial results for the quarter and year ended December 31,
2013.

The conference call telephone number is (877) 531-2986. Participants calling
from outside the United States and Canada should dial (612) 332-7516. No pass
code is necessary to access either call. Participants should dial in about 15
minutes prior to the scheduled start of the call. A replay of the conference
call will be available through 11:59 p.m. Eastern Time on Thursday, March 6,
2014. To hear the replay, dial (320) 365-3844. The replay pass code is 318037.

A live audio webcast of the conference call will also be available in a listen
only mode on CWH’s website, which is located at www.cwhreit.com. Participants
wanting to access the webcast should visit CWH’s website about five minutes
before the call. The archived webcast will be available for replay on CWH’s
website for about one week after the call.

The transcription, recording and retransmission in any way of CWH’s fourth
quarter conference call are strictly prohibited without the prior written
consent of CWH.

Supplemental Data:

A copy of CWH’s Fourth Quarter 2013 Supplemental Operating and Financial Data
is available for download at CWH’s website, www.cwhreit.com. CWH’s website is
not incorporated as part of this press release.

CommonWealth REIT is a real estate investment trust that primarily owns office
properties throughout the United States. CWH is headquartered in Newton, MA.

Please see the pages attached hereto for a more detailed statement of CWH’s
operating results and financial condition, for an explanation of CWH’s
calculation of FFO, Normalized FFO, CAD, NOI and Cash Basis NOI and for a
reconciliation of those non-GAAP amounts to net loss and net loss attributable
to CommonWealth REIT.

                WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER CWH USES WORDS SUCH AS
“BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR
EXPRESSIONS, CWH IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING
STATEMENTS ARE BASED UPON CWH’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT
FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY
THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE,
THIS PRESS RELEASE STATES THAT CWH EXPECTS TO SELL IN 2014 THE 45 PROPERTIES
THAT ARE CLASSIFIED AS HELD FOR SALE AS OF DECEMBER 31, 2013. HOWEVER, CWH MAY
BE UNABLE TO SELL SOME OR ALL OF THESE PROPERTIES IN 2014 OR EVER, ON TERMS
CWH IS WILLING TO ACCEPT OR OTHERWISE. ALSO, REMOVAL OF ALL OF CWH’S TRUSTEES
PURSUANT TO THE CONSENT SOLICITATION BY RELATED FUND MANAGEMENT, LLC AND
CORVEX MANAGEMENT LP MAY RESULT IN CWH NOT SELLING SOME OR ALL OF THESE
PROPERTIES. ACCORDINGLY, SOME OR ALL OF THE PROPERTIES CWH HAS IDENTIFIED FOR
SALE MAY NOT BE SOLD OR THE SALES OF THESE PROPERTIES MAY BE DELAYED.

THE INFORMATION CONTAINED IN CWH’S FILINGS WITH THE SEC, INCLUDING UNDER THE
CAPTION "RISK FACTORS" IN CWH’S PERIODIC REPORTS, OR INCORPORATED THEREIN,
IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM CWH’S
FORWARD LOOKING STATEMENTS. CWH’S FILINGS WITH THE SEC ARE AVAILABLE ON THE
SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, CWH DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD
LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.


CommonWealth REIT

Consolidated Statements of Operations, Funds from Operations and

Normalized Funds from Operations

(amounts in thousands)

(unaudited)
                                                        
                       Quarter Ended December 31,       Year Ended December 31,
                       2013           2012              2013            2012
Revenues:
Rental income          $ 157,815      $ 188,529         $ 707,380       $ 709,390
Tenant
reimbursements          40,604        43,428           178,156        172,515
and other
income
Total revenues          198,419       231,957          885,536        881,905
                                                                          
Expenses:
Operating                90,104         97,972            370,869         356,604
expenses
Depreciation
and                      51,908         57,931            218,854         209,759
amortization
General and              16,221         12,313            77,209          46,057
administrative
Acquisition             (19)          646              318            5,648
related costs
Total expenses          158,214       168,862          667,250        618,068
                                                                          
Operating                40,205         63,095            218,286         263,837
income
                                                                          
