# EDGAR Filing Document

**Accession Number:** 0000803649
**File Stem:** 0000803649-23-000030
**Filing Date:** 2023-2
**Character Count:** 368721
**Document Hash:** 59332f14f94d74c1f2236ba47c70967c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000803649-23-000030.hdr.sgml**: 20230209

**ACCESSION NUMBER**: 0000803649-23-000030

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 81

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230209

**DATE AS OF CHANGE**: 20230209

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Equity Commonwealth
- **CENTRAL INDEX KEY:** 0000803649
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **IRS NUMBER:** 046558834
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-09317
- **FILM NUMBER:** 23606480

**BUSINESS ADDRESS:**
- **STREET 1:** TWO NORTH RIVERSIDE PLAZA
- **STREET 2:** SUITE 2100
- **CITY:** CHICAGO
- **STATE:** IL
- **ZIP:** 60606
- **BUSINESS PHONE:** 312.646.2800

**MAIL ADDRESS:**
- **STREET 1:** TWO NORTH RIVERSIDE PLAZA
- **STREET 2:** SUITE 2100
- **CITY:** CHICAGO
- **STATE:** IL
- **ZIP:** 60606

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CommonWealth REIT
- **DATE OF NAME CHANGE:** 20100702

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** HRPT PROPERTIES TRUST
- **DATE OF NAME CHANGE:** 19980701

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** HEALTH & RETIREMENT PROPERTIES TRUST
- **DATE OF NAME CHANGE:** 19940811

?xml version="1.0" ? eqc-20221231

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-K**

☒ **&nbsp;&nbsp;&nbsp;&nbsp; ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended December 31, 2022** 

**OR**

☐**&nbsp;&nbsp;&nbsp;&nbsp; TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**Commission File Number 1-9317**

**EQUITY COMMONWEALTH**

(Exact Name of Registrant as Specified in Its Charter)

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| | |
|:---|:---|
| **Maryland** | **04-6558834** |
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |

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| | |
|:---|:---|
| **Two North Riverside Plaza, Suite 2100, Chicago, IL** | **60606** |
| (Address of Principal Executive Offices) | (Zip Code) |

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| |
|:---|
| **(312) 646-2800** |
| (Registrant's Telephone Number, Including Area Code) |

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**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **Title Of Each Class** | **Trading Symbol** | **Name of Each Exchange On Which Registered** |
| Common Shares of Beneficial Interest | EQC | New York Stock Exchange |
| 6.50% Series D Cumulative Convertible Preferred Shares of Beneficial Interest | EQCpD | New York Stock Exchange |

---

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes 🗷&nbsp;&nbsp;&nbsp;&nbsp;No □

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes □&nbsp;&nbsp;&nbsp;&nbsp;No 🗷

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 🗷 No □

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes 🗷 No □

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ⌧ | Accelerated filer | □ |
| Non-accelerated filer | □ | Smaller reporting company | ☐ |
| | | Emerging growth company | ☐ |

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 🗷

The aggregate market value of the voting common shares of beneficial ownership, $0.01 par value, or common shares, of the registrant held by non-affiliates was $3.0 billion based on the $27.53 closing price per common share on the New York Stock Exchange on June 30, 2022. For purposes of calculating the aggregate market value of shares held by non-affiliates, we have assumed that all outstanding shares are held by non-affiliates, except for shares held by each of our trustees, executive officers, and any 10% or greater shareholders. These assumptions should not be deemed to constitute an admission that all trustees, executive officers, and 10% or greater shareholders are, in fact, affiliates of our company, or that there are not other persons who may be deemed to be affiliates of our company. Further information concerning shareholdings of our trustees, officers, and principal shareholders is included or incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K.

Number of registrant's common shares outstanding as of February 6, 2023: 109,561,046.

**DOCUMENTS INCORPORATED BY REFERENCE**

Certain Information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated herein by reference to the definitive Proxy Statement for the 2023 Annual Meeting of Shareholders, or the definitive Proxy Statement, which Equity Commonwealth intends to file no later than 120 days after the end of its fiscal year ended December 31, 2022.

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**FORWARD LOOKING STATEMENTS**

Some of the statements contained in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the federal securities laws including, but not limited to, statements pertaining to our anticipated business strategies, goals, policies and objectives, capital resources and financing, portfolio performance, lease expiration schedules, results of operations or anticipated market conditions, including our statements regarding the overall impact of COVID-19, and changing laws, statutes, regulations, and the interpretations thereof, on the foregoing. Any forward-looking statements contained in this Annual Report on Form 10-K are intended to be made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. 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. You can identify forward-looking statements by the use of forward-looking terminology, including but not limited to, "may," "will," "should," "could," "would," "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.

Any forward-looking statements contained in this Annual Report on Form 10-K 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). 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 section entitled "Risk Factors" in this Annual Report on Form 10-K.

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**EQUITY COMMONWEALTH**

**2022 FORM 10-K ANNUAL REPORT**

**Table of Contents**

---

| | | |
|:---|:---|:---|
| <u>[Part I](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_13)</u> | <u>[Part I](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_13)</u> | <u>[Part I](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_13)</u> |
| <u>[Item 1.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_16)</u> | <u>[Business](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_16)</u> | <u>[1](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_16)</u> |
| <u>[Item 1A.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_19)</u> | <u>[Risk Factors](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_19)</u> | <u>[6](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_19)</u> |
| <u>[Item 1B.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_22)</u> | <u>[Unresolved Staff Comments](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_22)</u> | <u>[19](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_22)</u> |
| <u>[Item 2.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_25)</u> | <u>[Properties](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_25)</u> | <u>[19](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_25)</u> |
| <u>[Item 3.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_28)</u> | <u>[Legal Proceedings](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_28)</u> | <u>[20](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_28)</u> |
| <u>[Item 4.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_31)</u> | <u>[Mine Safety Disclosures](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_31)</u> | <u>[20](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_31)</u> |
| <u>[Part II](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_34)</u> | <u>[Part II](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_34)</u> | <u>[Part II](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_34)</u> |
| <u>[Item 5.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_37)</u> | <u>[Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_37)</u> | <u>[21](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_37)</u> |
| <u>[Item 6.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_40)</u> | <u>[\[Reserved\]](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_40)</u> | <u>[23](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_40)</u> |
| <u>[Item 7.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_43)</u> | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_43)</u> | <u>[23](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_43)</u> |
| <u>[Item 7A.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_55)</u> | <u>[Quantitative and Qualitative Disclosures About Market Risk](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_55)</u> | <u>[32](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_55)</u> |
| <u>[Item 8.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_58)</u> | <u>[Financial Statements and Supplementary Data](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_58)</u> | <u>[32](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_58)</u> |
| <u>[Item 9.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_61)</u> | <u>[Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_61)</u> | <u>[32](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_61)</u> |
| <u>[Item 9A.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_64)</u> | <u>[Controls and Procedures](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_64)</u> | <u>[32](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_64)</u> |
| <u>[Item 9B.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_67)</u> | <u>[Other Information](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_67)</u> | <u>[32](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_67)</u> |
| <u>[Item 9C.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_70)</u> | <u>[Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_70)</u> | <u>[33](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_70)</u> |
| <u>[Part III](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_73)</u> | <u>[Part III](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_73)</u> | <u>[Part III](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_73)</u> |
| <u>[Item 10.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_76)</u> | <u>[Directors, Executive Officers and Corporate Governance](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_76)</u> | <u>[34](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_76)</u> |
| <u>[Item 11.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_79)</u> | <u>[Executive Compensation](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_79)</u> | <u>[34](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_79)</u> |
| <u>[Item 12.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_82)</u> | <u>[Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_82)</u> | <u>[34](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_82)</u> |
| <u>[Item 13.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_85)</u> | <u>[Certain Relationships and Related Transactions, and Director Independence](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_85)</u> | <u>[34](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_85)</u> |
| <u>[Item 14.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_88)</u> | <u>[Principal Accountant Fees and Services](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_88)</u> | <u>[34](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_88)</u> |
| <u>[Part IV](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_91)</u> | <u>[Part IV](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_91)</u> | <u>[Part IV](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_91)</u> |
| <u>[Item 15.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_94)</u> | <u>[Exhibits and Financial Statement Schedules](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_94)</u> | <u>[35](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_94)</u> |
| <u>[Item 16.](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_97)</u> | <u>[Form 10-K Summary](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_97)</u> | <u>[37](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_97)</u> |
| | <u>[Signatures](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_100)</u> | |

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**EXPLANATORY NOTE**

References in this Annual Report on Form 10-K to "the Company", "EQC", "we", "us" or "our", refer to Equity Commonwealth and its consolidated subsidiaries as of December 31, 2022, unless the context indicates otherwise.

**PART I**

**Item 1.&nbsp;&nbsp;&nbsp;&nbsp;Business.**

*The Company.*&nbsp;&nbsp;&nbsp;&nbsp;We are an internally managed and self-advised real estate investment trust, or REIT, primarily engaged in the ownership and operation of office buildings in the United States. We were formed in 1986 under Maryland law and we have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, or the Code. The Company operates as what is commonly referred to as an umbrella partnership real estate investment trust, or UPREIT, conducting substantially all of its activities through EQC Operating Trust, a Maryland real estate investment trust, or the Operating Trust.

The Company beneficially owned 99.74% of the outstanding shares of beneficial interest, designated as units, or OP Units, in the Operating Trust, as of December 31, 2022, and the Company is the sole trustee of the Operating Trust. As the sole trustee, the Company generally has the power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units.

As of December 31, 2022, our portfolio consisted of four properties, with a total of 1.5 million square feet. Over the past nine years, we disposed of 164 properties and three land parcels totaling 44.3 million square feet for an aggregate gross sales price of $6.9 billion, as well as $704.8 million of common shares of Select Income REIT. The remaining four properties were 82.8% leased and had 78.7% commenced occupancy as of December 31, 2022. Since 2014, we have used proceeds to retire $3.3 billion of debt and preferred shares, repurchased $595.4 million of our common shares and paid $1.3 billion in distributions to our common shareholders. We have $2.6 billion of cash and cash equivalents and no debt outstanding as of December 31, 2022.

Our business has been and is continuing to be impacted by economic uncertainty following the COVID-19 virus as well as tenant uncertainty regarding office space needs given evolving remote and hybrid working trends. The Company has experienced a significant reduction in leasing interest and activity as well as parking revenue when compared to pre-pandemic levels. Many of our employees and the vast majority of our tenants' employees are currently working at least in part remotely, with many businesses reassessing their long-term demand for office space. The duration of these business disruptions continues to be unknown at this time, and we currently are not able to estimate the full impact of the COVID-19 virus and remote working trends on our business in 2023 and beyond.

During the year ended December 31, 2022, we entered into leases for 205,000 square feet, including lease renewals for 96,000 square feet and new leases for 109,000 square feet. Leases entered into during the year ended December 31, 2022, including both lease renewals and new leases, had weighted average cash rental rates that were approximately 0.3% higher than prior rental rates for the same space and weighted average GAAP rental rates that were approximately 3.8% higher than prior rental rates for the same space.

As of December 31, 2022, approximately 10.5% of our leased square feet and 10.7% of our annualized rental revenue are included in leases scheduled to expire through December 31, 2023. Renewal and new leases and rental rates at which available space may be relet in the future will depend on prevailing market conditions at the times these leases are negotiated. We believe that the in-place cash rents for leases expiring in 2023, that have not been backfilled, are approximately market, and we also expect most of the tenants with leases expiring in 2023 to vacate.

*Business Strategy.* We are continuing to evaluate investment opportunities while remaining focused on creating value through proactive asset management and improved operating results. We are seeking to use the strength and liquidity of our balance sheet for investments in high-quality assets or businesses in a broad range of property types that offer a compelling risk-reward profile. We intend to be patient and disciplined in our evaluation of investment opportunities while remaining focused on proactive asset management, leasing and operations at our four remaining properties, some or all of which we may sell to the extent we determine that is in the best interests of our business objectives. We may also determine to sell, liquidate or otherwise exit our business if we believe doing so will maximize shareholder value.

*Human Capital Resources.* As of December 31, 2022, we had 22 full-time employees, reduced from 66 full-time employees as of December 31, 2015, as the size of our property portfolio decreased. Our employee compensation program consists of the following: (i) base salary, (ii) annual cash bonus, (iii) long-term, at-risk time and performance-based equity

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awards, and (iv) health and welfare benefits. Each year, we set corporate, department and individual goals that we use to measure performance during our annual review process. We believe that the structure of our compensation program is aligned with the interests of our shareholders, rewards performance and serves to attract and retain employees. We also believe that our entrepreneurial culture, which is focused on encouraging transparency and open communication based on our guiding principles, is an important contributor to our success. We strive to provide our employees with a variety of resources and tools to promote training and development. For more information on our human capital resources, please see the section below on Social Responsibility.

Our principal executive offices are located at Two North Riverside Plaza, Suite 2100, Chicago, Illinois 60606, our telephone number is (312) 646-2800 and our website is www.eqcre.com.

*Investment Policies.*&nbsp;&nbsp;&nbsp;&nbsp;In evaluating potential property investments and dispositions, we consider various factors, including but not limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;• the type of properties;

&nbsp;&nbsp;&nbsp;&nbsp;• the risk-adjusted returns projected for the properties;

&nbsp;&nbsp;&nbsp;&nbsp;• the historical and projected rents received and likely to be received from the properties;

&nbsp;&nbsp;&nbsp;&nbsp;• the historical and expected operating expenses, including real estate taxes, incurred and expected to be incurred at the properties;

&nbsp;&nbsp;&nbsp;&nbsp;• the growth, tax and regulatory environments of the market in which the properties are located;

&nbsp;&nbsp;&nbsp;&nbsp;• the quality and credit worthiness of the tenants;

&nbsp;&nbsp;&nbsp;&nbsp;• occupancy and demand for similar properties in the same or nearby markets;

&nbsp;&nbsp;&nbsp;&nbsp;• the construction quality, physical condition, environmental risk-factors and design of the properties, and expected capital expenditures that may need to be made;

&nbsp;&nbsp;&nbsp;&nbsp;• the location of the properties; and

&nbsp;&nbsp;&nbsp;&nbsp;• the pricing of comparable properties as evidenced by recent market sales.

We have no policies that specifically limit the percentage of our assets that may be invested in any individual property, in any one type of property, in properties in one geographic area, in properties leased to any one tenant, in properties leased to an affiliated group of tenants, in real estate joint ventures or in participating, convertible or other types of mortgages. We have in the past provided seller financing for properties we have sold and may do so again in the future.

In the past, we have sought to acquire and considered the possibility of acquiring other companies, including via merger or other strategic combinations. We may undertake such activities in the future.

*Financing Policies.*&nbsp;&nbsp;&nbsp;&nbsp;We may seek additional capital through equity offerings, debt financings, retention of cash flows in excess of distributions to shareholders or a combination of these methods. To the extent that our Board of Trustees decides to obtain debt financing, we may do so on an unsecured basis or a secured basis, subject to limitations in any then-existing financing or other contractual arrangements; we may seek to obtain lines of credit or to issue securities senior to our common and/or preferred shares, including preferred shares or debt securities which may be convertible into common shares or be accompanied by warrants to purchase common shares; or we may engage in transactions which involve a sale or other conveyance of properties to affiliated or unaffiliated entities. We may finance investments by using retained cash flow from operations and dispositions, by the issuance of additional equity securities or debt, by assuming outstanding mortgage debt on the acquired properties or by an exchange of properties. The proceeds from any of our financings may be used to pay distributions, to provide working capital, to refinance indebtedness or to finance investments and expansions of existing or new properties or businesses. We may from time to time re-evaluate and modify our financing policies in light of then current market conditions, relative availability and costs of debt and equity capital, the changing values of properties, growth and investment opportunities and other factors, and we may increase or decrease our ratio of debt to total capitalization.

The Investment Policies and Financing Policies discussed above are established by our Board of Trustees and may be changed by our Board of Trustees at any time without shareholder approval.

*Competition.*&nbsp;&nbsp;&nbsp;&nbsp;Investing in and operating real estate is a highly competitive business. We compete against other REITs, numerous financial institutions, individuals and public and private companies who are actively engaged in the real estate business. Also, we compete for tenants and investments based on a number of factors including pricing, building quality and location, underwriting criteria and reputation. Our ability to successfully compete is also impacted by economic and population

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trends, availability of acceptable investment opportunities, our ability to negotiate beneficial leasing and investment terms, availability and cost of capital and new and existing laws and regulations. Some of our competitors are dominant in selected geographic markets, including in markets in which we operate. Some of our competitors have greater financial and other resources than we have.

For additional information on competition and the risks associated with our business, please see "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K.

*Environmental, Social and Governance.*&nbsp;&nbsp;&nbsp;&nbsp;Our Company believes that sustainability, social responsibility and strong corporate governance are key contributors to our success. Our approach to Environmental, Social and Governance ("ESG") matters is all-inclusive, addressing our effect on the environment, our social impact and our relationships with all of our stakeholders, including our shareholders, tenants, employees and vendors. We seek to operate our properties efficiently from both an economic and environmental perspective.

Our commitment to the principles of ESG starts at the top: our Board oversees our ESG program and initiatives, our management team regularly reports to our Board on that program and our executive officers are evaluated and compensated, in part, on the Company's efforts with respect to ESG initiatives. Our CEO directly oversees our sustainability activities and performance and our CEO and General Counsel regularly update our Board on sustainability initiatives.

We have an ESG team focused on ESG risks and initiatives. This team is co-managed by our Senior Vice President of Engineering, Construction and Operations and our Senior Vice President - Legal. The team comprises and leverages a variety of subject matter experts within the Company (e.g., engineering, IT, leasing, legal, asset management and finance) as well as a variety of third-party consultants.

The Company is a member of GRESB, a globally recognized independent organization that provides validated ESG performance data and peer benchmarks of more than 1,500 real estate portfolios worldwide. The Company received an overall score of 72 in 2022. GRESB is also aligned with many of the standards set forth in the Task Force on Climate-Related Financial Disclosures ("TCFD").

<u>Corporate Governance</u>

We are committed to a corporate governance approach that promotes transparency as well as alignment with and accountability to our shareholders. We consistently look to improve our corporate governance policies and practices, which include:

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| Majority voting in uncontested trustee elections |
| Annual trustee elections, with shareholder approval required to stagger the Board |
| Lead independent trustee with robust duties |
| Separate chairman and chief executive officer |
| 6 of 8 trustees are independent |
| Regular executive sessions of independent trustees |
| All members of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent |
| All members of Audit Committee are financially literate with two of three being audit committee financial experts under SEC rules |
| Annual board and committee review and self-evaluations |
| Code of Business Conduct and Ethics that covers trustees and employees as well as the Company's relationships with its vendors |
| Meaningful share ownership guidelines for our trustees (4x annual cash retainer), chief executive officer (6x salary) and other named executive officers (3x salary) |
| Opted out of Maryland business combination and control share acquisition statutes |
| No shareholder rights plan (commonly known as a "poison pill") |
| Active shareholder engagement |
| Shareholders have ability to amend the Company's bylaws by majority vote |

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Our Board reviews our corporate governance practices regularly, and we strive to operate the Company on a foundation of strong corporate governance principles. For further information on our corporate governance structure and policies, please see "Directors, Executive Officers and Corporate Governance" in Item 10 of Part III of this Annual Report on Form 10-K.

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<u>Environmental</u>

The Company's ESG program actively manages environmental impacts and climate-related risks and opportunities. Our environmental and climate strategic planning and initiatives, combined with our targeted capital investments, are aimed at reducing carbon emissions, mitigating risks and potentially realizing climate-related opportunities that benefit our stakeholders.

Our 2022 accomplishments with respect to environmental initiatives include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;●&nbsp;&nbsp;&nbsp;&nbsp;obtained LEED certification for our property located at 206 East 9<sup>th</sup> Street in Austin, Texas (50% of our properties are now LEED certified);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;●&nbsp;&nbsp;&nbsp;&nbsp;completed and posted a climate-related risk assessment, in line with recommendations made by TCFD and GRESB, with respect to our properties and corporate headquarters; this assessment and other disclosures are available in the investor relations section of our website at www.eqcre.com;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;●&nbsp;&nbsp;&nbsp;&nbsp;invested in energy efficiency projects by upgrading older, pneumatic Variable Air Volume boxes to direct digital control and connecting them to the existing Building Automation Systems as part of ongoing tenant improvements at two of our properties; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;●&nbsp;&nbsp;&nbsp;&nbsp;enhanced our portfolio lease forms by incorporating additional energy conservation, energy consumption data sharing and sustainability-related clauses.

We have commissioned an independent third party to provide assurance of our greenhouse gas ("GHG") emissions inventory and environmental data regarding indirect emissions from purchased electricity for CY2022. This assurance will be performed to a limited level of assurance based on the qualitative materiality of the verifier's professional judgment, using the independent third party's verification procedure and ISO 14064 – Part 3 for GHG emissions.

As an owner of real estate, we are subject to various federal, state and local laws and regulations relating to environmental, health and safety matters, including those relating to the presence of hazardous substances. We estimate the cost to remove hazardous substances or address environmental issues (including the presence of asbestos-containing materials) at some of our properties based in part on environmental surveys and analyses conducted on our properties. We do not believe that there are environmental conditions or issues at any of our properties that have had or will have a material adverse effect on us. However, no assurances can be given that conditions or issues are not present at our properties or that costs we may be required to incur in the future to remediate contamination or comply with environmental, health and safety laws will not have a material adverse effect on our business or financial condition.

The federal government and some of the states and localities in which our properties are located have enacted and may in the future enact climate change laws and regulations. We believe these laws may cause energy costs at our properties to increase, but we do not expect the direct impact of these increases to be material to our results of operations because the increased costs either would be the responsibility of our tenants directly or in large part may be passed through by us to our tenants as additional lease payments. While we evaluate ways to improve the energy efficiency at our properties, laws enacted to mitigate climate change may cause us to make material investments in our properties which could materially and adversely affect our financial condition.

For more information regarding environmental matters and their possible adverse impact on us, including climate change matters, see "Risk Factors—Risks Related to Our Business—Any environmental contamination or other environmental liabilities could materially and adversely affect us" and "Risk Factors—Risks Related to Our Business—We may be adversely affected by laws, regulations or other issues related to climate change, including the physical impacts of climate change on our properties" both in Part I, Item 1A of this Annual Report on Form 10-K.

<u>Social Responsibility</u>

We believe in a shared commitment to diversity, ethics, integrity and community engagement, which commitment serves as the foundation of our corporate purpose. Diversity of all types brings varying perspectives, encouraging differing viewpoints in order to effectively manage risk and create value.

We have continued to focus our efforts in the areas of diversity, equity and inclusion ("DE&I"), as well as employee health and well-being. Our President and CEO David Helfand signed the CEO Action for Diversity & Inclusion Pledge as a signal that we will put DE&I into action by creating a culture of involvement, respect and connection, where all employees' voices are heard. Our goal is to create and sustain an inclusive environment where diversity thrives and employees want to work. Our vision of diversity includes race, gender, age, sexual orientation, physical ability and ethnicity, among others, and celebrating diversity is one of our core values.

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The Company acknowledges that improving DE&I in our business will require a long-term, sustained effort. Toward that end, we launched an online weekly microlearning platform focused on diversity, inclusion and leadership development, surveyed vendors regarding the diversity of their team members and enhanced our parental leave policy to provide paid time off for primary and secondary caregivers. We also conducted stakeholder engagement surveys for both our employees and our portfolio tenants.

In our October 2022 employee survey, we had a 91% overall response rate, with 85% of the participants reporting they are "very happy" to be working at EQC. Additionally, 85% praised EQC's open and honest two-way communication and 80% of the participants indicated that their perspective and opinions are heard and valued. Overall, the survey provided meaningful feedback and an opportunity to discuss and address employee concerns. These surveys form an important part of our ongoing focus on engagement and overall employee experience.

Our commitment to community brings active engagement, both as individuals and in our corporate capacity. We are involved with local organizations and community outreach programs, including the Greater Chicago Food Depository and other Chicago-based, grass-roots organizations.

We seek to maintain the highest standards of integrity and ethics. We have implemented a set of rules that governs our conduct and can be found in our Code of Business Conduct and Ethics, which covers our employees and trustees and applies to the Company's relationships with its vendors. This Code remains a cornerstone in fostering a respectful and ethical work experience at the Company, setting forth our anti-bribery policy, our standards with respect to compliance with the United States Foreign Corrupt Practices Act and similar governance-related matters.

For further information on our efforts with respect to ESG, please visit our ESG page in the investor relations section of our website at www.eqcre.com.

*Taxation as a REIT*. The Company has elected to be taxed as a REIT under the Code. A REIT generally is not subject to U.S. federal income tax on the net income that it distributes to shareholders if it meets the applicable REIT distribution requirements and other requirements for REIT qualification under the Code. We believe that we have been organized and have operated so as to qualify as a REIT, but there can be no assurance that we qualify or will remain qualified as a REIT.

The law firm of Fried, Frank, Harris, Shriver & Jacobson LLP ("Fried Frank") has acted as our tax counsel in connection with the filing of this annual report. We have received an opinion from Fried Frank, dated February 9, 2023, that we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Code for each of our taxable years beginning with our taxable year ended December 31, 2018 through our taxable year ended December 31, 2022. It must be emphasized that the opinion of Fried Frank is based on various assumptions relating to our organization and operation, is conditioned upon factual representations and covenants made by our management regarding our organization, assets, income, the conduct of our business operations, the economic terms of our leases, and other items regarding our ability to meet the various requirements for qualification as a REIT, the results of which have not been and will not be reviewed by Fried Frank, and assumes that such representations and covenants are accurate and complete and that we have taken no action inconsistent with our qualification as a REIT. Given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in our circumstances, no assurance can be given by Fried Frank or by us that we will qualify as a REIT for any particular year. The opinion of Fried Frank was expressed as of the date issued. Fried Frank will have no obligation to advise us or our shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. You should be aware that opinions of counsel are not binding on the IRS, and no assurance can be given that the IRS will not challenge the conclusions set forth in such opinions. Fried Frank's opinion does not foreclose the possibility that we may have to utilize one or more of the REIT savings provisions, which could require us to pay an excise or penalty tax (which tax could be significant in amount) in order for us to maintain our REIT qualification.

Qualification and taxation as a REIT depend upon our ability to meet, through actual annual (or in some cases quarterly) operating results, requirements relating to income, asset ownership, distribution levels and diversity of share ownership, and the various other REIT qualification requirements imposed under the Code. Given the complex nature of the REIT qualification requirements, the ongoing importance of factual determinations and the possibility of future changes in our circumstances, we cannot provide any assurance that our actual operating results will satisfy the requirements for taxation as a REIT under the Code for any particular taxable year.

*Regulation FD Disclosures and Internet Website.* We use any of the following to comply with our disclosure obligations under Regulation FD: press releases, SEC filings, public conference calls, or our website. We routinely post important

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information on our website at www.eqcre.com, including information that may be deemed to be material. We encourage investors and others interested in the Company to monitor these distribution channels for material disclosures.

Copies of our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of our Audit, Compensation and Nominating and Corporate Governance committees are posted on our website and may be obtained free of charge by writing to Secretary, Equity Commonwealth, Two North Riverside Plaza, Suite 2100, Chicago, Illinois 60606. We make available, free of charge, on our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after these forms are filed with, or furnished to, the SEC. Any shareholder or other interested party who desires to communicate with our Board of Trustees, or our non-management Trustees, individually or as a group, may do so by contacting our investor relations department through our website. Our website address is included in this Annual Report on Form 10-K as a textual reference only and the information on the website is not incorporated by reference into this Annual Report on Form 10-K.

**RISK FACTORS**

**Item 1A.&nbsp;&nbsp;&nbsp;&nbsp;Risk Factors.**

Before making an investment decision, you should carefully consider the following risk factors together with all of the other information contained in this Annual Report on Form 10-K.

***Risks Related to Our Business***

**If we are unsuccessful in identifying and completing investments that we believe are strategically compelling, we may decide to sell, liquidate or otherwise exit our business in one or more transactions, which could materially and adversely impact us, including our stock price.**

We continue to evaluate potential investment opportunities in a range of property types. We are seeking to reinvest the significant cash balances we have accumulated, but we cannot provide any assurances that we will be successful in identifying investments that we believe are strategically compelling and completing such transactions on favorable terms or at all. Our ability to identify and consummate investments is subject to significant risks, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may be unable to identify attractive investment opportunities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may be unable to make an acquisition and/or investment because of competition from other real estate investors, such as private real estate companies, publicly traded REITs, non-traded REITs and institutional investment funds; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may be unable to finance investments on favorable terms or at all.

If we are unable to successfully complete any investments, we may sell or liquidate the Company or otherwise exit our business through one or more transactions. The Board of Trustees and management regularly evaluate the best course of action for the Company and have not set a timetable for making any decision regarding a sale, liquidation or exit of the Company, and the timing and manner of any such sale, liquidation or exit may be viewed unfavorably. If a sale, liquidation or other exit occurs, or does not occur in a time frame or manner viewed favorably, our stock price could be negatively impacted.

**We may make investments that are viewed unfavorably by our shareholders, which could materially and adversely affect our stock price.** 

We may make investments that are viewed unfavorably by our shareholders. We evaluate a range of investments in a variety of property types, including portfolios of properties, individual properties and businesses, which vary in significance from relatively minor initial investments to transformative transactions. Our investors may view negatively any acquisition and/or investment that we make for a number of reasons, including because they believe we overvalued the acquired assets or businesses, they dislike the property type or types, quality or location of the acquired assets or businesses, they view the initial investment as small and therefore requiring substantially more time to complete the repositioning of our portfolio, or they disfavor the management or other personnel involved in any acquired businesses. If we make investments that are viewed unfavorably by our shareholders, it could negatively affect our stock price.

**We may incur significant costs pursuing investment opportunities that we may not consummate, which could adversely affect our results of operations.**

We have incurred and may continue to incur costs such as diligence, legal, advisory and consulting fees in connection with pursuing investments that we ultimately may not consummate, which could adversely affect our results of operations.

