UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF

1934

 

Date of Report (Date of earliest event reported): August 8, 2016

 

TIER REIT, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Maryland		001-37512		68-0509956
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

5950 Sherry Lane, Suite 700, Dallas, Texas

75225

(Address of principal executive offices)

(Zip Code)

 

(972) 483-2400

(Registrant’s telephone number, including area code)

 

None

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02                                 Results of Operations and Financial Condition.

 

On August 8, 2016, TIER REIT, Inc. released supplemental information regarding its financial results and operations for the quarter and the period ended June 30, 2016, by posting to its website its Second Quarter 2016 Supplemental Operating and Financial Data and issued a press release announcing its financial results for the second quarter of 2016. The supplemental information and press release are included as Exhibit 99.1 and Exhibit 99.2 to this report and are incorporated herein by reference.

The information included in this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, nor shall the information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01.                              Financial Statements and Exhibits.

 

(d)                                 Exhibits.

99.1    Second Quarter 2016 Supplemental Operating and Financial Data     

99.2    Press Release, dated August 8, 2016

                        

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SIGNATURE

 

Pursuant to the requirements 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.

		TIER REIT, INC.
Dated:  August 8, 2016	By:	/s/ James E. Sharp
		James E. Sharp
		Chief Accounting Officer and Executive Vice President

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Exhibit Index

 

Exhibit No.		Description
99.1		Second Quarter 2016 Supplemental Operating and Financial Data
99.2		Press Release, dated August 8, 2016

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Exhibit 99.1

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Supplemental Operating and Financial Data

For the Quarter Ended June 30, 2016

About the Company

    

TIER REIT, Inc. is a self-managed, Dallas-based real estate investment trust focused on delivering outsized stockholder return through stock price appreciation and dividend growth while offering unparalleled tenant service. TIER REIT’s investment strategy is to acquire, develop, and operate a portfolio of best-in-class properties in select U.S. markets that consistently lead the nation in both population and office-using employment growth. Within these markets, we target TIER1 submarkets, which are primarily urban and amenity-rich locations.

As of June 30, 2016, we owned interests in 32 operating office properties, two non-operating properties, and one development property located in 13 markets throughout the United States with a total of 11.0 million rentable square feet.

Board of Directors		Executive Officers and Senior Management
Richard I. Gilchrist		Scott W. Fordham
Chairman of the Board and Independent Director		Chief Executive Officer, President, and Director
Scott W. Fordham		Dallas E. Lucas
Chief Executive Officer, President, and Director		Chief Financial Officer and Treasurer
Charles G. Dannis		William J. Reister
Independent Director		Chief Investment Officer and Executive Vice President
Thomas M. Herzog		Telisa Webb Schelin
Independent Director		Chief Legal Officer, Executive Vice President, and Secretary
Dennis J. Martin		James E. Sharp
Independent Director		Chief Accounting Officer and Executive Vice President
G. Ronald Witten		R. Heath Johnson
Independent Director		Managing Director - Asset Management
		Dean R. Hook
		Senior Vice President - Information Systems
		Anubhav Raj
		Senior Vice President - Capital Markets

Company Information
Corporate Headquarters		Trading Information		Investor inquiries should be directed to:
5950 Sherry Lane, Suite 700		Trading Symbol: TIER		Scott McLaughlin
Dallas, Texas 75225		New York Stock Exchange		Senior Vice President - Investor Relations
				at 972.483.2400 or
				ir@tierreit.com
Website		Research Coverage
www.tierreit.com		J.P. Morgan Securities		Janney Montgomery Scott LLC
		Anthony Paolone		Robert Stevenson
		212.622.6682		640.840.3217

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Supplemental Operating and Financial Data

For the Quarter Ended June 30, 2016

Table of Contents

Overview and Highlights
Overview	1
Financial Highlights	2-3
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Calculation of FFO and Additional Information	6
Calculation of EBITDA	7
Non Wholly-Owned Entities Financial Summary	8
Same Store Analysis	9
Schedule of Properties Owned	10
Portfolio Analysis	11
Components of Net Asset Value	12
Selected Non-Stabilized Properties	13
Significant Tenants	14
Industry Diversification	15
Leasing
Leasing Activity	16-17
Lease Expirations	18-19
Occupancy Trends	20
Capital Expenditures
Leasing Cost Summary	21
Leasing Cost Trend Analysis	22
Development, Leasing, and Capital Expenditures Summary	23
Other Information
Potential Future Development Sites	24
Summary of Development Activity	25
Properties Under Development	26
Acquisition and Disposition Activities	27
Summary of Financing	28
Principal Payments by Year	29
Definitions of Non-GAAP Financial Measures	30-31

Forward-Looking Statements

This supplemental operating and financial data report contains forward-looking statements within the meaning of the federal securities laws relating to the business and financial outlook of TIER REIT, Inc. that are based on current expectations, estimates, forecasts, and projections and are not guarantees of future performance. Statements contained herein may be impacted by a number of risks and uncertainties, including the company’s ability to rent space on favorable terms, its ability to address debt maturities and fund its capital requirements, its intentions to sell certain properties, its intentions with respect to development activity, the value of its assets, its anticipated capital expenditures, and other matters. Words such as “may,” "will," “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “objectives,” “strategies,” “goals,” and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this document, as well as other factors described in the Risk Factors section of TIER REIT, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015. Forward-looking statements in this document speak only as of the date on which such statements were made, and we undertake no obligation to update any such statements that may become untrue because of subsequent events.

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Overview

For the Quarter Ended June 30, 2016

Highlights and Financial Results

•	Net loss and net loss attributable to common stockholders for the second quarter of 2016 were each $9.4 million, or $0.20 per diluted share, as compared to $1.2 million, or $0.02 per diluted share, for the second quarter of 2015, an increase in loss of $8.2 million, or $0.18 per diluted share.

•	FFO attributable to common stockholders for the second quarter of 2016 was $18.1 million, or $0.38 per diluted share, as compared to $(18.1) million, or $(0.36) per diluted share, for the second quarter of 2015, an increase of $36.2 million, or $0.74 per diluted share.

•	FFO attributable to common stockholders, excluding certain items, for the second quarter of 2016 was $20.7 million, or $0.43 per diluted share, as compared to $17.2 million, or $0.34 per diluted share, for the second quarter of 2015, an increase of $3.5 million, or $0.09 per diluted share.

•	Same Store GAAP NOI for the second quarter of 2016 was $30.86 million, as compared to $30.92 million for the second quarter of 2015, a decrease of $0.06 million, or 0.2%.

•	Same Store Cash NOI for the second quarter of 2016 was $28.2 million, as compared to $26.5 million for the second quarter of 2015, an increase of $1.7 million, or 6.5%.

Property Results

•	Occupancy at June 30, 2016, was 90.4%, an increase of 150 basis points from March 31, 2016. The sale of FOUR40 increased our occupancy by 170 basis points, which was partially offset by a decrease in our remaining portfolio of 20 basis points.

•	193,000 square feet leased - 61,000 square feet of renewals, 35,000 square feet of expansion space, and 97,000 square feet of new leasing

Real Estate Activities

•	FOUR40, located in Chicago, Illinois, was sold for a contract sales price of $191.0 million and the Company is entitled to an additional payment of up to $12.5 million subject to future performance of the property.

Capital Market Activities

•	We paid off (without penalty) the $23.2 million loan secured by our Plaza at MetroCenter property that was scheduled to mature in July 2016. This loan had an effective interest rate of 6.14%.

•	We paid off $108.0 million on our revolving line of credit with proceeds from the sale of FOUR40. As of June 30, 2016, additional borrowings of $126.4 million were available under the credit facility.

•	We authorized distribution of $0.18 per share of common stock for the second quarter of 2016, which was paid on July 8, 2016.

•	Subsequent to quarter end, we paid off (without penalty) the $62.8 million loan secured by our Three Parkway property that was scheduled to mature in November 2016. This loan had an effective interest rate of 5.55%.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 1

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Financial Highlights
(in thousands, except per share data, effective rent data, percentages, and number of properties)
	30-Jun-16				30-Jun-15					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Portfolio Summary:
(at our ownership %, unless otherwise noted)
Total operating office properties	32				31					32				33				34				35				31
Rentable square feet (100%) (operating properties)	10,494				11,946					10,494				11,535				11,971				12,615				11,946
Rentable square feet (own %) (operating properties)	9,378				10,418					9,378				10,419				10,855				10,918				10,418
Occupancy %	90.4		%		89.0		%			90.4		%		88.9		%		89.7		%		89.4		%		89.0		%
Executed % SF leased	90.7		%		89.5		%			90.7		%		89.7		%		89.8		%		90.2		%		89.5		%
Economic % SF leased	86.9		%		82.3		%			86.9		%		84.6		%		84.1		%		83.6		%		82.3		%
Average effective rent/square foot	$	26.42			$	24.94				$	26.42			$	26.62			$	25.69			$	25.50			$	24.94
	Six Months Ended									Three Months Ended
	30-Jun-16				30-Jun-15					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Financial Results:
Revenue	$	132,745			$	145,857				$	64,267			$	68,478			$	67,085			$	69,423			$	70,038
Property related expenses	(40,290		)		(46,056		)			(19,805		)		(20,485		)		(21,812		)		(21,290		)		(20,877		)
Real estate taxes	(20,493		)		(21,842		)			(9,429		)		(11,064		)		(8,622		)		(9,670		)		(10,198		)
Property management fees	(510		)		(4,437		)			(226		)		(284		)		(249		)		(342		)		(2,105		)
NOI	$	71,452			$	73,522				$	34,807			$	36,645			$	36,402			$	38,121			$	36,858
Base rent	$	92,486			$	108,259				$	45,579			$	46,907			$	47,494			$	47,351			$	51,336
Free rent	$	(5,392	)		$	(10,538	)			$	(2,133	)		$	(3,259	)		$	(3,557	)		$	(3,718	)		$	(5,365	)
Net loss attributable to common stockholders	$	(22,059	)		$	(7,043	)			$	(9,352	)		$	(12,707	)		$	(11,216	)		$	(13,849	)		$	(1,151	)
Diluted loss per common share (1)	$	(0.47	)		$	(0.14	)			$	(0.20	)		$	(0.27	)		$	(0.24	)		$	(0.28	)		$	(0.02	)
FFO attributable to common stockholders	$	38,376			$	(1,147	)			$	18,144			$	20,232			$	17,363			$	18,883			$	(18,051	)
Diluted FFO per common share (1)	$	0.80			$	(0.02	)			$	0.38			$	0.42			$	0.37			$	0.39			$	(0.36	)
FFO attributable to common stockholders, excluding certain items	$	42,041			$	34,625				$	20,700			$	21,341			$	18,017			$	20,737			$	17,181
Diluted FFO, excluding certain items, per common share	$	0.88			$	0.69				$	0.43			$	0.45			$	0.38			$	0.42			$	0.34
Normalized EBITDA	$	66,971			$	70,511				$	32,957			$	34,014			$	34,789			$	35,752			$	33,439
Weighted average common shares outstanding - basic	47,398				49,892					47,406				47,390				47,244				48,843				49,893
Weighted average common shares outstanding - diluted	47,771				50,076					47,826				47,715				47,436				49,034				50,085
Selected Additional Trend Information:
Renewal % based on square feet	60		%		81		%			45		%		66		%		79		%		69		%		83		%
Distributions declared on common shares	$	17,188			$	9,011				$	8,594			$	8,594			$	8,576			$	8,539			$	9,011
Annualized distribution yield (2)	4.7		%		N/A					4.7		%		5.4		%		4.9		%		4.9		%		N/A