Interest and             298            384               1,229           1,404
other income
Interest
expense
(including net
amortization
of debt
discounts,
premiums and             (38,559)       (53,303)          (173,011)       (201,840)
deferred
financing fees
of ($256),
$635, $9 and
$3,296,
respectively)
Loss on early
extinguishment           (25)           -                 (60,052)        (287)
of debt
Gain on sale
of equity                -              -                 66,293          -
investment
Gain on
issuance of
shares by an            -             7,246            -              7,246
equity
investee
Income from
continuing
operations
before income
tax expense              1,919          17,422            52,745          70,360
and equity in
earnings of
investees


Income tax               (107)          (1,301)           (2,634)         (3,207)
expense
Equity in
earnings of             10,841        2,765            25,754         11,420
investees
Income from
continuing               12,653         18,886            75,865          78,573
operations
Discontinued
operations:
Income from
discontinued             10,085         2,476             15,867          9,783
operations
Loss on asset
impairment
from                     (1,507)        (168,632)         (227,122)       (168,632)
discontinued
operations
Loss on early
extinguishment
of debt from             (1,011)        -                 (1,011)         (1,608)
discontinued
operations
Net (loss)
gain on sale
of properties           (25,521)      -                (22,162)       2,039
from
discontinued
operations
Loss before
gain on sale             (5,301)        (147,270)         (158,563)       (79,845)
of properties
Gain on sale            -             -                1,596          -
of properties
Net loss                 (5,301)        (147,270)         (156,967)       (79,845)
Net income
attributable
to
noncontrolling          -             (5,514)          (20,093)       (15,576)
interest in
consolidated
subsidiary
Net loss
attributable
to                       (5,301)        (152,784)         (177,060)       (95,421)
CommonWealth
REIT
Preferred                (11,151)       (11,151)          (44,604)        (51,552)
distributions
Excess
redemption
price paid
over carrying           -             -                -              (4,985)
value of
preferred
shares
Net loss
available for
CommonWealth           $ (16,452)     $ (163,935)       $ (221,664)     $ (151,958)
REIT common
shareholders
                                                                          
                                                                          
Amounts
attributable
to
CommonWealth
REIT common
shareholders:
Income from
continuing             $ 1,502        $ 2,221           $ 12,764        $ 6,460
operations
Income from
discontinued             10,085         2,476             15,867          9,783
operations
Loss on asset
impairment
from                     (1,507)        (168,632)         (227,122)       (168,632)
discontinued
operations
Loss on early
extinguishment
of debt from             (1,011)        -                 (1,011)         (1,608)
discontinued
operations
Net (loss)
gain on sale
of properties           (25,521)      -                (22,162)       2,039
from
discontinued
operations
Net loss               $ (16,452)     $ (163,935)       $ (221,664)     $ (151,958)
                                                                          


CommonWealth REIT

Consolidated Statements of Operations, Funds from Operations and

Normalized Funds from Operations (continued)

(amounts in thousands, except per share data)

(unaudited)
                                                                
                             Quarter Ended December 31,       Year Ended December 31,
                             2013           2012              2013            2012
Calculation of
FFO:^(1)
Net loss
attributable to              $ (5,301)      $ (152,784)       $ (177,060)     $ (95,421)
CommonWealth REIT
      depreciation
      and
Plus: amortization             51,908         57,931            218,854         209,759
      from
      continuing
      operations
      depreciation
      and
Plus: amortization             825            12,021            28,098          48,533
      from
      discontinued
      operations
      loss on asset
      impairment
Plus: from                     1,507          168,632           227,122         168,632
      discontinued
      operations
Plus: FFO from                 14,568         5,313             33,564          21,383
      investees
      net income
      attributable
Plus: to                       -              5,514             20,093          15,576
      noncontrolling
      interest
      FFO
      attributable
Less: to                       -              (7,149)           (26,270)        (19,419)
      noncontrolling
      interest
Less: gain on sale             -              -                 (1,596)         -
      of properties
      net loss
      (gain) on sale
Less: of properties            25,521         -                 22,162          (2,039)
      from
      discontinued
      operations
      equity in
Less: earnings of             (10,841)      (2,765)          (25,754)       (11,420)
      investees
FFO attributable to            78,187         86,713            319,213         335,584
CommonWealth REIT
Less: preferred               (11,151)      (11,151)         (44,604)       (51,552)
      distributions
FFO available for
CommonWealth REIT            $ 67,036       $ 75,562          $ 274,609       $ 284,032
common shareholders
                                                                                
