Executive Summary

Q3 2024 GAAP results reflect wind-down actions: revenue was $13.99M and diluted EPS was $(0.26) driven by a $50.2M non-cash impairment on assets classified as held for sale; FFO/diluted share was $0.24 and Normalized FFO/diluted share was $0.25 .
Portfolio metrics deteriorated further: same-property NOI fell 16.0% YoY and cash NOI fell 15.4% YoY; the same-property portfolio ended 69.7% leased and 69.4% commenced (no leases signed in the quarter) .
Dispositions advancing: the two Austin assets and 1250 H Street (Washington, D.C.) are under contract with non-refundable deposits; pricing is consistent with the proxy’s distribution framework; Denver was formally brought to market in September .
Capital return timeline and catalysts: shareholder vote on the Plan of Sale set for Nov. 12; if approved, company expects to pay off the Series D preferred, then declare an initial common distribution of $18.00–$19.00 per share in early December, with total distributions estimated at $19.50–$21.00 as remaining assets are liquidated through Q1 2025 .

What Went Well and What Went Wrong

What Went Well

Executing the wind-down: “Our 2 Austin properties and our DC property are now under contract… The closing of these sales are expected to begin in early November, and the buyers have posted nonrefundable deposits.” Pricing, plus expectations for Denver, remain “consistent with the $234 million estimate” discussed previously, supporting the distribution framework .
Distribution framework reiterated: “We continue to estimate the total distributions resulting from the Plan of Sale will be in the $19.50 to $21 per share range.” Initial common distribution targeted for $18–$19 per share shortly after preferred payoff if the Plan of Sale is approved .
Balance sheet strength preserved: cash and cash equivalents of $2.225B as of Sept. 30, 2024, providing liquidity to execute the wind-down and distributions .

What Went Wrong

Earnings hit by impairment: Q3 recorded a $50.2M non-cash impairment tied to assets held for sale, moving GAAP EPS to $(0.26) from $0.22 a year ago .
Occupancy and NOI declines: same-property NOI decreased 16.0% YoY and cash NOI decreased 15.4% YoY, primarily from lower average commenced occupancy; no new or renewal leases were executed during the quarter .
Leasing trend deterioration: same-property leased fell to 69.7% from 71.4% in Q2 and 80.8% in Q3 2023; commenced fell to 69.4% from 70.7% in Q2 and 79.9% in Q3 2023 .

Financial Results

Income Statement and Cash Flow Metrics

Metric	Q3 2023	Q2 2024	Q3 2024
Revenue ($M)	$15.21	$14.11	$13.99
GAAP Diluted EPS	$0.22	$0.20	$(0.26)
Net Income (Loss) to Common ($M)	$24.15	$22.15	$(28.19)
FFO/diluted share	$0.26	$0.24	$0.24
Normalized FFO/diluted share	$0.26	$0.24	$0.25

Portfolio/Operating KPIs

KPI	Q3 2023	Q2 2024	Q3 2024
Same-Property % Leased	80.8%	71.4%	69.7%
Same-Property % Commenced	79.9%	70.7%	69.4%
Same-Property NOI ($M)	$8.49	$7.39	$7.13
Same-Property Cash NOI ($M)	$8.21	$7.06	$6.94
Same-Property NOI Margin	55.8%	52.4%	50.9%
Leases Executed (000s SF)	54	24	0
Cash & Equivalents ($B)	—	$2.196	$2.225

Notes:

GAAP results include a $50.2M impairment charge related to assets held for sale (Austin x2, Washington, D.C.), of which $33.9M reduced real estate net book value and $16.3M related to non-real estate assets .
Same-property NOI declines primarily reflect lower average commenced occupancy .

Segment Breakdown

Not applicable; EQC reports a four-property office portfolio without distinct segments .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total shareholder distributions under Plan of Sale	Through full liquidation	$19.50–$21.00/share (Definitive Proxy, Oct 2)	$19.50–$21.00/share reaffirmed	Maintained
Initial common distribution (post preferred payoff)	Within ~30 days post shareholder approval	$18.00–$19.00/share (Proxy)	$18.00–$19.00/share; expected early December if Plan approved	Maintained/Timing specified
Series D Preferred payoff	Shortly after shareholder approval	Payoff prior to common distribution (implied)	“Series D preferred will be paid first, then common distribution a few days later”	Clarified timing
Liquidation accounting	FY 2024 10-K	Not previously dated	Adopt liquidation basis accounting in 2024 10-K if Plan approved	New timing detail
Disposition timing	Remaining assets	Expectation to wind down in 2025 (implied)	Asset sales to complete by end of Q1 2025; delisting/deregistration and liquidating trust targeted in Q2 2025	Timeline specified