(1) In periods of net loss from continuing operations or negative FFO attributable to common stockholders there are no dilutive securities and diluted earnings (loss) per common share or diluted FFO per common share is calculated using weighted average common shares outstanding - basic as the denominator.

(2) Based on the closing price of our common stock as of the last day of the associated period. Prior to the July 23, 2015, listing of our common stock on the New York Stock Exchange, no stock price is available.

Occupancy % represents the total square footage subject to commenced leases as of the reporting date as a percentage of the total rentable square feet (at our ownership interest).

Executed % SF leased represents the total square footage subject to commenced leases plus the square footage for currently vacant space that is subject to executed leases that have not commenced as of the reporting date as a percentage of the total rentable square feet (at our ownership interest).

Economic % SF leased represents the total square footage subject to commenced leases as of the reporting date adjusted to exclude the square footage associated with leases receiving rental abatements as a percentage of the total rentable square feet (at our ownership interest).

Average effective rent represents 12 times the sum of the monthly contractual amounts for base rent and the pro rata budgeted operating expense reimbursements, as of period end, related to leases in place as of period end, as reduced for free rent and excluding any scheduled future rent increases, as adjusted for our ownership interest.

This section includes non-GAAP financial measures, which are accompanied by what we consider the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Quantitative reconciliations of the differences between the non-GAAP financial measures presented and the most directly comparable GAAP financial measures are shown on pages 6-7. A description of the non-GAAP financial measures we present and a statement of the reasons why management believes the non-GAAP measures provide useful information to investors about the Company’s financial condition and results of operations can be found on pages 30-31.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 2

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Financial Highlights (continued)
(in thousands, except percentages and ratios)
	30-Jun-16				30-Jun-15					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Selected Balance Sheet Items:
Total book value of real estate	$	1,320,775			$	1,488,373				$	1,320,775			$	1,503,088			$	1,573,248			$	1,590,422			$	1,488,373
Cash and cash equivalents	$	78,599			$	153,158				$	78,599			$	5,532			$	12,248			$	7,769			$	153,158
Unconsolidated cash and cash equivalents (at ownership %)	$	4,874			$	3,368				$	4,874			$	4,175			$	4,086			$	6,293			$	3,368
Restricted cash	$	10,778			$	29,620				$	10,778			$	12,756			$	10,712			$	16,615			$	29,620
Total assets	$	1,640,666			$	1,919,743				$	1,640,666			$	1,787,304			$	1,873,745			$	1,906,755			$	1,919,743
Mortgage debt	$	334,605			$	505,224				$	334,605			$	358,717			$	415,425			$	463,629			$	505,224
Revolving credit facility and term loans	$	575,000			$	525,000				$	575,000			$	683,000			$	665,000			$	626,000			$	525,000
Unconsolidated debt (at ownership %)	$	98,384			$	72,392				$	98,384			$	82,747			$	80,189			$	90,909			$	72,392
Total liabilities	$	1,015,748			$	1,144,786				$	1,015,748			$	1,142,948			$	1,195,926			$	1,216,646			$	1,144,786
Capitalization:
Shares of common stock outstanding	47,413				49,872					47,413				47,405				47,362				47,242				49,872
OP units and restricted stock units outstanding	150				84					150				141				29				82				84
Shares of restricted stock outstanding	333				192					333				333				282				189				192
	47,896				50,148					47,896				47,879				47,673				47,513				50,148
Closing stock price (1)	$	15.33			N/A					$	15.33			$	13.44			$	14.75			$	14.72			N/A
Market capitalization (1)	$	734,246			$	1,347,978				$	734,246			$	643,494			$	703,177			$	699,391			$	1,347,978
Total debt (2)	$	1,007,989			$	1,102,616				$	1,007,989			$	1,124,464			$	1,160,614			$	1,180,538			$	1,102,616
Net debt (3)	$	924,516			$	946,090				$	924,516			$	1,114,757			$	1,144,280			$	1,166,476			$	946,090
Total capitalization	$	1,742,235			$	2,450,594				$	1,742,235			$	1,767,958			$	1,863,791			$	1,879,929			$	2,450,594
	Six Months Ended									Three Months Ended
	30-Jun-16				30-Jun-15					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Ratios:
NOI margin % (4)	53.8		%		50.4		%			54.2		%		53.5		%		54.3		%		54.9		%		52.6		%
Normalized fixed charge coverage (5)	2.47				1.77					2.48				2.46				2.35				2.35				1.78
Normalized interest coverage (5)	2.74				2.06					2.76				2.72				2.67				2.68				2.05
Net debt/normalized annualized estimated full period EBITDA from properties owned at period end (5)	N/A				N/A					7.57x				8.40x				8.22x				8.02x				7.75x
(1) Market capitalization is equal to outstanding shares (common stock, restricted stock, OP units, and restricted stock units, as if converted) times the closing price of our common stock as of the the last day of the associated period. Prior to the July 23, 2015, listing of our common stock on the New York Stock Exchange, the price used was the estimated stock value of $26.88 per share.
(2) Includes book value of mortgage debt, the revolving credit facility and term loans, and unconsolidated debt (at ownership %).
(3) Total debt less cash and cash equivalents and unconsolidated cash and cash equivalents (at ownership %).
(4) NOI margin % is equal to NOI divided by revenue.
(5) See page 7 for more detailed information.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 3

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Consolidated Balance Sheets
(in thousands, except share and per share data)
					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Assets
	Real estate
	Land				$	159,736			$	176,309			$	179,989			$	184,318			$	167,231
	Land held for development				45,059				45,059				45,059				44,834				6,377
	Buildings and improvements, net				1,108,255				1,276,519				1,348,200				1,361,270				1,314,765
	Real estate under development				7,725				5,201				—				—				—
	Total real estate				1,320,775				1,503,088				1,573,248				1,590,422				1,488,373
	Cash and cash equivalents				78,599				5,532				12,248				7,769				153,158
	Restricted cash				10,778				12,756				10,712				16,615				29,620
	Accounts receivable, net				66,328				78,562				76,228				74,817				71,877
	Prepaid expenses and other assets				5,356				6,025				6,712				22,875				31,890
	Investments in unconsolidated entities				77,606				90,000				88,998				85,377				44,780
	Deferred financing fees, net				2,999				3,310				3,111				3,308				3,344
	Acquired above-market leases, net				1,136				1,258				1,388				1,518				1,619
	Other lease intangibles, net				67,202				76,787				82,160				84,351				74,850
	Other intangible assets, net				9,887				9,986				10,086				10,185				10,284
Total assets					$	1,640,666			$	1,787,304			$	1,864,891			$	1,897,237			$	1,909,795
Liabilities and equity
Liabilities:
	Mortgage debt				$	334,605			$	358,717			$	415,425			$	463,620			$	505,196
	Unsecured term loans				575,000				575,000				525,000				525,000				525,000
	Unsecured revolving credit facility				—				108,000				140,000				101,000				—
	Unamortized debt issuance costs				(8,310		)		(8,744		)		(8,854		)		(9,518		)		(9,948		)
	Unamortized mark to market premium (discount)				—				—				—				9				28
	Total notes payable, net				901,295				1,032,973				1,071,571				1,080,111				1,020,276
	Accounts payable and accrued liabilities				61,721				56,681				71,597				74,196				66,986
	Payables to related parties				—				294				292				302				794
	Acquired below-market leases, net				8,961				10,456				11,934				13,321				12,773
	Distributions payable				8,601				8,600				8,596				8,556				9,028
	Other liabilities				35,170				33,944				23,082				30,642				24,981
Total liabilities					1,015,748				1,142,948				1,187,072				1,207,128				1,134,838
Commitments and contingencies
Series A Convertible Preferred Stock					—				—				2,700				2,700				4,626
Equity:
	Preferred stock				—				—				—				—				—
	Convertible stock				—				—				—				—				—
	Common stock, $.0001 par value per share, 382,499,000 shares authorized				5				5				5				5				5
	Additional paid-in capital				2,604,614				2,603,564				2,600,193				2,598,333				2,645,825
	Cumulative distributions and net loss attributable to common stockholders				(1,961,968		)		(1,944,022		)		(1,922,721		)		(1,902,927		)		(1,878,611		)
	Accumulated other comprehensive income (loss)				(19,262		)		(16,732		)		(3,860		)		(10,148		)		799
	Stockholders’ equity				623,389				642,815				673,617				685,263				768,018
	Noncontrolling interests				1,529				1,541				1,502				2,146				2,313
Total equity					624,918				644,356				675,119				687,409				770,331
Total liabilities and equity					$	1,640,666			$	1,787,304			$	1,864,891			$	1,897,237			$	1,909,795
Common stock, number of shares issued and outstanding					47,412,705				47,404,980				47,362,372				47,241,851				49,871,776