Calculation of
Normalized FFO:^(1)
FFO attributable to          $ 78,187       $ 86,713          $ 319,213       $ 335,584
CommonWealth REIT
      acquisition
      related costs
Plus: from                     (19)           646               318             5,648
      continuing
      operations
Plus: normalized FFO           14,799         5,417             34,149          21,710
      from investees
      loss on early
      extinguishment
Plus: of debt from             25             -                 60,052          287
      continuing
      operations
      loss on early
      extinguishment
Plus: of debt from             1,011          -                 1,011           1,608
      discontinued
      operations
      shareholder
      litigation
Plus: costs and                6,475          -                 30,392          -
      related
      expenses
      average
      minimum rent
Plus: from direct              329            329               1,316           1,316
      financing
      lease
      FFO
      attributable
Plus: to                       -              7,149             26,270          19,419
      noncontrolling
      interest
      normalized FFO
      attributable
Less: to                       -              (7,491)           (26,573)        (20,132)
      noncontrolling
      interest
Less: FFO from                 (14,568)       (5,313)           (33,564)        (21,383)
      investees
      interest
      earned from
Less: direct                   (251)          (333)             (1,128)         (1,452)
      financing
      lease
      gain on sale
Less: of equity                -              -                 (66,293)        -
      investment
      gain on
      issuance of
Less: shares by an            -             (7,246)          -              (7,246)
      equity
      investee
Normalized FFO
attributable to                85,988         79,871            345,163         335,359
CommonWealth REIT
Less: preferred               (11,151)      (11,151)         (44,604)       (51,552)
      distributions
Normalized FFO
available for                $ 74,837       $ 68,720          $ 300,559       $ 283,807
CommonWealth REIT
common shareholders
                                                                                
Weighted average
common shares                 118,387       83,804           112,378        83,750
outstanding – basic
and diluted^(2)
                                                                                
Per common share:
   Income from
   continuing
   operations
   attributable to
     CommonWealth
     REIT common
     shareholders –          $ 0.01         $ 0.03            $ 0.11          $ 0.08
     basic and
     diluted
   Loss from
   discontinued
   operations
   attributable to
     CommonWealth
     REIT common
     shareholders –          $ (0.15)       $ (1.98)          $ (2.09)        $ (1.89)
     basic and
     diluted
   Net loss
   available for
   CommonWealth REIT
   common
     shareholders –
     basic and               $ (0.14)       $ (1.96)          $ (1.97)        $ (1.81)
     diluted
   FFO available for
   CommonWealth REIT
   common
     shareholders –
     basic and               $ 0.57         $ 0.90            $ 2.44          $ 3.39
     diluted
   Normalized FFO
   available for
   CommonWealth REIT
   common
     shareholders –
     basic and               $ 0.63         $ 0.82            $ 2.67          $ 3.39
     diluted
                                                                                

                              CommonWealth REIT
       Consolidated Statements of Operations, Funds from Operations and
                 Normalized Funds from Operations (continued)
                            (amounts in thousands)
                                 (unaudited)