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**We may encounter unanticipated difficulties and costs relating to integrating any properties or businesses we acquire, particularly if outside of the office sector, which could materially and adversely affect us.**

We may encounter unanticipated difficulties and expenditures relating to any properties or businesses we acquire. For example, notwithstanding pre-investment due diligence, we could become subject to unknown liabilities without any or limited recourse against the seller, including without limitation tenant claims, vendor claims, indemnification and other claims, and we may incur higher than expected property operating and capital costs. In addition, we may experience unexpected adverse market changes, including without limitation, re-leasing difficulties, occupancy and rental declines. For these and other reasons, we may not successfully integrate any properties or businesses we acquire, particularly if outside of the office sector, and may not achieve the returns we expected, which could have a material adverse effect on us.

**To the extent we are unable to complete dispositions at all, or we make any dispositions on unfavorable terms, it could adversely affect us.**

To the extent we seek to dispose of assets, we may not be able to complete sales in a timely manner, if at all, and any such dispositions could be made on unfavorable terms, which could adversely affect us. We could incur significant costs and liabilities in connection with the dispositions of any properties, including through indemnification protection we provide to purchasers, which could adversely affect us. We may also provide seller financing in connection with the disposition of certain properties. If any such properties fail to meet financial projections, perform poorly or decline in value, then the purchaser may not have sufficient funds to make required interest and principal payments due on such seller financing, which could adversely affect us.

**The COVID-19 virus and remote working trends which began with the COVID-19 pandemic and are continuing have and may continue to materially adversely affect us, including by impacting overall office demand, the long-term value of our properties, our growth prospects, our results of operations and our financial condition.**

Our business has been and is continuing to be impacted by the COVID-19 virus as well as tenant uncertainty regarding office space needs given evolving remote and hybrid working trends which began with the COVID-19 pandemic. The majority of our tenants' employees are currently working at least in part remotely, with many businesses reassessing their long-term demand for office space, which could adversely affect our ability to successfully re-lease our properties, the lease terms we are able to negotiate and the long-term value of our office properties. In addition, any future outbreaks of variants of the COVID-19 virus, or another pandemic, may result in the renewed imposition by governmental authorities of stay-at-home orders, quarantines, closures and other restrictions that could materially and adversely affect us.

Overall, our business has experienced a significant reduction in leasing interest and activity as well as parking revenue when compared to pre-pandemic levels. As of December 31, 2022 and December 31, 2019, our comparable property portfolio was 82.8% and 91.5% leased, respectively. The duration of these business disruptions continues to be unknown at this time, and we currently are not able to estimate the full impact of the COVID-19 virus and remote working trends on our business. For the above reasons, the ongoing COVID-19 outbreak and remote working trends have and may continue to materially adversely affect us, including by impacting overall office demand, the long-term value of our properties, our growth prospects, our results of operations and our financial condition.

**The failure of one or more of our tenants to pay rent due to market disruption, the COVID-19 virus outbreak, economic recession or for any other reason could materially and adversely affect us, including our results of operations.**

Our performance depends on the financial condition of our tenants and their ability to fulfill their lease obligations. Overall market disruption and the COVID-19 virus have adversely affected some of our tenants' businesses, and we cannot predict the impact on our results of operations. Such disruption could impact the markets in which our properties are located and exacerbate the risk that our tenants will not be able to meet their lease obligations.

Tenants with significant debt obligations may be unable to pay existing debt or rent payments as a result of COVID-19, rising interest rates, and/or suffer other hardships resulting from economic recession, which could result in tenant requests for rent relief arrangements, tenant default, and/or tenant bankruptcies. We would be harmed if one or more of our major tenants, or a number of our smaller tenants, were to experience financial difficulties, including bankruptcy, insolvency or a general downturn of business. As of December 31, 2022, our portfolio was comprised of four properties, and the failure of one or more of our tenants to pay all or a substantial portion of their rent obligations could materially and adversely affect us, including our results of operations. If any of our major tenants, or a significant number of our smaller tenants, were to stop paying rent or otherwise experience a downturn in their business, or a weakening of their financial condition, such an event could have a material adverse effect on our business and results of operations.

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**We may make investments in assets that we do not control, including in joint ventures with third parties, which may subject us to various risks, including limited decision-making authority, reliance on our joint venture partners' financial condition and the risk of disputes with our joint venture partners, which could adversely affect us.** 

We may make investments in assets that we do not control, including joint venture partnerships, or other structures with third parties. We also may make investments in which we share responsibility for managing the affairs of a business, property or partnership. If we enter into any joint ventures or similar ownership structures, we may have limited decision-making authority. In addition, we may face the risk of disputes with our joint venture partners, including without limitation potential deadlocks in making major decisions and restrictions on our ability to exit the joint venture. Any disputes that may arise between us and any joint venture partners may result in litigation or arbitration. We may also face risks associated with any joint venture partners' financial condition, including, among other things, the risk of bankruptcy and/or failure to fund their share of required capital contributions. As a result, we may be exposed to liabilities in excess of our share of any joint venture. Any joint venture partners may also have business interests or goals that are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives. We may, in specific circumstances, be liable for the actions of any joint venture partners. We also may invest in public securities, unsecured debt and third-party mortgages which we do not control. Any of the foregoing may have a material adverse effect on our business, financial condition and results of operations.

**We may not decrease our general and administrative expenses proportionally with any reduction in the size of our portfolio, which could adversely affect us, including our results of operations.** 

Because our current strategy is to grow through investments, we maintain a level of staffing that we believe will enable us to effectively identify investment opportunities and integrate any investments that we complete. As a result of this strategy, our general and administrative expenses may be higher than if we were not seeking growth through investments. If we are unable to grow through investments, and do not decrease our general and administrative expenses, our profitability and our results of operations could be adversely affected.

**We derive a substantial portion of our revenues from four properties, and losses at any one of our properties could materially and adversely affect us.**

As of December 31, 2022, we owned four office properties and, as a result, any events that negatively impact one or more of our properties, such as a natural disaster, could materially and adversely affect us, including our financial condition and results of operations.

**We may be unable to renew leases, re-lease properties as leases expire or lease vacant spaces on favorable terms, which could materially and adversely affect us.**

As of December 31, 2022, leases representing 10.5% of our portfolio square footage and 10.7% of our annualized rental revenue will expire by the end of 2023 and leases representing 28.3% of our portfolio square footage and 29.0% of our annualized rental revenue will expire by the end of 2024. For more information on how we calculate lease expirations, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Property Operations." We expect that many of our current tenants will decline to renew their leases when they expire in 2023 and 2024, and other tenants may also decline to renew their leases. We also cannot assure you that any leases that are renewed will have terms as economically favorable as the expiring lease terms. If tenants do not renew their leases as they expire, we cannot provide any assurance that we will be able to find new tenants or that our properties will be re-leased at rental rates equal to or above the current rates in place. To retain tenants as leases expire and attract new tenants, we may be required to make significant capital investments in our properties and offer substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal options. We may experience significant costs in connection with re-leasing our properties, which could materially and adversely affect us. Our inability to renew leases, re-lease properties as leases expire or lease vacant space on favorable terms could materially and adversely affect us.

**Significant competition for tenants may increase our costs or reduce rents which could materially and adversely affect us.**

We encounter significant competition for tenants at all of our properties. Some competing properties may be newer, better located or otherwise more attractive to tenants. Competing landlords may offer available space at lower rents or on other more attractive terms than we offer at our properties. This competition may affect our ability to attract and retain tenants and may increase our costs or reduce the rents we are able to charge, which could materially and adversely affect us.

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**Our reliance on CBRE, Inc., or CBRE, for third-party property management services may have a negative effect on our financial condition and results of operations.**

We have engaged CBRE to provide property management services for our properties pursuant to a master property management agreement. The successful operation and management of our properties requires significant coordination between us and CBRE. Additionally, CBRE can terminate the property management agreement, as a whole or as to any one or more of our properties, without cause upon providing three months' notice, and we are permitted to terminate the property management agreement, as a whole or as to any one or more of our properties, without cause upon 60 days' notice. If we are unable to successfully coordinate with CBRE with respect to property management or the property management agreement with CBRE is terminated, in whole or in part, our operations could be disrupted, which may have a negative effect on our financial condition and results of operations.

**High interest rates, inflation, increased regulation and political instability could lead to increased market volatility or recession, which could materially and adversely affect us.** 

Inflation is high, the Federal Reserve has imposed significant interest rate hikes, and interest rates may further increase in the near future. The Federal Reserve's action, coupled with other macroeconomic factors, may trigger a recession in the United States, globally, or both. Current and potential tenants of our properties may be adversely impacted by inflation and rising interest rates, which could negatively impact current and prospective tenants' ability to pay rent and as a result negatively impact the overall demand for our properties. Such adverse impacts on our tenants may cause increased vacancies, which may add pressure to lower rents and increase our re-leasing costs. Any such impacts may materially and adversely affect us. We may also encounter disruptions in one or more of the markets in which we operate due to increased regulation and political instability. Any of these factors could lead to increased market volatility or recession, the result of which could adversely impact our tenants, and, as a result, our occupancy rates, rental rates, rent collections, lease renewals, pursuit of new tenants and the overall value of our office properties, which could materially and adversely affect us.

**The loss of one or more members of our senior leadership team, particularly our Chairman or our Chief Executive Officer, could materially and adversely affect us.**

Our success, including our ability to complete investments and manage our operations, depends to a significant degree upon the efforts of our senior leadership team, particularly our Chairman and our Chief Executive Officer. The loss of one or more members of our senior leadership team could materially and adversely affect us.

**Increased interest rates would increase our interest costs on any future debt we incur, which could adversely affect us.** 

The increase in interest rates could impact our ability to complete potential investments. In addition, to the extent we incur any debt in the future, including in connection with any potential investments, increased interest rates would cause our interest costs to be higher, which could adversely affect our cash flow, ability to pay principal and interest on debt, cost of refinancing debt when it becomes due and our ability to make distributions to our shareholders. Additionally, if we choose to hedge any interest rate risk, we cannot assure that any such hedge will be effective or that our hedging counterparty will meet its obligations to us. Increased interest rates also could adversely affect the value of our properties to the extent that it decreases the amount buyers may be willing to pay for our properties. As a result, increased interest rates, including any future increases in interest rates, could adversely affect us.

**We can increase our leverage without any limits under our governing documents, which may be viewed unfavorably by our shareholders and could result in a decline in our stock price.**

Our governing documents do not limit the amount of debt we may incur. In connection with potential investments, we may incur debt and significantly increase our leverage, which could reduce cash available for distributions and be viewed unfavorably by our shareholders, resulting in a decline in our stock price.

**Future impairment charges could materially and adversely affect us, including our results of operations in the period for which the charge occurs.**

We periodically evaluate the recoverability of the carrying values of each of our properties. As part of this evaluation, we compare the current carrying value of the asset to the estimated undiscounted cash flows that are directly associated with the use and ultimate disposition of the asset. Our estimated cash flows are based on several key assumptions, including anticipated hold periods, assumptions regarding the residual value upon disposition, including the exit capitalization rate, rental rates, costs of tenant improvements, and leasing commissions. These key assumptions are subjective in nature and could differ materially from actual results. Additionally, circumstances may cause us to alter the hold period of an asset or asset group, which may result in an impairment loss and such loss could be material to the Company's financial condition or operating performance. To the extent that the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized

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equal to the excess of carrying value over fair value. Any future impairment could materially and adversely affect us, including our results of operations in the period in which the charge is taken.

**Any failure to maintain effective internal controls could materially and adversely affect us.**

Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. Our internal controls over financial reporting and operations may not prevent or detect financial misstatements or loss of assets due to human error, management override of controls or fraud. Effective internal controls can provide only reasonable assurance regarding financial statement accuracy, public disclosures and safeguarding of assets. Any failure to maintain effective controls or timely effect any necessary improvement of our internal and disclosure controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect our ability to remain listed with the New York Stock Exchange, or NYSE. Ineffective internal and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our securities. Any failure to maintain effective internal controls could materially and adversely affect us.

**We may become subject to litigation which could materially and adversely affect us.**

We may become subject to litigation, including, but not limited to, claims relating to our operations, corporate transactions, dispositions and investments and otherwise in the ordinary course of our business, that could have a material adverse effect on us. Some of these claims could result in significant defense costs and potentially significant judgments against us, which may not be covered by insurance. Protracted litigation also may divert management's and our Trustees' attention away from our business. We cannot provide any assurance regarding the outcome of any claims that may arise in the future. We also have agreed to indemnify our present and former trustees, officers and property managers in connection with litigation in which they are named or threatened to be named as a party in their capacity as trustees, officers and property managers which can be expensive. Any fines, judgments or settlements that exceed our insurance coverage and any indemnification costs that we are required to pay could materially and adversely affect us.

**Any environmental contamination or other environmental liabilities could materially and adversely affect us.**

Under various federal, state and local laws and regulations, as the current or former owner or operator of real estate, we may be liable for costs and damages resulting from the presence or release of hazardous substances, including waste or petroleum products, at, on, in, under or from such property, including costs for investigation, removal or remediation of such contamination and for natural resource damages arising from such contamination. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or personal injury or property damage, adversely affect our ability to lease or sell such property, or adversely affect our ability to borrow using such property as collateral. Environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. If contamination is discovered on our properties, environmental laws also may impose reporting requirements and/or restrictions on the manner in which those properties may be used or businesses may be operated, and these reporting requirements and/or restrictions may require significant expenditures. Additionally, we may remain responsible for costs and liabilities arising from environmental issues related to representations and warranties we make in sales agreements for sold properties. We also may be liable for the costs of removal or remediation of hazardous substances or waste at disposal or treatment facilities if we arranged for disposal or treatment of hazardous substances at such facilities, whether or not we own or operate such facilities. In addition, future environmental investigation and remediation costs, including capital expenditures for environmental projects, may increase because of new laws and regulations, changing interpretations and stricter enforcement of current laws and regulations by regulatory authorities, expanding groundwater and other testing requirements, and new information on emerging contaminants such as per- and polyfluoroalkyl substances ("PFAS"), as well as uncertainty regarding remediation methods for such emerging contaminants.

Some of our current or sold properties have been or may in the future be impacted by releases of hazardous substances or petroleum products. Such contamination may arise from a variety of sources, including historic uses of our properties for commercial or industrial purposes, spills of such materials at adjacent properties, or releases from tanks used on our or nearby properties to store petroleum or hazardous substances. Additionally, our tenants' operations, current and former operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties, may have affected or may in the future affect the environmental condition of our properties.

We, our tenants, and our properties are subject to various federal, state and local regulatory requirements related to environmental, health and safety matters, such as environmental laws, state and local fire and safety requirements, building codes and land use regulations. Failure to comply with these requirements could subject us or our tenants to governmental fines or private litigant damage awards. In addition, compliance with these requirements, including new requirements or stricter

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interpretation of existing requirements, may require us or our tenants to incur significant expenditures. We do not know whether existing requirements will change or whether future requirements, including any requirements that may emerge from pending or future climate change laws or regulations, will develop. Environmental noncompliance liability also could impact tenants' ability to make rental payments to us, and our reputation could be negatively affected if we or our tenants violate environmental, health or safety laws or regulations.

Buildings and other structures on properties that we currently own or operate or formerly owned or operated or those we acquire or operate in the future contain, may contain, or may have contained, asbestos-containing material, or ACM. Environmental, health and safety laws require that ACM be properly managed and maintained, and include requirements to undertake special precautions, such as removal or abatement, if ACM would be disturbed during maintenance, renovation, or demolition of a building, potentially resulting in substantial costs. Moreover, laws regarding ACM may impose fines and penalties on owners, employers and operators, and we may be subject to liability for releases of ACM into the air in our current or sold buildings and third parties may seek recovery from owners or operators of real property for personal injury associated with ACM.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues also can stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. The presence of mold or other airborne contaminants in our current or sold buildings could expose us to costs and liabilities to address these issues, including from third parties if property damage or personal injury occurs.

**We may be adversely affected by laws, regulations or other issues related to climate change, including the physical impacts of climate change on our properties.**

The federal government and some of the states and localities in which our properties are located have enacted and may enact in the future certain climate change laws and regulations, including laws and regulations with respect to the regulation of carbon footprints and greenhouse gas emissions associated with buildings and "green" building codes. Although these laws and regulations have not had any known material adverse effects on our business to date, they could result in substantial costs, including compliance costs, increased energy costs, retrofit costs and construction costs, monitoring and reporting costs, and capital expenditures for environmental control facilities and other new equipment, as well as increasing (or making unavailable) property insurance on terms we find acceptable. Furthermore, our reputation could be negatively affected if we violate climate change laws or regulations. We cannot predict how future laws and regulations, or future interpretations of current laws and regulations, related to climate change will affect our business, results of operations and financial condition. Also, the potential physical impacts of climate change itself on our properties are highly uncertain, and would be particular to the geographic circumstances in areas in which our properties are located. These may include changes in rainfall and storm patterns and intensities, resulting in flooding, wind damages, land erosion, droughts, wildfire risk and water shortages, rising sea levels, heatwaves and other changing temperatures. To the extent these events result in significant damage to or closure of any of our buildings, our operations and financial performance could be adversely affected through lost tenants and an inability to lease or re-lease the space. In addition, these events could result in significant expenses to restore or remediate a property, increases in fuel (or other energy) prices or a fuel shortage, and increases in the costs of insurance if they result in significant loss of property or other insurable damage. These impacts may adversely affect our business, financial condition and results of operations.

**We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.**

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personal identifying information of tenants and lease data. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential tenant information, such as individually identifiable information relating to financial accounts. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced to third party service providers. In addition, information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber attacks. Although we have taken steps to protect the security of the data maintained in our information systems, it is possible that our security measures will not be able to prevent the systems' improper functioning, or the improper disclosure of personally identifiable information such as in the event of cyber attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers, including ransom attacks, and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any

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failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could materially and adversely affect us.

**Any failure of one or more of our current or potential tenants to provide accurate or complete financial information could prevent us from identifying tenant problems that could materially and adversely affect us.**

We rely on information from our current and potential tenants to evaluate tenants' credit risk as well as for ongoing risk management. To the extent the procedures we use to evaluate a tenant's credit risk are not sufficient, or a tenant fails to provide appropriate, accurate and complete financial information to us, our ability to identify tenant problems in a timely manner, or at all, could be adversely impacted. Such inability to identify current or potential tenants' problems could materially and adversely affect us.

***Risks Related to the Real Estate Industry***

**Real estate ownership creates risks and liabilities that could materially and adversely affect us.**

Our economic performance and the value of our real estate assets, and consequently the value of our securities, are subject to risks inherently associated with real estate ownership, including:

&nbsp;&nbsp;&nbsp;&nbsp;• changes in supply of or demand for properties in areas in which we own buildings;

&nbsp;&nbsp;&nbsp;&nbsp;• the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly or to respond to changing market conditions;

&nbsp;&nbsp;&nbsp;&nbsp;• the subjectivity of real estate valuations and changes in such valuations over time;

&nbsp;&nbsp;&nbsp;&nbsp;• property and casualty losses;

&nbsp;&nbsp;&nbsp;&nbsp;• the ongoing need for property maintenance and repair, and the need to make expenditures due to changes in governmental regulations, including, but not limited to, the Americans with Disabilities Act;

&nbsp;&nbsp;&nbsp;&nbsp;• the inability of tenants to pay rent;

&nbsp;&nbsp;&nbsp;&nbsp;• competition from the development of properties in the markets in which we own property and the quality of such competition, such as the attractiveness of our properties as compared to our competitors' properties based on considerations such as convenience of location, rental rates, amenities and safety record;

&nbsp;&nbsp;&nbsp;&nbsp;• civil unrest, acts of war, acts of God, including, but not limited to, earthquakes, hurricanes, pandemics and other natural disasters (which may result in uninsured losses), and other factors beyond our control;

&nbsp;&nbsp;&nbsp;&nbsp;• legislative, tax and regulatory developments that may occur at the federal, state and local levels that have direct or indirect impact on the ownership, leasing and operation of our properties; and

&nbsp;&nbsp;&nbsp;&nbsp;• litigation incidental to our business.

If any of the foregoing events occur, our properties may generate less revenues than expected and that may not be sufficient to meet our operating expenses, including debt service and capital expenditures, which could have a material adverse effect on us.

**Potential losses may not be covered by our insurance policies, which could materially and adversely affect us.**

We do not carry insurance for certain losses such as loss from riots, war or acts of God. For other potential losses relating to acts of terrorism, environmental liabilities, hurricanes, earthquakes and floods, we currently carry insurance but our insurance policies may contain limitations, including large deductibles, co-payments and general policy limits. We cannot provide any assurances that any losses we incur resulting from the COVID-19 virus or another pandemic will be covered by our insurance policies, and any such coverage may be subject to limitations. In the future, we may be unable to renew or duplicate our current insurance coverage at adequate levels or at reasonable prices or at all. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts, environmental liabilities, or other catastrophic events including hurricanes and floods, or, if offered, the expense of obtaining these types of insurance may not be justified. If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but still remain obligated for certain financial obligations related to the property. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. If we experience losses that are ultimately uninsured, it could materially and adversely affect us.

**Local, state or national measures and regulations could restrict our ability to enforce tenants' contractual rental obligations, which could materially and adversely affect us.**

Local, state or national authorities may enact, expand or extend certain measures or regulations, in connection with, or wholly independent from, the COVID-19 virus or another pandemic. These measures or regulations include, by way of example, rent-freezes, eviction moratoria, rent control or rent stabilization efforts, or court closures, any of which could impose

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direct or indirect restrictions on our ability to enforce tenants' contractual rental obligations, which could materially and adversely affect us.

**Actual or threatened terrorist attacks, crimes, shootings, riots, other acts of violence or other incidents beyond our control may materially and adversely affect us.** 

We have significant investments in large metropolitan markets that have been or may be in the future the targets of actual or threatened terrorism attacks, crimes, shootings, riots, other acts of violence or other incidents beyond our control. As a result, tenant demand for our office space could decline if some tenants in these markets choose to relocate their businesses to other markets or to lower-profile office buildings within these markets that may be perceived to be less likely targets of future incidents. In addition, our office properties could be damaged, directly or indirectly, from future terrorist attacks or other acts of violence. If a future attack or incident occurs, it could require us to close a property for some time, it could increase vacancies at our properties, it could necessitate leasing our properties on less favorable terms, and it could expose us to civil liability, all of which could materially and adversely affect us.

**Changes in accounting pronouncements may materially and adversely affect our financial statements, our tenants' credit quality and our ability to secure long-term leases and renewal options.**

Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Uncertainties posed by various initiatives of accounting standard-setting by the Financial Accounting Standards Board and the Securities and Exchange Commission, which create and interpret applicable accounting standards for U.S. companies, may change the financial accounting and reporting standards or their interpretation and application of these standards that govern the preparation of our financial statements. These changes could have a material impact on our reported financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in potentially material restatements of prior period financial statements. Similarly, these changes could have a material impact on our tenants' reported financial condition or results of operations or could affect our tenants' preferences regarding leasing real estate.

**If governmental authorities in the future seek to acquire part or all of our properties through eminent domain, we may not receive adequate compensation or recover costs associated with divesting the properties.**

Government authorities, including federal and state governments as well as municipalities and other government subdivisions, may, in certain circumstances, seek to acquire part or all of our properties through eminent domain proceedings. While we may seek to contest these proceedings, such contests may be costly and could divert management's attention away from our business, and there can be no assurance that a governmental authority will not succeed in acquiring part or all of our properties. In such event, there is a risk that we will not receive adequate compensation for the assets acquired.

***Risks Related to Our Securities***

**We may not distribute any of our significant existing cash balances to shareholders, which could be viewed unfavorably by our shareholders and materially and adversely affect our share price.**

Any distributions will be made at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant. We currently hold a significant amount of cash and cash equivalents ($2.6 billion as of December 31, 2022) which enables us to pursue investments and, as a result, we may elect not to distribute any of our existing cash to our shareholders. To the extent that our actual distributions are less than expected by investors, it could materially and adversely affect our share price.

**A substantial portion of our assets is currently held in cash, which is subject to risk of loss and potentially decreasing rates of return, which could materially and adversely affect us, including limiting our growth.**

As of December 31, 2022, we held $2.6 billion of cash and cash equivalents. We currently invest the majority of our cash in bank deposits with investment grade financial institutions. Nearly all of our cash and bank deposits are not insured by the Federal Deposit Insurance Corporation, or the FDIC. In addition, while interest rates have recently been increasing, the potential for their decline could adversely affect our results of operations. Therefore, our cash and any bank deposits or other investments that we now hold or may acquire in the future may be subject to risks, including the risk of loss or of reduced value, interest rate risk, and liquidity risk.

**Changes in market conditions could adversely affect the market price of our common shares*.***

As with other publicly traded equity securities, our stock price depends on various market conditions that may change from time to time. Among the market conditions that may affect the value of our common shares are the following:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the extent of investor interest in our securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our underlying asset value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• national and global economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• interest rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in tax laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our financial performance; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general stock and bond market conditions.

Changes in one or more of these market conditions could cause the market price of our common shares to decline.

**The number of our common shares available for future issuance or sale could adversely affect the per share trading price of our common shares and may be dilutive to current shareholders.**

Our declaration of trust authorizes our Board of Trustees to, among other things, issue additional shares of capital stock without shareholder approval. We cannot predict whether future issuances or sales of our common shares or the availability of shares for resale in the open market will decrease the per share trading price of our common shares. The issuance of substantial numbers of our common shares in the public market, including, but not limited to, in connection with any future transaction involving the Company or upon conversion of our Series D preferred shares, or the perception that such issuances might occur, could adversely affect the per share trading price of our common shares. In addition, we may issue our common shares or other long-term equity awards under the Equity Commonwealth 2015 Omnibus Incentive Plan, as amended. Any such future issuances may be dilutive to existing shareholders.

**Conversion of our Series D preferred shares may dilute the ownership interests of existing shareholders.**

The conversion of some or all of our Series D preferred shares may dilute the ownership interests of existing shareholders.

***Risks Related to Our Organization and Structure***

**Ownership limitations and certain provisions in our declaration of trust and bylaws, as well as certain provisions of Maryland law, may deter, delay or prevent a change in our control or unsolicited acquisition proposals that otherwise could be viewed favorably by our shareholders.**

Our declaration of trust and bylaws prohibit any shareholder other than certain persons who have been exempted by our Board of Trustees from owning (directly and by attribution) more than 9.8% of the number or value of shares of any class or series of our outstanding shares of beneficial interest, including our common shares. These provisions are intended to assist with our REIT compliance under the Code and otherwise promote our orderly governance. However, these provisions also inhibit acquisitions of a significant stake in us and may deter, delay or prevent a change in our control or unsolicited acquisition proposals that a shareholder may consider favorable.

Additionally, provisions contained in our declaration of trust and bylaws or under Maryland law may have a similar impact, including, for example, provisions relating to: the authority of our Board of Trustees to fill most vacancies on our Board of Trustees; the fact that only the Chairman of the Board of Trustees, our Chief Executive Officer, our President, a majority of our Trustees or the holders of 10% of our common shares may call a special meeting of shareholders; and advance notice requirements for shareholder proposals.

Furthermore, our Board of Trustees has the authority to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares. The authorization and issuance of a new class of capital stock or additional common shares could have the effect of delaying or preventing someone from taking control of us, even if a change in control could be viewed favorably by our shareholders.

**Our Board of Trustees has the authority, without shareholder approval, to opt into certain provisions of Maryland law that could inhibit changes in control which otherwise could be viewed favorably by our shareholders.**

Although we currently have opted out of certain provisions of Maryland law that otherwise could have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control, our Board of Trustees has the authority, without shareholder approval, to opt back into these provisions. If our Board of Trustees decides to opt back into

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these provisions, it could impede a change of control transaction that could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "business combination moratorium/fair price" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested shareholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "control share" provisions that provide that "control shares" of our company - defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees - acquired in a "control share acquisition" - defined as the direct or indirect acquisition of ownership or control of "control shares" from a party other than the issuer - have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares, and are subject to redemption in certain circumstances.

Our Board of Trustees has the authority, without shareholder approval, to opt into these provisions at any time, which could inhibit changes in control which otherwise could be viewed favorably by our shareholders.

**Our Operating Trust's organizational documents contain provisions that may delay, defer or prevent unsolicited acquisitions of us or changes in our control that otherwise could be viewed favorably by our shareholders.**

Our Operating Trust's organizational documents contain provisions that may delay, defer or prevent unsolicited acquisitions or changes in our control that might involve a premium price for the Company's common shares. These provisions include, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• redemption rights of qualifying parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prohibition against our removal as the trustee of the Operating Trust with or without cause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• transfer restrictions on the OP Units held directly or indirectly by us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability as trustee in some cases to amend the organizational documents of the Operating Trust without the consent of the other holders of OP Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the right of the holders of OP Units to consent to mergers involving us under specified circumstances; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the right of the holders of OP Units to consent to our withdrawal as the sole trustee of the Operating Trust.

These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control that otherwise could be viewed favorably by our shareholders.

**As an UPREIT, we are a holding company with no direct operations and will rely on distributions received from our Operating Trust to make distributions to our shareholders.**

We are a holding company and conduct all of our operations through our Operating Trust, and we rely on distributions from our Operating Trust to make any distributions to our shareholders and to meet any of our obligations. The ability of our Operating Trust to make distributions to us will depend on its operating results and the ability of subsidiaries of our Operating Trust to make distributions to our Operating Trust, which could be subject to restrictions of any of its subsidiaries. In addition, the claims of our shareholders will be structurally subordinated to all existing and future liabilities and other obligations and any preferred equity of the Operating Trust and its subsidiaries, including in the case of any liquidation, bankruptcy or reorganization of our company.