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 4

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	Consolidated Statements of Operations
	(in thousands, except share and per share amounts)
		Six Months Ended									Three Months Ended
		30-Jun-16				30-Jun-15					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Revenue
	Rental income	$	123,879			$	135,557				$	60,588			$	63,291			$	61,736			$	62,794			$	63,953
	Straight-line rent and lease incentive revenue	5,147				7,108					1,897				3,250				3,310				2,547				4,625
	Above- and below-market rent amortization	2,463				2,522					1,115				1,348				1,256				2,064				1,335
	Lease termination fees	1,256				670					667				589				783				2,018				125
	Total revenue	132,745				145,857					64,267				68,478				67,085				69,423				70,038
Expenses
	Property related expenses	40,290				46,056					19,805				20,485				21,812				21,290				20,877
	Real estate taxes	20,493				21,842					9,429				11,064				8,622				9,670				10,198
	Property management fees	510				4,437					226				284				249				342				2,105
	Total property operating expenses	61,293				72,335					29,460				31,833				30,683				31,302				33,180
	Interest expense	22,223				30,232					10,722				11,501				11,668				11,884				14,591
	Interest rate hedge ineffectiveness expense	1,941				—					1,941				—				—				—				—
	Amortization of deferred financing costs	1,523				1,807					784				739				1,048				914				899
	Amortization of mark to market	—				(57		)			—				—				(9		)		(33		)		(30		)
	Total interest expense	25,687				31,982					13,447				12,240				12,707				12,765				15,460
	General and administrative	10,275				10,793					4,765				5,510				5,569				6,378				5,412
	BHT Advisors termination fee and HPT Management buyout fee	—				10,200					—				—				—				101				10,200
	Tender offer and listing costs	—				2,991					—				—				(27		)		2,562				2,488
	Amortization of restricted shares and units	2,049				1,099					1,055				994				3,371				505				564
	Straight-line rent expense adjustment	—				(14		)			—				—				—				(67		)		(7		)
	Acquisition expense	—				815					—				—				21				644				813
	Asset impairment losses	4,826				132					—				4,826				—				—				—
	Real estate depreciation and amortization	62,289				61,103					30,519				31,770				29,910				31,217				31,081
	Depreciation and amortization - non-real estate assets	552				—					278				274				272				229				—
	Total expenses	166,971				191,436					79,524				87,447				82,506				85,636				99,191
	Interest and other income	618				286					344				274				257				267				141
	Loss on early extinguishment of debt	—				(21,448		)			—				—				(24		)		(30		)		(21,412		)
Loss from continuing operations before income taxes, equity
	in operations of investments, and gain (loss) on sale of assets	(33,608		)		(66,741		)			(14,913		)		(18,695		)		(15,188		)		(15,976		)		(50,424		)
	Provision for income taxes	(463		)		(1,262		)			(281		)		(182		)		(209		)		(36		)		(1,338		)
	Equity in operations of investments	1,238				312					823				415				3,829				(159		)		69
Loss from continuing operations before gain (loss) on sale of assets		(32,833		)		(67,691		)			(14,371		)		(18,462		)		(11,568		)		(16,171		)		(51,693		)
Discontinued operations:
	Income (loss) from discontinued operations	—				1,369					—				—				17				21				(121		)
	Gain on sale of discontinued operations	—				14,683					—				—				297				403				6,077
Discontinued operations		—				16,052					—				—				314				424				5,956
Gain (loss) on sale of assets		10,749				44,564					5,010				5,739				(2		)		(85		)		44,564
Net loss		(22,084		)		(7,075		)			(9,361		)		(12,723		)		(11,256		)		(15,832		)		(1,173		)
	Noncontrolling interests - continuing operations	25				60					9				16				41				58				33
	Noncontrolling interests - discontinued operations	—				(28		)			—				—				(1		)		(1		)		(11		)
	Dilution of Series A Convertible Preferred Stock	—				—					—				—				—				1,926				—
Net loss attributable to common stockholders		$	(22,059	)		$	(7,043	)			$	(9,352	)		$	(12,707	)		$	(11,216	)		$	(13,849	)		$	(1,151	)
Basic and diluted weighted average common shares outstanding		47,397,679				49,892,390					47,405,767				47,389,591				47,244,471				48,842,711				49,893,330
Basic and diluted earnings (loss) per common share:
	Continuing operations	$	(0.47	)		$	(0.46	)			$	(0.20	)		$	(0.27	)		$	(0.24	)		$	(0.29	)		$	(0.14	)
	Discontinued operations	—				0.32					—				—				—				0.01				0.12
Basic and diluted loss per common share		$	(0.47	)		$	(0.14	)			$	(0.20	)		$	(0.27	)		$	(0.24	)		$	(0.28	)		$	(0.02	)
Distributions declared per common share		$	0.36			$	0.18				$	0.18			$	0.18			$	0.18			$	0.18			$	0.18
Net income (loss) attributable to common stockholders:
	Continuing operations	$	(22,059	)		$	(23,067	)			$	(9,352	)		$	(12,707	)		$	(11,529	)		$	(14,272	)		$	(7,096	)
	Discontinued operations	—				16,024					—				—				313				423				5,945
Net loss attributable to common stockholders		$	(22,059	)		$	(7,043	)			$	(9,352	)		$	(12,707	)		$	(11,216	)		$	(13,849	)		$	(1,151	)

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 5

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Calculation of FFO and Additional Information
(in thousands, except per share data)
		Six Months Ended									Three Months Ended
		30-Jun-16				30-Jun-15					30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Net loss		$	(22,084	)		$	(7,075	)			$	(9,361	)		$	(12,723	)		$	(11,256	)		$	(15,832	)		$	(1,173	)
Net loss attributable to noncontrolling interests		25				32					9				16				40				57				22
Dilution of Series A Convertible Preferred Stock		—				—					—				—				—				1,926				—
Net loss attributable to common stockholders		(22,059		)		(7,043		)			(9,352		)		(12,707		)		(11,216		)		(13,849		)		(1,151		)
Adjustments (1):
	Real estate depreciation and amortization - consolidated	62,289				61,103					30,519				31,770				29,910				31,217				31,081
	Real estate depreciation and amortization - unconsolidated joint ventures	4,050				2,654					2,005				2,045				2,427				1,904				1,367
	Real estate depreciation and amortization - noncontrolling interest	(6		)		—					—				(6		)		(10		)		(10		)		—
	Impairment of depreciable real estate assets	4,826				132					—				4,826				—				—				—
	Gain on sale of depreciable real estate	(10,749		)		(59,247		)			(5,010		)		(5,739		)		(3,698		)		(318		)		(50,641		)
	Taxes associated with sale of depreciable real estate	64				1,264					—				64				—				(5		)		1,264
	Noncontrolling interests	(39		)		(10		)			(18		)		(21		)		(50		)		(56		)		29
FFO attributable to common stockholders		38,376				(1,147		)			18,144				20,232				17,363				18,883				(18,051		)
Adjustments (1):
	Acquisition expenses	—				1,195					—				—				26				642				1,193
	Severance charges	493				—					—				493				—				—				—
	Tender offer and listing costs	—				2,991					—				—				(27		)		2,562				2,488
	Interest rate hedge ineffectiveness expense (2)	1,941				—					1,941				—				—				—				—
	Loss on early extinguishment of debt	—				21,448					—				—				31				127				21,412
	Default interest (3)	1,233				—					616				617				625				355				—
	BHT Advisors termination fee and HPT Management buyout fee	—				10,200					—				—				—				101				10,200
	Noncontrolling interests	(2		)		(62		)			(1		)		(1		)		(1		)		(7		)		(61		)
	Dilution of Series A Convertible Preferred Stock	—				—					—				—				—				(1,926		)		—
FFO attributable to common stock holders, excluding certain items		$	42,041			$	34,625				$	20,700			$	21,341			$	18,017			$	20,737			$	17,181
Additional Information (1)
Recurring capital expenditures		(20,728		)		(27,314		)			(11,375		)		(9,353		)		(11,113		)		(13,795		)		(14,067		)
Straight-line rent adjustments		(6,508		)		(7,219		)			(2,551		)		(3,957		)		(2,662		)		(2,525		)		(4,369		)
Above- and below-market rent amortization		(2,615		)		(2,722		)			(1,192		)		(1,423		)		(1,330		)		(2,139		)		(1,433		)
Amortization of deferred financing fees and mark to market		1,673				1,834					880				793				1,095				930				898
Amortization of restricted shares and units		2,049				1,099					1,055				994				3,371				505				564
Depreciation and amortization - non-real estate assets		552				—					278				274				272				229				—
Weighted average common shares outstanding - basic		47,398				49,892					47,406				47,390				47,244				48,843				49,893
Weighted average common shares outstanding - diluted		47,771				50,076					47,826				47,715				47,436				49,034				50,085
Diluted FFO per common share (4)		$	0.80			$	(0.02	)			$	0.38			$	0.42			$	0.37			$	0.39			$	(0.36	)
Diluted FFO, excluding certain items, per common share		$	0.88			$	0.69				$	0.43			$	0.45			$	0.38			$	0.42			$	0.34

(1) Includes our pro rata share of consolidated and unconsolidated amounts, including discontinued operations.

(2) Interest rate swaps are adjusted to fair value through other comprehensive income (loss). However, because our interest rate swaps do not have a LIBOR floor while the hedged debt is subject to a LIBOR floor, the portion of the change in fair value of our interest rate swaps attributable to this mismatch is reclassified to interest rate hedge ineffectiveness expense.

(3) We have a non-recourse loan in default which subjects us to incur default interest at a rate that is 500 basis points higher than the stated interest rate. Although there can be no assurance, we anticipate that when this property is sold or when ownership of this property is conveyed to the lender, this default interest will be forgiven.

