INVESTOR PRESENTATION September 2016
Forward-Looking Statements Some of the statements contained in this presentation constitute forward-looking statements within the meaning of the federal securities laws. Any forward-looking statements contained in this presentation are intended to be made pursuant to the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The forward-looking statements contained in this presentation 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). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: changes in the real estate industry, particularly in those markets in which our properties are located; our ability to raise equity or debt capital; the future amount of leasing activity and occupancy rates at our properties; the future rent rates we will be able to charge at our properties; the costs we may incur to lease space in our properties; our ability to declare or pay distributions to our shareholders and the amounts of such distributions; the credit quality of our tenants; the likelihood that our tenants will pay rent, renew leases, enter into new leases or be affected by cyclical economic conditions; our sales of properties; our ability to compete for tenancies effectively; our ability to pay interest on and principal of our debt; our ability to obtain credit facilities, and the availability of borrowings under those credit facilities; and our tax status as a REIT. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. For a further discussion of these and other factors that could cause our future results to differ materially from any forward-looking statements, see the sections entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015. NOTE: Data in presentation as of June 30, 2016 unless otherwise noted 2 September 2016
COMPANY OVERVIEW 1735 Market Street Chicago-based internally managed and self- Philadelphia advised office real estate investment trust (REIT) Corporate culture that incorporates Equity company values of alignment with stakeholders and focus on value creation Strategic priorities: ─ Rationalize the portfolio ─ Lease and operate entrepreneurially ─ Emphasize financial flexibility ─ Allocate capital opportunistically to grow net asset value 3 September 2016
PORTFOLIO OVERVIEW Current portfolio comprised of 38 properties totaling 16.9 MSF 96% of total Annualized Rental Revenue (ARR) from office assets and 4% from industrial/flex 1 70% of ARR is in our five largest markets, up from 46% in our six largest markets in 4Q 2014 Year-End 2014 Portfolio Current Portfolio 156 Properties 38 Properties % of 2Q 2016 Annualized Rental Revenue 1 % of 4Q 2014 Annualized Rental Revenue 1 Bellevue Indianapolis Bellevue 7% 5% 3% Denver Denver 5% 10% Other Austin 30% 6% Other 54% Austin 11% Philadelphia 12% Chicago Chicago 15% 18% Philadelphia 24% 1 Annualized rental revenue (ARR) is annualized contractual rents from our tenants pursuant to leases which have commenced as of June 30, 2016, plus estimated recurring expense reimbursements; includes triple net lease rents and 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. As of 4Q 2014, ARR included revenue from straight line rent adjustments and excluded revenue during free rent periods. 4 September 2016
STRATEGIC PRIORITIES Rationalize the portfolio, improve operations and maximize shareholder value Rationalize the portfolio: closed $4.1bn of dispositions since taking ownership responsibility in 2014 1,2 ― $3.1bn of sales completed since 2015 2 Lease and operate with an entrepreneurial focus ― Develop strong relationships with brokers and tenants ― Focus on tenant engagement and responsiveness ― Review vacant inventory and ensure it is priced and positioned appropriately ― Identify incremental cost savings and value-creation opportunities Continue to improve the balance sheet ― Decreased liabilities and preferred equity by $2.0bn since March 31, 2014 ― Reduced net debt to adjusted EBITDA from 6.1x to (0.6x) since March 31, 2014 3 ― Cash balance as of August 29, 2016 of $2.4bn or $19 per share ― Increased capacity for future opportunities Reinvest proceeds opportunistically ― Identify new investments with a strong growth profile and attractive risk adjusted returns ― Repurchased 4.4mm shares totaling approximately $113mm 1 $4.1bn of total dispositions since taking ownership responsibility in 2014 includes the sale of SIR shares. 2 As of August 29, 2016. 3 Net Debt is calculated as total debt minus cash and cash equivalents; Annualized Adjusted EBITDA is defined and a reconciliation to net income is included in the company’s Second Quarter 2016 Supplemental Operating and Financial Data, which is available on the Investor Relations section of www.eqcre.com. 5 September 2016
DISPOSITION ACTIVITY TO DATE Sales completed total $1.1bn year-to-date, and $4.1bn since taking ownership responsibility in 2014 1,2 9 properties totaling approximately 4 MSF are in various stages of the sale process 2016 YTD 1 2014 2015 •$1.1bn gross sales price •$2.0bn gross sales price •$215.9mm gross sales price •27 properties, 7.2 MSF •91 properties, 18.9 MSF •14 properties, 2.8 MSF •$704.8mm Select Income REIT shares $4.1bn of sales 1,2 1 As of August, 29 2016. 2 Dispositions since taking ownership responsibility in 2014 total $4.062bn and includes the sale of Select Income REIT (SIR) shares. 6 September 2016
DISPOSITION ACTIVITY Sales have been at a weighted average cap rate in the low 7% range 3 2016 Dispositions SF No. of No. of Sale Price PSF 1 Period Portfolio City State (000's) Properties Buildings Type Leased % (000's) Cap Rate Range 2015 Subtotal 18,939 91 135 80.1% $1,999,413 $106 Low- to- Mid 7% 1Q 2016 Executive Park Brookhaven GA 427 1 9 Office 72.8% $50,865 $119 High 1% 3330 N Washington Boulevard Arlington VA 56 1 1 Office 15.3% $11,250 $202 N/A 111 East Kilbourn Avenue Milwaukee WI 374 1 1 Office 81.1% $60,500 $162 High 5% 2Q 2016 633 Ahua Street Honolulu HI 93 1 1 Self Storage 81.5% $29,000 $311 High 3% 1525 Locust Street Philadelphia PA 98 1 1 Office 95.4% $17,700 $181 Low 7% Rio Grande and San Antonio Street Austin TX 116 2 2 Office 89.9% $32,600 $282 Low 5% Lakewood on the Park Austin TX 181 1 2 Office 84.1% $37,100 $205 Mid 4% Vineyards Gonzalez CA 0 1 7 Leased Land N/A $48,450 N/A Low 6% 9110 E Nichols Avenue Centennial CO 144 1 1 Office 99.8% $17,200 $119 Mid 8% Carmike Cinemas Various Var. 552 6 6 Theaters 100.0% $109,100 $198 High 7% 3Q 2016 3 111 River Street 2 Hoboken NJ 566 1 1 Office 100.0% $235,000 $415 Mid 6% South Carolina Industrial Portfolio Various SC 804 3 3 Industrial 100.0% $30,000 $37 Mid 8% Sky Park Centre San Diego CA 63 1 2 Office 100.0% $13,700 $216 Mid 8% Raintree Industrial Park Solon OH 563 1 12 Industrial 81.2% $11,500 $20 Low 10% 8701 Mopac Austin TX 122 1 1 Office 79.1% $21,500 $176 Low 6% Midwest Portfolio Various Var. 3,064 4 6 Office 86.5% $416,900 $136 Low 8% 2016 Subtotal 7,223 27 56 88.3% $1,142,365 $151 High 6% Total 26,161 118 191 82.3% $3,141,778 $118 Low 7% 1 PSF total excludes Vineyard sales price. 2 Proceeds after credit for contractual lease costs were $210.8mm. 3 Through August 29, 2016. 7 September 2016
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