**We may complete investments through issuance of OP units in tax-deferred contribution transactions, which could result in shareholder dilution and restrict our ability to sell such assets, which could adversely affect us.**

In the future, we may complete investments through tax-deferred contribution transactions in exchange for OP Units in the Operating Trust, which may result in shareholder dilution. In addition, such transactions may reduce the amount of tax depreciation we could deduct over the tax lives of the acquired properties and may require that we agree to protect the contributors' abilities to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions could limit our ability to sell or finance an asset at a time, or on terms, that otherwise would be favorable to us.

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**Our shareholders' recourse against our Trustees and officers is limited by the terms contained in our declaration of trust and bylaws, which may be viewed unfavorably by our shareholders.**

Our declaration of trust limits the liability of our Trustees and officers to us and our shareholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our Trustees and officers will not have any liability to us and our shareholders for money damages other than liability resulting from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual receipt of an improper benefit or profit in money, property or services; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our declaration of trust and bylaws require us to indemnify any present or former Trustee or officer, to the maximum extent permitted by Maryland law, who is made or threatened to be made a party to a proceeding by reason of his or her service in that capacity. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former Trustees and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, our shareholders' recourse against our Trustees and officers is limited, which may be viewed unfavorably by our shareholders.

Our bylaws provide that actions by our shareholders against us or against our Trustees and officers, including derivative and class actions, may be referred to binding arbitration proceedings. As a result, our shareholders would not be able to pursue litigation for these disputes in courts against us or our Trustees and officers if the disputes were referred to arbitration. In addition, the ability to collect attorneys' fees or other damages may be limited, which may discourage attorneys from agreeing to represent parties wishing to commence such a proceeding. As a result, our shareholders' recourse against our Trustees and officers is limited by the terms of our declaration of trust and bylaws, which may be viewed unfavorably by our shareholders.

**Conflicts of interest could arise in the future between the interests of the Company's shareholders and the interests of OP Unitholders, which may impede business decisions that could benefit our shareholders.**

Conflicts of interest may exist or could arise in the future as a result of the relationships between the Company and its affiliates, on the one hand, and the Operating Trust or holders of OP Units, on the other. Our trustees and officers have duties to the Company under applicable Maryland law in connection with their management of the Company. At the same time, we, as trustee, have duties to the Operating Trust under Maryland law in connection with the management of the Operating Trust. The Company's duties as trustee to the Operating Trust may come into conflict with the duties of our trustees and officers to the Company.

Additionally, the organizational documents of the Operating Trust expressly limit our liability by providing that the Company will not be liable for monetary or other damages or otherwise for losses sustained, liabilities incurred or benefits not derived in connection with such decisions unless the Company acted with willful misfeasance, bad faith, gross negligence or reckless disregard of duty, and the act or omission was material to the matter giving rise to the loss, liability or benefit not derived. Moreover, the organizational documents of the Operating Trust provide that the Operating Trust may indemnify, and pay or reimburse reasonable expenses to, the Company and the Company's and the Operating Trust's present or former unitholders, trustees, officers or agents and any other persons acting on behalf of the Company that the Company may designate from and against all claims and liabilities by reason of his, her or its service in such capacity. The Operating Trust has the power, with the approval of the Company, to provide such indemnification and advancement of expenses. The provisions of Maryland law that allow the duties of a trustee to be modified by such organizational documents have not been resolved in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the organizational documents of the Operating Trust that purport to waive or restrict our duties that would be in effect were it not for such organizational documents.

**We may change our operational, financing and investment policies without shareholder approval, and any future changes we may implement may be viewed unfavorably.** 

Our Board of Trustees determines our operational, financing and investment policies and may amend or revise our policies, including our policies with respect to our intention to qualify for taxation as a REIT, investments, dispositions, growth, operations, indebtedness, capitalization and distributions, or approve transactions that deviate from these policies, without shareholder approval. Policy changes could adversely affect the market value of our common shares and our ability to make distributions to our shareholders. Further, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. We could significantly increase our leverage, which could increase the risk of default on our obligations. In addition, we could change our investment policies, including how we allocate our resources across our portfolio or the types of assets in which we seek to invest and how we address our exposure to interest rate risk, real estate market fluctuations and liquidity risk.

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***Risks Related to Our Taxation as a REIT***

**If we do not qualify as a REIT or fail to remain qualified as a REIT, we will be subject to U.S. federal income tax and potentially to additional state and local taxes which would reduce the amount of cash available for distribution to our shareholders.**

We believe that we have been organized and have operated in a manner to allow us to qualify us to be taxed under the Code as a REIT. However, we cannot be certain that, upon review or audit, the IRS will agree with this conclusion. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts might issue new rulings, that make it more difficult, or impossible, for us to remain qualified as a REIT. We do not intend to request a ruling from the IRS as to our REIT qualification.

As a REIT, we generally do not pay U.S. federal income tax on our net income that we distribute currently to our shareholders. However, actual qualification as a REIT under the Code depends on satisfying complex statutory requirements, for which there are only limited judicial and administrative interpretations. Many of the REIT requirements are highly technical and complex. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our qualification as a REIT for U.S. federal income tax purposes depends on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control.

If we fail to qualify as a REIT for U.S. federal income tax purposes, and do not avail ourselves of certain savings provisions set forth in the Code, we likely would be subject to U.S. federal income tax at regular corporate rates. As a taxable corporation, we would not be allowed to take a deduction for distributions to shareholders in computing our taxable income or pass through long-term capital gains to individual shareholders at favorable rates. We also could be subject to increased state and local taxes. We would not be able to elect to be taxed as a REIT for four years following the year we first failed to qualify unless the IRS were to grant us relief under certain statutory provisions. If we failed to qualify as a REIT, we likely would have to pay significant income taxes, which likely would reduce our net earnings available for investment or distribution to our shareholders. If we fail to qualify as a REIT, such failure may adversely affect our ability to raise capital and to service our debt. This likely would have a significant adverse effect on our earnings and the value of our securities. In addition, we would no longer be required to pay any distributions to shareholders. If we fail to qualify as a REIT for U.S. federal income tax purposes and are able to avail ourselves of one or more statutory savings provisions set forth in the Code in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure.

We also own properties through a subsidiary entity which is intended to qualify as a REIT, and we may in the future use other structures that include REITs. The failure of any of such entities to qualify as a REIT could materially and adversely affect us.

**Even if we qualify and remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.**

Even if we qualify and remain qualified for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, excise taxes, state or local income, property and transfer taxes, such as mortgage recording taxes, and other taxes. We are subject to U.S. federal and state income tax (and any applicable non-U.S. taxes) on the net income earned by our taxable REIT subsidiaries. Moreover, if we have net income from "prohibited transactions," for example in connection with the dispositions of property held primarily for sale to customers in the ordinary course of business, that income will be subject to a 100% tax. Finally, some state and local jurisdictions may impose taxes, such as franchise taxes, on some of our income even though as a REIT we are not subject to U.S. federal income tax on that income because not all states and localities treat REITs the same way they are treated for U.S. federal income tax purposes. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareholders.

**With less rental revenue, in order to comply with the 75% gross income test, we may be required to reduce interest payments on our investments in cash and cash equivalents, make qualifying investments in real estate assets that satisfy this test, contribute cash to our taxable REIT subsidiary which is subject to U.S. federal and state income tax, or take other steps which could adversely affect our cash flow.**

One of the gross income requirements a REIT must satisfy each taxable year is that at least 75% of its gross income (excluding gross income from prohibited transactions and qualifying hedges) generally must be derived directly or indirectly from investments relating to real property or mortgages on real property. As of December 31, 2022, we had equity interests in four office properties and cash and cash equivalents of $2.6 billion. With a large cash balance and fewer income-producing real properties, we receive less rental revenue as a percentage of our total revenue. In order to comply with the 75% gross income test for each taxable year, we may be required to reduce interest payments on our investments in cash and cash equivalents,

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contribute cash to our taxable REIT subsidiary which is subject to U.S. federal and state income tax, or take other steps which could adversely affect our cash flow. We may also be required to invest some or all of our cash and cash equivalents in qualifying investments in real estate assets, including mortgages on real property and investments in assets that we do not control, and such investments may have more risks than investments in cash and cash equivalents.

**Complying with REIT requirements may force us to forego and/or liquidate otherwise attractive investment opportunities.** 

To qualify as a REIT, we must ensure that we meet the REIT 75% and 95% gross income tests annually and that, at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total securities can be represented by securities of one or more taxable REIT subsidiaries, or TRS, and no more than 25% of the value of our assets can be represented by debt instruments issued by "publicly offered REITs." If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio, or contribute to a TRS, otherwise attractive investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income, increasing our income tax liability, and reducing amounts available for distribution to our shareholders. In addition, we may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution, and may be unable to pursue investments (or, in some cases, forego the sale of such investments) that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as a REIT. Thus, compliance with the REIT requirements may hinder our ability to make, and, in certain cases, maintain ownership of certain attractive investments.

**REIT distribution requirements could adversely affect our ability to execute our business plan.**

We generally must distribute annually at least 90% of our "REIT taxable income" (determined before the deduction for dividends paid and excluding net capital gains) in order for U.S. federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. We intend to make distributions to our shareholders to comply with the REIT requirements of the Code and avoid entity-level taxes.

From time to time, we may generate taxable income greater than our income for financial reporting purposes prepared in accordance with U.S. generally accepted accounting principles, or GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash or between the deduction of expenses and actual payment of those expenses may occur. If we do not have other funds available in these situations, we could be required to (i) borrow funds on unfavorable terms, (ii) sell investments at disadvantageous prices, (iii) distribute amounts that would otherwise be invested in future investments, or (iv) make a taxable distribution of our common shares as part of a distribution in which shareholders may elect to receive our common shares or (subject to a limit measured as a percentage of the total distribution) cash to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement. These alternatives could increase our costs or reduce our shareholders' equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our shares.

**Our transactions with our TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm's length terms.** 

A REIT may own up to 100% of the stock of one or more TRS. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% of the value of a REIT's assets may consist of stock or securities of one or more TRS. The tax rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's length basis.

TRSs that we have formed are subject to and will continue to be subject to U.S. federal, state and local income tax on their taxable income, and their after-tax net income is available for distribution to us but is not required to be distributed by such TRSs to us. We believe that the aggregate value of the stock and securities of our TRSs has been and we anticipate that the

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aggregate value will continue to be less than 20% of the value of our total assets (including our TRS stock and securities). Furthermore, we have monitored and will continue to monitor the value of our respective investments in our TRSs for the purpose of ensuring compliance with TRS ownership limitations. In addition, we have scrutinized and will continue to scrutinize all of our transactions with our TRSs to ensure that they are entered into on arm's length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the TRS limitation discussed above or to avoid application of the 100% excise tax discussed above.

**The tax on "prohibited transactions" may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes.** 

A REIT's net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We believe that the dispositions related to the repositioning of our portfolio along with other dispositions that we have made or that we might make in the future will not be subject to the 100% penalty tax; however, because application of the prohibited transactions tax could be based on an analysis of all of the facts and circumstances, there can be no assurance that the gains on some of our prior real estate sales, or any future real estate sales, will not be subject to the 100% prohibited transaction tax.

**There is a risk of changes in the tax law applicable to REITs.**

The IRS, the United States Treasury Department and Congress frequently review U.S. federal income tax legislation, regulations and other guidance. We cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us and/or our shareholders.

**Item 1B.&nbsp;&nbsp;&nbsp;&nbsp;Unresolved Staff Comments.**

None.

**Item 2.&nbsp;&nbsp;&nbsp;&nbsp;Properties.**

*General.*&nbsp;&nbsp;&nbsp;&nbsp;As of December 31, 2022, we had real estate investments totaling $408.1 million in four properties (eight buildings), that were leased to 100 tenants. We account for the operations of all our properties in one reporting segment. As of December 31, 2022, we owned the following real estate (dollars in thousands):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Property** | **State** | **Number of<br>Buildings** | **Undepreciated<br>Carrying<br>Value** | **Depreciated<br>Carrying<br>Value** | **Annualized<br>Rental<br>Revenue(1)** |
| 1225 Seventeenth Street (17th Street Plaza) | CO | 1 | $175914 | $116201 | $29062 |
| 1250 H Street, NW | DC | 1 | 76560 | 36188 | 7607 |
| 206 East 9th Street (Capitol Tower) | TX | 1 | 52466 | 40128 | 7837 |
| Bridgepoint Square | TX | 5 | 103183 | 46076 | 13206 |
| **Total** |  | 8 | $408123 | $238593 | $57712 |

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(1)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of December 31, 2022, plus estimated recurring expense reimbursements; 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. Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.

As of December 31, 2022, we did not have any properties encumbered by mortgage notes.

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**Item 3. Legal Proceedings.** 

We are or may become a party to various legal proceedings. We are not currently involved in any litigation nor, to our knowledge, is any litigation threatened against us where the outcome would, in our judgment based on information currently available to us, have a material adverse effect on the Company.

**Item 4.&nbsp;&nbsp;&nbsp;&nbsp;Mine Safety Disclosures.**

Not applicable.

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**PART II**

**Item 5.&nbsp;&nbsp;&nbsp;&nbsp;Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.**

Our common shares are traded on the NYSE (symbol: EQC). As of February 6, 2023, there were 987 shareholders of record of our common shares. However, because many of our common shares are held by brokers and other institutions on behalf of shareholders, we believe that there are considerably more beneficial holders of our common shares than record holders.

**Distributions**

Under our governing documents and Maryland law, distributions to our shareholders are to be authorized and declared by our Board of Trustees.

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

On September 16, 2020, our Board of Trustees declared a special, one-time cash distribution of $3.50 per common share/unit to shareholders/unitholders of record on October 1, 2020. On October 20, 2020, we paid this distribution to such shareholders/unitholders in the aggregate amount of $426.7 million.

In February 2022, 2021, and 2020, the number of earned awards for recipients of the Company's restricted stock units and market-based LTIP Units granted in January 2019, 2018, and 2017, respectively, was determined. Pursuant to the terms of such awards, we paid one-time catch-up cash distributions to these recipients in the aggregate amounts of $1.5 million, $6.0 million, and $2.9 million, in February 2022, 2021, and 2020, respectively, for distributions to common shareholders and unitholders declared by our Board of Trustees during such awards' performance measurement period.

The timing and amount of future distributions is determined at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant, including, but not limited to, our results of operations, our financial condition, debt and equity capital available to us, our expectations of our future capital requirements and operating performance, including our FFO, our Normalized FFO, and our cash available for distribution, restrictive covenants in our financial or other contractual arrangements (including those in our senior notes indenture), tax law requirements to qualify for taxation as and to remain a REIT, restrictions under Maryland law and our expected needs and availability of cash to pay our obligations and fund acquisitions. If our taxable income exceeds our net operating loss carryforwards, we will be required to make a distribution of at least 90% of our taxable income to maintain our qualification as a REIT. Whether we will make a distribution in 2023 and the timing of any such distribution remains uncertain. There can be no assurance that we will pay distributions in the future.

**Issuer Repurchases**

*Common Share Repurchase Program* 

On March 1, 2021, our Board of Trustees authorized the repurchase of up to $150.0 million of our outstanding common shares through June 30, 2022, and on December 14, 2021, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through December 31, 2022. On March 15, 2022, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through June 30, 2023.

During the year ended December 31, 2022, we repurchased and retired 6,110,646 of our common shares at a weighted average dividend adjusted price of $24.64 per share, for a total investment of $155.5 million. As of December 31, 2022, we have $120.4 million of remaining availability under our share repurchase program, which is scheduled to expire on June 30, 2023.

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The following table provides information with respect to the common share repurchases described above during the three months ended December 31, 2022:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Total Number of Shares Purchased** | **Average Price Paid per Share** | **Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs** | **Maximum Number or Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs** |
| October 2022 | 1223319 | $23.99 | 1223319 | $120396378 |
| November 2022 |  | $— |  | $120396378 |
| December 2022 |  | $— |  | $120396378 |
| Total | 1223319 | $23.99 | 1223319 | $120396378 |

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**Unregistered Sales of Securities**

There were no unregistered sales of equity securities during the year ended December 31, 2022.

**Performance Graph**

Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act that might incorporate SEC filings, in whole or in part, the following performance graph will not be incorporated by reference into any such filings.

The following graph compares the cumulative total shareholder return of our common shares for the period from December 31, 2017 to December 31, 2022, to the Nareit All REITs Index, Standard & Poor's 500 Index (S&P 500 Index), and to the Nareit Equity Office Index over the same period. The graph assumes an investment of $100.00 in our common shares and each index and the reinvestment of all distributions. The shareholder return shown on the graph below is not indicative of future performance.

![eqc-20221231_g1.jpg](eqc-20221231_g1.jpg)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Period Ended** | **Period Ended** | **Period Ended** | **Period Ended** | **Period Ended** | **Period Ended** |
|<br>**Index** | **12/31/2017** | **12/31/2018** | **12/31/2019** | **12/31/2020** | **12/31/2021** | **12/31/2022** |
| Equity Commonwealth | $100.00 | $106.64 | $129.91 | $122.28 | $116.09 | $116.59 |
| Nareit All REITs Index | $100.00 | $95.90 | $122.82 | $115.62 | $161.73 | $121.13 |
| S&P 500 Index | $100.00 | $95.62 | $125.72 | $148.85 | $191.58 | $156.88 |
| Nareit Equity Office Index | $100.00 | $85.50 | $112.36 | $91.65 | $111.81 | $69.75 |

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**Source: S&P Global Market Intelligence**

**Item 6. Reserved**

**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

**OBJECTIVE**

The objective of this section of this Annual Report on Form 10-K is to provide a discussion and analysis, from management's perspective, of the material information necessary to assess our financial condition, results of operations, liquidity and cash flows for the year ended December 31, 2022. In addition, we have also included a discussion of any material events or uncertainties that we believe are reasonably likely to cause our 2022 financial results to not be indicative of future results. We also discuss potential business opportunities that we may pursue and the uncertainties associated with such pursuit. We have included an executive summary to identify what we believe are the more important items that affected our 2022 financial results, including both our business activities as well as events outside of our control. In addition to the executive summary, we encourage you to read the entire discussion in this section of our material financial and statistical data together with our consolidated financial statements and the accompanying notes that are included in Part IV, Item 15 of this Annual Report on Form 10-K. The full discussion analyzes in detail our financial condition, results of operations, liquidity and cash flows, including comparisons of our 2022 and 2021 financial results. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

**OVERVIEW**

We are an internally managed and self-advised REIT primarily engaged in the ownership and operation of office properties in the United States. We were formed in 1986 under Maryland law. The Company operates as an UPREIT, conducting substantially all of its activities through the Operating Trust. As of December 31, 2022, the Company beneficially owned 99.74% of the outstanding OP Units.

As of December 31, 2022, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet, and we had $2.6 billion of cash and cash equivalents.

We use leasing and occupancy metrics to evaluate the performance of our properties. We believe these metrics provide useful information to investors because they reflect the leasing activity and vacant space at the properties and may facilitate comparisons of our leasing and occupancy metrics with other REITs and real estate companies.

As of December 31, 2022, our overall portfolio was 82.8% leased. During the year ended December 31, 2022, we entered into leases for 205,000 square feet, including lease renewals for 96,000 square feet and new leases for 109,000 square feet. Leases entered into during the year ended December 31, 2022, including both lease renewals and new leases, had weighted average cash rental rates that were approximately 0.3% higher than prior rental rates for the same space and weighted average GAAP rental rates that were approximately 3.8% higher than prior rental rates for the same space. The change in GAAP rents is different than the change in cash rents due to differences in the amount of rent abatements, the magnitude and timing of contractual rent increases over the lease term, and the length of term for the newly executed leases compared to the prior leases. Percent change in GAAP and cash rents is a comparison of current rent, including estimated tenant expense reimbursements, if any, to the rent, including actual/projected tenant expense reimbursements, if any, last received for the same space on a GAAP and cash basis, respectively. Cash rent during the reporting period is calculated before deducting any initial period free rent.

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On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

We have engaged CBRE to provide property management services. We pay CBRE a property-by-property management fee and may engage CBRE from time-to-time to perform project management services, such as coordinating and overseeing the completion of tenant improvements and other capital projects at the properties. We reimburse CBRE for certain expenses incurred in the performance of its duties, including certain personnel and equipment costs. For the years ended December 31, 2022 and 2021, we incurred expenses of $3.0 million and $3.0 million, respectively, related to our property management agreement with CBRE, for property management fees, typically calculated as a percentage of the properties' revenues, and salary and benefits reimbursements for property personnel, such as property managers, engineers and maintenance staff. As of December 31, 2022 and 2021, we had amounts payable pursuant to these services of $0.4 million and $0.3 million, respectively.

After executing on our disposition strategy and evaluating a variety of opportunities to invest our capital, on May 4, 2021, we entered into a merger agreement to acquire Monmouth Real Estate Investment Corporation, or Monmouth, a publicly-traded industrial REIT. On August 31, 2021, following Monmouth's failure to obtain shareholder approval of the merger, in accordance with the terms of the merger agreement, we terminated the merger agreement.

Following the termination of the merger agreement with Monmouth, we shifted our focus back to capital allocation and are continuing to evaluate investment opportunities. We are seeking to use the strength and liquidity of our balance sheet for investments in high-quality assets or businesses in a range of property types that offer a compelling risk-reward profile. We may also determine to sell, liquidate or otherwise exit our business if we believe doing so will maximize shareholder value.

Our business has been and is continuing to be impacted by economic uncertainty following the COVID-19 virus as well as tenant uncertainty regarding office space needs given the evolving remote and hybrid working trends. Many of our employees and the majority of our tenants' employees are currently working at least in part remotely. Overall, our business has experienced a significant reduction in leasing interest and activity as well as parking revenue when compared to pre-pandemic levels. As of December 31, 2022 and December 31, 2019, our comparable property portfolio was 82.8% and 91.5% leased, respectively. The duration of these business disruptions continues to be unknown at this time, and we currently are not able to estimate the full impact of the COVID-19 virus and remote working trends on our business.

***Property Operations***

Leased occupancy data for 2022 and 2021 are as follows (square feet in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **All Properties** | **All Properties** | **Comparable Properties(1)** | **Comparable Properties(1)** |
| | **As of December 31,** | **As of December 31,** | **As of December 31,** | **As of December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Total properties | 4 | 4 | 4 | 4 |
| Total square feet | 1507 | 1507 | 1507 | 1507 |
| Percent leased(2) | 82.8% | 82.3% | 82.8% | 82.3% |

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(1)Based on properties owned continuously from January 1, 2020 through December 31, 2022.

(2)Percent leased is the percent of space subject to signed leases. Percent leased is disclosed to quantify the ratio of leased square feet to rentable square feet and we believe provides useful information as to the proportion of rentable square feet subject to a lease.

The weighted average lease term based on square feet for leases entered into during the year ended December 31, 2022 was 5.5 years. Commitments made for leasing expenditures and concessions, such as tenant improvements and leasing commissions, for leases entered into during the year ended December 31, 2022 totaled $9.4 million, or $46.00 per square foot on average (approximately $8.43 per square foot per year of the lease term).

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As of December 31, 2022, approximately 10.5% of our leased square feet and 10.7% of our annualized rental revenue, determined as set forth below, are included in leases scheduled to expire through December 31, 2023. Renewal and new leases and rental rates at which available space may be relet in the future will depend on prevailing market conditions at the times these leases are negotiated. We believe that the in-place cash rents for leases expiring in 2023, that have not been backfilled, are approximately market. Lease expirations by year, as of December 31, 2022, are as follows (square feet and dollars in thousands):

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Year** | **Number<br>of Tenants Expiring(1)** | **Leased Square<br> Feet Expiring(2)** | **% of Leased Square Feet Expiring(2)** | **Cumulative% of Leased Square<br>Feet Expiring(2)** | **Annualized Rental <br>Revenue Expiring(3)** | **% of**<br>**Annualized Rental**<br>**Revenue Expiring** | **Cumulative**<br>**% of**<br>**Annualized Rental Revenue Expiring** |
| 2023 | 15 | 132 | 10.5% | 10.5% | $6174 | 10.7% | 10.7% |
| 2024 | 17 | 222 | 17.8% | 28.3% | 10552 | 18.3% | 29.0% |
| 2025 | 12 | 144 | 11.5% | 39.8% | 6809 | 11.8% | 40.8% |
| 2026 | 9 | 72 | 5.8% | 45.6% | 3730 | 6.5% | 47.3% |
| 2027 | 16 | 227 | 18.2% | 63.8% | 11008 | 19.0% | 66.3% |
| 2028 | 11 | 126 | 10.1% | 73.9% | 4946 | 8.6% | 74.9% |
| 2029 | 7 | 137 | 11.0% | 84.9% | 6844 | 11.9% | 86.8% |
| 2030 | 6 | 87 | 7.0% | 91.9% | 3140 | 5.4% | 92.2% |
| 2031 | 2 | 22 | 1.8% | 93.7% | 590 | 1.0% | 93.2% |
| 2032 | 1 | 32 | 2.5% | 96.2% | 1877 | 3.3% | 96.5% |
| Thereafter | 4 | 47 | 3.8% | 100.0% | 2042 | 3.5% | 100.0% |
|  | 100 | 1248 | 100.0% |  | $57712 | 100.0% |  |
| Weighted average remaining lease term (in years): | Weighted average remaining lease term (in years): | 4.2 |  |  | 4.1 |  |  |

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(1)Tenants with leases expiring in multiple years are counted in each year they expire.

(2)Leased Square Feet as of December 31, 2022 includes space subject to leases that have commenced for revenue recognition purposes in accordance with GAAP, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants. The Leased Square Feet Expiring corresponds to the latest-expiring signed lease for a given suite. Thus, backfilled suites expire in the year stipulated by the new lease.

(3)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of December 31, 2022, plus estimated recurring expense reimbursements; 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. Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.

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The principal source of funds for our operations is rents from tenants at our properties. Rents are generally received from our tenants monthly in advance. As of December 31, 2022, tenants representing 2.5% or more of our total annualized rental revenue were as follows (square feet in thousands):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Tenant** | **Tenant** | **Square Feet(1)** | **% of Total Leased Square Feet(1)** | **% of Annualized Rental Revenue(2)** | **Weighted Average Remaining Lease Term** |
| 1. | Equinor Energy Services, Inc. | 80 | 6.4% | 6.1% | 1.0 |
| 2. | KPMG, LLP(3) | 71 | 5.7% | 5.3% | 5.8 |
| 3. | Salesforce.com, Inc. | 65 | 5.2% | 5.2% | 2.9 |
| 4. | Crowdstrike, Inc.(4) | 36 | 2.9% | 3.9% | 1.8 |
| 5. | CBRE, Inc. | 40 | 3.2% | 3.6% | 5.3 |
| 6. | RSM US LLP | 32 | 2.6% | 3.3% | 9.4 |
| 7. | SonarSource US, Inc. | 28 | 2.2% | 3.0% | 4.7 |
| 8. | Alden Torch Financial, LLC | 34 | 2.7% | 2.7% | 4.2 |
| 9. | New York Life Insurance Company | 32 | 2.6% | 2.5% | 2.5 |
| 10. | Comcast Cable Communications | 30 | 2.4% | 2.5% | 4.0 |
| 11. | Wunderman Thompson, LLC | 24 | 1.9% | 2.5% | 4.6 |
|  | Total | 472 | 37.8% | 40.6% | 3.9 |

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(1)Total Leased Square Feet as of December 31, 2022 includes space subject to leases that have commenced, space being fitted out for occupancy pursuant to existing leases, and space which is leased but is not occupied or is being offered for sublease by tenants.

(2)Annualized rental revenue is annualized contractual rents from our tenants pursuant to leases which have commenced as of December 31, 2022, plus estimated recurring expense reimbursements; 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. Annualized rental revenue is a forward-looking non-GAAP measure. Annualized rental revenue cannot be reconciled to a comparable GAAP measure without unreasonable efforts, primarily due to the fact that it is calculated from the billings of tenants in the most recent month at the most recent rental rates during the quarter reported, whereas historical GAAP measures include billings from a potentially different group of tenants over multiple months at potentially different rental rates.

(3)Approximately 7,000 square feet of KPMG, LLP's space expiring in 2023 has been backfilled and will expire in 2034. The remaining 64,000 square feet expire in 2029.

(4)Subsequent to December 31, 2022, Crowdstrike, Inc.'s lease was amended to expand the square footage by approximately 11,000 square feet and extend the weighted average remaining term to 7.2 years. The expansion is expected to commence late in 2023.

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**RESULTS OF OPERATIONS**

***Year Ended December 31, 2022 Compared to Year Ended December 31, 2021***

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Comparable Properties Results(1)** | **Comparable Properties Results(1)** | **Comparable Properties Results(1)** | **Comparable Properties Results(1)** | **Other Properties Results(2)** | **Other Properties Results(2)** | **Consolidated Results** | **Consolidated Results** | **Consolidated Results** | **Consolidated Results** |
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **$ Change** | **% Change** | **2022** | **2021** | **2022** | **2021** | **$ Change** | **% Change** |
| | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Rental revenue | $58912 | $54787 | 4125 | 7.5% | $(149) | $140 | $58763 | $54927 | $3836 | 7.0% |
| Other revenue | 4362 | 3047 | 1315 | 43.2% | 15 | 28 | 4377 | 3075 | 1302 | 42.3% |
| Operating expenses | (25928) | (25927) | (1) | —% | 1744 | 34 | (24184) | (25893) | 1709 | (6.6)% |
| Net operating income(3) | $37346 | $31907 | $5439 | 17.0% | $1610 | $202 | 38956 | 32109 | 6847 | 21.3% |
| Other expenses: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | &nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |  |  |  | 17810 | 17774 | 36 | 0.2% |
| &nbsp;&nbsp;&nbsp;General and administrative | &nbsp;&nbsp;&nbsp;General and administrative |  |  |  |  |  | 30378 | 37444 | (7066) | (18.9)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expenses |  |  |  |  |  | 48188 | 55218 | (7030) | (12.7)% |
| Interest and other income, net | Interest and other income, net |  |  |  |  |  | 46945 | 6800 | 40145 | 590.4% |
| Gain on sale of properties, net | Gain on sale of properties, net | Gain on sale of properties, net |  |  |  |  | 97 |  | 97 | N/A |
| Income (loss) before income taxes | Income (loss) before income taxes | Income (loss) before income taxes | Income (loss) before income taxes |  |  |  | 37810 | (16309) | 54119 | (331.8)% |
| Income tax expense |  |  |  |  |  |  | (453) | (120) | (333) | 277.5% |
| Net income (loss) |  |  |  |  |  |  | 37357 | (16429) | 53786 | (327.4)% |
| Net (income) loss attributable to noncontrolling interest | Net (income) loss attributable to noncontrolling interest | Net (income) loss attributable to noncontrolling interest |  |  |  |  | (94) | 33 | (127) | (384.8)% |
| Net income (loss) attributable to Equity Commonwealth | Net income (loss) attributable to Equity Commonwealth | Net income (loss) attributable to Equity Commonwealth |  |  |  |  | 37263 | (16396) | 53659 | (327.3)% |
| Preferred distributions |  |  |  |  |  |  | (7988) | (7988) |  | —% |
| Net income (loss) attributable to Equity Commonwealth common shareholders | Net income (loss) attributable to Equity Commonwealth common shareholders | Net income (loss) attributable to Equity Commonwealth common shareholders |  |  |  |  | $29275 | $(24384) | $53659 | (220.1)% |

---

(1)Comparable properties consist of four properties we owned continuously from January 1, 2021 to December 31, 2022.