No revenue, margin, OpEx, tax-rate, or dividend run-rate guidance provided beyond wind-down and distribution framework .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2024, Q2 2024)	Current Period (Q3 2024)	Trend
Plan of Sale / Strategic Path	Q1: “Before the end of this year, we expect to either announce a transaction or move forward with a plan to wind down our business.”	Vote set Nov 12; initial common distribution $18–$19 shortly after preferred payoff if approved; total distributions $19.50–$21 reaffirmed; liquidation accounting at FY24 10-K	From exploratory to execution with specific dates and amounts
Dispositions	Q1: No specific sales called out	Two Austin assets and 1250 H Street under contract with non-refundable deposits; Denver marketing launched September; pricing consistent with proxy assumptions	Clear progress toward asset monetization
Liquidity & Capital Return	Q1: Cash ~$2.17B; highlighted $19.95/share cash then	Cash $2.225B at quarter-end; sequencing of preferred payoff then common distribution confirmed	Liquidity stable; execution clarity improved
Leasing / Demand	Q1: 18k SF signed; modest negative rent spreads on cash	Q2: 24k SF signed; modest positive rent spreads	Q3: No leases; same-property leased/commenced fell; NOI down YoY
Wind-down costs	Q1: Not highlighted	Q2: G&A lower YoY due to prior-year one-time item	Q3: Wind-down costs of $1.2M included in G&A

Management Commentary

“Our 2 Austin properties and our DC property are now under contract… The closing of these sales are expected to begin in early November, and the buyers have posted nonrefundable deposits.”
“We continue to estimate the total distributions resulting from the Plan of Sale will be in the $19.50 to $21 per share range.”
“Following shareholder approval of the Plan of Sale… we will pay off the Series D preferred and declare a common distribution of $18 to $19 per share with the payments made in early December.”
“Assuming shareholders approve the plan of Sale, we will adopt liquidation basis accounting for our 2024 10-K.”
Disposition caution: “Market conditions for selling office assets are uniquely challenging… we may not be able to complete sales in a timely manner… dispositions could be completed for less than estimated” (press release risk language) .

Q&A Highlights

Preferred vs. common distribution sequencing: “The Series D preferred will be paid first, and then we expect to do the common distribution a few days later… within that 30-day window after the vote.”
Earnest money and financing risk: Deposits range from 1% to 5% of purchase price; two buyers are all-cash, one subject to financing risk .
Closing cadence and payout sensitivity: Closings expected to begin in early November and continue thereafter; initial distribution magnitude depends on closing status at that time .
Wind-down cost check: Wind-down costs “have not changed”; management flagged the need to deduct preferred when reconciling per-share distribution math .

Estimates Context

S&P Global consensus estimates for Q3 2024 revenue and EPS for EQC were unavailable via our SPGI tool at this time; therefore, we cannot provide a beat/miss assessment relative to Street expectations. We will update when/if S&P Global mappings become available. Values would have been retrieved from S&P Global.

Additional Disposition Detail (as disclosed)

Property	Status at Q3	Notes
Bridgepoint Square (Austin)	Under contract	Included in assets held for sale; part of group under contract with non-refundable deposits
206 East 9th Street (Austin)	Under contract	Included in assets held for sale; part of group under contract with non-refundable deposits
1250 H Street NW (Washington, D.C.)	Under contract	Included in assets held for sale; part of group under contract with non-refundable deposits
1225 Seventeenth Street (Denver)	Marketing launched in September	Sale expected after shareholder approval of Plan of Sale

Key Takeaways for Investors

The quarter’s headline loss is a one-time impairment from classifying three assets as held for sale; FFO remained stable at $0.24–$0.25 per diluted share despite leasing softness, supported by interest income on EQC’s large cash balance .
The wind-down is moving from concept to execution: vote on Nov. 12, initial common payout targeted for early December (post preferred payoff), and delisting/deregistration/liquidating trust targeted by Q2 2025 if Plan approved—key timeline catalysts for the stock .
Distribution framework ($19.50–$21.00 total) is reaffirmed with current sales pricing consistent with proxy assumptions; timing and proceeds from Denver and closing mechanics remain the swing factors .
Leasing is a headwind into the wind-down: no leases signed in Q3 and double-digit declines in same-property NOI/cash NOI underscore the rationale for portfolio exit vs. rehabilitation .
Liquidity is ample to execute preferred payoff and initial distribution while awaiting closings; cash stood at $2.225B at quarter end .
Monitoring points: 1) results of Nov. 12 vote; 2) November/December closing flow; 3) exact size/timing of initial common distribution; 4) Denver bids vs. book/implied proxy values; 5) any slippage in sale timelines that could push cash returns into 2025 .
Consensus benchmarks were not available; price reaction likely to hinge on corporate actions (vote outcome and distributions) rather than operating beats/misses this quarter (S&P Global estimates unavailable).

References: Q3 2024 8-K press release and supplemental ; Q3 2024 earnings call transcript ; Q2 2024 8-K press release and supplemental ; Q1 2024 8-K press release and supplemental .

Equity Commonwealth (EQC)·Q3 2024 Earnings Summary