(4) There are no dilutive securities for purposes of calculating diluted FFO per common share when FFO attributable to common stockholders is negative.

For additional information regarding the non-GAAP measures, see pages 30-31.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 6

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Calculation of EBITDA
(in thousands, except ratios)
		Three Months Ended
		30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
Net loss attributable to common stockholders		$	(9,352	)		$	(12,707	)		$	(11,216	)		$	(13,849	)		$	(1,151	)
Adjustments:
	Noncontrolling interests	(6		)		(8		)		(20		)		(27		)		(1		)
	Dilution of Series A Convertible Preferred Stock	—				—				—				(1,926		)		—
	Interest expense - consolidated (including discontinued operations)	10,722				11,501				11,668				11,884				14,635
	Interest expense - unconsolidated entities	702				641				727				1,437				617
	Interest rate hedge ineffectiveness expense	1,941				—				—				—				—
	Amortization of deferred financing costs - consolidated (including discontinued operations)	784				739				1,048				914				899
	Amortization of deferred financing costs - unconsolidated entities	96				54				56				48				13
	Mark to market - consolidated (including discontinued operations)	—				—				(9		)		(33		)		(30		)
	Mark to market - unconsolidated entities	—				—				—				1				16
	Total interest expense	14,245				12,935				13,490				14,251				16,150
	Tax (benefit) provision - consolidated (including discontinued operations)	281				182				209				36				1,338
	Tax provision - unconsolidated entities	8				2				1				1				1
	Depreciation and amortization - consolidated (including discontinued operations)	30,797				32,044				30,182				31,446				31,081
	Depreciation and amortization - unconsolidated entities	2,005				2,045				2,427				1,904				1,367
	Depreciation and amortization - noncontrolling interests	—				(6		)		(10		)		—				—
	Impairment losses	—				4,826				—				—				—
	Gain on sale of real estate	(5,010		)		(5,739		)		(3,698		)		(318		)		(50,641		)
	Loss on early extinguishment of debt	—				—				31				127				21,412
EBITDA		32,968				33,574				31,396				31,645				19,556
Adjustments:
	Costs incurred in connection with listing activities	—				—				(27		)		2,562				2,488
	Acquisition expenses	—				—				26				642				1,193
	Non-cash write-off (recoveries) of tenant receivables	(11		)		(53		)		557				802				2
	Severance charges	—				493				—				—				—
	Transition-related stock-based compensation expense (1)	—				—				2,837				—				—
	BHT Advisors termination fee and HPT Management buyout fee	—				—				—				101				10,200
Normalized EBITDA		32,957				34,014				34,789				35,752				33,439
Adjustments:
	EBITDA from properties disposed before period end	(2,418		)		(832		)		25				(42		)		(2,933		)
	Full quarter adjustment for acquired properties	—				—				—				656				—
Normalized estimated full period EBITDA from properties owned at period end		$	30,539			$	33,182			$	34,814			$	36,366			$	30,506
Fixed charges
	Interest expense	$	14,245			$	12,935			$	13,490			$	14,251			$	16,150
	Interest rate hedge ineffectiveness expense (2)	(1,941		)		—				—				—				—
	Default interest (3)	(616		)		(617		)		(625		)		(355		)		—
	Interest expense related to participating mortgage (4)	—				—				(53		)		(660		)		—
	Capitalized interest incurred (5)	249				198				199				119				132
	Normalized interest expense	11,937				12,516				13,011				13,355				16,282
	Principal payments (excludes debt payoff)	1,369				1,318				1,776				1,876				2,498
Normalized fixed charges		$	13,306			$	13,834			$	14,787			$	15,231			$	18,780
Normalized interest coverage (6)		2.76				2.72				2.67				2.68				2.05
Normalized fixed charge coverage (6)		2.48				2.46				2.35				2.35				1.78

______________________

(1)	During the fourth quarter of 2015, we incurred a charge from the acceleration of stock grants related to our transition from an arrears-based equity incentive program to a new, forward-looking, multi-year, long-term equity incentive program.

(2) Interest rate swaps are adjusted to fair value through other comprehensive income (loss). However, because our interest rate swaps do not have a LIBOR floor while the hedged debt is subject to a LIBOR floor, the portion of the change in fair value of our interest rate swaps attributable to this mismatch is reclassified to interest rate hedge ineffectiveness expense.

(3) We have a non-recourse loan in default which subjects us to incur default interest at a rate that is 500 basis points higher than the stated interest rate. Although there can be no assurance, we anticipate that when this property is sold or when ownership of this property is conveyed to the lender, this default interest will be forgiven.

(4) Represents the portion of the Paces West B note that was repaid based on achievement of certain investment return thresholds which is included in interest expense- unconsolidated entities above. Paces West was sold in November 2015.

(5) Excludes capitalized interest funded from construction loans.

(6) Normalized interest coverage is equal to normalized EBITDA divided by normalized interest expense. Normalized fixed charge coverage is equal to normalized EBITDA divided by normalized fixed charges.

For additional information regarding the non-GAAP measures, see pages 30-31.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 7

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Non Wholly-Owned Entities Financial Summary
As of and for the Quarter Ended June 30, 2016
(dollars in thousands)
		Unconsolidated Entities at																								Consolidated Entities at
		TIER REIT Ownership Share																								TIER REIT Ownership Share
		Wanamaker Building				1325 G Street				Colorado Building				Domain 2 & 7				Domain 8								Legacy Land				Third + Shoal
Ownership % during the period		60.00%				10.00%				10.00%				49.84%				50.00%								95.00%				95.00%
Ownership % at period end		60.00%				10.00%				10.00%				49.84%				50.00%				Total				95.00%				95.00%				Total
Results of Operations
Rental income		$	3,860			$	258			$	63			$	1,453			$	—			$	5,634			—				33				33
Straight-line rent and lease incentive revenue		106				85				74				94				—				359				—				—				—
Above- and below-market rent amortization		104				(25		)		(9		)		—				—				70				—				—				—
Other income		35				46				—				—				—				81				—				—				—
	Total revenue	4,105				364				128				1,547				—				6,144				—				33				33
Property related expenses		1,313				71				39				334				6				1,763				12				29				41
Real estate taxes		346				73				28				249				—				696				19				—				19
Property management fees		124				8				2				46				—				180				—				—				—
	NOI	2,322				212				59				918				(6		)		3,505				(31		)		4				(27		)
Interest expense		439				55				19				189				—				702				—				—				—
Amortization of deferred financing costs		20				6				2				79				—				107				—				—				—
Asset management fees		—				3				2				—				—				5				—				—				—
Real estate depreciation and amortization		1,231				133				56				440				—				1,860				—				—				—
Interest income and other expense		4				—				1				—				—				5				—				1				1
Provision for income taxes		1				5				2				—				—				8				—				—				—
	Net income (loss)	627				10				(23		)		210				(6		)		818				(31		)		3				(28		)
Adjustments:
Depreciation of basis adjustments		—				—				—				(145		)		—				(145		)		—				—				—
Above- and below-market amortization of basis adjustment		—				—				—				7				—				7				—				—				—
Eliminate amortization of deferred financing costs		11				—				—				—				—				11				—				—				—
Eliminate property management fees		124				6				2				—				—				132				—				—				—
	Adjusted net income (loss)	762				16				(21		)		72				(6		)		823				(31		)		3				(28		)
Adjustments:
	Real estate depreciation and amortization	1,231				133				56				585				—				2,005				—				—				—
Funds from operations		$	1,993			$	149			$	35			$	657			$	(6	)		$	2,828			$	(31	)		$	3			$	(28	)
Balance Sheet Information
Real estate book value		$	102,678			$	12,829			$	3,817			$	36,147			$	18,569			$	174,040			6,416				14,663				21,079
Accumulated depreciation		(26,237		)		(254		)		(55		)		(2,024		)		—				(28,570		)		—				(264		)		(264		)
Real estate book value after depreciation (1)		$	76,441			$	12,575			$	3,762			$	34,123			$	18,569			$	145,470			$	6,416			$	14,399			$	20,815
Cash and cash equivalents		$	2,488			$	479			$	238			$	1,503			$	166			$	4,874			$	57			$	949			$	1,006
Assets		$	97,175			$	15,923			$	5,119			$	41,005			$	18,758			$	177,980			$	6,473			$	15,415			$	21,888
Mortgage debt		$	44,830			$	9,909			$	3,465			$	39,872			$	308			$	98,384			$	—			$	—			$	—
Equity		$	49,178			$	5,605			$	1,486			$	69			$	14,111			$	70,449			$	6,071			$	14,680			$	20,751
Basis differences		(5,452		)		(1,289		)		(608		)		10,868				3,638				7,157				46				(468		)		(422		)
Carrying value of the Company’s investment		$	43,726			$	4,316			$	878			$	10,937			$	17,749			$	77,606			$	6,117			$	14,212			$	20,329
________________________________
(1)	Third + Shoal real estate book value after depreciation includes $7.5 million for a ground lease intangible.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 8