(2)Other properties consist of properties sold.

(3)We define net operating income, or NOI, as income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses. For a discussion of why we consider NOI to be an appropriate supplemental measure to net income as well as a reconciliation of NOI to net income, the most directly comparable financial measure under GAAP reported on our consolidated financial statements, please see the section entitled "Liquidity and Capital Resources - Property Net Operating Income (NOI)."

*Rental revenue.* Rental revenue increased $3.8 million, or 7.0%, in the 2022 period, compared to the 2021 period, primarily due to the increase in rental revenue at the comparable properties. Rental revenue at the comparable properties increased $4.1 million, or 7.5%, in the 2022 period, compared to the 2021 period, primarily due to the $1.9 million collection of a previously reserved receivable, a $1.3 million increase in lease termination fees and a $0.8 million increase in escalations.

*Other revenue.* Other revenue, which primarily includes parking revenue, increased $1.3 million, or 42.3% in the 2022 period, compared to the 2021 period primarily due to an increase in parking demand.

*Operating expenses.* Operating expenses decreased $1.7 million, or 6.6%, in the 2022 period, compared to the 2021 period, primarily due to a $1.8 million real estate tax refund received at a sold property. Operating expenses at our comparable properties slightly increased in the 2022 period, compared to the 2021 period, primarily due to a $0.4 million increase in utilities, a $0.2 million increase in maintenance and repairs, a $0.2 million increase in cleaning expense and a $0.2 million increase in parking expense, partially offset by a $0.9 million decrease in real estate tax expense

*General and administrative.* General and administrative expenses decreased $7.1 million, or 18.9% in the 2022 period, compared to the 2021 period, primarily due to a $7.1 million decrease in compensation expenses primarily related to severance, a $0.3 million decrease in share-based compensation expenses and a $0.3 million decrease in payroll expense, partially offset by a $0.8 million increase in legal expense due to an internal restructuring.

------

*Interest and other income, net.* Interest and other income, net increased $40.1 million, or 590.4%, in the 2022 period, compared to the 2021 period, primarily due to more interest received from higher average interest rates, partially offset by lower average cash balances.

*Gain on sale of properties, net*. Gain on sale of properties, net of $0.1 million in the 2022 period relates to adjustments to prior period sales. We did not have any gain on sale of properties, net in the 2021 period.

*Income tax expense.* Income tax expense increased $0.3 million, or 277.5%, in the 2022 period, compared to the 2021 period, primarily due to an increase in federal income taxes at our taxable REIT subsidiary.

*Net (income) loss attributable to noncontrolling interest.* From 2017 through 2022, we granted LTIP Units to certain of our trustees and employees. Net (income) loss attributable to noncontrolling interest of $(0.1) million in the 2022 period and $33,000 in the 2021 period, relates to the allocation of (income) loss to the LTIP/OP Unit holders.

**LIQUIDITY AND CAPITAL RESOURCES**

***Our Operating Liquidity and Resources***

As of December 31, 2022, we had $2.6 billion of cash and cash equivalents. We expect to use our cash balances, cash flow from our operations and proceeds of any future property sales to fund our operations, make distributions, repurchase our common shares, make investments in properties or businesses, fund tenant improvements and leasing costs and for other general business purposes. We believe our cash balances and the cash flow from our operations will be sufficient to fund our ordinary course activities.

Our future cash flows from operating activities will depend on our ability to collect rent from our current tenants under their leases. Our ability to collect rent and generate parking revenue in the near term may continue to be adversely impacted by the market disruption caused by economic uncertainty following the COVID-19 virus as well as remote and hybrid working trends. We cannot predict the ultimate impact of the pandemic on our results of operations.

Our future cash flows from operating activities will also depend upon our:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ability to maintain or improve the occupancy of, and the rental rates at, our properties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ability to control operating and financing expense increases at our properties; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ability to purchase additional properties, which produce rents, less property operating expenses, in excess of our costs of acquisition capital.

In addition, our future cash flows will also depend in part on interest income earned on our invested cash balances.

Volatility in energy costs and real estate taxes may cause our future operating expenses to fluctuate; however, the impact of these fluctuations is expected to be partially offset by the pass through of operating expenses to our tenants pursuant to lease terms, although there can be no assurance that we will be able to successfully offset these expenses or that doing so would not negatively impact our competitive position or business.

Net cash flows provided by (used in) operating, investing and financing activities were $65.0 million, $(3.5) million and $(280.3) million, respectively, for the year ended December 31, 2022, and $16.1 million, $(6.8) million and $(195.5) million, respectively, for the year ended December 31, 2021. Changes in these three categories of our cash flows between 2022 and 2021 are primarily related to an increase in property net operating income, an increase in interest income as a result of higher average interest rates partially offset by lower average balances in 2022, repurchase of our common shares and distributions to common shareholders.

***Our Investment and Financing Liquidity and Resources***

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

During the year ended December 31, 2022, we paid an aggregate of $8.0 million of distributions on our series D preferred

------

shares. On January 13, 2023, our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on February 15, 2023 to shareholders of record on January 31, 2023.

During the year ended December 31, 2022, we repurchased and retired 6,110,646 of our common shares at a weighted average dividend adjusted price of $24.64 per share, for a total investment of $155.5 million. As of December 31, 2022, we have $120.4 million of remaining availability under our share repurchase program, which is scheduled to expire on June 30, 2023.

We may utilize various types of financings, including debt or equity, to fund future investments and to pay any debt we may incur and other obligations as they become due. Although we are not currently rated by the debt rating agencies, the completion and the costs of any future debt transactions will depend primarily upon market conditions and our credit ratings at such time, if any. We have no control over market conditions. Any credit ratings will depend upon evaluations by credit rating agencies of our business practices and plans and, in particular, whether we appear to have the ability to maintain our earnings, to space any debt maturities and to balance our use of debt and equity capital so that our financial performance and leverage ratios afford us flexibility to withstand any reasonably foreseeable adverse changes. We intend to conduct our business activities in a manner which will continue to afford us reasonable access to capital for investment and financing activities. However, there can be no assurance regarding our ability to complete any debt or equity offerings or that our cost of any future public or private financings will not increase.

During the years ended December 31, 2022, 2021 and 2020 amounts capitalized at our properties, including properties sold, for tenant improvements, leasing costs and building improvements were as follows (amounts in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Tenant improvements(1) | $3405 | $5442 | $9598 |
| Leasing costs(2) | 2899 | 1498 | 2097 |
| Building improvements(3) | 597 | 884 | 2044 |

---

(1)Tenant improvements include capital expenditures to improve tenants' spaces.

(2)Leasing costs include leasing commissions and related legal expenses.

(3)Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. Tenant-funded capital expenditures are excluded.

During the year ended December 31, 2022, commitments made for expenditures in connection with leasing space at our properties were as follows (dollar and square foot measures in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | **New**<br>**Leases** | **Renewals** | **Total** |
| Square feet leased during the period | 109 | 96 | 205 |
| Tenant improvements and leasing commissions | $7441 | $1999 | $9440 |
| Tenant improvements and leasing commissions per square foot | $68.27 | $20.82 | $46.00 |
| Weighted average lease term by square foot (years)(1) | 7.0 | 3.7 | 5.5 |
| Tenant improvements and leasing commissions per square foot per year of lease term | $9.73 | $5.63 | $8.43 |

---

(1)For renewal lease terms, if the existing rents of an original lease term are modified, the new term starts at the rent modification date. Weighted average lease term generally excludes renewal options.

Committed but unspent tenant related obligations are leasing commissions and tenant improvements. Based on existing leases as of December 31, 2022, committed but unspent tenant related obligations were $10.3 million.

***Debt Covenants***

We have no debt outstanding as of December 31, 2022, and, as a result, we have no debt covenants. We are also not rated by the debt rating agencies.

------

**NON-GAAP MEASURES**

***Funds from Operations (FFO) and Normalized FFO***

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or Nareit. Nareit defines FFO as net income (loss), calculated in accordance with GAAP, excluding real estate depreciation and amortization, gains (or losses) from sales of depreciable property, impairment of depreciable real estate, and our portion of these items related to equity investees and noncontrolling interests. Our calculation of Normalized FFO differs from Nareit's definition of FFO because we exclude certain items that we view as nonrecurring or impacting comparability from period to period. We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income attributable to Equity Commonwealth common shareholders and cash flow from operating activities.

We believe 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 our operating performance between periods and with other REITs. 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 income (loss), net income (loss) attributable to Equity Commonwealth common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. These measures should be considered in conjunction with net income (loss), net income (loss) attributable to Equity Commonwealth common shareholders and cash flow from operating activities as presented in our consolidated statements of operations and consolidated statements of cash flows. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

The following table provides a reconciliation of net income (loss) to FFO attributable to Equity Commonwealth common shareholders and unitholders and a reconciliation to Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | **Years Ended December 31,** | **Years Ended December 31,** | **Years Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Reconciliation to FFO:** |  |  |  |
| Net income (loss) | $37357 | $(16429) | $452093 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate depreciation and amortization | 17652 | 17593 | 18442 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of properties, net | (97) |  | (446744) |
| FFO attributable to Equity Commonwealth | 54912 | 1164 | 23791 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred distributions | (7988) | (7988) | (7988) |
| FFO attributable to Equity Commonwealth common shareholders and unitholders | $46924 | $(6824) | $15803 |
| **Reconciliation to Normalized FFO:** |  |  |  |
| FFO attributable to Equity Commonwealth common shareholders and unitholders | $46924 | $(6824) | $15803 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Straight-line rent adjustments | 238 | (1407) | 340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sold property expense included in interest and other income, net |  | (225) | 515 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on early extinguishment of debt |  |  | (131) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive severance expense |  | 7107 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes related to property sales included in general and administrative |  |  | 1472 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes related to property sales, net included in income tax expense |  |  | 130 |
| Normalized FFO attributable to Equity Commonwealth common shareholders and unitholders | $47162 | $(1349) | $18129 |

---

***Property Net Operating Income (NOI)*** 

We use another non-GAAP measure, property net operating income, or NOI, to evaluate the performance of our properties. We define NOI as income from our real estate including lease termination fees received from tenants less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and corporate level expenses.

------

The following table includes the reconciliation of NOI to net income, the most directly comparable financial measure under GAAP reported in our consolidated financial statements. We consider NOI to be an appropriate supplemental measure to net income (loss) because it may help to understand the operations of our properties. We use NOI internally to evaluate property level performance, and we believe that NOI provides useful information to investors regarding our results of operations because it reflects only those income and expense items that are incurred at the property level and may facilitate comparisons of our operating performance between periods and with other REITs. NOI does not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, net income attributable to Equity Commonwealth common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as an indicator of our financial performance or liquidity, nor is this measure necessarily indicative of sufficient cash flow to fund all of our needs. This measure should be considered in conjunction with net income (loss), net income (loss) attributable to Equity Commonwealth common shareholders and cash flow from operating activities as presented in our consolidated statements of operations and consolidated statements of cash flows. Other REITs and real estate companies may calculate NOI differently than we do.

A reconciliation of NOI to net income (loss) for the years ended December 31, 2022, 2021 and 2020, is as follows (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Rental revenue | $58763 | $54927 | $62134 |
| Other revenue | 4377 | 3075 | 4144 |
| Operating expenses | (24184) | (25893) | (28858) |
| &nbsp;&nbsp;&nbsp;NOI | $38956 | $32109 | $37420 |
| NOI | $38956 | $32109 | $37420 |
| Depreciation and amortization | (17810) | (17774) | (19329) |
| General and administrative | (30378) | (37444) | (33233) |
| Interest and other income, net | 46945 | 6800 | 21228 |
| Interest expense |  |  | (620) |
| Gain on early extinguishment of debt |  |  | 131 |
| Gain on sale of properties, net | 97 |  | 446744 |
| Income (loss) before income taxes | 37810 | (16309) | 452341 |
| Income tax expense | (453) | (120) | (248) |
| Net income (loss) | $37357 | $(16429) | $452093 |

---

**CRITICAL ACCOUNTING POLICIES**

Our critical accounting policies are those that will have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates. We believe that our judgments and estimates are consistently applied and produce financial information that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property. These policies affect our assessment of the carrying values and impairments of long lived assets.

We periodically evaluate our properties for possible impairments. Impairment indicators may include declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long-term prospects for improvement in property performance, weak or declining tenant profitability, cash flow or liquidity, our decision to dispose of an asset before the end of its estimated useful life and legislative, market or industry changes that could permanently reduce the value of a property. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows to be generated from that property over our anticipated hold period. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the property to its estimated fair value. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows. Projections of expected future operating cash flows require that we estimate future market rental revenue amounts subsequent to the expiration of current lease agreements, future property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future

------

cash flow analysis, including discount rates, could result in an incorrect assessment of the property's fair value and could result in the misstatement of the carrying value of our real estate assets and net income (loss).

These policies involve significant judgments made based upon experience, including judgments about current valuations, ultimate realizable value, estimated useful lives, salvage or residual value, the ability and willingness of our tenants to perform their obligations to us, current and future economic conditions and competitive factors in the markets in which our properties are located. Competition, economic conditions and other factors may cause occupancy declines in the future. In the future, we may need to revise our carrying value assessments to incorporate information which is not now known, and such revisions could increase or decrease our depreciation expense related to properties we own or decrease the carrying values of our assets.

**RELATED PERSON TRANSACTIONS**

For information about our related person transactions, see Note 14 of the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which is incorporated herein by reference.

**Item 7A. Quantitative and Qualitative Disclosures About Market Risk.**

We do not currently have any exposure to risks associated with market changes in interest rates.

**Item 8.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Supplementary Data.**

The information required by Item 8 is included in Item 15 of this Annual Report on Form 10-K.

**Item 9.&nbsp;&nbsp;&nbsp;&nbsp;Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.**

None.

**Item 9A.&nbsp;&nbsp;&nbsp;&nbsp;Controls and Procedures.**

***Evaluation of Disclosure Controls and Procedures***

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

***Changes in Internal Control Over Financial Reporting***

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

***Management Report on Assessment of Internal Control Over Financial Reporting***

We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) in *Internal Control—Integrated Framework*. Based on our assessment, we believe that, as of December 31, 2022 our internal control over financial reporting is effective.

Our internal control over financial reporting has been audited as of December 31, 2022 by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein on page F-2.

**Item 9B.&nbsp;&nbsp;&nbsp;&nbsp;Other Information.**

None.

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**Item 9C.&nbsp;&nbsp;&nbsp;&nbsp;Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.**

Not applicable.

------

**PART III**

**Item 10.&nbsp;&nbsp;&nbsp;&nbsp;Directors, Executive Officers and Corporate Governance.**

Our Code of Business Conduct and Ethics applies to all our representatives, including our officers and Trustees. Our Code of Business Conduct and Ethics is posted on our website, www.eqcre.com. A printed copy of our Code of Business Conduct and Ethics is also available free of charge to any person who requests a copy by writing to our Secretary, Equity Commonwealth, Two North Riverside Plaza, Suite 2100, Chicago, IL 60606. We have disclosed and intend to disclose any amendments or waivers to our Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller (or any person performing similar functions) on our website.

The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement.

**Item 11.&nbsp;&nbsp;&nbsp;&nbsp;Executive Compensation.**

The information required by Item 11 is incorporated by reference to our definitive Proxy Statement.

**Item 12.&nbsp;&nbsp;&nbsp;&nbsp;Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.**

The information required by Item 12 is incorporated by reference to our definitive Proxy Statement.

**Item 13.&nbsp;&nbsp;&nbsp;&nbsp;Certain Relationships and Related Transactions, and Director Independence.**

The information required by Item 13 is incorporated by reference to our definitive Proxy Statement.

**Item 14.&nbsp;&nbsp;&nbsp;&nbsp;Principal Accountant Fees and Services.**

The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.

------

**PART IV**

**Item 15.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and Financial Statement Schedules.**

(a)The following documents are filed as part of this Annual Report on Form 10-K:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) and (ii) Financial Statements and Financial Statement Schedule.

The following consolidated financial statements and financial statement schedule of Equity Commonwealth are included on the pages indicated:

---

| | |
|:---|:---|
| | Page |
| <u>[Reports of Independent Registered Public Accounting Firm](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_103)</u> (PCAOB ID: 42) | <u>[F-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_103)[1](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_103)</u> |
| <u>[Consolidated Balance Sheets](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_106)</u> | <u>[F-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_106)[3](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_106)</u> |
| <u>[Consolidated Statements of Operations](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_109)</u> | <u>[F-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_109)[4](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_109)</u> |
| <u>[Consolidated Statements of Equity](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_115)</u> | <u>[F-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_115)[5](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_115)</u> |
| <u>[Consolidated Statements of Cash Flows](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_118)</u> | <u>[F-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_118)[6](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_118)</u> |
| <u>[Notes to Consolidated Financial Statements](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_124)</u> | <u>[F-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_124)[8](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_124)</u> |
| <u>[Schedule III—Real Estate and Accumulated Depreciation](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_175)</u> | <u>[S-](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_175)[1](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_175)</u> |

---

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or are inapplicable, and therefore have been omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Exhibits.

The following documents are filed as exhibits to this Annual Report on Form 10-K:

---

| | |
|:---|:---|
| **Exhibit** <br>**Number** | **Description** |
| 3.1 | <u>[Articles of Amendment and Restatement of Declaration of Trust of the Company, dated July 1, 1994, as amended to date](http://www.sec.gov/Archives/edgar/data/803649/000110465914055699/a14-18213_1ex3d1.htm)</u>. (Incorporated by reference to the Company's Current Report on Form 8-K filed August 1, 2014.) |
| 3.2 | <u>[Articles Supplementary, dated October 10, 2006](http://www.sec.gov/Archives/edgar/data/803649/000090873706000738/ex3-1.htm)</u>. (Incorporated by reference to the Company's Current Report on Form 8-K filed October 11, 2006.) |
| 3.3 | <u>[Articles Supplementary, dated May 31, 2011](http://www.sec.gov/Archives/edgar/data/803649/000110465911032379/a11-13010_4ex3d1.htm)</u>. (Incorporated by reference to the Company's Current Report on Form 8-K filed May 31, 2011.) |
| 3.4 | <u>[Articles Supplementary, dated March 14, 2018](http://www.sec.gov/Archives/edgar/data/803649/000110465918017651/a18-8334_1ex3d1.htm)</u>. (Incorporated by reference to the Company's Current Report on Form 8-K filed March 15, 2018.) |
| 3.5 | <u>[Fourth Amended and Restated Bylaws of the Company, adopted April 2, 2020](http://www.sec.gov/Archives/edgar/data/803649/000080364920000049/a202004eqcfourthamende.htm)</u>. (Incorporated by reference to the Company's Current Report on Form 8-K filed April 3, 2020.) |
| 4.1 | <u>[Form of Common Share Certificate](http://www.sec.gov/Archives/edgar/data/803649/000110465914058317/a14-14088_1ex4d1.htm)</u>. (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.) |
| 4.2 | <u>[Form of 6 1/2% Series D Cumulative Convertible Preferred Share Certificate](http://www.sec.gov/Archives/edgar/data/803649/000104746913001551/a2213090zex-4_2.htm)</u>. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2012.) |
| 4.3 | <u>[Description of the Company's Securities](eqc123122exhibit43.htm)</u>. (Filed herewith.) |
| 10.1 | <u>[Articles of Amendment and Restatement of Declaration of Trust of EQC Operating Trust, dated November 10, 2016](http://www.sec.gov/Archives/edgar/data/803649/000110465916156407/a16-21459_1ex10d1.htm)</u>. (Incorporated by reference to the Company's Current Report on Form 8-K filed November 14, 2016.) |

---

------

---

| | |
|:---|:---|
| **Exhibit** <br>**Number** | **Description** |
| 10.2 | <u>[Master Sub-Management Agreement, dated as of June 13, 2014, between Equity Commonwealth Management LLC, a wholly owned subsidiary of the Company, and CBRE, Inc.](http://www.sec.gov/Archives/edgar/data/803649/000110465914046330/a14-15525_1ex1d1.htm)</u> (+) (Incorporated by reference to the Company's Current Report on Form 8-K filed June 17, 2014.) |
| 10.3 | <u>[Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000110465915046167/a15-14292_1ex10d1.htm)</u>. (+) (Incorporated by reference to the Company's Current Report on Form 8-K filed June 18, 2015.) |
| 10.4 | <u>[Amendment No. 1 to the Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364916000024/eqc123115exhibit104.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 18, 2016.) |
| 10.5 | <u>[Amendment No. 2 to the Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000110465919040550/a19-12886_1ex10d3.htm)</u>. (+) (Incorporated by reference to the Company's Registration Statement on Form S-8 filed July 16, 2019.) |
| 10.6 | <u>[Form of Restricted Stock Agreement for Employees under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit108.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.7 | <u>[Form of Restricted Stock Unit Agreement for Employees under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit109.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.8 | <u>[Form of Time-Based LTIP Unit Agreement for Employees under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit1010.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.9 | <u>[Form of Performance-Based LTIP Unit Agreement for Employees under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit1011.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.10 | <u>[Form of Restricted Stock Agreement for Chairman of the Board under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit1012.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.11 | <u>[Form of Restricted Stock Unit Agreement for Chairman of the Board under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit1013.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.12 | <u>[Form of Time-Based LTIP Unit Agreement for Chairman of the Board under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit1014.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.13 | <u>[Form of Performance-Based LTIP Unit Agreement for Chairman of the Board under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000080364918000007/eqc123117exhibit1015.htm)</u>. (+) (Incorporated by reference to the Company's Annual Report on Form 10-K filed February 15, 2018.) |
| 10.14 | <u>[Form of Restricted Stock Agreement for Trustees under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000110465916127379/a16-13424_1ex10d1.htm)</u>. (+) (Incorporated by reference to the Company's Current Report on Form 8-K filed June 15, 2016.) |
| 10.15 | <u>[Form of Time-Based LTIP Unit Agreement for Trustees under Equity Commonwealth 2015 Omnibus Incentive Plan](http://www.sec.gov/Archives/edgar/data/803649/000110465917040673/a17-15519_1ex10d1.htm)</u>. (+) (Incorporated by reference to the Company's Current Report on Form 8-K filed June 21, 2017.) |
| 10.16 | <u>[Summary of Trustee Compensation](eqc123122exhibit1016.htm)</u>. (+) (Filed herewith.) |
| 10.17 | <u>[Change in Control Agreement, dated as of April 24, 2019, by and between the Company, Equity Commonwealth Management LLC and David Helfand](http://www.sec.gov/Archives/edgar/data/803649/000080364919000074/eqc63019exhibit102.htm)</u>. (+) (†) (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.) |

---

------

---

| | |
|:---|:---|
| **Exhibit** <br>**Number** | **Description** |
| 21.1 | <u>[Subsidiaries of the Company](eqc123122exhibit211.htm)</u>. (Filed herewith.) |
| 23.1 | <u>[Consent of Ernst & Young LLP](eqc123122exhibit231.htm)</u>. (Filed herewith.) |
| 31.1 | <u>[Rule 13a-14(a) Certification](eqc123122exhibit311.htm)</u>. (Filed herewith.) |
| 31.2 | <u>[Rule 13a-14(a) Certification](eqc123122exhibit312.htm)</u>. (Filed herewith.) |
| 32.1 | <u>[Section 1350 Certification](eqc123122exhibit321.htm)</u>. (Furnished herewith.) |
| 101.1 | The following materials from the Company's Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

(+)&nbsp;&nbsp;&nbsp;&nbsp;Management contract or compensatory plan or arrangement.

† Pursuant to Instruction 2 of Item 601 of Regulation S-K, Registrant has omitted certain change in control agreements (the "Omitted CIC Agreements"), which are substantially identical in all material respects except as to the parties thereto, the dates of execution, or other details. The below schedule identifies the Omitted CIC Agreements. The only term in the Omitted CIC Agreements that differs from the change in control agreement filed herewith is the term of coverage under the Company's group health plan, which is 24 months under Section 3(a)(iv) of the Omitted CIC Agreements. The Registrant hereby agrees to file the Omitted CIC Agreements upon request by the Commission.

<u>Schedule</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Change in Control Agreement, dated as of April 24, 2019, by and between the Company, Equity Commonwealth Management LLC and David Weinberg.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Change in Control Agreement, dated as of April 24, 2019, by and between the Company, Equity Commonwealth Management LLC and Orrin Shifrin.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Change in Control Agreement, dated as of August 1, 2022, by and between the Company, Equity Commonwealth Management LLC and William H. Griffiths.

**Item 16.&nbsp;&nbsp;&nbsp;&nbsp;Form 10-K Summary.**

Not applicable

------

**SIGNATURES**

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| EQUITY COMMONWEALTH | EQUITY COMMONWEALTH |
| By: | /s/ David A. Helfand |
|  | David A. Helfand |
|  | President and Chief Executive Officer |
|  | Dated: February 9, 2023 |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant, in the capacities set forth below and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **<u>Signature</u>** | **<u>Title</u>** | **<u>Date</u>** |
| /s/ David A. Helfand | President and Chief Executive Officer (principal executive officer), Trustee | February 9, 2023 |
| David A. Helfand |  |  |
| /s/ William H. Griffiths | Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer) | February 9, 2023 |
| William H. Griffiths |  |  |
| /s/ Andrew M. Levy | Senior Vice President and Chief Accounting Officer (principal accounting officer) | February 9, 2023 |
| Andrew M. Levy |  |  |
| /s/ Sam Zell | Chairman of the Board of Trustees | February 9, 2023 |
| Sam Zell |  |  |
| /s/ Ellen-Blair Chube | Trustee | February 9, 2023 |
| Ellen-Blair Chube |  |  |
| /s/ Martin L. Edelman | Trustee | February 9, 2023 |
| Martin L. Edelman |  |  |
| /s/ Peter Linneman | Trustee | February 9, 2023 |
| Peter Linneman |  |  |
| /s/ Mary Jane Robertson | Trustee | February 9, 2023 |
| Mary Jane Robertson |  |  |
| /s/ Gerald A. Spector | Trustee | February 9, 2023 |
| Gerald A. Spector |  |  |
| /s/ James A. Star | Trustee | February 9, 2023 |
| James A. Star |  |  |

---

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and the Board of Trustees of Equity Commonwealth

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Equity Commonwealth (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 9, 2023 expressed an unqualified opinion thereon.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. We determined that there are no critical audit matters.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 1986.

Chicago, Illinois

February 9, 2023

------

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and the Board of Trustees of Equity Commonwealth

**Opinion on Internal Control Over Financial Reporting**

We have audited Equity Commonwealth's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Equity Commonwealth (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Equity Commonwealth as of December 31, 2022 and 2021, the related consolidated statements of operations, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed at Item 15(a) and our report dated February 9, 2023 expressed an unqualified opinion thereon.

**Basis for Opinion**

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

**Definition and Limitations of Internal Control Over Financial Reporting**

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Chicago, Illinois

February 9, 2023

------

**EQUITY COMMONWEALTH**

**CONSOLIDATED BALANCE SHEETS**

**(amounts in thousands, except share data)**

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Real estate properties: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land | $44060 | $44060 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buildings and improvements | 364063 | 362042 |
|  | 408123 | 406102 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation | (169530) | (156439) |
|  | 238593 | 249663 |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 2582222 | 2800998 |
| &nbsp;&nbsp;&nbsp;Rents receivable | 16009 | 15549 |
| &nbsp;&nbsp;&nbsp;Other assets, net | 18061 | 15173 |
| &nbsp;&nbsp;&nbsp;Total assets | $2854885 | $3081383 |
| **LIABILITIES AND EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses and other | $25935 | $19762 |
| &nbsp;&nbsp;&nbsp;Rent collected in advance | 2355 | 3986 |
| &nbsp;&nbsp;&nbsp;Distributions payable | 2863 | 2365 |
| &nbsp;&nbsp;&nbsp;Total liabilities | 31153 | 26113 |
| &nbsp;&nbsp;&nbsp;Commitments and contingencies |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series D preferred shares; 6.50% cumulative convertible; 4,915,196 shares issued and outstanding, aggregate liquidation preference of $122,880 | 119263 | 119263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 109,428,252 and 115,205,818 shares issued and outstanding, respectively | 1094 | 1152 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid in capital | 3979566 | 4128656 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative net income | 3835815 | 3798552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative common distributions | (4393522) | (4281195) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cumulative preferred distributions | (725688) | (717700) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 2816528 | 3048728 |
| &nbsp;&nbsp;&nbsp;Noncontrolling interest | 7204 | 6542 |
| &nbsp;&nbsp;&nbsp;Total equity | 2823732 | 3055270 |
| &nbsp;&nbsp;&nbsp;Total liabilities and equity | $2854885 | $3081383 |

---

See accompanying notes.