^(1) CWH calculates FFO and Normalized FFO as shown above. FFO is calculated
on the basis defined by The National Association of Real Estate Investment
Trusts, or NAREIT, which is net income, calculated in accordance with GAAP,
plus real estate depreciation and amortization, loss on real estate asset
impairment, net income attributable to noncontrolling interest and FFO from
equity investees, excluding any gain or loss on sale of properties, equity in
earnings from investees and FFO attributable to noncontrolling interests.
CWH’s calculation of Normalized FFO differs from NAREIT's definition of FFO
because CWH excludes acquisition related costs, gains from issuance of shares
by equity investees, gain from sale of equity investment, loss on early
extinguishment of debt, shareholder litigation costs and related expenses, the
difference between average minimum rent and interest earned from CWH’s direct
financing lease and the difference between FFO and Normalized FFO from equity
investees and noncontrolling interests. CWH considers FFO and Normalized FFO
to be appropriate measures of operating performance for a REIT, along with net
loss, net loss attributable to CommonWealth REIT, net loss available for
CommonWealth REIT common shareholders, operating income and cash flow from
operating activities. CWH believes 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 CWH’s operating performance between periods and
with other REITs. FFO and Normalized FFO are among the factors considered by
CWH’s Board of Trustees when determining the amount of distributions to CWH’s
shareholders. Other factors include, but are not limited to, requirements to
maintain CWH’s status as a REIT, limitations in CWH’s revolving credit
facility and term loan agreement and public debt covenants, the availability
of debt and equity capital to CWH, CWH’s cash available for distribution,
CWH’s expectation of its future capital requirements and operating
performance, and CWH’s expected needs and availability of cash to pay its
obligations. 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 loss, net loss attributable to CommonWealth REIT, net loss
available for CommonWealth REIT common shareholders, operating income or cash
flow from operating activities, determined in accordance with GAAP, or as
indicators of CWH’s financial performance or liquidity, nor are these measures
necessarily indicative of sufficient cash flow to fund all of CWH’s needs.
These measures should be considered in conjunction with net loss, net loss
attributable to CommonWealth REIT, net loss available for CommonWealth REIT
common shareholders, operating income and cash flow from operating activities
as presented in CWH’s Consolidated Statements of Operations, Consolidated
Statements of Comprehensive (Loss) Income and Consolidated Statements of Cash
Flows. Other REITs and real estate companies may calculate FFO and Normalized
FFO differently than CWH does.

^(2) As of December 31, 2013, CWH’s 15,180 outstanding series D cumulative
convertible preferred shares were convertible into 7,298 common shares and the
effect of a conversion of CWH’s series D cumulative convertible preferred
shares on income from continuing operations attributable to CommonWealth REIT
common shareholders per share is anti-dilutive to income, FFO and Normalized
FFO for all periods presented. Set forth below is the calculation of diluted
net loss available for common shareholders, diluted FFO available for common
shareholders, diluted Normalized FFO available for common shareholders and
diluted weighted average common shares outstanding.

                                                
                         Quarter Ended December 31,       Year Ended December 31,
                         2013         2012              2013          2012
                                                                            
  Net loss
  available for
  CommonWealth           $ (16,452)     $ (163,935)       $ (221,664)     $ (151,958)
  REIT common
  shareholders
  Add - Series D
  convertible             6,167         6,167            24,668         24,668
  preferred
  distributions
  Net loss
  available for
  CommonWealth           $ (10,285)     $ (157,768)       $ (196,996)     $ (127,290)
  REIT common
  shareholders –
  diluted
                                                                            
  FFO available
  for
  CommonWealth           $ 67,036       $ 75,562          $ 274,609       $ 284,032
  REIT common
  shareholders
  Add - Series D
  convertible             6,167         6,167            24,668         24,668
  preferred
  distributions
  FFO available
  for
  CommonWealth           $ 73,203       $ 81,729          $ 299,277       $ 308,700
  REIT common
  shareholders –
  diluted
                                                                            
  Normalized FFO
  available for
  CommonWealth           $ 74,837       $ 68,720          $ 300,559       $ 283,807
  REIT common
  shareholders
  Add - Series D
  convertible              6,167          6,167             24,668          24,668
  preferred
  distributions
  Normalized FFO
  available for                                                      
  CommonWealth
  REIT common
    shareholders         $ 81,004       $ 74,887          $ 325,227       $ 308,475
    – diluted
                                                                            
  Weighted
  average common
  shares                   118,387        83,804            112,378         83,750
  outstanding –
  basic
  Effect of
  dilutive
  Series D                7,298         7,298            7,298          7,298
  preferred
  shares
  Weighted
  average common
  shares                  125,685       91,102           119,676        91,048
  outstanding –
  diluted
                                                                            