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Same Store Analysis
(in thousands, except property count and percentages)
		Three Months Ended													Six Months Ended
Same Store GAAP NOI:		30-Jun-16				30-Jun-15				Favorable/ (Unfavorable)					30-Jun-16				30-Jun-15				Favorable/ (Unfavorable)
Revenues:
Total revenue		$	51,142			$	51,168			$	(26	)			$	102,286			$	101,486			$	800
Less: Lease termination fees		(667		)		(125		)		(542		)			(1,098		)		(671		)		(427		)
		50,475				51,043				(568		)	(1.1	)%	101,188				100,815				373			0.4	%
Expenses:
Property operating expenses (less tenant improvement demolition costs)		15,053				13,648				(1,405		)	(10.3	)%	29,195				28,576				(619		)	(2.2	)%
Real estate taxes		7,148				7,090				(58		)	(0.8	)%	14,559				14,102				(457		)	(3.2	)%
Property management fees		140				1,519				1,379			90.8	%	266				3,174				2,908			91.6	%
Property expenses		22,341				22,257				(84		)	(0.4	)%	44,020				45,852				1,832			4.0	%
Same Store GAAP NOI - consolidated properties		28,134				28,786				(652		)	(2.3	)%	57,168				54,963				2,205			4.0	%
Same Store GAAP NOI - unconsolidated properties (at ownership %)		2,727				2,137				590			27.6	%	5,277				4,372				905			20.7	%
Same Store GAAP NOI		$	30,861			$	30,923			$	(62	)	(0.2	)%	$	62,445			$	59,335			$	3,110		5.2	%
Same Store Cash NOI:
Same Store GAAP NOI - consolidated properties		$	28,134			$	28,786			$	(652	)			$	57,168			$	54,963			$	2,205
Less:
Straight-line rent revenue adjustment		(1,438		)		(2,652		)		1,214					(3,990		)		(2,565		)		(1,425		)
Above- and below-market rent amortization		(852		)		(1,512		)		660					(1,842		)		(2,706		)		864
Same Store Cash NOI - consolidated properties		25,844				24,622				1,222			5.0	%	51,336				49,692				1,644			3.3	%
Same Store Cash NOI - unconsolidated properties (at ownership %)		2,391				1,881				510			27.1	%	4,595				3,923				672			17.1	%
Same Store Cash NOI		$	28,235			$	26,503			$	1,732		6.5	%	$	55,931			$	53,615			$	2,316		4.3	%
Occupancy % at period end (% owned)		90.8		%		92.2		%							90.8		%		92.2		%
Operating properties		27													27
Rentable square feet (% owned)		8,545													8,545
Reconciliation of net loss to Same Store GAAP NOI and Same Store Cash NOI:
Net loss		$	(9,361	)		$	(1,173	)							$	(22,084	)		$	(7,075	)
Adjustments:
Interest expense		13,447				15,460									25,687				31,982
Asset impairment losses		—				—									4,826				132
Tenant improvement demolition costs		76				80									140				206
General and administrative		4,765				5,412									10,275				10,793
BHT Advisors termination fee and HPT Management buyout fee		—				10,200									—				10,200
Tender offer and listing costs		—				2,488									—				2,991
Amortization of restricted shares and units		1,055				564									2,049				1,099
Straight-line rent expense adjustment		—				(7		)							—				(14		)
Acquisition expense		—				813									—				815
Real estate depreciation and amortization		30,519				31,081									62,289				61,103
Depreciation and amortization of non-real estate assets		278				—									552				—
Interest and other income		(344		)		(141		)							(618		)		(286		)
Loss on early extinguishment of debt		—				21,412									—				21,448
Provision for income taxes		281				1,338									463				1,262
Equity in operations of investments		(823		)		(69		)							(1,238		)		(312		)
(Income) loss from discontinued operations		—				121									—				(1,369		)
Gain on sale of discontinued operations		—				(6,077		)							—				(14,683		)
Gain on sale of assets		(5,010		)		(44,564		)							(10,749		)		(44,564		)
Net operating income of non-same store properties		(6,082		)		(8,027		)							(13,326		)		(18,094		)
Lease termination fees		(667		)		(125		)							(1,098		)		(671		)
Same store GAAP NOI of unconsolidated properties (at ownership %)		2,727				2,137									5,277				4,372
Same Store GAAP NOI		30,861				30,923									62,445				59,335
Straight-line rent revenue adjustment		(1,438		)		(2,652		)							(3,990		)		(2,565		)
Above- and below-market rent amortization		(852		)		(1,512		)							(1,842		)		(2,706		)
Cash NOI adjustments for unconsolidated properties (at ownership %)		(336		)		(256		)							(682		)		(449		)
Same Store Cash NOI		$	28,235			$	26,503								$	55,931			$	53,615

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 9

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Schedule of Properties Owned
as of June 30, 2016
(in thousands, except average effective and estimated market rent $/RSF and percentages)
				Rentable SF  (100%)			Rentable SF  (own %)						Average Effective Rent (own %)				Average Effective Rent $/RSF (own %)				Estimated Market Rent $/RSF (own %)							% Average Effective Rent (own %)
										Occupancy %															% of NRA (own %)
Property (% owned, if not 100%)		Location
Terrace Office Park		Austin, TX		619			619			93.7	%		$	20,501			$	35.37			$	41.60			6.6	%		9.1	%
Domain 3		Austin, TX		179			179			100.0	%		6,155				$	34.39			$	36.90			1.9	%		2.7	%
Domain 4		Austin, TX		153			153			100.0	%		3,344				$	21.68			$	36.70			1.6	%		1.5	%
Domain 7 (49.84%)		Austin, TX		222			111			93.7	%		3,682				$	35.51			$	41.97			1.2	%		1.6	%
Domain 2 (49.84%)		Austin, TX		115			57			100.0	%		2,319				$	40.58			$	46.40			0.6	%		1.0	%
Austin				1,288			1,119			95.9	%		36,001				$	33.55			$	40.41			11.9	%		16.1	%
5950 Sherry Lane		Dallas, TX		197			197			83.2	%		5,959				$	36.41			$	39.88			2.1	%		2.7	%
Burnett Plaza		Fort Worth, TX		1,025			1,025			86.0	%		16,975				$	19.28			$	23.44			10.9	%		7.6	%
Centreport Office Center		Fort Worth, TX		133			133			100.0	%		2,678				$	20.10			$	19.00			1.4	%		1.2	%
Dallas/Fort Worth				1,355			1,355			86.9	%		25,612				$	21.74			$	25.23			14.4	%		11.4	%
Loop Central		Houston, TX		575			575			89.9	%		12,785				$	24.57			$	26.00			6.1	%		5.7	%
One & Two Eldridge Place		Houston, TX		519			519			96.0	%		15,956				$	32.07			$	36.25			5.5	%		7.1	%
One BriarLake Plaza		Houston, TX		502			502			92.8	%		19,103				$	41.03			$	44.26			5.4	%		8.5	%
Two BriarLake Plaza		Houston, TX		333			333			67.9	%		8,437				$	37.33			$	44.42			3.6	%		3.8	%
Three Eldridge Place		Houston, TX		305			305			80.3	%		9,933				$	40.51			$	40.51			3.3	%		4.4	%
Houston				2,234			2,234			87.4	%		66,214				$	33.92			$	36.93			23.8	%		29.6	%
Bank of America Plaza		Charlotte, NC		891			891			89.7	%		19,820				$	24.79			$	32.50			9.5	%		8.8	%
Charlotte				891			891			89.7	%		19,820				$	24.79			$	32.50			9.5	%		8.8	%
Buena Vista Plaza		Burbank, CA		115			115			99.1	%		4,289				$	37.55			$	37.55			1.2	%		1.9	%
Los Angeles				115			115			99.1	%		4,289				$	37.55			$	37.55			1.2	%		1.9	%
Forum Office Park		Louisville, KY		328			328			96.3	%		5,679				$	17.99			$	18.00			3.5	%		2.5	%
Hurstbourne Place		Louisville, KY		235			235			87.2	%		3,936				$	19.17			$	19.75			2.5	%		1.8	%
One Oxmoor Place		Louisville, KY		135			135			98.5	%		3,047				$	22.94			$	22.00			1.4	%		1.4	%
Hurstbourne Park		Louisville, KY		104			104			74.0	%		1,371				$	17.87			$	19.00			1.1	%		0.6	%
Steeplechase Place		Louisville, KY		77			77			80.5	%		1,069				$	17.19			$	17.50			0.8	%		0.5	%
Lakeview		Louisville, KY		76			76			92.1	%		1,405				$	20.14			$	19.25			0.8	%		0.6	%
Hunnington		Louisville, KY		62			62			85.5	%		1,025				$	19.20			$	17.50			0.7	%		0.5	%
Louisville				1,017			1,017			90.1	%		17,532				$	19.14			$	19.09			10.8	%		7.8	%
Plaza at MetroCenter		Nashville, TN		361			361			93.1	%		5,885				$	17.52			$	18.75			3.8	%		2.6	%
Nashville				361			361			93.1	%		5,885				$	17.52			$	18.75			3.8	%		2.6	%
Eisenhower I		Tampa, FL		130			130			100.0	%		3,553				$	27.31			$	28.00			1.4	%		1.6	%
Tampa				130			130			100.0	%		3,553				$	27.31			$	28.00			1.4	%		1.6	%
801 Thompson		Rockville, MD		51			51			—	%		—				$	—			$	26.50			0.5	%		—	%
1325 G Street (10%)		Washington, D.C.		307			31			83.9	%		1,157				$	44.36			$	49.50			0.3	%		0.5	%
Colorado Building (10%)		Washington, D.C.		128			13			84.6	%		258				$	26.27			$	48.50			0.1	%		0.1	%
Washington, D.C.				486			95			38.9	%		1,415				$	38.24			$	49.20			1.0	%		0.6	%
Operating office properties in strategic portfolio				7,877			7,317			89.3	%		180,321				$	27.59			$	31.32			78.0	%		80.5	%
500 East Pratt		Baltimore, MD		280			280			93.2	%		8,396				$	32.23			$	32.50			3.0	%		3.7	%
Woodcrest Corporate Center		Cherry Hill, NJ		333			333			99.1	%		7,480				$	22.67			$	21.50			3.6	%		3.3	%
111 Woodcrest		Cherry Hill, NJ		53			53			84.9	%		941				$	20.91			$	16.00			0.6	%		0.4	%
Wanamaker Building (60%)		Philadelphia, PA		1,390			834			99.0	%		14,581				$	17.66			$	17.51			8.9	%		6.5	%
Three Parkway		Philadelphia, PA		561			561			86.5	%		12,339				$	25.44			$	24.50			6.0	%		5.5	%
Other operating office properties				2,617			2,061			94.5	%		43,737				$	22.46			$	21.90			22.0	%		19.5	%
Total operating office properties				10,494			9,378			90.4	%		$	224,058			$	26.42			$	29.16			100.0	%		100.0	%
Non-operating properties
Hurstbourne Plaza (1)		Louisville, KY		79			79			50.2	%
Fifth Third Center (2)		Columbus, OH		331			331			68.0	%
Total Properties				10,904			9,788
(1) Hurstbourne Plaza is a retail property planned for redevelopment within the Hurstbourne Business Park.
(2) The non-recourse loan on Fifth Third Center is currently in default and we are working with the lender to dispose of this property on their behalf.
Average effective rent represents 12 times the sum of the monthly contractual amounts for base rent and the pro rata budgeted operating expense reimbursements, as of period end, related to leases in place as of period end, as reduced for free rent and excluding any scheduled future rent increases, as adjusted for our ownership interest.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 10