------

**EQUITY COMMONWEALTH**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(amounts in thousands, except per share data)**

---

| | | | |
|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** |
| | **2022** | **2021** | **2020** |
| Revenues: |  |  |  |
| &nbsp;&nbsp;&nbsp;Rental revenue | $58763 | $54927 | $62134 |
| &nbsp;&nbsp;&nbsp;Other revenue | 4377 | 3075 | 4144 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 63140 | 58002 | 66278 |
| Expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating expenses | 24184 | 25893 | 28858 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 17810 | 17774 | 19329 |
| &nbsp;&nbsp;&nbsp;General and administrative | 30378 | 37444 | 33233 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 72372 | 81111 | 81420 |
| Interest and other income, net | 46945 | 6800 | 21228 |
| Interest expense (including net amortization of debt premiums and deferred <br>&nbsp;&nbsp;&nbsp;&nbsp;financing fees of $—, $— and $(119), respectively) |  |  | (620) |
| Gain on early extinguishment of debt |  |  | 131 |
| Gain on sale of properties, net | 97 |  | 446744 |
| Income (loss) before income taxes | 37810 | (16309) | 452341 |
| Income tax expense | (453) | (120) | (248) |
| Net income (loss) | 37357 | (16429) | 452093 |
| Net (income) loss attributable to noncontrolling interest | (94) | 33 | (799) |
| Net income (loss) attributable to Equity Commonwealth | 37263 | (16396) | 451294 |
| Preferred distributions | (7988) | (7988) | (7988) |
| Net income (loss) attributable to Equity Commonwealth common shareholders | $29275 | $(24384) | $443306 |
| Weighted average common shares outstanding — basic | 111674 | 121411 | 121786 |
| Weighted average common shares outstanding — diluted | 112825 | 121411 | 126606 |
| Earnings per common share attributable to Equity Commonwealth common shareholders: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.26 | $(0.20) | $3.64 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.26 | $(0.20) | $3.56 |

---

See accompanying notes.

------

**EQUITY COMMONWEALTH**

**CONSOLIDATED STATEMENTS OF EQUITY**

**(amounts in thousands, except share data)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | **Equity Commonwealth Shareholders** | | |
| | **Number<br>of Series D Preferred<br>Shares** | **Series D Preferred<br>Shares** | **Number of<br>Common Shares** | **Common<br>Shares** | **Additional<br>Paid in<br>Capital** | **Cumulative<br>Net<br>Income** | **Cumulative<br>Common<br>Distributions** | **Cumulative<br>Preferred<br>Distributions** |<br>**Noncontrolling Interest** |<br>**Total** |
| Balance at December 31, 2019 | 4915196 | $119263 | 121924199 | $1219 | $4313831 | $3363654 | $(3851666) | $(701724) | $1295 | $3245872 |
| Net income |  |  |  |  |  | 451294 |  |  | 799 | 452093 |
| Repurchase of shares |  |  | (711000) | (7) | (20862) |  |  |  |  | (20869) |
| Surrender of shares for tax withholding |  |  | (184068) | (2) | (6026) |  |  |  |  | (6028) |
| Share-based compensation |  |  | 493424 | 5 | 11679 |  |  |  | 1531 | 13215 |
| Contributions |  |  |  |  |  |  |  |  | 1 | 1 |
| Distributions |  |  |  |  |  |  | (432002) | (7988) | (1099) | (441089) |
| Redemption of noncontrolling interest |  |  |  |  |  |  |  |  | (31) | (31) |
| Adjustment for noncontrolling interest |  |  |  |  | (3990) |  |  |  | 3990 |  |
| Balance at December 31, 2020 | 4915196 | 119263 | 121522555 | 1215 | 4294632 | 3814948 | (4283668) | (709712) | 6486 | 3243164 |
| Net loss |  |  |  |  |  | (16396) |  |  | (33) | (16429) |
| Repurchase of shares |  |  | (6735810) | (67) | (174340) |  |  |  |  | (174407) |
| Surrender of shares for tax withholding |  |  | (245560) | (2) | (7079) |  |  |  |  | (7081) |
| Share-based compensation |  |  | 664633 | 6 | 14555 |  |  |  | 881 | 15442 |
| Distributions |  |  |  |  |  |  | 2473 | (7988) | 96 | (5419) |
| Adjustment for noncontrolling interest |  |  |  |  | 888 |  |  |  | (888) |  |
| Balance at December 31, 2021 | 4915196 | 119263 | 115205818 | 1152 | 4128656 | 3798552 | (4281195) | (717700) | 6542 | 3055270 |
| Net income |  |  |  |  |  | 37263 |  |  | 94 | 37357 |
| Repurchase of shares |  |  | (6110646) | (61) | (155649) |  |  |  |  | (155710) |
| Surrender of shares for tax withholding |  |  | (160506) | (2) | (4158) |  |  |  |  | (4160) |
| Share-based compensation |  |  | 493586 | 5 | 10455 |  |  |  | 1479 | 11939 |
| Contributions |  |  |  |  |  |  |  |  | 1 | 1 |
| Distributions |  |  |  |  |  |  | (112327) | (7988) | (650) | (120965) |
| Adjustment for noncontrolling interest |  |  |  |  | 262 |  |  |  | (262) |  |
| Balance at December 31, 2022 | 4915196 | $119263 | 109428252 | $1094 | $3979566 | $3835815 | $(4393522) | $(725688) | $7204 | $2823732 |

---

See accompanying notes.

------

**EQUITY COMMONWEALTH**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(amounts in thousands)**

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income (loss) | $37357 | $(16429) | $452093 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 15230 | 15235 | 16162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net amortization of debt premiums and deferred financing fees |  |  | (119) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Straight-line rental income | 238 | (1407) | 340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other amortization | 2580 | 2539 | 3167 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of right-of-use asset |  |  | 767 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 11939 | 15442 | 13215 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on early extinguishment of debt |  |  | (131) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gain on sale of properties | (97) |  | (446744) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in assets and liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rents receivable and other assets | (6089) | 81 | (2119) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses and other | 5513 | (410) | (3104) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rent collected in advance | (1631) | 1058 | (199) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 65040 | 16109 | 33328 |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Real estate improvements | (3577) | (6803) | (12039) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of properties, net | 97 |  | 655291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by investing activities | (3480) | (6803) | 643252 |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Repurchase and retirement of common shares | (159870) | (181488) | (26897) |
| &nbsp;&nbsp;&nbsp;Payments on borrowings |  |  | (25441) |
| &nbsp;&nbsp;&nbsp;Contributions from holders of noncontrolling interest | 1 |  | 1 |
| &nbsp;&nbsp;&nbsp;Distributions to common shareholders | (112199) | (6024) | (427795) |
| &nbsp;&nbsp;&nbsp;Distributions to preferred shareholders | (7988) | (7988) | (7988) |
| &nbsp;&nbsp;&nbsp;Distributions to holders of noncontrolling interest | (280) | (33) | (1849) |
| &nbsp;&nbsp;&nbsp;Redemption of noncontrolling interest |  |  | (31) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (280336) | (195533) | (490000) |
| (Decrease) increase in cash, cash equivalents, and restricted cash | (218776) | (186227) | 186580 |
| Cash, cash equivalents, and restricted cash at beginning of year | 2800998 | 2987225 | 2800645 |
| Cash, cash equivalents, and restricted cash at end of year | $2582222 | $2800998 | $2987225 |

---

See accompanying notes.

------

**EQUITY COMMONWEALTH**

**CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)**

**(amounts in thousands)**

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest paid | $— | $— | $843 |
| &nbsp;&nbsp;&nbsp;Taxes paid (refunded), net | 456 | 246 | (1444) |
| NON-CASH INVESTING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Accrued capital expenditures | 934 | 509 | 986 |
| NON-CASH FINANCING ACTIVITIES: |  |  |  |
| &nbsp;&nbsp;&nbsp;Distributions payable | $2863 | $2365 | $10991 |

---

See accompanying notes.

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u>

**EQUITY COMMONWEALTH**

 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1. Organization**

Equity Commonwealth, or the Company, is a real estate investment trust, or REIT, formed in 1986 under the laws of the State of Maryland. Our business is primarily the ownership and operation of office properties in the United States.

The Company operates in an umbrella partnership real estate investment trust, or UPREIT, and conducts substantially all of its activities through EQC Operating Trust, a Maryland real estate investment trust, or the Operating Trust. The Company beneficially owned, 99.74% of the outstanding shares of beneficial interest, designated as units, in the Operating Trust, or OP Units, as of December 31, 2022, and the Company is the sole trustee of the Operating Trust. As the sole trustee, the Company generally has the power under the declaration of trust of the Operating Trust to manage and conduct the business of the Operating Trust, subject to certain limited approval and voting rights of other holders of OP Units.

As of December 31, 2022, our portfolio consisted of four properties (eight buildings), with a combined 1.5 million square feet, and we had $2.6 billion of cash and cash equivalents. All numbers of properties, numbers of buildings and square feet are unaudited.

On May 4, 2021, we entered into a merger agreement to acquire Monmouth Real Estate Investment Corporation (NYSE: MNR), or Monmouth, a publicly-traded industrial REIT. On August 31, 2021, following Monmouth's failure to obtain shareholder approval of the merger, in accordance with the terms of the merger agreement, we terminated the merger agreement and were reimbursed $10.0 million by Monmouth for our out-of-pocket expenses. Total transaction costs net of the reimbursement resulted in $0.1 million of general and administrative expense recorded in the year ended December 31, 2021.

**Note 2. Summary of Significant Accounting Policies**

*Basis of Presentation.*&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements include our investments in 100% owned subsidiaries and majority owned subsidiaries that are controlled by us. References to we, us, our and the Company, refer to Equity Commonwealth and its consolidated subsidiaries as of December 31, 2022, unless the context indicates otherwise. All intercompany transactions and balances have been eliminated.

Dollar amounts presented may be approximate. Share amounts are presented in whole numbers, except where noted.

*Real Estate Properties.*&nbsp;&nbsp;&nbsp;&nbsp;We record real estate properties at cost. We depreciate real estate investments on a straight-line basis over estimated useful lives of up to 40 years for buildings and improvements, and up to 12 years for personal property.

Each time we enter into a new lease, or materially modify an existing lease, we evaluate its classification as either a finance or operating lease. The classification of a lease as finance or operating affects the carrying value of a property, as well as our recognition of rental payments as revenue. These evaluations require us to make estimates of, among other things, the remaining useful life and fair market value of a leased property, appropriate discount rates and future cash flows.

We allocate the consideration paid for our properties among land, buildings and improvements and, for properties that qualify as acquired businesses under the Business Combinations Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, to identified intangible assets and liabilities, consisting of the value of above market and below market leases, the value of acquired in place leases and the value of tenant relationships. Purchase price allocations and the determination of useful lives are based on our estimates and, under some circumstances, studies from independent real estate appraisal firms to provide market information and evaluations that are relevant to our purchase price allocations and determinations of useful lives; however, we are ultimately responsible for the purchase price allocations and determination of useful lives.

We allocate the consideration to land, buildings and improvements based on a determination of the fair values of these assets assuming the property is vacant. We determine the fair value of a property using methods that we believe are similar to those used by independent appraisers. Purchase price allocations for above market and below market leases are based on the estimated present value (using an interest rate which reflects our assessment of the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the acquired in place leases and (2) our estimate of fair market lease rates for the corresponding leases, measured over a period equal to the remaining non-cancelable terms of the respective leases. Purchase price allocations to acquired in place leases and tenant relationships are determined as the excess of (1) the purchase price paid for a property after adjusting existing in place leases to estimated market rental rates over (2) the estimated fair value of the property as if vacant. We aggregate this value between acquired in place lease values and tenant relationships based on our evaluation of the specific characteristics of each tenant's lease; however, the value of tenant

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

relationships has not been separated from acquired in place lease value for our properties because we believe such value and related amortization expense is immaterial for acquisitions reflected in our historical financial statements. We consider certain factors in performing these analyses including estimates of carrying costs during the expected lease up periods, including real estate taxes, insurance and other operating income and expenses and costs to execute similar leases in current market conditions, such as leasing commissions, legal and other related costs. If we believe the value of tenant relationships is material in the future, those amounts will be separately allocated and amortized over the estimated lives of the relationships. We recognize the excess, if any, of the consideration paid over amounts allocated to land, buildings and improvements and identified intangible assets and liabilities as goodwill and we recognize gains if amounts allocated exceed the consideration paid.

We amortize capitalized above market lease values as a reduction to rental income over the remaining terms of the respective leases. We amortize capitalized below market lease values as an increase to rental income over the remaining terms of the respective leases. We amortize the value of acquired in place leases exclusive of the value of above market and below market acquired in place leases to expense over the remaining terms of the respective leases. If a lease is terminated prior to its stated expiration, the unamortized lease intangibles relating to that lease is written off.

We review our properties for impairment quarterly, or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Impairment indicators may include our decision to dispose of an asset before the end of its estimated useful life, declining tenant occupancy, lack of progress releasing vacant space, tenant bankruptcies, low long-term prospects for improvement in property performance, weak or declining tenant profitability, and cash flow or liquidity. When indicators of potential impairment are present that suggest that the carrying amounts of real estate assets may not be recoverable, we assess the recoverability of these assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future operating cash flows expected from the use of the assets and their eventual disposition. The determination of undiscounted cash flow includes consideration of many factors including income to be earned from the investment over our anticipated hold period, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions. In the event that such expected undiscounted future cash flows do not exceed the carrying values, we estimate the fair value of the assets and record an impairment charge equal to the amount by which the carrying value exceeds the estimated fair value. Estimated fair values are calculated based on the following information, (i) recent third party estimates of market value, (ii) market prices for comparable properties, or (iii) the present value of future cash flows. During the years ended December 31, 2022, 2021 and 2020 we did not record any loss on asset impairment.

When we classify properties as held for sale, we discontinue the recording of depreciation expense and estimate their fair value less costs to sell. If we determine that the carrying value for these properties exceed their estimated fair value less costs to sell, we record a loss on asset impairment. As of December 31, 2022 and 2021, we did not have any properties classified as held for sale.

Certain of our real estate assets contain hazardous substances, including asbestos. We believe any asbestos in our buildings is contained in accordance with current regulations. If we remove the asbestos or renovate or demolish these properties, certain environmental regulations govern the manner in which the asbestos must be handled and removed. We do not believe that there are other environmental conditions or issues at any of our properties that have had or will have a material adverse effect on us. However, no assurances can be given that conditions or issues are not present at our properties or that costs we may be required to incur in the future to remediate contamination or comply with environmental, health and safety laws will not have a material adverse effect on our business or financial condition. As of December 31, 2022 and 2021, we did not have any accrued environmental remediation costs.

*Cash and Cash Equivalents.*&nbsp;&nbsp;&nbsp;&nbsp;Our cash and cash equivalents consist of cash maintained in time deposits, depository accounts and money market accounts. We regularly monitor the credit ratings of the financial institutions holding our deposits to minimize our exposure to credit risk. Throughout the year, we have cash balances in excess of federally insured limits deposited with various financial institutions. We do not believe we are exposed to any significant credit risk on cash and cash equivalents.

*Other Assets, Net.*&nbsp;&nbsp;&nbsp;&nbsp;Other assets consist principally of deferred leasing costs, capitalized lease incentives and prepaid property operating expenses. Deferred leasing costs are amortized on a straight-line basis over the terms of the respective leases. Capitalized lease incentives are amortized on a straight-line basis against rental income over the terms of the respective leases.

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

*Revenue Recognition.*&nbsp;&nbsp;&nbsp;&nbsp;Rental revenue from operating leases, which includes rent concessions (including free rent and other lease incentives) and scheduled increases in rental rates during the lease term, represents the lease component and is recognized on a straight-line basis over the life of the lease agreements. We defer the recognition of contingent rental income, such as percentage rents, until the specific targets that trigger the contingent rental income are achieved. Rental revenue also includes non-lease components such as property level operating expenses reimbursed by our tenants and other incidental revenues, which are recorded as expenses are incurred. We concluded that the timing and pattern of transfer for non-lease components and the associated lease component are the same. We determined that the predominant component was the lease component and we have elected to account for and present the lease component and non-lease component of our leases as a single component in Rental revenue in our consolidated statements of operations in accordance with FASB Topic 842.

*Lessee Lease Classification*. We classify leases as either finance or operating in accordance with FASB Topic 842, Leases. This classification determines whether the related expense is recognized based on an effective interest method for finance leases or on a straight-line basis over its life for operating leases. Additionally, lessees are required to record a right-of-use asset and lease liability for all leases with a term greater than 12 months. We have made an accounting policy election as permitted under ASC 842 to forgo recognition of a right-of-use asset and lease liability for short-term leases of less than 12 months.

*Earnings Per Common Share.*&nbsp;&nbsp;&nbsp;&nbsp;Earnings per common share, or EPS, is computed using the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if our series D convertible preferred shares, our restricted share units, or RSUs, or beneficial interests in the Operating Trust, or LTIP Units, were converted into our common shares, which could result in a lower EPS amount. The effect of our series D convertible preferred shares on net income attributable to common shareholders is anti-dilutive for the years ended December 31, 2022 and 2021 and dilutive for the year ended December 31, 2020.

*Reclassifications.*&nbsp;&nbsp;&nbsp;&nbsp;Reclassifications have been made to the prior years' financial statements and notes to conform to the current year's presentation.

*Legal Matters.* We are or may become a party to various legal proceedings. We are not currently involved in any litigation nor, to our knowledge, is any litigation threatened against us where the outcome would, in our judgment based on information currently available to us, have a material adverse effect on the Company.

*Income Taxes.*&nbsp;&nbsp;&nbsp;&nbsp;We are a REIT under the Internal Revenue Code of 1986, as amended, and are generally not subject to federal and state income taxes provided we distribute our taxable income to our shareholders and meet other requirements for qualifying as a REIT. We are also subject to certain state and local taxes without regard to our REIT status.

The Income Taxes Topic of the FASB ASC prescribes how we should recognize, measure and present in our financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Deferred tax assets are recognized to the extent that it is "more likely than not" that a particular tax position will be sustained upon examination or audit. To the extent the "more likely than not" standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. We classify interest and penalties related to uncertain tax positions, if any, in our financial statements as a component of general and administrative expense.

*Use of Estimates.*&nbsp;&nbsp;&nbsp;&nbsp;Preparation of these financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. The actual results could differ from these estimates.

**Note 3. Real Estate Properties**

*Acquisitions and Expenditures*

We did not make any acquisitions during the years ended December 31, 2022, 2021 or 2020.

During the years ended December 31, 2022, 2021, and 2020, we made improvements, excluding tenant-funded improvements, to our properties totaling $4.0 million, $6.3 million and $11.6 million, respectively.

We committed $9.4 million for expenditures related to 0.2 million square feet of leases executed during 2022. Committed but unspent tenant related obligations are leasing commissions and tenant improvements. Based on existing leases as of December 31, 2022, committed but unspent tenant related obligations were $10.3 million.

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<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

*Property Dispositions:*

We did not sell any properties during the years ended December 31, 2022 and 2021.

During the year ended December 31, 2020, we sold the following properties, which did not represent strategic shifts under ASC Topic 205-20 (dollars in thousands):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Property** | **Date Sold** | **Number of Properties** | **Number of Buildings** | **Square Footage** | **Gross Sale Price(1)** | **Gain on Sale** |
| &nbsp;&nbsp;109 Brookline Avenue | &nbsp;&nbsp;&nbsp;February 2020 | 1 | 1 | 285556 | $270000 | $225190 |
| &nbsp;&nbsp;333 108th Avenue NE(2) | &nbsp;&nbsp;&nbsp;March 2020 | 1 | 1 | 435406 | 401500 | 194662 |
| &nbsp;&nbsp;&nbsp;Georgetown-Green and Harris Buildings | &nbsp;&nbsp;&nbsp;May 2020 | 1 | 2 | 240475 | 85000 | 24916 |
|  |  | 3 | 4 | 961437 | $756500 | $444768 |

---

(1)Gross sale price is before transfer taxes and credits, such as capital costs, contractual lease costs and rent abatements.

(2)The sale represents an individually significant disposition. The operating results of this property are included in continuing operations for all periods presented through the date of sale. Net income (loss) related to this property was $8,000, $(14,000) and $193.4 million, of which $194.7 million related to the gain on sale, for the years ended December 31, 2022, 2021 and 2020, respectively.

*Lease Payments*

Our real estate properties are generally leased on gross lease and modified gross lease bases pursuant to non-cancelable, fixed term operating leases expiring between 2023 and 2035. These gross leases and modified gross leases require us to pay all or some property operating expenses and to provide all or some property management services. A portion of these property operating expenses are reimbursed by the tenants.

The future minimum lease payments, excluding tenant reimbursement revenue, scheduled to be received by us during the current terms of our leases as of December 31, 2022 are as follows (in thousands):

---

| | |
|:---|:---|
| 2023 | $36557 |
| 2024 | 33006 |
| 2025 | 29949 |
| 2026 | 26332 |
| 2027 | 20645 |
| Thereafter | 44870 |
|  | $191359 |

---

Rental revenue consists of the following (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| | **December 31,** | **December 31,** | **December 31,** |
| | **2022** | **2021** | **2020** |
| Lease payments | $37846 | $36461 | $40514 |
| Variable lease payments | 20917 | 18466 | 21620 |
| Rental revenue | $58763 | $54927 | $62134 |

---

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<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Note 4. Other Assets**

*Deferred Leasing Costs and Capitalized Lease Incentives*

The following table summarizes our deferred leasing costs and capitalized lease incentives as of December 31, 2022, and 2021 (in thousands):

---

| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Deferred leasing costs | $22034 | $20781 |
| &nbsp;&nbsp;&nbsp;Accumulated amortization | (11320) | (10387) |
| Deferred leasing costs, net | $10714 | $10394 |
| Capitalized lease incentives | $3352 | $2752 |
| &nbsp;&nbsp;&nbsp;Accumulated amortization | (1873) | (1446) |
| Capitalized lease incentives, net | $1479 | $1306 |

---

Future amortization of deferred leasing costs, included in amortization expense, and capitalized lease incentives, included in rental revenues, to be recognized by us during the current terms of our leases as of December 31, 2022 are approximately (in thousands):

---

| | | |
|:---|:---|:---|
| | **Deferred Leasing Costs** | **Capitalized Lease Incentives** |
| 2023 | $2838 | $400 |
| 2024 | 2011 | 269 |
| 2025 | 1595 | 214 |
| 2026 | 1400 | 208 |
| 2027 | 1078 | 162 |
| Thereafter | 1792 | 226 |
|  | $10714 | $1479 |

---

**Note 5. Indebtedness**

We have no debt outstanding as of December 31, 2022, and, as a result, we have no debt covenants. We are also not rated by the debt rating agencies.

*Mortgage Notes Payable:*

As of July 5, 2020, we repaid at par $25.1 million of mortgage debt at 206 East 9th Street and recognized a gain on early extinguishment of debt of $0.1 million for the year ended December 31, 2020 from the write off of an unamortized premium, net of prepayment fees and the write off of unamortized deferred financing fees.

**Note 6. Shareholders' Equity**

*Common Share Issuances:*

See Note 9 for information regarding equity issuances related to share-based compensation.

*Common Share Repurchases:*

On August 24, 2015, our Board of Trustees approved a common share repurchase program. On March 10, 2020, our Board of Trustees authorized the repurchase of up to $150.0 million of our outstanding common shares over the twelve month period following the date of authorization. In March 2021, this share repurchase authorization expired. On March 1, 2021, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

June 30, 2022, and on December 14, 2021, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through December 31, 2022. On March 15, 2022, our Board of Trustees authorized the repurchase of up to an additional $150.0 million of our outstanding common shares through June 30, 2023.

During the year ended December 31, 2022, we repurchased and retired 6,110,646 of our common shares at a weighted average dividend adjusted price of $24.64 per share, for a total investment of $155.5 million. During the year ended December 31, 2021, we repurchased and retired 6,735,810 of our common shares at a weighted average price of $25.85 per share, for a total investment of $174.1 million. During the year ended December 31, 2020, we repurchased and retired 711,000 of our common shares at a weighted average price of $29.31 per share, for a total investment of $20.8 million. The share repurchases in 2022 and 2020 discussed in this paragraph were completed prior to the special, one-time cash distributions in each of those years, which were in the amount of $1.00 and $3.50 per common share/unit paid on October 18, 2022 and October 20, 2020, respectively. As of December 31, 2022, we have $120.4 million of remaining availability under our share repurchase program, which is scheduled to expire on June 30, 2023.

During the years ended December 31, 2022, 2021 and 2020, certain of our employees and former employees surrendered 160,506, 245,560 and 184,068 common shares owned by them, respectively, to satisfy their statutory tax withholding obligations in connection with the vesting of such common shares pursuant to our equity compensation plans.

*Common Share and Unit Distributions:*

On September 8, 2022, our Board of Trustees declared a special, one-time cash distribution of $1.00 per common share/unit to shareholders/unitholders of record on September 29, 2022. On October 18, 2022, we paid this distribution to such shareholders/unitholders in the aggregate amount of $111.0 million.

On September 16, 2020 our Board of Trustees declared a special, one-time cash distribution of $3.50 per common share/unit to shareholders/unitholders of record on October 1, 2020. On October 20, 2020, we paid this distribution to such shareholders/unitholders in the aggregate amount of $426.7 million.

In February 2022, 2021, and 2020, the number of earned awards for recipients of the Company's restricted stock units and market-based LTIP Units granted in January 2019, 2018, and 2017, respectively, was determined. Pursuant to the terms of such awards, we paid one-time catch-up cash distributions to these recipients in the aggregate amounts of $1.5 million, $6.0 million, and $2.9 million, in February 2022, 2021, and 2020, respectively, for distributions to common shareholders and unitholders declared by our Board of Trustees during such awards' performance measurement period.

The following characterizes distributions paid per common share for the years ended December 31, 2022, 2021, and 2020:

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Ordinary income | 99.07% | —% | 0.15% |
| Return of capital | 0.93% | —% | —% |
| Capital gain(1) | —% | —% | 82.60% |
| Unrecaptured Section 1250 gain | —% | —% | 17.25% |
|  | 100.00% | —% | 100.00% |

---

(1)The 2020 capital gain distribution amounts are comprised entirely of long-term capital gain determined under Section 1231 of the Code, which amounts are excluded from Section 1061 of the Code. Accordingly, for purposes of Section 1061 of the Code and the Treasury Regulations thereunder, the Company makes the following disclosures that the "One Year Amounts Disclosure" and the "Three Year Amounts Disclosure" are $0.

*Series D Preferred Shares:*

Each of our 4,915,196 series D cumulative convertible preferred shares accrue dividends of $1.625, or 6.50% per annum of the liquidation amount, payable in equal quarterly payments. Our series D preferred shares are convertible, at the holder's option, into our common shares at a conversion rate of 0.6846 common shares per series D preferred share, which is equivalent

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<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

to a conversion price of $36.52 per common share, or 3,364,943 additional common shares at December 31, 2022. The conversion rate changed from 0.6585 to 0.6846 common shares per series D preferred share effective September 30, 2022 as a result of the common share distribution declared by our Board of Trustees in 2022. The conversion rate changed from 0.5813 to 0.6585 common shares per series D preferred share effective October 2, 2020 as a result of the common share distribution declared by our Board of Trustees in 2020.

If our common shares trade at or above the then applicable conversion price, we may, at our option, convert some or all of the series D preferred shares into common shares at the then applicable conversion rate. If a fundamental change occurs, which generally will be deemed to occur upon a change in control or a termination of trading of our common shares (or other equity securities into which our series D preferred shares are then convertible), holders of our series D preferred shares will have a special right to convert their series D preferred shares into a number of our common shares per $25.00 liquidation preference, plus accrued and unpaid distributions, divided by 98% of the average closing market price of our common shares for a specified period before such event is effective, unless we exercise our right to repurchase these series D preferred shares for cash, at a purchase price equal to 100% of their liquidation preference, plus accrued and unpaid distributions. The issuance of a large number of common shares as a result of the exercise of this conversion right after a fundamental change may have a dilutive effect on net income attributable to Equity Commonwealth common shareholders per share for future periods. As of December 31, 2022, we had 4,915,196 outstanding series D preferred shares that were convertible into 3,364,943 of our common shares.

*Preferred Share Distributions:*

Under our governing documents and Maryland law, distributions to our shareholders are to be authorized and declared by our Board of Trustees. In 2022, our Board of Trustees declared distributions on our series D preferred shares to date as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Declaration Date** | **Record Date** | **Payment Date** | **Dividend Per Share** |
| January 11, 2022 | January 28, 2022 | February 15, 2022 | $0.40625 |
| April 11, 2022 | April 29, 2022 | May 16, 2022 | $0.40625 |
| July 14, 2022 | July 29, 2022 | August 15, 2022 | $0.40625 |
| October 14, 2022 | October 31, 2022 | November 15, 2022 | $0.40625 |

---

The following characterizes distributions paid per preferred share for the years ended December 31, 2022, 2021, and 2020:

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Ordinary income | 100.00% | —% | 0.15% |
| Return of capital | —% | 100.00% | —% |
| Capital gain(1) | —% | —% | 82.60% |
| Unrecaptured Section 1250 gain | —% | —% | 17.25% |
|  | 100.0% | 100.0% | 100.00% |

---

(1)The 2020 capital gain distribution amounts are comprised entirely of long-term capital gain determined under Section 1231 of the Code, which amounts are excluded from Section 1061 of the Code. Accordingly, for purposes of Section 1061 of the Code and the Treasury Regulations thereunder, the Company makes the following disclosures that the "One Year Amounts Disclosure" and the "Three Year Amounts Disclosure" are $0.

