Q4 2023 Equity Commonwealth Earnings Call
Participants
David Weinberg; COO & EVP; Equity Commonwealth
Seth Bergey; Analyst; Citigroup Inc.
Presentation
Operator
Good morning and thanks for joining this call to discuss Equity Commonwealth's results for the fourth quarter and full year ending December 31, 2023, and an update on the company at this time, all participants are in a listen only mode. Our question and answer session will follow the formal presentation. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue, you may press star two. If you would like to remove your question from the queue
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of federal securities law please refer to the section titled Forward-Looking Statements in the press release issued yesterday as well as the section titled Risk Factors in the Company's annual report on Form 10 K and quarterly reports on Form 10-Q for subsequent quarters for a discussion of factors that could cause the Company's actual results to materially differ from any forward-looking statements. The Company assumes no obligation to update or supplement any forward-looking statements made today. The Company post important information on its website at www.eqcre.com, including information that may be material portion of today's remarks on the Company's quarterly and 2023 earnings also include certain non-GAAP financial measures. Please refer to yesterday's press release and supplement containing the company's results for a reconciliation of these non-GAAP measures to the company's GAAP financial results.
On the call today are David Helfand, President and CEO, David Weinberg, COO, and Bill Griffiths, CFO.
With that, I'll turn the call to David Weinberg. Please go ahead, sir.
David Weinberg
Good morning, everyone. Thanks for joining us. I'll review the Company's results for the quarter and the full year, as well as provide an update on our investment activities for the quarter, funds from operations or $0.27 per share compared to $0.21 per share in the fourth quarter 2022. Normalized FFO was $0.26 per share compared to $0.21 per share a year ago.
The growth in FFO and normalized FFO was largely the result of a $0.05 per share increase in interest and other income. Same property NOI was down 2.3% and same-property cash NOI was 12% lower compared to the fourth quarter of 2022. For the full year 2023 funds from operations or $0.91 per share compared to $0.41 per share for the full year 2022. Normalized FFO was $0.97 per share compared to $0.42 per share a year ago.
The growth in FFO was largely the result of a $0.61 per share increase in interest and other income, a $0.06 per share increase in G&A expense and a $0.04 per share decrease in property. Same property NOI. The growth in normalized FFO was largely driven by the $0.61 per share increase in interest and other income and the $0.04 per share decrease in same property cash NOI. Same property NOI was down 11.5% and same-property cash NOI was 11.4% lower compared to the full year 2022, excluding a one-time collection in early 2022. Same property NOI and same-property cash NOI declined 6.7% and 6.5%, respectively.
At our properties, leasing activity remained slow in the fourth quarter as office tenants continue to work through their space requirements. For the quarter, we signed 32,000 square feet of new leases and renewals. Rents on those leases were up 7.9% on a cash basis and up 26.4% on a GAAP basis. For the year, we signed 214,000 square feet of new leases and renewals. Rents on those leases were up 1.6% on a cash basis and up 13.7% on a GAAP basis. As of December 31, leased occupancy was 81.2% and commenced occupancy was 80%.
Turning to the balance sheet, we have approximately $2.2 billion of cash or roughly $20 per share and no debt. Net of our preferred stock. Our cash balance is just under $19 per share. The change in our cash balance during 2023 was primarily caused by the interest income on our cash net of the $4.25 per share common distribution in March and share buybacks. The interest rate on our cash increased during the year from an average of 3.75% during 2022 to an average of 5.5% during 2023.
With respect to share buybacks, during 2023, we repurchased 3 million shares at a cost of $56.7 million at an average price of $18.78. Since we began buying back stock in 2015, we have repurchased a total of 25.4 million shares for an aggregate of $652 million at an average dividend adjusted price of $17.63. We currently have $93 million remaining on our existing share buyback authorization.
Earlier this month, we completed a contribution of cash to a subsidiary rate, which makes the interest income from that cash qualified income for the 75% rate income test for the next 12 months.
With that we expect to qualify as a rate in 2024.
With respect to the capital markets, investment sales volumes remained down across all asset classes as buyers and sellers sort through the impact of the change in credit markets and tried to gauge the strength of different sectors at EQC, we continue to work to identify an investment opportunity and to create value at our four office assets. As we have said previously, we believe a compelling investment opportunity is one where we are getting paid for the risk we are taking. We also believe that investments with strong long-term growth prospects are good businesses for public rate accordingly, while we look across sectors, we are spending more time on industrial and residential investments, including workforce housing we remain hopeful that we will find a deal. In the meantime, the team remains focused and disciplined.
With that, David, Bill and I are happy to take your questions.
Question and Answer Session
Operator
Thank you.
Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Craig Mailman, Citi.
Seth Bergey
Hi, good morning. This is Seth Bergey on for Craig. I guess my first question would be, you know, how do you see the number of opportunities you're evaluating today? Like how does that volume compare to Q2 on the opportunity set that you've been looking at over the prior quarter, does it increase or decrease?
David Weinberg
Hi hey, It's David Weinberg.
I'd say just from quarter to quarter, I'm not sure there's that much of a difference. While there's a lot more chatter in the market and you're seeing more references to one-off sales, please keep in mind, we're looking for larger transformative investments and maybe there's an uptick on those. But from my perspective, we saw opportunities last year and we're continuing to look at opportunities early into this year.
Seth Bergey
Okay, great. And then just another one on the past, you've kind of mentioned, you know, catalyst for a transaction would be COVID, which didn't turn out to be a catalyst and then kind of the dislocation in the capital markets kind of alluding to some of that chatter you've talked about on increasing, you know, kind of how do you view that window of opportunity? Do you see that you know, still plenty of opportunity or do you kind of see that window narrowing just in terms of the timeframe you're looking at?
David Weinberg
I'd say the windows open, it's hard to predict if and when it shuts down. But for the reasons we've just discussed before, given the change in credit markets, proceeds down, interest rates up harder for private companies to get public pressure on private, really companies to create some liquidity and things we can do in addition to just providing cash, we think we are an attractive option for lots of large owners. And in this environment in general, we think there are conversations that are being had and will continue to be had. But to specifically address your question, I can't predict if and when that window will shut and we need to look longer and harder at perhaps selling the four remaining properties and liquidating the Company.
Seth Bergey
Great. Thank you.
Operator
Thank you. As there are no further questions. I will now hand the conference over to David. David, please go ahead.
David Weinberg
Well, thank you again, and we appreciate your time.
Operator
Thank you.
The conference of Equity Commonwealth has now concluded. Thank you for your participation. You may now disconnect your lines.