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Portfolio Analysis
For the Three Months Ended and
as of June 30, 2016
		Number of			Number of			Net Rentable			Commenced			% of			NOI				% of
Metro Area		Properties			Buildings			Area (000's)			% SF Leased			NRA			($000’s)				NOI
Austin, TX		5			8			1,119			95.9	%		11.9	%		$	6,071			17.2	%
Dallas/Fort Worth, TX		3			4			1,355			86.9	%		14.4	%		3,426				9.7	%
Houston, TX		5			8			2,234			87.4	%		23.8	%		9,858				27.9	%
Charlotte, NC		1			1			891			89.7	%		9.5	%		3,837				10.9	%
Los Angeles, CA		1			1			115			99.1	%		1.2	%		823				2.3	%
Louisville, KY		7			10			1,017			90.1	%		10.8	%		2,329				6.6	%
Nashville, TN		1			3			361			93.1	%		3.8	%		772				2.2	%
Tampa, FL		1			1			130			100.0	%		1.4	%		765				2.1	%
Washington, D.C.		3			3			95			38.9	%		1.0	%		398				1.1	%
Other Markets		5			5			2,061			94.5	%		22.0	%		7,068				20.0	%
Total		32			44			9,378			90.4	%		100.0	%		35,347				100.0	%
Reconciliation to NOI (Consolidated):
Less NOI from Unconsolidated Operating Properties																	(3,519		)
Plus NOI from Consolidated Non-Operating Properties (includes all properties sold prior to June 30, 2016)																	2,979
NOI (Consolidated) (3)																	$	34,807
Notes:
(1) Analysis relates to operating properties owned at the end of the most recent period only.
(2) Amounts reflect TIER REIT’s ownership %.
(3) NOI is a non-GAAP performance measure. A calculation of NOI is presented on Page 2.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 11

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Components of Net Asset Value
(in thousands, except percentages)
					Annualized Three Months Ended
					30-Jun-16
Consolidated total revenue					$	257,068
		Less:
		GAAP rent adjustments			(12,048		)
		Lease termination fees			(2,668		)
					242,352
Consolidated total property operating expenses					(117,840		)
Adjusted cash NOI					124,512
		Adjustments:
		Adjusted cash NOI from unconsolidated real estate assets, at ownership share			12,832
		Adjusted cash NOI from sold properties, at ownership share			(9,036		)
		Adjusted cash NOI from non-stabilized properties, at ownership share (1)			(7,683		)
		Adjusted cash NOI from land and development properties, at ownership share (2)			145
Total adjusted cash NOI at ownership share					$	120,770
					30-Jun-16
Other real estate properties
		Estimated value of non-stabilized real estate properties, at ownership share			$	258,620
		Cost basis of land and development properties, at ownership share (2)			81,684
Total other real estate properties					$	340,304
Other tangible assets
		Cash and cash equivalents			$	78,599
		Restricted cash			10,778
		Accounts receivable (excluding $61,270 of straight-line rent receivable)			3,829
		Prepaid expenses and other assets			5,356
Total other tangible assets					$	98,562
Liabilities
		Mortgage debt			$	334,605
		Unsecured term loans and revolving credit facility			575,000
		Accrued and other liabilities			105,492
		Ownership share of unconsolidated mortgage debt			98,384
Total liabilities					$	1,113,481
Total common shares, restricted stock, and restricted stock units outstanding					47,896
(1	)	Non-stabilized properties include:	Economic % SF Leased
			30-Jun-16
		Burnett Plaza	71%
		Two BriarLake Plaza	60%
(2	)	Includes Third + Shoal, Legacy Land, Domain Blocks B, C, D, & G, and Domain 8 development, at ownership share.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 12

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Selected Non-Stabilized Properties

Property Name Market Sub-Market

Property Type

Rentable Square Feet

Occupancy % at June 30, 2016

Estimated Cash NOI at Stabilization (in thousands)

Estimated Stabilization Date

Description

Burnett Plaza

Office

1,025,000

86.0%

$13,000

2017

GM Financial has leased 116,000 SF that is in the process of being vacated by a tenant that is in bankruptcy. There will be outsized free rent at the property, primarily related to this lease, until late 2017.

Dallas/Fort Worth

Fort Worth CBD

Two BriarLake Plaza

Office Development

333,000

67.9%

$8,000

2018

Property operates as a multi-campus facility with our One BriarLake Plaza property. Major construction was completed in the third quarter of 2014.

Houston

Westchase

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 13

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Significant Tenants
June 30, 2016
(In thousands, except percentages and years)
Properties in Strategic Portfolio
	Annualized Gross Rental Revenues				Percentage of Annualized Gross Rental Revenues						Percentage of Square Feet Leased			Weighted Average Remaining Term (Years)
								Square Feet Leased								Moody’s / S&P Credit Rating
Tenant
Amoco	$	12,871			7	%		329			5	%		2.1		A2 / A-
Bank of America	9,634				5	%		421			6	%		2.6		Baa1 / BBB+
Apache Corporation	8,293				4	%		210			3	%		8.3		Baa3 / BBB
Samsung Engineering America	7,105				4	%		161			3	%		10.4		NR
McDermott, Inc.	5,901				3	%		190			3	%		4.1		B1 / B+
GM Financial	5,768				3	%		253			4	%		9.4		Ba1 / BBB-
Universal Pegasus International	5,456				3	%		218			3	%		3.8		NR
GSA	4,987				3	%		227			3	%		4.9		U.S. Government
Disney Enterprises Inc	4,121				2	%		113			2	%		9.7		A2 / A
Blackbaud, Inc.	3,800				2	%		113			2	%		7.3		NR
E.R. Squibb and Sons, LLC	3,553				2	%		130			2	%		8.0		A2 / A+
Vinson & Elkins LLP	3,541				2	%		88			1	%		5.5		NR
SCOR Global Life	3,394				2	%		140			2	%		12.1		NR / AA-
Linebarger Goggan Blair & Sampson, LLP	3,328				2	%		115			2	%		6.5		NR
Nexen Petroleum	2,757				1	%		63			1	%		0.9		NR
Total of largest 15 tenants at operating office properties in strategic portfolio	$	84,509			45	%		2,771			42	%		5.9
Total all tenants at operating office properties in strategic portfolio	$	188,683						6,535						5.3
Total Portfolio
	Annualized Gross Rental Revenues				Percentage of Annualized Gross Rental Revenues						Percentage of Square Feet Leased			Weighted Average Remaining Term (Years)
								Square Feet Leased								Moody’s / S&P Credit Rating
Tenant
Amoco	$	12,871			6	%		329			4	%		2.1		A2 / A-
Bank of America	9,634				4	%		421			5	%		2.6		Baa1 / BBB+
GSA	8,513				4	%		400			5	%		5.0		U.S. Government
Apache Corporation	8,293				4	%		210			2	%		8.3		Baa3 / BBB
Samsung Engineering America	7,105				3	%		161			2	%		10.4		NR
McDermott, Inc.	5,901				3	%		190			2	%		4.1		B1 / B+
GM Financial	5,768				2	%		253			3	%		9.4		Ba1 / BBB-
Universal Pegasus International	5,456				2	%		218			3	%		3.8		NR
Drexel University	4,808				2	%		191			2	%		6.6		NR
Disney Enterprises Inc	4,121				2	%		113			1	%		9.7		A2 / A
Blackbaud, Inc.	3,800				2	%		113			1	%		7.3		NR
Xerox Corporation	3,721				2	%		151			2	%		4.2		Baa2 / BBB-
E.R. Squibb and Sons, LLC	3,553				1	%		130			2	%		8.0		A2 / A+
Vinson & Elkins LLP	3,541				1	%		88			1	%		5.5		NR
SCOR Global Life	3,394				1	%		140			2	%		12.1		NR / AA-
Total of largest 15 tenants	$	90,479			39	%		3,108			37	%		5.9
Total all tenants	$	231,524						8,482						5.6

Notes:

The above tables set forth the company’s 15 largest tenants including subsidiaries for the operating properties as of the date noted above, based upon annualized gross rents plus estimated operating cost recoveries in place at the end of the above noted period.

As annualized rental revenue is not derived from the historical GAAP results, historical results may differ from those set forth above.