**Note 7. Noncontrolling Interest**

Noncontrolling interest represents the portion of the OP Units not beneficially owned by the Company. The ownership of an OP Unit and a common share of beneficial interest have essentially the same economic characteristics. Distributions with respect to OP Units will generally mirror distributions with respect to the Company's common shares. Unitholders (other than the Company) generally have the right, commencing six months from the date of issuance of such OP Units, to cause the Operating Trust to redeem their OP Units in exchange for cash or, at the option of the Company, common shares of the Company on a one-for-one basis. As sole trustee, the Company has the sole discretion to elect whether the redemption right

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<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

will be satisfied by the Company in cash or the Company's common shares. As a result, the Noncontrolling interest is classified as permanent equity. As of December 31, 2022, the portion of the Operating Trust not beneficially owned by the Company is in the form of OP Units and LTIP Units (see Note 9 for a description of LTIP Units). LTIP Units may be subject to additional vesting requirements.

The following table presents the changes in Equity Commonwealth's issued and outstanding common shares and units for the year ended December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
| | **Common Shares** | **OP Units and LTIP Units** | **Total** |
| Outstanding at January 1, 2022 | 115205818 | 247217 | 115453035 |
| Repurchase and surrender of shares | (6271152) |  | (6271152) |
| Share-based compensation grants and vesting, net of forfeitures | 493586 | 32675 | 526261 |
| Outstanding at December 31, 2022 | 109428252 | 279892 | 109708144 |
| Noncontrolling ownership interest in the Operating Trust |  |  | 0.26% |

---

The carrying value of the Noncontrolling interest is allocated based on the number of OP Units and LTIP Units in proportion to the number of OP Units and LTIP Units plus the number of common shares. We adjust the Noncontrolling interest balance at the end of each period to reflect the noncontrolling partners' interest in the net assets of the Operating Trust. Net income is allocated to the Noncontrolling interest in the Operating Trust based on the weighted average ownership percentage during the period. Equity Commonwealth's weighted average ownership interest in the Operating Trust was 99.75%, 99.80% and 99.82%, respectively, for the years ended December 31, 2022, 2021 and 2020.

**Note 8. Income Taxes**

Our provision for income taxes consists of the following (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;State and local | $(103) | $(120) | $(248) |
| &nbsp;&nbsp;&nbsp;Federal | (350) |  |  |
| Income tax expense | $(453) | $(120) | $(248) |

---

During the years ended December 31, 2022, 2021 and 2020, we recorded benefit (expense) of $0.0 million, $0.1 million and $(0.1) million, respectively, related to uncertain tax positions, as part of our income tax provision.

A reconciliation of our effective tax rate and the U.S. Federal statutory income tax rate is as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| Taxes at statutory U.S. federal income tax rate | 21.00% | 21.00% | 21.00% |
| Dividends paid deduction and net operating loss utilization | (21.00)% | (21.00)% | (21.00)% |
| Federal taxes | 0.93% | —% | —% |
| State and local income taxes | 0.27% | (0.74)% | 0.05% |
| Effective tax rate | 1.20% | (0.74)% | 0.05% |

---

On August 31, 2022, the Company completed an internal restructuring intended to comply with Section 351 of the Internal Revenue Code. As a result, the Operating Trust recognized an $82.0 million taxable gain for federal income tax purposes. The gain was distributed by the Company and has no impact on the Company's provision for income taxes for the year ended December 31, 2022.

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

At December 31, 2022 and 2021, we had federal net operating loss, or NOL, carryforwards of $29 million and $29 million, respectively. These amounts can be used to offset future taxable income, if any. The REIT will be entitled to utilize NOL carryforwards only to the extent that REIT taxable income exceeds our deduction for dividends paid. NOLs arising in taxable years ending before January 1, 2018 can generally be carried forward 20 years, with no carryforward limitation on NOLs generated after that date. NOL carryforwards of $18 million expire in 2037 and NOL carryforwards of $11 million never expire.

**Note 9. Share-Based Compensation**

*Equity Commonwealth 2015 Omnibus Incentive Plan (2015 Incentive Plan)*

On June 16, 2015, at our 2015 annual meeting of shareholders, our shareholders approved the 2015 Incentive Plan. The 2015 Incentive Plan replaced the Equity Commonwealth 2012 Equity Compensation Plan (as amended, the 2012 Plan). The Board of Trustees approved the 2015 Incentive Plan, subject to shareholder approval, on March 18, 2015 (the Effective Date). On January 26, 2016, the Board of Trustees approved an amendment to the 2015 Incentive Plan to allow the Compensation Committee (Committee) to authorize in an award agreement a transfer of all or a part of certain equity awards not for value to a "family member" (as defined in the 2015 Incentive Plan). At our annual meeting of shareholders on June 20, 2019, our shareholders approved an amendment to the 2015 Incentive Plan to increase the number of common shares of beneficial interest authorized thereunder by 2,500,000 (hereafter, as amended, the 2015 Incentive Plan). The following description of certain terms of the 2015 Incentive Plan is qualified in all respects by the terms of the 2015 Incentive Plan.

*Eligibility.* Awards may be granted under the 2015 Incentive Plan to employees, officers and non-employee directors of the Company, its subsidiaries or its affiliates, or consultants and advisors (who are natural persons) providing services to the Company, its subsidiaries or its affiliates, or any other person whose participation in the 2015 Incentive Plan is determined by the Committee to be in the best interests of the Company.

*Term*. The 2015 Incentive Plan terminates automatically ten years after the Effective Date, unless it is terminated earlier by the Board of Trustees.

*Shares Available for Issuance.* Subject to adjustment as provided in the 2015 Incentive Plan, the maximum number of common shares of the Company that are available for issuance under the 2015 Incentive Plan is 5,750,000 shares.

*Awards.* The following types of awards may be made under the 2015 Incentive Plan, subject to limitations set forth in the 2015 Incentive Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Stock options;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Stock appreciation rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Restricted stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Restricted stock units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Unrestricted stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Dividend equivalent rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Performance shares and other performance-based awards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Limited partnership interests in any partnership entity through which the Company may conduct its business in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Other equity-based awards; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Cash bonus awards.

Recipients of the Company's restricted shares have the same voting rights as any other common shareholder. During the period of restriction, holders of unvested restricted shares are eligible to receive dividend payments on their shares at the same rate and on the same date as any other common shareholder. The restricted shares are service based awards and vest over a service period determined by the Committee.

Recipients of the Company's restricted stock units, or RSUs, are entitled to receive dividends with respect to the common shares underlying the RSUs if and when the RSUs are earned, at which time the recipient will be entitled to receive an amount in cash equal to the aggregate amount of cash dividends that would have been paid in respect to the common shares underlying the recipient's earned RSUs had such common shares been issued to the recipient on the first day of the performance period. To the extent that an award does not vest, the dividends related to unvested RSUs will be forfeited. The RSUs are market-based

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

awards with a service condition and recipients may earn RSUs based on the Company's total shareholder return, or TSR, relative to the TSRs of the companies that comprise the Nareit Office Index over a three-year performance period. Following the end of the three-year performance period, the number of earned awards will be determined. The earned awards vest in two tranches with 50% of the earned award vesting following the end of the performance period on the date the Committee determines the level of achievement of the performance metric and the remaining 50% of the earned award vesting approximately one year thereafter, subject to the grant recipient's continued employment. Compensation expense for the RSUs is determined using a Monte Carlo simulation model and is recognized ratably from the grant date to the vesting date of each tranche.

LTIP Units are a class of beneficial interests in the Operating Trust that may be issued to employees, officers or trustees of the Operating Trust, the Company or their subsidiaries, or LTIP Units. Time-based LTIP Units have the same general characteristics as restricted shares and market-based LTIP Units have the same general characteristics as RSUs. Each LTIP Unit will convert automatically into an OP Unit on a one-for-one basis when the LTIP Unit becomes vested and its capital account is equalized with the per-unit capital account of the OP Units. Holders of LTIP Units generally will be entitled to receive the same per-unit distributions as the other outstanding OP Units in the Operating Trust, except that market-based LTIP Units will not participate in distributions until expiration of the applicable performance period, at which time any earned market-based LTIP Units generally will become entitled to receive a catch-up distribution for the periods prior to such time.

*Administration.* The 2015 Incentive Plan will be administered by the Committee, which will determine all terms and recipients of awards under the 2015 Incentive Plan.

*2022 Equity Award Activity*

On January 26, 2022, the Compensation Committee approved grants in the aggregate amount of 29,071 time-based LTIP Units, 59,024 market-based LTIP Units at target (147,117 market-based LTIP Units at maximum) 92,573 restricted shares and 187,951 RSUs at target (468,468 RSUs at maximum) to the Company's officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2021. The restricted shares and time-based LTIP Units were valued at $25.50 per share/unit, the closing price of our common shares on the New York Stock Exchange, or the NYSE, on the grant date.

On June 21, 2022, in accordance with the Company's compensation program for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2022-2023 year of service on the Board of Trustees. These awards equated to 3,604 shares or time-based LTIP Units per Trustee, for a total of 18,020 shares and 3,604 time-based LTIP Units, valued at $27.75 per share and unit, the closing price of our common shares on the NYSE on that day. These shares and time-based LTIP Units vest one year after the date of the award, on June 21, 2023.

During the year ended December 31, 2022, 382,993 RSUs vested, and, as a result, we issued 382,993 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 6).

*2021 Equity Award Activity*

On January 25, 2021, the Committee approved grants in the aggregate amount of 122,466 restricted shares and 248,646 RSUs at target (619,750 RSUs at maximum) to the Company's officers, certain employees, and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2020. The restricted shares were valued at $28.25 per share, the closing price of our common shares on the NYSE on the grant date.

On June 23, 2021, in accordance with the Company's compensation plan for independent Trustees, the Committee awarded each of the six independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2021-2022 year of service on the Board of Trustees. These awards equated to 3,701 shares or time-based LTIP Units per Trustee, for a total of 18,505 shares and 3,701 time-based LTIP Units, valued at $27.02 per share and unit, the closing price of our common shares on the New York Stock Exchange, or NYSE, on that day. These shares and time-based LTIP Units vested on June 23, 2022.

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

During the year ended December 31, 2021, 523,662 RSUs vested, and, as a result, we issued 523,662 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 6). Additionally, 81,434 market-based LTIP Units vested and converted into OP Units (see Note 7).

*2020 Equity Award Activity*

On January 27, 2020, the Committee approved grants in the aggregate amount of 20,116 time-based LTIP Units, 40,841 market-based LTIP Units at target (101,796 market-based LTIP Units at maximum), 85,058 restricted shares and 172,697 RSUs at target (430,447 RSUs at maximum) to the Company's officers, certain employees and to Mr. Zell, the Chairman of our Board of Trustees, as part of their compensation for fiscal year 2019. The restricted shares and time-based LTIP Units were valued at $32.81 per share and per unit, the closing price of our common shares on the NYSE on that day.

On June 23, 2020, in accordance with the Company's compensation plan for independent Trustees, the Committee awarded each of the then nine independent Trustees $0.1 million in restricted shares or time-based LTIP Units as part of their compensation for the 2020-2021 year of service on the Board of Trustees. These awards equated to 3,184 shares or time-based LTIP Units per Trustee, for a total of 19,104 shares and 9,552 time-based LTIP Units, valued at $31.41 per share and unit, the closing price of our common shares on the NYSE on that day. These shares and time-based LTIP Units vested on June 23, 2021.

On September 16, 2020, following the resignation of one of our then-existing nine independent trustees, our Board of Trustees appointed a new independent Trustee. In accordance with the Company's compensation plan for independent Trustees, the Committee awarded this Trustee $0.1 million in restricted shares as part of her prorated compensation for the 2020-2021 year of service on the Board of Trustees. This award equated to 2,526 shares valued at $30.39 per share, the closing price of our common shares on the NYSE on that day. These shares vested on June 23, 2021.

During the year ended December 31, 2020, 388,615 RSUs vested, and, as a result, we issued 388,615 common shares, prior to certain employees surrendering their common shares to satisfy tax withholding obligations (see Note 6). Additionally, 84,754 market-based LTIP Units vested and converted into OP Units (see Note 7).

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

*Outstanding Equity Awards*

The table below presents a summary of restricted share, RSU and LTIP Unit activity for the years ended December 31, 2022, 2021 and 2020:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Number<br>of<br>Restricted Shares and Time-Based LTIP Units** | **Weighted<br>Average<br>Grant Date<br>Fair Value** | **Number<br>of<br>RSUs and Market-Based LTIP Units** | **Weighted<br>Average<br>Grant Date<br>Fair Value** |
| Outstanding at December 31, 2019 | 400314 | $29.95 | 2003175 | $15.57 |
| &nbsp;&nbsp;&nbsp;Granted | 136356 | 32.47 | 532243 | 16.12 |
| &nbsp;&nbsp;&nbsp;Vested | (149103) | 29.65 | (473369) | 15.79 |
| &nbsp;&nbsp;Not earned(1) |  |  | (97131) | 15.97 |
| &nbsp;&nbsp;Forfeited(2) | (1879) | 31.41 |  |  |
| Outstanding at December 31, 2020 | 385688 | $31.52 | 1964918 | $15.65 |
| &nbsp;&nbsp;&nbsp;Granted | 144672 | 28.06 | 619750 | 15.19 |
| &nbsp;&nbsp;&nbsp;Vested | (188990) | 30.99 | (605096) | 15.31 |
| &nbsp;&nbsp;Not earned(1) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |  |
| Outstanding at December 31, 2021 | 341370 | $30.35 | 1979572 | $15.61 |
| &nbsp;&nbsp;&nbsp;Granted | 143268 | 25.84 | 615585 | 14.09 |
| &nbsp;&nbsp;&nbsp;Vested | (125958) | 30.15 | (382993) | 15.46 |
| &nbsp;&nbsp;Not earned(1) |  |  | (358692) | 15.91 |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |  |
| Outstanding at December 31, 2022 | 358680 | $28.62 | 1853472 | $15.13 |

---

(1) The table presents the maximum number of shares issued or issuable from outstanding equity awards. RSUs and market-based LTIP Units not earned are the shares market-based award recipients do not receive based on the performance measurement completed at the end of the performance period.

(2) Restricted shares forfeited as a result of a resignation of an independent Trustee in November 2020.

The 358,680 unvested restricted shares and time-based LTIP Units as of December 31, 2022 are scheduled to vest as follows: 116,288 shares/units in 2023, 100,840 shares/units in 2024, 81,947 shares/units in 2025 and 59,605 shares/units in 2026. As of December 31, 2022, the estimated future compensation expense for all unvested restricted shares and time-based LTIP Units was $5.0 million. Compensation expense for the restricted share and time-based LTIP Units is being recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The weighted average period over which the future compensation expense will be recorded for the restricted shares and time-based LTIP Units is approximately 2.3 years.

As of December 31, 2022, the estimated future compensation expense for all unvested RSUs and market-based LTIP Units was $10.9 million. The weighted average period over which the future compensation expense will be recorded for the RSUs and market-based LTIP Units is approximately 2.1 years.

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

The assumptions and fair values for the RSUs and market-based LTIP Units granted for the years ended December 31, 2022, 2021 and 2020 are included in the following table on a per share and unit basis.

---

| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | **2020** |
| Fair value of RSUs and market-based LTIP Units granted at the target amount | $35.11 | $37.87 | $40.17 |
| Fair value of RSUs and market-based LTIP Units granted at the maximum amount | $14.09 | $15.19 | $16.12 |
| Expected term (years) | 4 | 4 | 4 |
| Expected volatility | 17.04% | 16.99% | 12.39% |
| Expected dividend yield | —% | —% | —% |
| Risk-free rate | 1.39% | 0.17% | 1.41% |

---

During the years ended December 31, 2022, 2021 and 2020, we recorded $11.9 million, $15.4 million and $13.2 million, respectively, of compensation expense, net of forfeitures, in general and administrative expense for grants to our Trustees, officers, eligible consultants and employees related to our equity compensation plans. Compensation expense recorded during the years ended December 31, 2022, 2021 and 2020 includes $0.4 million, $3.5 million and $17,000, respectively, of accelerated vesting due to staffing reductions. Forfeitures are recognized as they occur. At December 31, 2022, 1,126,571 shares/units remain available for issuance under the 2015 Incentive Plan.

**Note 10. Defined Contribution Plan**

We have a defined contribution plan that covers employees meeting eligibility requirements. We match 100% of the first 3% of compensation that an employee elects to defer plus 50% of compensation that an employee elects to defer exceeding 3% but not exceeding 5%, subject to a maximum of $8,000. The Company's matching contribution vests immediately. The Company's contributions were $0.2 million, $0.2 million and $0.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

**Note 11. Fair Value of Assets and Liabilities**

As of December 31, 2022 and 2021, we do not have any assets or liabilities measured at fair value.

*Financial Instruments*

Our financial instruments include our cash and cash equivalents. At December 31, 2022 and 2021, the fair value of these financial instruments was not different from their carrying values.

Other financial instruments that potentially subject us to concentrations of credit risk consist principally of rents receivable. As of December 31, 2022, no single tenant of ours is responsible for more than 10% of our consolidated revenues.

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**Note 12. Earnings Per Common Share**

The following table sets forth the computation of basic and diluted earnings per share (amounts in thousands except per share amounts):

---

| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2020** |
| **Numerator for earnings per common share - basic:** |  |  |  |
| Net income (loss) | $37357 | $(16429) | $452093 |
| Net (income) loss attributable to noncontrolling interest | (94) | 33 | (799) |
| Preferred distributions | (7988) | (7988) | (7988) |
| Numerator for net income (loss) per share - basic | $29275 | $(24384) | $443306 |
| **Numerator for earnings per common share - diluted:** |  |  |  |
| Net income (loss) | $37357 | $(16429) | $452093 |
| Net (income) loss attributable to noncontrolling interest | (94) | 33 | (799) |
| Preferred distributions | (7988) | (7988) |  |
| Numerator for net income (loss) per share - diluted | $29275 | $(24384) | $451294 |
| **Denominator for earnings per common share - basic and diluted:** |  |  |  |
| Weighted average number of common shares outstanding - basic(1) | 111674 | 121411 | 121786 |
| RSUs(2) | 970 |  | 1508 |
| LTIP Units(3) | 181 |  | 75 |
| Series D preferred shares; 6.50% cumulative convertible |  |  | 3237 |
| Weighted average number of common shares outstanding - diluted | 112825 | 121411 | 126606 |
| **Net income (loss) per common share attributable to Equity Commonwealth common shareholders:** |  |  |  |
| Basic | $0.26 | $(0.20) | $3.64 |
| Diluted | $0.26 | $(0.20) | $3.56 |
| **Anti-dilutive securities(4):** |  |  |  |
| Effect of Series D preferred shares; 6.50% cumulative convertible | 3365 | 3237 |  |
| Effect of RSUs(2) |  | 549 |  |
| Effect of LTIP Units |  | 84 | 119 |
| Effect of OP Units(5) | 276 | 208 | 102 |

---

(1) The years ended December 31, 2022, 2021 and 2020, include 105, 256, and 157 weighted-average, unvested, earned RSUs, respectively.

(2) Represents the weighted-average number of common shares that would have been issued if the year-end was the measurement date for unvested, unearned RSUs.

(3) Represents the weighted-average dilutive shares issuable from LTIP Units if the year-end was the measurement date for the periods shown.

(4) The Series D preferred shares are excluded from the diluted earnings per share calculation for the years ended December 31, 2022 and 2021 because including the Series D preferred shares would also require that the preferred distributions be added back to net income, resulting in anti-dilution. The RSUs and market-based LTIP Units are excluded from the

------

<u>[**Table of Contents**](#ibcaf5cd8f5fe44c2a4ebf27161f91b61_10)</u> 

**EQUITY COMMONWEALTH**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

diluted earnings per share calculation for the year ended December 31, 2021, because including them results in anti-dilution.

(5) Beneficial interests in the Operating Trust.

**Note 13. Segment Information**

Our primary business is the ownership and operation of office properties, and we currently have one reportable segment. One hundred percent of our revenues for the year ended December 31, 2022 were from office properties.

**Note 14. Related Person Transactions**

The following discussion includes a description of our related person transactions for the years ended December 31, 2022, 2021 and 2020.

*Two North Riverside Plaza Joint Venture Limited Partnership:* We entered into a lease on July 20, 2015 with Two North Riverside Plaza Joint Venture Limited Partnership, an entity associated with Mr. Zell, our Chairman, to occupy office space on the twentieth and twenty-first floors of Two North Riverside Plaza in Chicago, Illinois (20th/21st Floor Office Lease). The initial term of the lease was approximately five years, expiring on December 31, 2020. We made improvements to the office space utilizing the $0.7 million tenant improvement allowance pursuant to the lease. In connection with the 20th/21st Floor Office Lease, we also had a storage lease with Two North Riverside Plaza Joint Venture Limited Partnership for storage space in the basement of Two North Riverside Plaza, which we terminated, effective August 31, 2020.

In December 2020, we entered into an amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2021, with no renewal options. The lease payment for the extended term was $0.3 million. In December 2021, we entered into a second amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2022, with no renewal options. The lease payment for the second extended term was $0.4 million. In December 2022, we entered into a third amendment to the 20th/21st Floor Office Lease extending the lease term for one year, through December 31, 2023, with no renewal options. The lease payment for the third extended term is $0.4 million.

During the years ended December 31, 2022, 2021 and 2020, we recognized expense of $0.4 million, $0.3 million and $0.9 million, respectively, pursuant to the 20th/21st Floor Office Lease and the related storage lease. The future minimum lease payments scheduled to be paid by us during the term of this lease as of December 31, 2022 are $0.4 million in 2023. As of December 31, 2022 and 2021, we did not have any amounts due to Two North Riverside Plaza Joint Venture Limited Partnership pursuant to the 20th/21st Floor Office Lease.

**Note 15. Subsequent Events**

*Preferred Share Distribution*

On January 13, 2023, we announced that our Board of Trustees declared a dividend of $0.40625 per series D preferred share, which will be paid on February 15, 2023 to shareholders of record on January 31, 2023.

------

**EQUITY COMMONWEALTH**

**SCHEDULE III**

**REAL ESTATE AND ACCUMULATED DEPRECIATION**

**December 31, 2022**

**(dollars in thousands)**

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | **Initial Cost to Company** | **Initial Cost to Company** | | | **Cost Amount Carried at Close of Period** | **Cost Amount Carried at Close of Period** | **Cost Amount Carried at Close of Period** | | | |
|<br>**Property** |<br>**City** |<br>**State** | **Land** | **Buildings and<br>Improvements** |<br>**Costs<br>Capitalized<br>Subsequent to<br>Acquisition, Net** |<br>**Impairment/Write Downs** | **Land** | **Buildings and<br>Improvements** | **Total(1)** |<br>**Accumulated<br>Depreciation(2)** |<br>**Date<br>Acquired** |<br>**Original<br>Construction<br>Date** |
| 1225 Seventeenth Street | Denver | CO | $22400 | $110090 | $46971 | $(3547) | $22400 | $153514 | $175914 | $59713 | 6/24/2009 | 1982 |
| 1250 H Street, NW | Washington | DC | 5975 | 53778 | 21490 | (4683) | 5975 | 70585 | 76560 | 40372 | 6/23/1998 | 1992 |
| 206 East 9th Street | Austin | TX | 7900 | 38533 | 7743 | (1710) | 7900 | 44566 | 52466 | 12338 | 5/31/2012 | 1984 |
| Bridgepoint Square | Austin | TX | 7785 | 70526 | 28950 | (4078) | 7785 | 95398 | 103183 | 57107 | 12/5/1997 | 1986;1996;<br>1997 |
|  |  |  | $44060 | $272927 | $105154 | $(14018) | $44060 | $364063 | $408123 | $169530 |  |  |

---

------

**EQUITY COMMONWEALTH**

**SCHEDULE III**

**REAL ESTATE AND ACCUMULATED DEPRECIATION**

**December 31, 2022**

**(dollars in thousands)**

Analysis of the carrying amount of real estate properties and accumulated depreciation:

---

| | | |
|:---|:---|:---|
| | **Real Estate<br>Properties** | **Accumulated<br>Depreciation** |
| Balance at January 1, 2020 | $662121 | $202700 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 11642 | 15275 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposals | (272053) | (74656) |
| Balance at December 31, 2020 | 401710 | 143319 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 6326 | 15054 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposals | (1934) | (1934) |
| Balance at December 31, 2021 | 406102 | 156439 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additions | 4002 | 15072 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposals | (1981) | (1981) |
| Balance at December 31, 2022 | $408123 | $169530 |

---

(1)Excludes value of real estate intangibles. Aggregate cost for federal income tax purposes is $478,202.

(2)Depreciation is calculated using the straight-line method over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property.

## Exhibit 4.3

**Exhibit 4.3**

**DESCRIPTION OF THE COMPANY'S SECURITIES**

**REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934**

As of December 31, 2022, we had two classes of stock registered under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act: our common shares of beneficial interest and our Series D Cumulative Convertible Preferred Shares of beneficial interest, or the Series D Preferred Shares. The following is a summary of the material terms of such securities, as well as certain provisions of our Articles of Amendment and Restatement of Declaration of Trust, as amended and supplemented, or our Declaration of Trust, and our Third Amended and Restated Bylaws, or our Bylaws. The summary is subject to and qualified in its entirety by reference to our Declaration of Trust and Bylaws, each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is apart. It also summarizes some relevant provisions of the Maryland statute governing real estate investment trusts formed under the laws of that state, which we refer to as the Maryland REIT law, and is subject to and qualified in its entirety by reference to the Maryland REIT law.

**Description of Common Shares of Beneficial Interest** 

***Voting Rights of Common Shares***

Subject to the provisions of any class or series of outstanding shares and to the provisions of our Declaration of Trust regarding restrictions on ownership and transfer of our shares of beneficial interest, each outstanding common share entitles the holder to one vote on the following matters: (i) election and removal of trustees; (ii) amendment of the Declaration of Trust; (iii) termination of the Company; (iv) the merger or consolidation of the Company or a share exchange, provided that shareholders are not entitled to vote on a merger of the Company that may be approved pursuant to the provisions of the Maryland REIT Law by a majority of the entire board of trustees without a vote of the shareholders; (v) the transfer of all or substantially all of the Company, provided that the Company shall be permitted to transfer or otherwise dispose of all or substantially all of the Company's property without the approval of the shareholders by means of a distribution to shareholders or in a disposition, immediately following which the Company continues to own, directly or indirectly, substantially all of the ownership interests in the transferees of all or substantially all of the Company's property; (vi) consolidation of the Company with one or more other entities into a new entity; (vii) such other matters with respect to which the board of trustees has adopted a resolution declaring advisable or recommending a proposal and directing that the matter be submitted to the shareholders for consideration; and (viii) such other matters as may be properly brought before a meeting by a shareholder pursuant to the Bylaws.

Except as otherwise required by law and except as provided with respect to any other class or series of shares of beneficial interest, the holders of common shares will possess the exclusive voting power. There is no cumulative voting in the election of trustees.

Under the Maryland REIT law, a Maryland REIT generally cannot amend its declaration of trust or merge unless recommended by its board of trustees and approved by the affirmative vote of shareholders holding at least two-thirds of the shares entitled to vote on the matter unless a lesser percentage (but not less than a majority of all the votes entitled to be cast on the matter) is set forth in the REIT's declaration of trust. Our Declaration of Trust provides that a merger, consolidation, share exchange or the transfer of all or substantially all of the assets of the Company may be approved by the affirmative vote of the holders of not less than a majority of all the shares then outstanding and entitled to vote thereon. All other matters permitting or requiring action by shareholders must be approved by the affirmative vote of the holders of shares representing a majority of the total number of votes cast by shares then outstanding and entitled to vote thereon, provided, however, that the election of a trustee in a contested election, which is an election in which the number of nominees for election is greater than the number to be elected at the meeting, shall be by the affirmative vote of shares representing a plurality of the total number of share votes cast by shares then outstanding and entitled to vote thereon. Our Declaration of Trust permits two-thirds of the

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trustees to amend the Declaration of Trust from time to time to qualify as a REIT under the Internal Revenue Code or the Maryland REIT law after written notice to the shareholders, without the affirmative vote or written consent of the shareholders.

***Dividends, Liquidation and Other Rights***

Holders of our common shares will be entitled to receive dividends when, as and if declared by our board of trustees out of assets legally available for the payment of dividends. They also will be entitled to share ratably in our assets legally available for distribution to our shareholders in the event of our liquidation, dissolution or winding up, after payment of or adequate provision for all of our known debts and liabilities. These rights will be subject to the preferential rights of any other class or series of our shares and to the provisions of our Declaration of Trust regarding restrictions on transfer of our shares.

Holders of our common shares will have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and will have no preemptive rights to subscribe for any of the securities. Subject to the restrictions on transfer of shares contained in our Declaration of Trust and to the ability of the board of trustees to create common shares with differing voting rights, all common shares will have equal dividend, liquidation and other rights.

**Description of Series D Preferred Shares**

***Ranking***

The Series D Preferred Shares ranks, with respect to distribution rights and rights upon our liquidation, dissolution or winding up:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• junior to all of our existing and future debt obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• senior to our common shares and to any other of our equity securities that by their terms rank junior to the Series D Preferred Shares with respect to distribution rights or payments upon our liquidation, dissolution or winding up;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on a parity with other series of our preferred shares or other equity securities that we may later authorize and that by their terms are on a parity with the Series D Preferred Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• junior to any equity securities that we may later authorize and that by their terms rank senior to the Series D Preferred Shares (which we may only authorize with the affirmative vote of the holders of at least two-thirds of the Series D Preferred Shares).

***Distributions***

Holders of the Series D Preferred Shares are entitled to receive, when and as authorized by our board of trustees and declared by us, out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 6.50% of the liquidation preference per year (equivalent to $1.625 per Series D Preferred Share per year). Distributions on the Series D Preferred Shares accrue and are cumulative from the date of original issuance and are payable quarterly in arrears on the 15th day of each February, May, August and November or, if not a business day, the next business day, in each case a Distribution Payment Date. Distributions payable on the Series D Preferred Shares for any partial period is computed on the basis of a 360-day year consisting of twelve 30-day months. We pay distributions to holders of record as they appear in our share records at the close of business on the applicable record date designated by our board of trustees for the payment of distributions that is not more than 60 nor less than 10 days prior to the Distribution Payment Date, each a Distribution Record Date.

