Equity Commonwealth (EQC 0.32%) continues to shrink under the management of famed real estate guru Sam Zell. That's all part of Zell's repositioning plan to scale the company down to a much smaller core foundation, upon which he intends to make it grow stronger than ever before. That said, it is still in the midst of the slim-down process, which was evident in its fourth-quarter results that reported after the market closed on Wednesday.

Equity Commonwealth results: The raw numbers


Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)

Normalized FFO

$34.4 million

$68.7 million


Normalized FFO Per Share




Data source: Equity Commonwealth.

What happened with Equity Commonwealth this quarter? 
Earnings fell alongside its asset base. Also:

  • It sold nine properties totaling 2.6 million square feet, which brought in gross proceeds of $275.2 million. This brought total property sales up to $2 billion for 2015.
  • These property sales were the primary factor driving normalized funds from operations lower year over year.
  • The same property portfolio was 91.4% leased, which was a little lower than the 91.7% from last quarter but higher than the 90% it was leased in the year-ago quarter.
  • Cash rental rates on new and renewal leases were 5.6% higher than previous leases on the same space.
  • It repaid at par the $116 million mortgage loan encumbering a property in Indiana.
  • Equity Commonwealth was not required to pay dividends in 2015, and decided not to make any dividend payments for the year. 

What management had to say 
According to the management team:

The company continues to pursue its previously announced plan to sell approximately $3.0 billion of assets, creating capacity for future opportunities. As part of this plan, the company has sold $2.1 billion of assets at a weighted average cap rate in the low 7% range. The company has 11 properties totaling over 1.5 million square feet in the market.

It is now more than two-thirds of the way through with its repositioning plan, which brought in more than $1.7 billion in net cash proceeds following mortgage debt repayments and other costs. With that cash, the company reduced corporate debt by $629 million while also buying back $110 million in stock. It is still left with a substantial amount of cash that's just sitting there waiting to be put to work. Once it completes the last leg of asset sales, it intends to use that capacity to rebuild the company in a more prudent manner than the previous management team was able to achieve.

Looking forward 
At the moment, however, about the only thing investors can look forward to each quarter are additional asset sales as the company marches onward toward its goal of unloading $3 billion of them. With 11 more properties already on the market at the moment, it's another step closer to hitting that goal.