Amounts reflect TIER REIT’s ownership %.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 14

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Industry Diversification (by square foot)

As of June 30, 2016

Notes:
The Company’s tenants are classified according to the U.S. Government’s North American Industrial Classification System (NAICS).
Amounts reflect TIER REIT’s ownership %.
“Other” includes ten industry classifications.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 15

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Leasing Activity Summary
For the Three Months Ended
June 30, 2016
					Occupancy																		Occupancy						Cash											Straight-lined
		Rentable SF (000’s)			%			SF (000’s)			Activity for the Quarter (SF 000’s)												SF (000’s)			%			Net Rent /SF								% Increase of Cash Net Rent			Net Rent /SF								% Increase of SL Net Rent
Market					31-Mar-16			31-Mar-16			Expiring			Renewals			Expansions			New			30-Jun-16			30-Jun-16			Expiring				Activity							Expiring				Activity
Austin		1,119			94.1	%		1,053			(34	)		4			—			50			1,073			95.9	%		$	17.43			$	23.13			33	%		$	16.68			$	24.59			47	%
Dallas/Fort Worth		1,355			84.1	%		1,140			(8	)		5			10			31			1,178			86.9	%		$	15.06			$	14.84			-1	%		$	12.96			$	13.22			2	%
Houston		2,234			86.5	%		1,933			(7	)		—			16			10			1,952			87.4	%		$	25.40			$	25.07			-1	%		$	22.90			$	23.44			2	%
Charlotte		891			89.5	%		797			—			—			—			2			799			89.7	%		$	20.95			$	22.09			5	%		$	20.95			$	23.11			10	%
Los Angeles		115			99.1	%		114			—			—			—			—			114			99.1	%		$	—			$	—			—	%		$	—			$	—			0	%
Louisville		1,017			90.3	%		918			(35	)		26			5			2			916			90.1	%		$	9.84			$	10.10			3	%		$	9.76			$	11.06			13	%
Nashville		361			92.0	%		332			(2	)		2			4			—			336			93.1	%		$	9.24			$	9.90			7	%		$	8.75			$	9.75			11	%
Tampa		130			100.0	%		130			—			—			—			—			130			100.0	%		$	—			$	—			—	%		$	—			$	—			0	%
Washington, D.C.		95			91.6	%		87			(53	)		1			—			2			37			38.9	%		$	29.43			$	28.63			-3	%		$	27.05			$	26.16			-3	%
Operating office properties in strategic portfolio		7,317			88.9	%		6,504			(139	)		38			35			97			6,535			89.3	%		$	16.50			$	18.27			11	%		$	15.23			$	18.20			19	%
Other operating office properties		2,061			96.9	%		1,997			(73	)		23			—			—			1,947			94.5	%		$	22.93			$	16.84			-27	%		$	20.78			$	17.82			-14	%
Total		9,378			90.6	%		8,501			(212	)		61			35			97			8,482			90.4	%		$	17.26			$	18.10			5	%		$	15.90			$	18.15			14	%
		End of Period																											Cash											Straight-lined
					Occupancy																		Occupancy						Net Rent /SF								% Increase of Cash Net Rent			Net Rent /SF								% Increase of SL Net Rent
Year-To-Date Summary		NRA (000's)			%			SF (000's)			Expiring			Renewals			Expansions			New			SF (000's)			%			Expiring				Activity							Expiring				Activity
Operating office properties in strategic portfolio
Q1 Activity		7,317			90.3	%		6,606			(414	)		205			58			49			6,504			88.9	%		$	14.17			$	16.14			14	%		$	12.84			$	15.07			17	%
Q2 Activity		7,317			88.9	%		6,504			(139	)		38			35			97			6,535			89.3	%		$	16.50			$	18.27			11	%		$	15.23			$	18.20			19	%
											(553	)		243			93			146									$	14.99			$	16.89			13	%		$	13.68			$	16.17			18	%
Total Portfolio
Q1 Activity		10,419			89.4	%		9,313			(513	)		271			70			121			9,262			88.9	%		$	14.94			$	15.90			6	%		$	13.66			$	15.12			11	%
Q2 Activity		9,378			90.6	%		8,501			(212	)		61			35			97			8,482			90.4	%		$	17.26			$	18.10			5	%		$	15.90			$	18.15			14	%
											(725	)		332			105			218									$	15.63			$	16.55			6	%		$	14.32			$	16.01			12	%

Notes:
Analysis relates to operating properties owned at the end of the period and reflects TIER REIT’s ownership %.
Occupancy includes all leases for tenants under lease contracts that have commenced during the period.
Rates for expiring leases relate to the lease previously occupying the specific space for which positive absorption was shown or the current lease rate if it is a first generation lease.
Net Rent is equal to the fixed base rental amount paid under the terms of the lease less any portion used to offset real estate taxes, utility charges, and other operating expenses incurred in connection with the leased space.
Cash Net Rent disregards any free rent periods. Therefore, the rate shown is first full monthly cash rent paid.
The impact of short term temporary leasing activity is excluded from the analysis of % increase of cash net rent and % increase of SL net rent.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 16

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Leasing Rate Activity Summary
For the Three Months Ended
June 30, 2016
		Renewals																			Expansions																			New
					Cash								Straight-lined											Cash								Straight-lined											Cash								Straight-lined
		SF (000’s)			Net Rent /SF								Net Rent /SF								SF (000’s)			Net Rent /SF								Net Rent /SF								SF (000’s)			Net Rent /SF								Net Rent /SF
Markets					Expiring				Activity				Expiring				Activity							Expiring				Activity				Expiring				Activity							Expiring				Activity				Expiring				Activity
Austin		4			$	23.18			$	25.66			$	21.35			$	25.40			—			$	—			$	—			$	—			$	—			50			$	16.98			$	22.94			$	16.32			$	24.54
Dallas/Fort Worth		5			$	17.23			$	21.51			$	16.03			$	20.64			10			$	14.64			$	14.64			$	12.64			$	12.64			31			$	14.84			$	13.83			$	12.56			$	12.20
Houston		—			$	—			$	—			$	—			$	—			16			$	29.24			$	28.86			$	25.31			$	26.17			10			$	19.25			$	19.02			$	19.04			$	19.07
Charlotte		—			$	—			$	—			$	—			$	—			—			$	—			$	—			$	—			$	—			2			$	20.95			$	22.09			$	20.95			$	23.11
Los Angeles		—			$	—			$	—			$	—			$	—			—			$	—			$	—			$	—			$	—			—			$	—			$	—			$	—			$	—
Louisville		26			$	9.73			$	10.23			$	9.64			$	11.18			5			$	11.30			$	9.13			$	11.26			$	10.49			2			$	9.35			$	10.23			$	9.35			$	10.26
Nashville		2			$	12.38			$	12.38			$	12.13			$	13.63			4			$	7.60			$	8.60			$	6.99			$	7.73			—			$	—			$	—			$	—			$	—
Tampa		—			$	—			$	—			$	—			$	—			—			$	—			$	—			$	—			$	—			—			$	—			$	—			$	—			$	—
Washington, D.C.		1			$	19.51			$	27.27			$	19.51			$	20.15			—			$	—			$	—			$	—			$	—			2			$	36.91			$	29.65			$	32.74			$	30.70
Operating office properties in strategic portfolio		38			$	12.53			$	13.90			$	12.10			$	14.29			35			$	20.03			$	19.66			$	17.59			$	17.96			97			$	16.87			$	19.48			$	15.69			$	19.83
Percentage increase (decrease)									11		%						18		%									(2		)%						2		%									15		%						26		%
Other operating office properties		23			$	22.93			$	16.84			$	20.78			$	17.82			—			$	—			$	—			$	—			$	—			—			$	—			$	—			$	—			$	—
Total		61			$	16.45			$	15.01			$	15.37			$	15.62			35			$	20.03			$	19.66			$	17.59			$	17.96			97			$	16.87			$	19.48			$	15.69			$	19.83
Percentage increase (decrease)									(9		)%						2		%									(2		)%						2		%									15		%						26		%
Year-To-Date Summary:
Operating office properties in strategic portfolio
Q1 Activity		205			$	12.22			$	14.37			$	11.25			$	12.98			58			$	16.04			$	14.02			$	13.00			$	13.48			49			$	20.06			$	26.05			$	19.22			$	25.43
Q2 Activity		38			$	12.53			$	13.90			$	12.10			$	14.29			35			$	20.03			$	19.66			$	17.59			$	17.96			97			$	16.87			$	19.48			$	15.69			$	19.83
		243			$	12.27			$	14.30			$	11.38			$	13.18			93			$	17.54			$	16.14			$	14.73			$	15.16			146			$	17.94			$	21.69			$	16.87			$	21.71
Percentage increase (decrease)									17		%						16		%									(8		)%						3		%									21		%						29		%
Total Portfolio
Q1 Activity		271			$	12.65			$	14.30			$	11.75			$	13.34			70			$	15.22			$	13.55			$	12.56			$	12.96			121			$	19.91			$	20.87			$	18.56			$	20.23
Q2 Activity		61			$	16.45			$	15.01			$	15.37			$	15.62			35			$	20.03			$	19.66			$	17.59			$	17.96			97			$	16.87			$	19.48			$	15.69			$	19.83
		332			$	13.35			$	14.43			$	12.42			$	13.76			105			$	16.82			$	15.59			$	14.24			$	14.63			218			$	18.56			$	20.25			$	17.28			$	20.05
Percentage increase (decrease)									8		%						11		%									(7		)%						3		%									9		%						16		%
Notes:
Analysis relates to operating properties owned at the end of the period and reflects TIER REIT’s ownership %.
SF includes all leases for tenants under lease contracts that have commenced during the period.
Rates for expiring leases relate to the lease previously occupying the specific space for which positive absorption was shown or the current lease rate if it is a first generation lease.
Net Rent is equal to the fixed base rental amount paid under the terms of the lease less any portion used to offset real estate taxes, utility charges, and other operating expenses incurred in connection with the leased space.
Cash Net Rent disregards any free rent periods. Therefore, the rate shown is first full monthly cash rent paid.
The impact of short term temporary leasing activity is excluded from the analysis of % increase of cash net rent and % increase of SL net rent.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 17