We will not authorize or pay any distributions on the Series D Preferred Shares or set aside funds for the payment of distributions if restricted or prohibited by law, or if the terms of any of our agreements, including agreements relating to our indebtedness or our other series of preferred shares, prohibit that authorization, payment

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or setting aside of funds or provide that the authorization, payment or setting aside of funds is a breach of or a default under that agreement. We are, and may in the future become, a party to agreements which restrict or prevent the payment of distributions on, or the purchase of, shares. These restrictions may include indirect covenants which require us to maintain specified levels of net worth or assets. We do not believe that these restrictions currently have any adverse impact on our ability to pay distributions on the Series D Preferred Shares.

Notwithstanding the foregoing, distributions on the Series D Preferred Shares accrue whether or not we have earnings, whether or not there are funds legally available for the payment of distributions and whether or not distributions are authorized. Accrued but unpaid distributions on the Series D Preferred Shares will not bear interest, and holders of the Series D Preferred Shares will not be entitled to any distributions in excess of full cumulative distributions as described above. All of our distributions on the Series D Preferred Shares, including any capital gain distributions, will be credited first to the earliest accrued and unpaid distribution due.

We will not declare or pay any distributions, or set aside any funds for the payment of distributions, on common shares or other shares that rank junior to the Series D Preferred Shares, or redeem or otherwise acquire common shares or other junior shares, unless we also have declared and either paid or set aside for payment the full cumulative distributions on the Series D Preferred Shares and on all our other series of preferred shares ranking senior to or on a parity with the Series D Preferred Shares, for all past distribution periods. This restriction will not limit our acquisition of shares under incentive, benefit or share purchase plans for officers, trustees or employees or others performing or providing similar services, for the purposes of enforcing restrictions upon ownership and transfer of our equity securities contained in our declaration of trust, for the purpose of preserving our status as a REIT or our acquisition of rights issued under our shareholder rights plan or any successor plan we adopt.

We will not authorize the full cumulative distributions on any preferred shares unless we have authorized those distributions as are accrued on all of our outstanding preferred shares which are on a parity with the Series D Preferred Shares. If we do not declare and either pay or set aside for payment the full cumulative distributions on the Series D Preferred Shares and all shares that rank on a parity with Series D Preferred Shares, the amount which we have declared will be allocated pro rata among the Series D Preferred Shares and each parity series of shares, so that the amount declared for each Series D Preferred Share and for each share of each parity series is proportionate to the accrued and unpaid distributions on those shares.

***Liquidation Rights***

In the event of our voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of the Series D Preferred Shares will be entitled to be paid out of our assets legally available for distribution to our shareholders, liquidating distributions in cash or property at fair market value as determined by our board of trustees equal to a liquidation preference of $25.00 per share, plus any accrued and unpaid distributions (whether or not declared) through the date of the payment. The holders of Series D Preferred Shares will be entitled to receive this liquidating distribution before we distribute any assets to holders of our common shares or any other shares of beneficial interest that rank junior to the Series D Preferred Shares as to payments upon our liquidation, dissolution or winding up. The rights of holders of Series D Preferred Shares to receive their liquidation preference would be subject to the proportionate rights of each parity series, and the preferential rights of the holders of any series of shares which is senior to the Series D Preferred Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of the Series D Preferred Shares will be entitled to notice of any such liquidation. After payment of the full amount of the liquidating distributions to which they are entitled, holders of our Series D Preferred Shares will have no right or claim to any of our remaining assets. The consolidation or merger of us with or into any other corporation, trust or entity or of any other corporation with or into us, or the sale, lease or conveyance of all or substantially all of our assets or business, will not be deemed to constitute a liquidation, dissolution or winding up of us. In determining whether a distribution (other than upon voluntary or involuntary liquidation), by redemption or other acquisition of shares or otherwise, is permitted under Maryland law, amounts that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of the holders of Series D Preferred Shares will not be added to our total liabilities.

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***Voting Rights***

Holders of Series D Preferred Shares will have no voting rights, except as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If distributions on our Series D Preferred Shares are due for six or more quarterly periods and remain unpaid, whether or not these quarterly periods are consecutive, holders of the Series D Preferred Shares, voting together with all other series of preferred shares which have similar voting rights, will be entitled to vote for the election of two additional trustees to serve on our board of trustees until all distribution arrearages have been paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In addition, the affirmative vote of the holders of at least two-thirds of the Series D Preferred Shares is required for us to authorize, create or increase our shares of beneficial interest ranking senior to the outstanding Series D Preferred Shares with respect to distribution rights or payments upon our liquidation, dissolution or winding up or to amend our declaration of trust in a manner that materially and adversely affects the rights of the holders of the Series D Preferred Shares.

In any matter in which the Series D Preferred Shares are entitled to vote, each Series D Preferred Share will be entitled to one vote. If the holders of Series D Preferred Shares and another series of preferred shares are entitled to vote together as a single class on any matter, the Series D Preferred Shares and the shares of the other series will have one vote for each $25.00 of liquidation preference.

***Conversion Rights***

The holders of the Series D Preferred Shares, at their option, may convert some or all of their outstanding Series D Preferred Shares currently at a Conversion Rate of 0.5813 common shares per $25.00 liquidation preference (subject to adjustment in certain events). Series D Preferred Shares will be convertible only into our common shares.

We may elect not to issue fractional common shares upon the conversion of Series D Preferred Shares, in which case we will pay the cash value of such fractional shares based upon the Closing Sale Price of our common shares on the Trading Day immediately prior to the Conversion Date or the Company Conversion Option Date, as the case may be (each as defined below).

Holders of Series D Preferred Shares are not entitled to any rights of a common shareholder until such holder of Series D Preferred Shares has converted its Series D Preferred Shares or unless we have exercised the Company Conversion Option, and only to the extent the Series D Preferred Shares are deemed to have been converted into common shares under the articles supplementary establishing the Series D Preferred Shares.

***Company Conversion Option***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

We may, at our option, convert some or all of the Series D Preferred Shares into that number of common shares that are issuable at the then applicable Conversion Rate. We refer to this as the Company Conversion Option. We may exercise the Company Conversion Option only if the Closing Sale Price of our common shares equals or exceeds the then applicable conversion price of the Series D Preferred Shares for at least 20 Trading Days in a period of 30 consecutive Trading Days (including the last Trading Day of such period) ending on the Trading Day immediately prior to our issuance of a press release announcing our exercise of the Company Conversion Option as described below.

If we convert less than all of the outstanding Series D Preferred Shares, the transfer agent will select the shares by lot, on a pro rata basis or in accordance with any other method the transfer agent considers fair and appropriate. We may convert the Series D Preferred Shares only in a whole number of shares. If a portion of a holder's Series D Preferred Shares is selected for partial conversion by us and the holder converts a portion of such

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Series D Preferred Shares, the number of Series D Preferred Shares subject to conversion by us will be reduced by the number of shares that the holder converted.

The Closing Sale Price of our common shares on any date means the closing sale price per share (or, if no closing sale price is reported, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) on such date as reported by the NYSE or, if our common shares are not reported by the NYSE, in composite transactions for the principal other U.S. national or regional securities exchange on which our common shares are traded. If our common shares are not listed for trading on a U.S. national or regional securities exchange on the relevant date, the Closing Sale Price will be the last quoted bid price for our common shares in the over-the-counter market on the relevant date as reported by the National Quotation Bureau Incorporated or similar organization. If our common shares are not so quoted, the Closing Sale Price will be the average of the mid-point of the last bid and asked prices for our common shares on the relevant date from each of at least three independent nationally recognized investment banking firms selected by us for this purpose.

Trading Day means a day during which trading in securities generally occurs on the NYSE or, if our common shares are not quoted on the NYSE, then a day during which trading in securities generally occurs on the principal U.S. securities exchange on which our common shares are listed or, if our common shares are not listed on a U.S. national or regional securities exchange, then on the principal other market on which our common shares are then traded or quoted.

To exercise our Company Conversion Option described above, we must issue a press release for publication on the Dow Jones & Company, Inc., Business Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) prior to the opening of business on the first Trading Day following any date on which the conditions described in the fourth preceding paragraph are met, announcing such conversion. We will also give notice by mail or by publication (with subsequent prompt notice by mail) to holders of our Series D Preferred Shares (not more than four Trading Days after the date of the press release) of our exercise of the Company Conversion Option announcing our intention to convert the Series D Preferred Shares. The effective date for any Company Conversion Option, or the Company Conversion Option Date, will be the date that is five Trading Days after the date on which we issue such press release.

In addition to any information required by applicable law or regulation, the press release and notice of our exercise of the Company Conversion Option will state, as appropriate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Company Conversion Option Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of common shares to be issued upon conversion of each Series D Preferred Share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of Series D Preferred Shares to be converted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that distributions on the Series D Preferred Shares to be converted will cease to accrue on the Company Conversion Option Date.

***Conversion Procedures***

Holders of Series D Preferred Shares may convert some or all of their shares by surrendering to us at our principal office or at the office of our transfer agent, as may be designated by our board of trustees, the certificate or certificates for the Series D Preferred Shares to be converted accompanied by a written notice stating that the holder of Series D Preferred Shares elects to convert all or a specified whole number of those shares and specifying the name or names in which the holder of the Series D Preferred Shares wishes the certificate or certificates for the common shares to be issued. In case the notice specifies a name or names other than the name of a holder of Series D Preferred Shares, the notice must be accompanied by payment of all transfer taxes payable upon the issuance of common shares in that name or names. Other than those taxes, we will pay any documentary, stamp or similar issue or transfer taxes that may be payable in respect of any issuance or delivery of common shares upon conversion of the Series D Preferred Shares. As promptly as practicable after the surrender of that certificate or

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certificates and the receipt of the notice relating to the conversion and payment of all required transfer taxes, if any, or the demonstration to our satisfaction that those taxes have been paid, we will deliver or cause to be delivered (a) certificates evidencing the number of validly issued, fully paid and non-assessable common shares to which the holder of Series D Preferred Shares, or the transferee of a holder of Series D Preferred Shares, will be entitled and (b) if less than the full number of Series D Preferred Shares evidenced by the surrendered certificate or certificates being converted, a new certificate or certificates, of like tenor, for the number of shares evidenced by the surrendered certificate or certificates, less the number of shares being converted. This conversion will be deemed to have been made at the close of business on the date of giving the notice and of surrendering the certificate or certificates evidencing the shares of the Series D Preferred Shares to be converted, or the Conversion Date, so that the rights of a holder of Series D Preferred Shares as to the shares being converted will cease except for the right to receive the conversion value, and, if applicable, the person entitled to receive common shares will be treated for all purposes as having become the record holder of those common shares at that time.

In lieu of the foregoing procedures, if the Series D Preferred Shares are held in global form, the holder of Series D Preferred Shares must comply with applicable procedures of The Depository Trust Company, or DTC, to convert such holder's Series D Preferred Shares.

Holders of Series D Preferred Shares are not eligible to exercise any rights of a common shareholder until they have converted their Series D Preferred Shares into common shares.

In case any Series D Preferred Shares are to be converted pursuant to the Company Conversion Option, the right of a holder of Series D Preferred Shares to voluntarily convert those shares of Series D Preferred Shares will terminate if we have not received from such holder of Series D Preferred Shares its conversion notice by 5:00 p.m., New York City time, on the business day immediately preceding the Company Conversion Option Date.

If more than one share of our Series D Preferred Shares is surrendered for conversion by the same shareholder at the same time, the number of full common shares issuable on conversion of those Series D Preferred Shares will be computed on the basis of the total number of Series D Preferred Shares so surrendered.

We will at all times reserve and keep available, free from preemptive rights, out of our authorized but unissued shares of beneficial interest, for issuance upon the conversion of Series D Preferred Shares, a number of our authorized but unissued common shares that will from time to time be sufficient to permit the conversion of all outstanding Series D Preferred Shares as described above.

Before the delivery of any common shares upon conversion of the Series D Preferred Shares, we will comply with all applicable federal and state laws and regulations. All common shares delivered upon conversion of the Series D Preferred Shares will upon delivery be duly and validly issued, fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights.

If we have elected to repurchase the Series D Preferred Shares, a holder's conversion rights (other than the Fundamental Change Conversion Right) with respect to the Series D Preferred Shares so subject to repurchase will expire if we have not received a holder's conversion notice by 5:00 p.m., New York City time, on the business day immediately preceding the repurchase date, unless we default on the payment of the Fundamental Change Repurchase Price (as defined below), and a holder's Fundamental Change Conversion Right will automatically not be exercisable but instead a holder will be entitled to receive the Fundamental Change Repurchase Price from the Company unless a holder has converted their Series D Preferred Shares other than by exercise of the Fundamental Change Conversion Right.

***Payment of Distributions Upon Conversion***

<u>Optional Conversion</u> 

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*General.*&nbsp;&nbsp;&nbsp;&nbsp;If a holder of Series D Preferred Shares exercises its conversion rights, upon delivery of the Series D Preferred Shares for conversion, those Series D Preferred Shares will cease to cumulate distributions as of the end of the Conversion Date and the holder of those Series D Preferred Shares will not receive any cash payment representing accrued and unpaid distributions on the Series D Preferred Shares, except in those limited circumstances discussed below. Except as provided below, we will make no payment for accrued and unpaid distributions, whether or not in arrears, on Series D Preferred Shares converted at the election of the holder of Series D Preferred Shares, or for distributions on the common shares issued upon such conversion.

*Conversion On or Before Record Date.*&nbsp;&nbsp;&nbsp;&nbsp;If we receive a conversion notice before the close of business on a Distribution Record Date, the holder of Series D Preferred Shares will not be entitled to receive any portion of the distribution payable on such converted shares on the corresponding Distribution Payment Date.

*Conversion After Record Date and Prior to Payment Date.*&nbsp;&nbsp;&nbsp;&nbsp;If we receive a conversion notice after the Distribution Record Date but prior to the corresponding Distribution Payment Date, the holder of Series D Preferred Shares on the record date will receive on that Distribution Payment Date accrued distributions on those Series D Preferred Shares, notwithstanding the conversion of those Series D Preferred Shares prior to that Distribution Payment Date, because that holder of Series D Preferred Shares will have been the holder of record of the Series D Preferred Shares on the corresponding record date. At the time that such holder of the Series D Preferred Shares surrenders Series D Preferred Shares for conversion, however, it must pay to us an amount equal to the distribution that has accrued and that will be paid on the related Distribution Payment Date.

*Conversion On or After Distribution Payment Date and On or Prior to the Immediately Succeeding Record Date.*&nbsp;&nbsp;&nbsp;&nbsp;If the holder of Series D Preferred Shares is a holder of Series D Preferred Shares on a Distribution Record Date and converts such shares of Series D Preferred Shares into common shares on or after the corresponding Distribution Payment Date, such holder of Series D Preferred Shares will be entitled to receive the distribution payable on such shares of Series D Preferred Shares on such Distribution Payment Date, and the holder of Series D Preferred Shares will not need to include payment of the amount of such distribution upon surrender for conversion of shares of the Series D Preferred Shares.

*Fundamental Change Conversion Right.*&nbsp;&nbsp;&nbsp;&nbsp;The provisions described in the three preceding paragraphs do not apply to Series D Preferred Shares which are converted into common shares pursuant to the Fundamental Change Conversion Right or which are repurchased by us in lieu of such conversion. The rights of the holders of such Series D Preferred Shares to receive accrued and unpaid distributions are described below under "—Special Conversion Right of Series D Preferred Shares upon a Fundamental Change; Company Repurchase Right."

<u>Company Conversion Option</u> 

*General.*&nbsp;&nbsp;&nbsp;&nbsp;If we convert Series D Preferred Shares pursuant to the Company Conversion Option, whether prior to, on, or after the Distribution Record Date for the current period, all unpaid distributions that are in arrears as of the Company Conversion Option Date will be payable to the holders of Series D Preferred Shares.

*Conversion After a Payment Date and Prior to the next Record Date.*&nbsp;&nbsp;&nbsp;&nbsp;If we exercise the Company Conversion Option and the Company Conversion Option Date is a date that is after the close of business on a Distribution Payment Date and prior to the close of business on the next Distribution Record Date, the holder of Series D Preferred Shares will not be entitled to receive any portion of the distribution payable for such period on such converted shares on the corresponding Distribution Payment Date.

*Conversion On or After Record Date and Prior to Payment Date.*&nbsp;&nbsp;&nbsp;&nbsp;If we exercise the Company Conversion Option and the Company Conversion Option Date is a date that is on or after the close of business on any Distribution Record Date and prior to the close of business on the corresponding Distribution Payment Date, all distributions, including accrued and unpaid distributions, whether or not in arrears, with respect to the Series D Preferred Shares called for a conversion on such date, will be payable on such Distribution Payment Date to the

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holder of Series D Preferred Shares if the holder of Series D Preferred Shares is the record holder of such shares on such record date.

***Conversion Rate Adjustments***

Subject to and in accordance with the terms of the articles supplementary establishing the Series D Preferred Shares, we will adjust the Conversion Rate for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.distributions on our common shares payable in our common shares, based on the following formula:

CR<sup>1</sup> = CRO × OS1/OSO

where,

CRO = the Conversion Rate in effect immediately prior to such event

CR<sup>1</sup> = the Conversion Rate in effect immediately after such event

OSO = the number of our common shares outstanding immediately prior to such event

OS1 = the number of our common shares outstanding immediately after such event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.subdivisions, combinations or reclassifications of our common shares, based on the following formula:

CR<sup>1</sup> = CRO × OS1/OSO

where,

CRO = the Conversion Rate in effect immediately prior to such event

CR<sup>1</sup> = the Conversion Rate in effect immediately after such event

OSO = the number of our common shares outstanding immediately prior to such event

OS1 = the number of our common shares outstanding immediately after such event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.distributions to all or substantially all holders of our common shares of certain rights or warrants entitling them, for a period expiring not more than 60 days immediately following the record date for the distribution, to purchase or subscribe for our common shares, or securities convertible into or exchangeable or exercisable for common shares, at a price per share that is less than the Closing Sale Price per share of our common shares on the record date for the distribution, based on the following formula:

CR<sup>1</sup> = CRO × (OSO+X)/(OSO+Y)

where,

CRO = the Conversion Rate in effect immediately prior to such event

CR<sup>1</sup> = the Conversion Rate in effect immediately after such event

OSO = the number of our common shares outstanding immediately prior to such event

X = the total number of our common shares issuable pursuant to such rights or warrants

Y = the number of our common shares equal to the quotient of (A) the aggregate price payable to exercise of such rights or warrants and (B) the average of the Closing Sale Prices of our common shares for the 10 consecutive Trading Days prior to the business day immediately preceding the date of announcement for the issuance of such rights, warrants, options, other securities or convertible securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.distributions to all or substantially all holders of our common shares of shares of our or any of our existing or future subsidiaries' shares of beneficial interest (other than our common shares), evidences of indebtedness or other assets (other than distributions covered by paragraphs 5 and 6 below) or the distribution to all or substantially all holders of our common shares of certain rights or warrants (other than those covered in paragraph 3, or as described below, certain rights or

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warrants distributed pursuant to a shareholder rights plan) to purchase or subscribe for our securities; however, we will not adjust the Conversion Rate pursuant to this provision for distributions of certain rights or warrants, if we make certain arrangements for holders of Series D Preferred Shares to receive those rights and warrants upon conversion of the Series D Preferred Shares, based on the following formula:

CR<sup>1</sup> = CRO × SPO/(SPO - FMV)

where,

CRO = the Conversion Rate in effect immediately prior to such distribution

CR<sup>1</sup> = the Conversion Rate in effect immediately after such distribution

SPO = the average of the Closing Sale Prices of our common shares for the 10 consecutive Trading Days prior to the business day immediately preceding the ex-dividend date for such distribution

FMV = the fair market value (as determined in good faith by our board of trustees) of such shares of beneficial interest, evidences of indebtedness or other assets distributed with respect to each of our outstanding common shares on the record date for such distribution

With respect to an adjustment pursuant to this paragraph 4 where there has been a payment or a distribution on our common shares or capital shares of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit, which we refer to as a "spin-off", the Conversion Rate in effect immediately before the close of business on the ex-dividend date will be increased, based on the following formula:

CR<sup>1</sup> = CRO × (FMVO+MPO) /MPO

where,

CRO = the Conversion Rate in effect immediately prior to such distribution

CR<sup>1</sup> = the Conversion Rate in effect immediately after such distribution

FMVO = the average of the Closing Sale Prices of the capital shares or similar equity interest distributed to holders of our common shares applicable to one share of our common shares over the first 10 Trading Days after the effective date of the spin-off

MPO = the average of the Closing Sale Prices of our common shares over the first 10 consecutive Trading Days after the effective date of the spin-off

The adjustment to the Conversion Rate under the preceding paragraph with respect to a spin-off will occur on the tenth Trading Day from, and including, the effective date of the spin-off;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.cash distributions by us to all or substantially all holders of our common shares in excess of $0.21, or the Initial Distribution Threshold, during any fiscal quarter other than distributions described in paragraph 6, based on the following formula:

CR<sup>1</sup> = CRO × SPO /(SPO - C)

where,

CRO = the Conversion Rate in effect immediately prior to the record date for such distribution

CR<sup>1</sup> = the Conversion Rate in effect immediately after the record date for such distribution

SPO = the average of the Closing Sale Prices of our common shares for the 10 consecutive Trading Days prior to the business day immediately preceding the record date of such distribution

C = the amount in cash per share we distribute to holders of our common shares that exceeds the Initial Distribution Threshold, in the case of a regular quarterly distribution, or in the case of another distribution the full amount of such distribution; and

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The Initial Distribution Threshold will be adjusted in a manner inversely proportional to adjustments to the Conversion Rate with the exception of adjustments for regular quarterly distributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.distributions of cash or other consideration by us or any of our subsidiaries in respect of a tender offer or exchange offer for our common shares, where such cash and the value of any such other consideration per share of our common shares validly tendered or exchanged exceeds the Closing Sale Price per common share on the first trading day after expiration of the tender or exchange offer, based on the following formula:

CR<sup>1</sup> = CRO × (AC + (SP1 × OS1))/(OSO × SP1)

where,

CRO = the Conversion Rate in effect on the date such tender or exchange offer expires

CR<sup>1</sup> = the Conversion Rate in effect on the day next succeeding the date such tender or exchange offer expires

AC = the aggregate value of all cash and any other consideration (as determined by our board of trustees) paid or payable for shares purchased in such tender or exchange offer

OSO = the number of common shares outstanding immediately prior to the date such tender or exchange offer expires

OS1 = the number of common shares outstanding immediately after the date such tender or exchange offer expires

SP1 = the average of the Closing Sale Prices of our common shares for the 10 consecutive Trading Days commencing on the Trading Day next succeeding the date such tender or exchange offer expires

If, however, the application of the foregoing formula would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we issue rights, options or warrants that are only exercisable upon the occurrence of certain triggering events, then:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will not adjust the Conversion Rate pursuant to the numbered paragraphs above until the earliest of these triggering events occurs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will readjust the Conversion Rate to the extent any of these rights, options or warrants are not exercised before they expire.

We will not adjust the Conversion Rate for any of the transactions described in the numbered paragraphs above if we make provision for each holder of the Series D Preferred Shares to participate in the transaction without conversion as if such holder held a number of shares equal to the Conversion Rate in effect on the "ex date" or effective date, as the case may be, for such transaction multiplied by the number of Series D Preferred Shares held by such holder.

We will not adjust the Conversion Rate pursuant to the numbered paragraphs above unless the adjustment would result in a change of at least 1% in the then effective Conversion Rate. However, we will carry forward any adjustment that we would otherwise have to make and take that adjustment into account in any subsequent adjustment. In addition, at the end of each fiscal year, beginning with the fiscal year ending on December 31, 2007, we will give effect to any adjustments that we have otherwise deferred pursuant to this provision, and those adjustments, if any, will no longer be carried forward and taken into account in any subsequent adjustment. Furthermore, if a Fundamental Change occurs, then we will give effect to all adjustments that we have otherwise deferred pursuant to this provision.

&nbsp;&nbsp;&nbsp;&nbsp;

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In no event will the conversion price be reduced below $0.01, subject to adjustment for share splits and combinations, reclassifications and similar events.

In addition, the Conversion Rate will not be adjusted:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• upon the issuance of any common shares pursuant to any present or future plan providing for the reinvestment of distributions or interest payable on our securities and the investment of additional optional amounts in common shares under any plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• upon the issuance of any common shares or options or rights to purchase common shares pursuant to, or the repurchase by us of common shares pursuant to, any present or future employee, trustee, manager or consultant incentive or benefit plan or program of or assumed by us or any of our subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for a change in the par value of the common shares; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• for accumulated and unpaid distributions.

In the case of the following events, each a Business Combination:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any recapitalization, reclassification or change of our common shares (other than changes resulting from a subdivision or combination);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a consolidation, merger or combination involving us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a sale, conveyance or lease to another entity of all or substantially all of our property and assets (other than to one or more of our subsidiaries); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a statutory share exchange;

in each case, as a result of which our common shareholders are entitled to receive stock, other securities, other property or assets (including cash or any combination thereof) with respect to or in exchange for our common shares, a holder of Series D Preferred Shares will be entitled thereafter to convert such Series D Preferred Shares into the kind and amount of stock, other securities or other property or assets (including cash or any combination thereof) which a holder of Series D Preferred Shares would have owned or been entitled to receive upon such Business Combination. In the event that our common shareholders have the opportunity to elect the form of consideration to be received in such Business Combination, we will make adequate provision whereby the holders of Series D Preferred Shares shall have a reasonable opportunity to determine the form of consideration into which all of the Series D Preferred Shares, treated as a single class, shall be convertible from and after the effective date of such Business Combination. Such determination shall be based on the weighted average of elections made by the holders of Series D Preferred Shares who participate in such determination, shall be subject to any limitations to which all of our common shareholders are subject, such as pro rata reductions applicable to any portion of the consideration payable in such Business Combination, and shall be conducted in such a manner as to be completed by the date which is the earliest of (1) the deadline for elections to be made by our common shareholders, and (2) two Trading Days prior to the anticipated effective date of the Business Combination.

&nbsp;&nbsp;&nbsp;&nbsp;

We will provide notice of the opportunity to determine the form of such consideration, as well as notice of the determination made by the holders of our Series D Preferred Shares (and the weighted average of elections), by posting such notice with DTC and providing a copy of such notice to the transfer agent. If the effective date of a Business Combination is delayed beyond the initially anticipated effective date, holders of Series D Preferred Shares will be given the opportunity to make subsequent similar determinations in regard to such delayed effective date. We may not become a party to any such transaction unless its terms are consistent with the preceding sentence. None of the foregoing provisions shall affect the rights of the holders of Series D Preferred Shares to convert Series D Preferred Shares into our common shares prior to the effective date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

To the extent permitted by law and the continued listing requirements of the NYSE or any other securities exchange on which our common shares may then be listed, we may, from time to time, increase the Conversion Rate by any amount for a period of at least 20 days or any longer period required by law, so long as the increase is irrevocable during that period and our board of trustees determines that the increase is in our best interests. Such a

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determination by our board of trustees shall be conclusive. We will mail a notice of the increase to holders at least 15 days before the day the increase commences. In addition, we may also increase the Conversion Rate as we determine to be advisable in order to avoid taxes to recipients of certain distributions. However, we may not decrease the conversion price below $0.01, subject to adjustment for share splits and combinations, reclassifications and similar events.

To the extent that we adopt any rights plan (i.e., a poison pill) in the future, upon conversion of Series D Preferred Shares, you will receive, in addition to common shares, the rights under such rights agreement or future rights plan, unless the rights have separated from our common shares at the time of conversion, in which case the Conversion Rate will be adjusted at the time of separation as if we had distributed to all holders of our common shares, evidences of indebtedness, other assets or certain rights or warrants as described in paragraph number 4 above, subject to readjustment in the event of the expiration, termination or redemption of such rights.

&nbsp;&nbsp;&nbsp;&nbsp;

In the event of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a taxable distribution to holders of common shares which results in an adjustment to the Conversion Rate; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an increase in the Conversion Rate at our discretion,

the holders of the Series D Preferred Shares may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal income tax as a distribution. This generally would occur, for example, if we adjust the Conversion Rate to compensate holders for cash distributions on our common shares and could also occur if we make other distributions of cash or property to our shareholders.

**No Maturity; Redemption** 

The Series D Preferred Shares have no maturity date. We are not required to redeem or repurchase the Series D Preferred Shares, and, except in certain circumstances described below under "—Special Conversion Right of Series D Preferred Shares upon a Fundamental Change; Company Repurchase Right" or "—Restrictions on Ownership and Transfer," we may not elect to repurchase Series D Preferred Shares. Accordingly, the Series D Preferred Shares will remain outstanding indefinitely unless Series D Preferred Shareholders or we decide to convert them. See "—Conversion Rights," "—Company Conversion Option" and "—Special Conversion Right of Series D Preferred Shares upon a Fundamental Change; Company Repurchase Right."

The Series D Preferred Shares will not be subject to any sinking fund or mandatory redemption provisions.

Subject to applicable law, we may purchase Series D Preferred Shares in the open market, by tender or by private agreement. Any Series D Preferred Shares that we reacquire will be returned to the status of authorized but unissued Series D Preferred Shares, unless determined otherwise by our board of trustees.