                                                                
CommonWealth REIT

Calculation of Cash Available for Distribution

(amounts in thousands, except per share data)

(unaudited)
        
                             Quarter Ended December          Year Ended December 31,
                             31,
                             2013           2012             2013            2012
Calculation of
CAD:^(1)
Normalized FFO
available for                $ 74,837       $ 68,720         $ 300,559       $ 283,807
CommonWealth REIT
common shareholders
      lease value
      amortization
Plus: from                     2,445          2,588            10,158          10,274
      continuing
      operations
      lease value
      amortization
Plus: from                     (126)          (89)             (623)           (312)
      discontinued
      operations
      amortization
Plus: of prepaid
      interest and
      debt discounts
        from
        continuing             (255)          635              9               3,296
        operations
      amortization
Plus: of prepaid
      interest and
      debt discounts
        from
        discontinued           15             18               72              109
        operations
Plus: distributions            10,120         4,279            24,079          16,816
      from investees
      non-cash
Plus: general and
      administrative
      expenses paid
        in common              338            542              2,113           1,686
        shares^(2)
      minimum cash
      rent from
Plus: direct                   2,025          2,025            8,098           8,098
      financing
      lease
      normalized FFO
      attributable
Plus: to                       -              7,491            26,573          20,132
      noncontrolling
      interest
      CAD
      attributable
Less: to                       -              (6,119)          (23,792)        (17,968)
      noncontrolling
      interest
      average
      minimum rent
Less: from direct              (329)          (329)            (1,316)         (1,316)
      financing
      lease
      straight-line
Less: rent from                (5,522)        (10,667)         (32,549)        (41,569)
      continuing
      operations
      straight-line
Less: rent from                349            521              1,320           2,757
      discontinued
      operations
      recurring
Less: capital                  (50,510)       (48,658)         (145,795)       (132,725)
      expenditures
Less: Normalized FFO          (14,799)      (5,417)         (34,149)       (21,710)
      from investees
CAD                          $ 18,588       $ 15,540         $ 134,757       $ 131,375
                                                                               
Weighted average
common shares                 118,387       83,804          112,378        83,750
outstanding - basic
                                                                               
CAD per share                $ 0.16         $ 0.19           $ 1.20          $ 1.57
                                                                               

(1) CWH calculates CAD as shown above. CWH considers CAD to be an appropriate
measure of its operating performance, along with net loss, net loss
attributable to CommonWealth REIT, net loss available for CommonWealth REIT
common shareholders, operating income and cash flow from operating activities.
CWH believes that CAD provides useful information to investors because CAD may
facilitate a comparison of cash based operating performance between periods
and with other REITs. CAD does not represent cash generated by operating
activities in accordance with GAAP and should not be considered as an
alternative to net loss, net loss attributable to CommonWealth REIT, net loss
available for CommonWealth REIT common shareholders, operating income or cash
flow from operating activities, determined in accordance with GAAP, or as an
indicator of CWH’s financial performance or liquidity, nor is this measure
necessarily indicative of sufficient cash flow to fund all of CWH’s needs.
This measure should be considered in conjunction with net loss, net loss
attributable to CommonWealth REIT, net loss available for CommonWealth REIT
common shareholders, operating income and cash flow from operating activities
as presented in CWH’s Consolidated Statements of Operations, Consolidated
Statements of Comprehensive (Loss) Income and Consolidated Statements of Cash
Flows. Other REITs and real estate companies may calculate CAD differently
than CWH does.

(2) Represents the amortized value of shares issued during the year to
trustees of CWH and SIR (amounts for SIR are only for the periods when SIR was
a consolidated subsidiary of CWH), to officers of CWH and SIR, and to Reit
Management & Research LLC employees, under CWH's and SIR's equity award plans.

                                                          
CommonWealth REIT

Calculation of Property Net Operating Income (NOI) and Cash Basis NOI

(amounts in thousands)

(unaudited)
                                                                          
                       Quarter Ended December 31,       Year Ended December 31,
                       2013           2012              2013            2012
Calculation of
NOI and Cash
Basis NOI:^(1)
Rental income          $ 157,815      $ 188,529         $ 707,380       $ 709,390
Tenant
reimbursements           40,604         43,428            178,156         172,515
and other
income
Operating               (90,104)      (97,972)         (370,869)      (356,604)
expenses
Property net
operating                108,315        133,985           514,667         525,301
income (NOI)
Non cash
straight line            (5,522)        (10,667)          (32,549)        (41,569)
rent
adjustments
Lease value              2,445          2,588             10,158          10,274
amortization
Lease
termination             (1,043)       (1,920)          (2,758)        (5,146)
fees
Cash Basis NOI         $ 104,195      $ 123,986         $ 489,518       $ 488,860
                                                                          
Reconciliation
of Cash Basis
NOI to Net
Loss:
Cash Basis NOI         $ 104,195      $ 123,986         $ 489,518       $ 488,860
Non cash
straight line            5,522          10,667            32,549          41,569
rent
adjustments
Lease value              (2,445)        (2,588)           (10,158)        (10,274)
amortization
Lease
termination             1,043         1,920            2,758          5,146
fees
Property NOI             108,315        133,985           514,667         525,301
Depreciation
and                      (51,908)       (57,931)          (218,854)       (209,759)
amortization
General and              (16,221)       (12,313)          (77,209)        (46,057)
administrative
Acquisition             19            (646)            (318)          (5,648)
related costs
Operating                40,205         63,095            218,286         263,837
income
                                                                          
Interest and             298            384               1,229           1,404
other income
Interest                 (38,559)       (53,303)          (173,011)       (201,840)
expense
Loss on early
extinguishment           (25)           -                 (60,052)        (287)
of debt
Gain on sale
of equity                -              -                 66,293          -
investment
Gain on
issuance of
shares by an            -             7,246            -              7,246
equity
investee
Income from
continuing
operations
before income            1,919          17,422            52,745          70,360
tax expense
and equity in
earnings of
investees
Income tax               (107)          (1,301)           (2,634)         (3,207)
expense
Equity in
earnings of             10,841        2,765            25,754         11,420
investees
Income from
continuing               12,653         18,886            75,865          78,573
operations
Discontinued
operations:
Income from
discontinued             10,085         2,476             15,867          9,783
operations
Loss on asset
impairment
from                     (1,507)        (168,632)         (227,122)       (168,632)
discontinued
operations
Loss on early
extinguishment
of debt from             (1,011)        -                 (1,011)         (1,608)
discontinued
operations
Net loss
(gain) on sale
of properties           (25,521)      -                (22,162)       2,039
from
discontinued
operations
Loss before
gain on sale             (5,301)        (147,270)         (158,563)       (79,845)
of properties
Gain on sale            -             -                1,596          -
of properties
Net loss               $ (5,301)      $ (147,270)       $ (156,967)     $ (79,845)
                                                                          

(1) CWH calculates NOI on a GAAP and cash basis as shown above. CWH defines
NOI as income from CWH’s real estate including lease termination fees received
from tenants less CWH’s property operating expenses, which expenses include
property marketing costs. NOI excludes amortization of capitalized tenant
improvement costs and leasing commissions. CWH defines Cash Basis NOI as NOI
less non cash straight line rent adjustments, lease value amortization and
lease termination fees. CWH considers NOI and Cash Basis NOI to be appropriate
supplemental measures to net loss because they may help both investors and
management to understand the operations of CWH’s properties. CWH uses NOI and
Cash Basis NOI internally to evaluate individual, regional and companywide
property level performance, and CWH believes that NOI and Cash Basis NOI
provide useful information to investors regarding CWH’s results of operations
because they reflect only those income and expense items that are incurred at
the property level and may facilitate comparisons of CWH’s operating
performance between periods and with other REITs. The calculation of NOI and
Cash Basis NOI exclude certain components of net loss in order to provide
results that are more closely related to CWH’s properties' results of
operations. NOI and Cash Basis NOI do not represent cash generated by
operating activities in accordance with GAAP, and should not be considered as
alternatives to net loss, net loss attributable to CommonWealth REIT, net loss
available for CommonWealth REIT common shareholders, operating income or cash
flow from operating activities, determined in accordance with GAAP, or as
indicators of CWH’s financial performance or liquidity, nor are these measures
necessarily indicative of sufficient cash flow to fund all of CWH’s needs.
These measures should be considered in conjunction with net loss, net loss
attributable to CommonWealth REIT, net loss available for CommonWealth REIT
common shareholders, operating income and cash flow from operating activities
as presented in CWH’s Consolidated Statements of Operations, Consolidated
Statements of Comprehensive (Loss) Income and Consolidated Statements of Cash
Flows. Other REITs and real estate companies may calculate NOI and Cash Basis
NOI differently than CWH does.