**Special Conversion Right of Series D Preferred Shares upon a Fundamental Change; Company Repurchase Right** 

In the event of a Fundamental Change described below, each holder of Series D Preferred Shares will have the special right, or the Fundamental Change Conversion Right, in addition to any other applicable conversion right, to convert some or all of its Series D Preferred Shares on the relevant Fundamental Change Conversion Date into a number of our common shares per $25.00 liquidation preference equal to such liquidation preference plus accrued and unpaid distributions to, but not including, such Fundamental Change Conversion Date divided by 98% of the Market Price of our common shares, or the Fundamental Change Conversion Rate. The Market Price of our common shares will be determined prior to the applicable Fundamental Change Conversion Date. The determination of the Market Price is described below under "—Determination of Market Price". A holder of Series D Preferred Shares

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which has elected to convert such shares otherwise than pursuant to the Fundamental Change Conversion Right will not be able to exercise the Fundamental Change Conversion Right.

If a holder of Series D Preferred Shares elects to convert Series D Preferred Shares as described in the preceding paragraph, we may elect, in lieu of that conversion, to repurchase for cash some or all of such Series D Preferred Shares at a repurchase price equal to 100% of the liquidation preference of the Series D Preferred Shares to be repurchased plus accrued and unpaid distributions to, but not including, such Fundamental Change Conversion Date, or the Fundamental Change Repurchase Price; provided that if the relevant Fundamental Change Conversion Date is on a date that is after a Distribution Record Date and on or prior to the corresponding Distribution Payment Date, we will pay such distributions to the holder of record on the corresponding Distribution Record Date, which may or may not be the same person to whom we will pay the Fundamental Change Repurchase Price, and the Fundamental Change Repurchase Price will be equal to 100% of the liquidation preference of the Series D Preferred Shares to be repurchased.

In the event we elect to repurchase Series D Preferred Shares that would otherwise be converted into common shares on a Fundamental Change Conversion Date, such Series D Preferred Shares shall not be converted into common shares and the holder of such shares will be entitled to receive the Fundamental Change Repurchase Price in cash from us.

Subject to the next sentence, the aggregate number of our common shares issuable in connection with the exercise of the Fundamental Change Conversion Right may not exceed 32,500,000 shares or such other number of common shares as shall then be authorized and available for issuance. If the number of common shares issuable upon such conversion would exceed 32,500,000 shares or such other number of common shares as shall then be authorized and available for issuance, we will have the option to satisfy the remainder of such conversion in common shares that are authorized for issuance in the future. We will use our best efforts to have any such additional number of common shares authorized for issuance within 180 days of the Fundamental Change Conversion Date.

Within 15 days after the occurrence of a Fundamental Change, we will provide to the holder of Series D Preferred Shares and the transfer agent a notice of the occurrence of the Fundamental Change and of the resulting repurchase right. Such notice will state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the events constituting the Fundamental Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date of the Fundamental Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the last date on which the holder of Series D Preferred Shares may exercise the Fundamental Change Conversion Right;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• to the extent applicable, the Fundamental Change Conversion Rate and the Fundamental Change Repurchase Price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether we will elect to repurchase some or all of the Series D Preferred Shares as to which the Fundamental Change Conversion Right may be exercised and, if we will not purchase all such Series D Preferred Shares, indicating the percentage which we may elect to repurchase;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unless we have elected to repurchase all Series D Preferred Shares as to which the Fundamental Change Conversion Right has been exercised, the method of calculating the Market Price of our common shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Fundamental Change Conversion Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the name and address of the paying agent and the conversion agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Conversion Rate and any adjustment to the Conversion Rate that will result from the Fundamental Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that Series D Preferred Shares as to which the Fundamental Change Conversion Right has been exercised may be converted at the applicable Conversion Rate, if otherwise convertible, only if the notice of exercise of the Fundamental Change Conversion Right has been properly withdrawn; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the procedures that the holder of Series D Preferred Shares must follow to exercise the Fundamental Change Conversion Right.

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We will also issue a press release for publication on the Dow Jones & Company, Inc., Business Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of such press release, such other news or press organization as is reasonably calculated to broadly disseminate the relevant information to the public) prior to the opening of business on the first Trading Day following any date on which we provide such notice to the holders of Series D Preferred Shares.

The Fundamental Change Conversion Date will be a date no less than 20 days nor more than 35 days after the date on which we give the above notice. To exercise the Fundamental Change Conversion Right, the holder of Series D Preferred Shares must deliver, on or before the close of business on the Fundamental Change Conversion Date, the Series D Preferred Shares to be converted, duly endorsed for transfer, together with a written conversion notice completed, to our transfer agent. The conversion notice will state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the relevant Fundamental Change Conversion Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of Series D Preferred Shares to be converted; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that the Series D Preferred Shares are to be converted pursuant to the applicable provisions of the Series D Preferred Shares.

If the Series D Preferred Shares are held in global form, the conversion notice must comply with applicable DTC procedures.

Holders of Series D Preferred Shares may withdraw any notice of exercise of its Fundamental Change Conversion Right (in whole or in part) by a written notice of withdrawal delivered to our transfer agent prior to the close of business on the business day prior to the Fundamental Change Conversion Date. The notice of withdrawal shall state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of withdrawn Series D Preferred Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if certificated Series D Preferred Shares have been issued, the certificate numbers of the withdrawn Series D Preferred Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the number of shares, if any, which remains subject to the conversion notice.

If the Series D Preferred Shares are held in global form, the holder of Series D Preferred Shares notice of withdrawal of the holder of Series D Preferred Shares must comply with applicable DTC procedures.

Series D Preferred Shares as to which the Fundamental Change Conversion Right has been properly exercised and for which the conversion notice has not been properly withdrawn will be converted into common shares in accordance with the Fundamental Change Conversion Right on the Fundamental Change Conversion Date, unless we have elected to repurchase such Series D Preferred Shares.

The holder of any Series D Preferred Share which we have elected to repurchase and as to which the conversion election has not been properly withdrawn will receive payment of the Fundamental Change Repurchase Price promptly following the later of the Fundamental Change Conversion Date or the time of book-entry transfer or delivery of the Series D Preferred Shares. If the paying agent holds cash sufficient to pay the Fundamental Change Repurchase Price of the Series D Preferred Shares on the business day following the Fundamental Change Conversion Date, then:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Series D Preferred Shares will cease to be outstanding and distributions will cease to accrue (whether or not book-entry transfer of the Series D Preferred Shares is made or whether or not the Series D Preferred Shares Certificate is delivered to the transfer agent); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all of the other rights of the holders of Series D Preferred Shares will terminate (other than the right to receive the Fundamental Change Repurchase Price upon delivery or transfer of the Series D Preferred Shares).

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A Fundamental Change generally will be deemed to occur upon the occurrence of a "change in control" or a "termination of trading."

A "change in control" generally will be deemed to occur at such time as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any "person" or "group" (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as that term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the total outstanding voting power of all classes of our shares of beneficial interest entitled to vote generally in the election of trustees, or the "voting share";

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• there occurs a sale, transfer, lease, conveyance or other disposition of all or substantially all of our property or assets, or of all or substantially all of the property or assets of us and our subsidiaries on a consolidated basis, to any "person" or "group" (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we consolidate with, or merge with or into, another person or any person consolidates with, or merges with or into, us, unless the persons that "beneficially owned," directly or indirectly, our voting share(s) immediately prior to such consolidation or merger "beneficially owned", directly or indirectly, immediately after such consolidation or merger, shares of the surviving or continuing corporation's voting share representing at least a majority of the total outstanding voting power of all outstanding classes of voting share of the surviving or continuing corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the following persons cease for any reason to constitute a majority of our board of trustees:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• individuals who on the first issue date of the Series D Preferred Shares constituted our board of trustees; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any new trustees whose election to our board of trustees or whose nomination for election by our shareholders was approved by at least a majority of our trustees then still in office either who were trustees on such first issue date of the Series D Preferred Shares or whose election or nomination for election was previously so approved; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we are liquidated or dissolved or holders of our shares of beneficial interest approve any plan or proposal for our liquidation or dissolution.

Notwithstanding the foregoing, a transaction described in the second and third bullet points above will not constitute a change in control if at least 90% of the consideration (other than cash payments for fractional shares or pursuant to statutory appraisal rights) in such transaction consists of common shares and any associated rights traded on a U.S. national securities exchange (or which will be so traded when issued or exchanged in connection with such transaction).

A "termination of trading" is deemed to occur if our common shares (or other common shares into which the Series D Preferred Shares are then convertible) are neither listed for trading on a United States national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States.

There is no precise, established definition of the phrase "all or substantially all" under applicable law. Accordingly, there may be uncertainty as to whether a sale, transfer, lease, conveyance or other disposition of less than all of our property or assets, or of less than all of the property or assets of us and our subsidiaries on a consolidated basis, would permit a holder to exercise the Fundamental Change Conversion Right above.

In connection with a Fundamental Change repurchase, we will comply with all U.S. federal and state securities laws in connection with any offer by us to repurchase the Series D Preferred Shares upon a Fundamental Change.

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This Fundamental Change conversion and repurchase feature may make more difficult or discourage a party from taking over our company and removing incumbent management. We are not aware, however, of any specific effort to accumulate our shares of beneficial interest with the intent to obtain control of our company by means of a merger, tender offer, solicitation or otherwise. In addition, the Fundamental Change repurchase feature is not part of a plan by management to adopt a series of anti-takeover provisions. Instead, the Fundamental Change conversion and repurchase feature is a result of negotiations between us and the underwriters.

We could, in the future, enter into certain transactions, including recapitalizations that would not constitute a Fundamental Change but would increase the amount of debt outstanding or otherwise adversely affect the holders of Series D Preferred Shares. The incurrence of significant amounts of additional debt could adversely affect our ability to service our debt, and to permit us to elect to repurchase the Series D Preferred Shares upon a Fundamental Change.

If a Fundamental Change were to occur, we may not have enough funds to pay the Fundamental Change Repurchase Price. In addition, we may in the future incur indebtedness with similar change in control provisions permitting the holders thereof to accelerate or to require us to purchase such indebtedness upon the occurrence of similar events or on some specific dates. Our option to make a repurchase upon a Fundamental Change may be exercised by a third party that effects the payment of the Fundamental Change Repurchase Price in the manner, at the times and otherwise in compliance in all material respects with the requirements hereof and purchases all Series D Preferred Shares as to which the Fundamental Change Conversion Right was properly exercised and not withdrawn and which we elected to repurchase and otherwise complies with the obligations in connection therewith.

**Determination of Market Price**

Market Price means, with respect to any Fundamental Change Conversion Date, the average of the Closing Sale Prices of our common shares for the five consecutive Trading Days ending on the third Trading Day prior to the Fundamental Change Conversion Date, appropriately adjusted to take into account the occurrence, during the period commencing on the first Trading Day of such five Trading Day period and ending on the Fundamental Change Conversion Date of any event requiring an adjustment of the Conversion Rate as described under "—Conversion Rate Adjustments"; provided that in no event shall the Market Price be less than $0.01, subject to adjustment for share splits and combinations, reclassifications and similar events.

Because the Market Price of our common shares is determined prior to the Fundamental Change Conversion Date, you will bear the market risk with respect to the value of our common shares, if any, to be received from the date as of which the Market Price is determined to the date on which you receive such shares. In addition, the Market Price of our common shares is an average price rather than the price as of a single date.

**Transfer Agent and Registrar**

The transfer agent and registrar for our common shares and Series D Preferred Shares is Equiniti Trust Company.

**Power to Classify and Reclassify Shares and Issue Additional Common Shares or Preferred Shares**

Our Declaration of Trust authorizes our board of trustees to classify any unissued preferred shares and to reclassify any previously classified but unissued preferred shares of any series from time to time in one or more series. Prior to issuance of shares of each class or series, the board of trustees is required by the Maryland REIT law and our Declaration of Trust to set for each such class or series, subject to the provisions of our Declaration of Trust regarding the restrictions on transfer of shares of beneficial interest, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such class or series. As a result, our board of trustees could authorize the issuance of preferred shares that have priority over the common shares with respect to dividends and rights upon liquidation

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and with other terms and conditions that could have the effect of delaying, deterring or preventing a transaction or a change in control that might involve a premium price for holders of common shares or otherwise might be in their best interest.

To permit us increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise, our Declaration of Trust allows us to issue additional common shares or preferred shares and to classify or reclassify unissued preferred shares and thereafter to issue the classified or reclassified shares without shareholder approval, unless shareholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Although we have no present intention of doing so, we could issue a class or series of shares that could delay, deter or prevent a transaction or a change in control that might involve a premium price for holders of common shares or might otherwise be in their best interests.

Holders of our common shares do not have preemptive rights, which means they have no right to acquire any additional shares that we may issue at a subsequent date.

**Certain Provisions of Maryland Law and Our Declaration of Trust and Bylaws**

The following description of certain provisions of Maryland law and of our Declaration of Trust and Bylaws is only a summary. For a complete description, we refer you to applicable Maryland law, our Declaration of Trust and Bylaws.

***Number of Trustees; Vacancies***

***Removal of Trustees***

Our Declaration of Trust provides that a trustee may be removed at any time with or without cause by the vote or consent of holders of shares representing two-thirds of the total votes entitled to be cast by shares then outstanding and entitled to vote thereon.

***Business Combinations***

Our board of trustees has approved a resolution that exempts us from the provisions of the Maryland business combination statute described below but may opt to make these provisions applicable to us in the future. If applicable, the Maryland Business Combination Statute would prohibit "business combinations" between us and an interested shareholder or an affiliate of an interested shareholder for five years after the most recent date on which the interested shareholder becomes an interested shareholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Maryland law defines an interested shareholder as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any person who beneficially owns 10% or more of the voting power of our shares; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding voting shares.

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A person is not an interested shareholder under Maryland law if our board of trustees approves in advance the transaction by which the person otherwise would have become an interested shareholder. However, in approving a transaction, our board of trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by our board of trustees.

After the five-year prohibition, any business combination between us and an interested shareholder generally must be recommended by our board of trustees and approved by the affirmative vote of at least:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 80% of the votes entitled to be cast by holders of our then outstanding shares of beneficial interest; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• two-thirds of the votes entitled to be cast by holders of our voting shares other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or shares held by an affiliate or associate of the interested shareholder.

These super-majority vote requirements do not apply if our common shareholders receive a minimum price, as described under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested shareholder for its shares.

The statute permits various exemptions from its provisions, including business combinations that are approved by our board of trustees before the time that the interested shareholder becomes an interested shareholder.

***Control Share Acquisitions***

Our Bylaws contain a provision exempting any and all acquisitions of our common shares from the control shares provisions of Maryland law. However, our board of trustees may opt to make these provisions applicable to us at any time by amending or repealing this provision in the future, and may do so on a retroactive basis. If applicable, these provisions of Maryland law providef that "control shares" of a Maryland REIT acquired in a "control share acquisition" have no voting rights unless approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror or by officers or trustees who are our employees are excluded from the shares entitled to vote on the matter. "Control shares" are issued and outstanding voting shares that, if aggregated with all other shares previously acquired by the acquiring person, or in respect of which the acquiring person is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiring person to exercise or direct the exercise of the voting power in electing trustees within one of the following ranges of voting power:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one-tenth or more but less than one-third;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one-third or more but less than a majority; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A "control share acquisition" means the acquisition of control shares subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel our board of trustees to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the special meeting. If no request for a special meeting is made, we may present the question at any shareholders' meeting.

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If voting rights are not approved at the shareholders' meeting or if the acquiring person does not deliver the statement required by Maryland law, then, subject to certain conditions and limitations, we may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. Fair value is determined without regard to the absence of voting rights for the control shares and as of the date of the last control share acquisition or of any meeting of shareholders at which the voting rights of the shares were considered and not approved. If voting rights for control shares are approved at a shareholders' meeting, the acquiror may then vote a majority of the shares entitled to vote, and all other shareholders may exercise appraisal rights. The fair value of the shares for purposes of these appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if we are a party to the transaction, nor does it apply to acquisitions approved by or exempted by our Declaration of Trust or Bylaws.

***Merger, Amendment of Declaration of Trust***

Under Maryland REIT law, a Maryland REIT generally cannot dissolve, amend its declaration of trust or merge with another entity unless recommended by the board of trustees and approved by the affirmative vote of shareholders holding at least two-thirds of the shares entitled to vote on the matter unless a lesser percentage, but not less than a majority of all the votes entitled to be cast on the matter, is set forth in the REIT's declaration of trust. Our Declaration of Trust provides that a merger, consolidation, share exchange or the transfer of all or substantially all of the Company must be approved by the affirmative vote of the holders of not less than a majority of all the shares then outstanding and entitled to vote thereon. Additionally, our Declaration of Trust may be amended by the affirmative vote of the holders of shares representing a majority of the total number of votes authorized to be cast in respect of shares then outstanding and entitled to be cast on the matter. Under the Maryland REIT law and our Declaration of Trust, our trustees are permitted, after written notice to the shareholders, to amend the Declaration of Trust from time to time to qualify as a REIT under the Internal Revenue Code or the Maryland REIT law without the affirmative vote or written consent of the shareholders.

***Limitation of Liability and Indemnification***

Our Declaration of Trust limits the liability of our trustees and officers for money damages, except for liability resulting from his or her own willful malfeasance, bad faith, gross negligence or reckless disregard of duty.

Our Declaration of Trust authorizes us, to the maximum extent permitted by Maryland law, to indemnify, and to pay or reimburse reasonable expenses to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any present or former trustee or officer who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any individual who, while a trustee or officer of our Company and at our request, serves or has served as a trustee, officer or partner of another corporation, REIT, limited liability Company, partnership, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.

The indemnification covers any claim or liability against the person.

Maryland law will permit us to indemnify our present and former trustees and officers against liabilities and reasonable expenses actually incurred by them in any proceeding unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the act or omission of the trustee or officer was material to the matter giving rise to the proceeding; and was committed in bad faith;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• was the result of active and deliberate dishonesty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the trustee or officer actually received an improper personal benefit in money, property or services; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in a criminal proceeding, the trustee or officer had reasonable cause to believe that the act or omission was unlawful.

In addition, Maryland law prohibits us from indemnifying our present and former trustees and officers for an adverse judgment in an action by us or in a derivative action or if the trustee or officer was adjudged to be liable for an improper personal benefit. Our Bylaws and Maryland law require us, as a condition to advancing expenses in certain circumstances, to obtain:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a written affirmation by the trustee or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a written undertaking to repay the amount reimbursed if the standard of conduct is not met.

***Disputes by Shareholders***

Our Bylaws provide that actions brought against us or any trustee, officer, manager, agent or employee of us, by a shareholder, including derivative and class actions, shall, on the demand of any party to such dispute, be resolved through binding arbitration in accordance with the procedures set forth in our Bylaws.

***Term and Termination***

Our Declaration of Trust provides for us to have a perpetual existence. Pursuant to our Declaration of Trust, and subject to the provisions of any of our classes or series of shares of beneficial interest then outstanding, our shareholders, at any meeting thereof, by the affirmative vote of holders of shares representing two-thirds of the total number of shares then outstanding and entitled to be cast on the matter, may approve the dissolution or termination of the Company.

***Meetings of Shareholders***

Under our Bylaws, annual meetings of shareholders are to be held each year at a date and time as determined by our board of trustees. Special meetings of shareholders may be called only by a majority of the trustees then in office, by the Chairman of our board of trustees, our President or our Chief Executive Officer, and under some circumstances, upon the request of our shareholders. Only matters set forth in the notice of the special meeting may be considered and acted upon at such a meeting. Our Bylaws provide that any action required or permitted to be taken at a meeting of shareholders may be taken without a meeting by unanimous written consent, if that consent sets forth that action and is signed by each shareholder entitled to vote on the matter.

***Advance Notice of Trustee Nominations and New Business***

Our Bylaws provide that, with respect to an annual meeting of shareholders, nominations of persons for election to our board of trustees and the proposal of business to be considered by shareholders at the annual meeting may be made only:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pursuant to our notice of the meeting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• by our board of trustees; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• by a shareholder who was a shareholder of record both at the time of the provision of notice and at the time of the meeting who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our Bylaws.

With respect to special meetings of shareholders, only the business specified in our notice of meeting may be brought before the meeting of shareholders and nominations of persons for election to our board of trustees may be made only:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• by our board of trustees; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provided that our board of trustees has determined that trustees shall be elected at such meeting, by a shareholder who was a shareholder of record both at the time of the provision of notice and at the time of the meeting who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in our Bylaws.

The purpose of requiring shareholders to give advance notice of nominations and other proposals is to afford our board of trustees the opportunity to consider the qualifications of the proposed nominees or the advisability of the other proposals and, to the extent considered necessary by our board of trustees, to inform shareholders and make recommendations regarding the nominations or other proposals. The advance notice procedures also permit a more orderly procedure for conducting our shareholder meetings. Although our Bylaws do not give our board of trustees the power to disapprove timely shareholder nominations and proposals, they may have the effect of precluding a contest for the election of trustees or proposals for other action if the proper procedures are not followed, and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of trustees to our board of trustees or to approve its own proposal.

***Possible Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Declaration of Trust and Bylaws***

The business combination provisions of Maryland law (if our board of trustees opts to make them applicable to us), the control share acquisition provisions of Maryland law (if the applicable provision in our Bylaws is rescinded), the limitations on removal of trustees, the restrictions on the acquisition of our shares of beneficial interest, the power to issue additional common shares or preferred shares and the advance notice provisions of our Bylaws could have the effect of delaying, deterring or preventing a transaction or a change in control that might involve a premium price for holders of the common shares or might otherwise be in their best interest. The "unsolicited takeovers" provisions of Maryland law would permit our board of trustees, without shareholder approval and regardless of what is provided in our Declaration of Trust or Bylaws, to implement takeover defenses that we may not yet have. However, we have elected that the provisions that would allow our trustees unilaterally to classify our board will not be available unless approved by a vote of a majority of our outstanding shares entitled to vote.

**Restrictions on Ownership** 

In order to qualify as a REIT under the Internal Revenue Code, our shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, no more than 50% of the value of our outstanding shares (after taking into account options to acquire shares) may be owned, directly, indirectly, or through attribution, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities).

Because our board of trustees believes that it is essential for us to qualify as a REIT, our Declaration of Trust, subject to certain exceptions, contains restrictions on the number of our shares of beneficial interest that a person may own. Our Declaration of Trust provides that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no person, other than an excepted holder (as defined in the Declaration of Trust), may own directly, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, more than 9.8%, in value or number of shares, whichever is more restrictive, of our issued and outstanding common or preferred shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no excepted holder (as defined in the Declaration of Trust), may own directly, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, shares in excess of an excepted holder limit established by the board of trustees;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no person shall beneficially or constructively own our shares of beneficial interest that would result in us being "closely held" under Section 856(h) of the Internal Revenue Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no person shall beneficially own shares that would result in our otherwise failing to qualify as a REIT (including but not limited to ownership that would result in the our owning (directly or constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Internal Revenue Code if the income derived by us (either directly or indirectly through one or more partnerships or limited liability companies) from such tenant would cause us to fail to satisfy any of the gross income requirements of Section 856(c) of the Internal Revenue Code); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no person shall transfer our shares of beneficial interest if such transfer would result in our shares of beneficial interest being owned by fewer than 100 persons.

Our board of trustees may waive the 9.8% ownership limit for common and preferred shares for a shareholder that is not an individual if such shareholder provides information and makes representations to the board that are satisfactory to the board, in its sole discretion, to establish that such person's ownership in excess of the 9.8% ownership limit for common and preferred shares, would not jeopardize our qualification as a REIT.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of our shares that will or may violate any of the foregoing restrictions on transferability and ownership will be required to give written notice immediately to us and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. Any person who would have owned excess shares in a proposed or attempted transaction shall give at least (15) days prior written notice to us and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. If any transfer of shares or any other event would otherwise result in any person violating the ownership limits described above, then our Declaration of Trust provides that the Board of Trustees shall be authorized to deem the shares automatically transferred to a charitable trust (as defined in the Declaration of Trust) or void *ab initio*, in which case the intended transferee shall acquire no rights in the excess shares. The Board of Trustees or a committee thereof may take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Trust to redeem Shares, refusing to give effect to such Transfer on the books of the Trust or the Trust's transfer agent or instituting proceedings to enjoin such Transfer or other event. The foregoing restrictions on transferability and ownership will not apply if our board of trustees determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

All certificates representing our shares will bear a legend referring to the restrictions described above.

Every owner of more than 5% (or such lower percentage as required by the Internal Revenue Code or the regulations promulgated thereunder) of all classes or series of our shares, including common shares, will be required to give written notice to us within 30 days after the end of each taxable year and within 3 days after a request from us stating the name and address of such owner, the number of Shares Beneficially Owned, and a description of the manner in which such Shares are held. Each such owner shall provide to us such additional information as we may request in order to determine the effect, if any, of such beneficial ownership on our status as a REIT and to ensure compliance with the ownership limitations. In addition, each shareholder shall upon demand be required to provide to us such information as we may request, in good faith, in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance.

These ownership limitations could delay, deter or prevent a transaction or a change in control that might involve a premium price for the common shares or might otherwise be in the best interest of our shareholders.

## Exhibit 10.16

**Exhibit 10.16**

**EQUITY COMMONWEALTH**

**<u>Schedule of Annual Independent Trustee Fees and Other Compensation</u>**

The independent trustees of Equity Commonwealth are entitled to the following annual compensation:

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| | |
|:---|:---|
| **Annual Retainer - Cash** | $60000 |
| **Annual Retainer - Equity Awards** | Each independent trustee will receive, at the trustee's option, restricted common shares of EQC or time-based LTIP units in EQC Operating Trust, with a value of $100,000 on an annual basis, which shares or units will vest on the one-year anniversary of the grant date. |
| **Lead Trustee Annual Retainer** | $30000 |
| **Audit Committee Chair Annual Retainer** | $20000 |
| **Compensation Committee Chair Annual Retainer** | $15000 |
| **Nominating and Corporate Governance Committee Chair Annual Retainer** | $15000 |
| **Audit Committee Member** | $8000 |
| **Compensation Committee Member** | $6000 |
| **Governance Committee Member** | $6000 |
| **Reimbursements** | Each independent trustee will be entitled to reimbursement for travel expenses related to a Board or Committee meeting. |

---

**<u>Annual Compensation for Chairman of the Board of Trustees</u>**

The Chairman of the Board is entitled to the following annual compensation:

---

| | |
|:---|:---|
| **Annual Retainer - LTIC Awards** | The Chairman of the Board will receive equity awards pursuant to the Company's Long-Term Incentive Compensation Plan (the "LTIC Awards"). 33% of the target LTIC Awards will consist of, at the Chairman's option, restricted common shares of EQC or time-based LTIP units in EQC Operating Trust, subject to time-based vesting restrictions. 67% of the target LTIC Awards will consist of, at the Chairman's option, restricted stock units of EQC ("RSUs") or performance-based LTIP units in EQC Operating Trust ("PB LTIP Units"), subject to time-based and performance-based vesting restrictions. The LTIC Awards issued to the Chairman of the Board will have a target value of $2,000,000. The number of RSUs or PB LTIP Units that will be earned by the Chairman of the Board, if any, will not be determined until the end of a three-year performance period, and therefore the actual value of any RSUs or PB LTIP Units could be higher or lower than the foregoing target level, depending on the Company's achievement of the applicable performance criteria. |
| **Reimbursements** | The Chairman of the Board will be entitled to reimbursement for travel expenses related to company business and Board or Committee meetings. |

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## Exhibit 21.1

**Exhibit 21.1**

**EQUITY COMMONWEALTH**

**SUBSIDIARIES OF THE REGISTRANT**

---

| | |
|:---|:---|
| **Name** | **State of Formation, Organization or Incorporation** |
| EQC 600 West Chicago Property LLC | Delaware |
| EQC Capitol Tower Property LLC | Delaware |
| EQC Herald Square Property LLC | Delaware |
| EQC Operating Trust | Maryland |
| EQC Securities LLC | Delaware |
| EQC TRS, Inc. | Delaware |
| Equity Commonwealth LLC | Delaware |
| Equity Commonwealth Management LLC | Delaware |

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## Exhibit 23.1

**Exhibit 23.1**

**Consent of Independent Registered Public Accounting Firm**

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-232668) pertaining to the Equity Commonwealth 2015 Omnibus Incentive Plan of our reports dated February 9, 2023, with respect to the consolidated financial statements and schedule of Equity Commonwealth, and the effectiveness of internal control over financial reporting of Equity Commonwealth, included in this Annual Report (Form 10-K) for the year ended December 31, 2022.

/s/ Ernst & Young LLP

Chicago, Illinois

February 9, 2023

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)**

I, David A. Helfand, certify that:

1.&nbsp;&nbsp;&nbsp;&nbsp; I have reviewed this Annual Report on Form 10-K of Equity Commonwealth;

2.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.&nbsp;&nbsp;&nbsp;&nbsp; The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.&nbsp;&nbsp;&nbsp;&nbsp; The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| Date: | February 9, 2023 | /s/ David A. Helfand |
| | | David A. Helfand |
| | | President and Chief Executive Officer |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)**

I, William H. Griffiths, certify that:

1.&nbsp;&nbsp;&nbsp;&nbsp; I have reviewed this Annual Report on Form 10-K of Equity Commonwealth;

2.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.&nbsp;&nbsp;&nbsp;&nbsp; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.&nbsp;&nbsp;&nbsp;&nbsp; The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.&nbsp;&nbsp;&nbsp;&nbsp; The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

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| | | |
|:---|:---|:---|
| Date: | February 9, 2023 | /s/ William H. Griffiths |
| | | William H. Griffiths |
| | | Executive Vice President, Chief |
| | | Financial Officer and Treasurer |

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## Exhibit 32.1

**Exhibit 32.1**

<u>Certification Pursuant to 18 U.S.C. Sec. 1350<br></u>

In connection with the filing by Equity Commonwealth (the "Company") of the Annual Report on Form 10-K for the year ended December 31, 2022 (the "Report"), each of the undersigned hereby certifies, to the best of his knowledge:

1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| /s/ David A. Helfand | /s/ William H. Griffiths |
| David A. Helfand | William H. Griffiths |
| President and Chief Executive Officer | Executive Vice President, Chief Financial Officer |
| | and Treasurer |
| Date: February 9, 2023 | |

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