                                   
CommonWealth REIT

Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)
                                             
                                             December 31,
                                             2013             2012
ASSETS
  Real estate properties:
      Land                                   $ 699,135           $ 1,531,416
      Buildings and improvements              4,838,030          6,297,993
                                               5,537,165           7,829,409
      Accumulated depreciation                (895,059)          (1,007,606)
                                               4,642,106           6,821,803
  Properties held for sale                     573,531             171,832
  Acquired real estate leases, net             255,812             427,756
  Equity investments                           517,991             184,711
  Cash and cash equivalents                    222,449             102,219
  Restricted cash                              22,101              16,626
  Rents receivable, net of allowance
  for doubtful accounts of $7,885
      and $9,962, respectively                 223,769             253,394
  Other assets, net                           188,675            211,293
  Total assets                               $ 6,646,434         $ 8,189,634
                                                                   
LIABILITIES AND SHAREHOLDERS' EQUITY
  Revolving credit facility                  $ 235,000           $ 297,000
  SIR revolving credit facility                -                   95,000
  Senior unsecured debt, net                   1,855,900           2,972,994
  Mortgage notes payable, net                  914,510             984,827
  Liabilities related to properties            28,734              2,339
  held for sale
  Accounts payable and accrued                 165,855             194,184
  expenses
  Assumed real estate lease                    33,935              69,304
  obligations, net
  Rent collected in advance                    27,553              35,700
  Security deposits                            11,976              23,860
  Due to related persons                      9,385              12,958
  Total liabilities                           3,282,848          4,688,166
                                                                   
  Commitments and contingencies
                                                                   
  Shareholders' equity:
    Shareholder's equity
    attributable to CommonWealth
    REIT:
      Preferred shares of beneficial
      interest, $0.01 par value:
      50,000,000 shares authorized;
        Series D preferred shares; 6
        1/2% cumulative convertible;
            15,180,000 shares issued
            and outstanding,
            aggregate liquidation
            preference $379,500                368,270             368,270
        Series E preferred shares; 7
        1/4% cumulative redeemable
        on or after
            May 15, 2016; 11,000,000
            shares issued and
            outstanding,
            aggregate liquidation              265,391             265,391
            preference $275,000
      Common shares of beneficial
      interest, $0.01 par value:
        350,000,000 shares
        authorized; 118,386,918 and
        83,804,068 shares
            issued and outstanding,            1,184               838
            respectively
      Additional paid in capital               4,213,474           3,585,400
      Cumulative net income                    2,209,840           2,386,900
      Cumulative other comprehensive           (38,331)            565
      (loss) income
      Cumulative common                        (3,082,271)         (2,972,569)
      distributions
      Cumulative preferred                    (573,971)          (529,367)
      distributions
        Total shareholders' equity
        attributable to CommonWealth           3,363,586           3,105,428
        REIT
    Noncontrolling interest in                -                  396,040
    consolidated subsidiary
        Total shareholders' equity            3,363,586          3,501,468
  Total liabilities and                      $ 6,646,434         $ 8,189,634
  shareholders' equity
                                                                   

A Maryland Real Estate Investment Trust with transferable shares of beneficial
  interest listed on the New York Stock Exchange. No shareholder, Trustee or
     officer is personally liable for any act or obligation of the Trust.

Contact:

CommonWealth REIT
Timothy A. Bonang, 617-796-8222
Vice President, Investor Relations
or
Jason Fredette, 617-796-8222
Director, Investor Relations
www.cwhreit.com
 
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