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Lease Expirations
For Four Quarters From July 1, 2016
(In thousands, except per SF data)
	Market		Month to Month				3Q'16				4Q'16				1Q'17				2Q'17				Grand Total
	By Square Foot
	Austin		5				8				19				—				36				68
	Dallas/Fort Worth		2				1				16				—				18				37
	Houston		—				61				11				—				139				211
	Charlotte		—				—				—				—				18				18
	Los Angeles		—				—				—				—				—				—
	Louisville		2				17				6				34				164				223
	Nashville		59				—				16				—				—				75
	Tampa		—				—				—				—				—				—
	Washington, D.C.		—				—				1				2				—				3
	Operating office properties in strategic portfolio		68				87				69				36				375				635
	Other operating office properties		9				14				8				12				10				53
	Total		77				101				77				48				385				688
	By Annualized Expiring Rentals
	Austin		$	62			$	228			$	736			$	—			$	1,322			$	2,348
	Dallas/Fort Worth		51				17				321				—				597				986
	Houston		1				1,671				510				—				5,302				7,484
	Charlotte		—				—				—				27				586				613
	Los Angeles		13				—				—				—				—				13
	Louisville		57				348				107				649				2,948				4,109
	Nashville		663				—				292				—				—				955
	Tampa		—				—				—				—				—				—
	Washington, D.C.		—				—				44				89				—				133
	Operating office properties in strategic portfolio		847				2,264				2,010				765				10,755				16,641
	Other operating office properties		7				364				195				319				236				1,121
	Total		$	854			$	2,628			$	2,205			$	1,084			$	10,991			$	17,762
	By Expiring Rent Per SF
	Austin		$	12.71			$	30.49			$	38.27			$	—			$	37.09			$	34.94
	Dallas/Fort Worth		$	33.78			$	25.05			$	20.71			$	—			$	31.66			$	26.98
	Houston		$	—			$	27.05			$	44.49			$	—			$	38.19			$	35.29
	Charlotte		$	—			$	—			$	—			$	60.72			$	33.28			$	33.95
	Los Angeles		$	—			$	—			$	—			$	—			$	—			$	—
	Louisville		$	25.69			$	19.97			$	17.31			$	19.60			$	17.91			$	18.38
	Nashville		$	11.20			$	—			$	18.75			$	—			$	—			$	12.77
	Tampa		$	—			$	—			$	—			$	—			$	—			$	—
	Washington, D.C.		$	—			$	—			$	46.29			$	55.83			$	—			$	47.04
	Operating office properties in strategic portfolio		$	12.46			$	26.02			$	29.13			$	21.25			$	28.68			$	26.21
	Other operating office properties		$	0.75			$	26.38			$	26.00			$	26.42			$	23.84			$	21.21
	Total		$	11.09			$	26.02			$	28.64			$	22.58			$	28.55			$	25.82
Notes:
Leases with an expiration on the last day of the period are considered leased at the last day of the period (i.e., expiring on the first day of the following period).
Reflects TIER REIT’s ownership %.
Rentals shown above are the contractually obligated annualized base rent charged in the final month prior to lease termination grossed up to include current operating cost recoveries.
2Q’17 excludes $1.1 million of annualized expiring rent related to Wanamaker Building parking management agreement (0 SF leased)

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 18

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Lease Expirations
Annually From July 1, 2016
(In thousands, except percentage and per SF data)
	Market	2016				2017				2018				2019				2020				2021				2022				2023				2024				2025				2026+				Grand Total
	By Square Foot
	Austin	32				85				111				108				103				56				154				224				101				3				95				1,073
	Dallas/Fort Worth	18				133				191				100				76				72				28				144				15				—				402				1,178
	Houston	72				208				59				315				287				255				104				56				272				55				269				1,952
	Charlotte	—				21				12				405				15				23				8				81				32				8				195				799
	Los Angeles	—				—				—				4				—				—				—				—				—				—				110				114
	Louisville	26				248				32				152				93				65				36				35				14				192				21				916
	Nashville	75				10				7				—				2				36				14				—				4				22				167				336
	Tampa	—				—				—				—				—				—				—				—				130				—				—				130
	Washington, D.C.	1				2				2				1				3				2				3				5				—				6				12				37
	Operating office properties in strategic portfolio	224				707				414				1,085				579				509				347				545				568				286				1,271				6,535
	As a % of Occupied SF	4		%		11		%		6		%		17		%		9		%		8		%		5		%		8		%		9		%		4		%		19		%		100		%
	As a % of Total NRA	3		%		10		%		6		%		15		%		8		%		6		%		5		%		7		%		8		%		4		%		17		%		89		%
	Other operating office properties	31				127				33				148				414				160				146				281				27				21				559				1,947
	Total	255				834				447				1,233				993				669				493				826				595				307				1,830				8,482
	As a % of Occupied SF	3		%		10		%		5		%		14		%		12		%		8		%		6		%		10		%		7		%		4		%		21		%		100		%
	As a % of Total NRA	3		%		9		%		5		%		13		%		10		%		7		%		5		%		9		%		6		%		3		%		20		%		90		%
	By Annualized Expiring Rentals
	Austin	$	1,025			$	3,068			$	3,847			$	4,523			$	4,098			$	2,408			$	6,478			$	9,163			$	3,788			$	143			$	4,341			$	42,882
	Dallas/Fort Worth	389				3,229				4,738				2,476				2,875				2,745				666				4,148				407				—				10,929				32,602
	Houston	2,182				7,421				2,500				12,694				9,454				9,046				3,418				2,216				11,885				1,857				11,054				73,727
	Charlotte	—				703				460				9,422				490				873				269				2,943				329				415				6,561				22,465
	Los Angeles	13				—				—				192				—				—				—				—				—				—				5,328				5,533
	Louisville	513				4,535				584				3,172				1,775				1,300				801				840				309				3,964				531				18,324
	Nashville	955				185				120				—				39				717				286				—				87				521				3,742				6,652
	Tampa	—				—				—				—				—				—				—				—				4,473				—				—				4,473
	Washington, D.C.	44				89				123				78				216				75				339				302				30				336				664				2,296
	Operating office properties in strategic portfolio	5,121				19,230				12,372				32,557				18,947				17,164				12,257				19,612				21,308				7,236				43,150				208,954
	As a % of Total Annualized Expiring Rentals	3		%		9		%		6		%		16		%		9		%		8		%		6		%		9		%		10		%		3		%		21		%		100		%
	Other operating office properties	566				3,882				704				3,874				11,366				4,074				4,065				8,235				487				631				9,750				47,634
	Total	$	5,687			$	23,112			$	13,076			$	36,431			$	30,313			$	21,238			$	16,322			$	27,847			$	21,795			$	7,867			$	52,900			$	256,588
	As a % of Total Annualized Expiring Rentals	2		%		9		%		5		%		14		%		12		%		8		%		6		%		11		%		9		%		3		%		21		%		100		%
	By Expiring Rent Per SF
	Austin	$	32.51			$	36.25			$	34.57			$	41.94			$	39.67			$	43.82			$	41.96			$	40.83			$	37.55			$	43.31			$	45.21			$	39.98
	Dallas/Fort Worth	$	21.98			$	24.34			$	24.74			$	24.92			$	37.94			$	37.96			$	23.56			$	28.86			$	27.56			$	—			$	27.23			$	27.69
	Houston	$	29.79			$	35.67			$	42.67			$	40.20			$	32.92			$	35.46			$	32.63			$	39.29			$	43.76			$	34.35			$	41.32			$	37.77
	Charlotte	$	—			$	33.37			$	37.92			$	23.26			$	33.60			$	36.65			$	36.47			$	36.30			$	10.37			$	50.86			$	33.73			$	28.10
	Los Angeles	$	—			$	—			$	—			$	44.64			$	—			$	—			$	—			$	—			$	—			$	—			$	48.47			$	48.44
	Louisville	$	19.82			$	18.33			$	18.74			$	20.90			$	18.99			$	19.82			$	21.84			$	23.70			$	22.37			$	20.52			$	24.89			$	20.01
	Nashville	$	12.77			$	19.29			$	18.44			$	—			$	19.76			$	19.86			$	20.76			$	—			$	21.04			$	23.26			$	22.45			$	19.80
	Tampa	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	34.39			$	—			$	—			$	34.39
	Washington, D.C.	$	35.63			$	55.83			$	55.45			$	60.10			$	62.85			$	42.20			$	109.70			$	60.13			$	63.79			$	58.81			$	57.70			$	61.45
	Operating office properties in strategic portfolio	$	22.86			$	27.20			$	29.88			$	30.01			$	32.72			$	33.72			$	35.32			$	35.99			$	37.51			$	25.30			$	33.95			$	31.97
	Other operating office properties	$	18.33			$	30.63			$	21.18			$	26.20			$	27.39			$	25.49			$	27.78			$	29.27			$	18.32			$	30.55			$	17.48			$	24.47
	Total	$	22.30			$	27.71			$	29.25			$	29.55			$	30.53			$	31.75			$	33.11			$	33.71			$	36.63			$	25.63			$	28.91			$	30.25
	Notes:
	Leases with an expiration on the last day of the period are considered leased at the last day of the period (i.e., expiring on the first day of the following period).
	Reflects TIER REIT’s ownership %.
	Rentals shown above are the contractually obligated annualized base rent charged in the final month prior to lease termination grossed up to include current operating cost recoveries.
	2017 excludes $1.1 million of annualized expiring rent related to Wanamaker Building parking management agreement (0 SF leased)

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 19

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Occupancy Trends
		Rentable SF (000’s)
					Occupancy %
Market		30-Jun-16			30-Jun-16			31-Mar-16			31-Dec-15			30-Sep-15			30-Jun-15
Austin		1,119			95.9	%		94.1	%		94.5	%		94.6	%		93.2	%
Dallas/Fort Worth		1,355			86.9	%		84.1	%		86.4	%		88.2	%		85.0	%
Houston (1)		2,234			87.4	%		86.5	%		87.9	%		93.0	%		94.2	%
Charlotte		891			89.7	%		89.5	%		87.8	%		86.4	%		89.2	%
Los Angeles		115			99.1	%		99.1	%		99.1	%		100.0	%		100.0	%
Louisville		1,017			90.1	%		90.3	%		94.8	%		95.0	%		92.6	%
Nashville		361			93.1	%		92.0	%		92.8	%		92.8	%		92.8	%
Tampa		130			100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Washington, D.C. (2)		95			38.9	%		91.6	%		93.7	%		93.7	%		93.7	%
Operating office properties in strategic portfolio		7,317			89.3	%		88.9	%		90.3	%		92.0	%		91.4	%
Other operating office properties		2,061			94.5	%		96.9	%		95.8	%		94.9	%		94.7	%
Total		9,378			90.4	%		90.6	%		91.5	%		92.7	%		92.2	%
(1) We began including our recently developed Two BriarLake Plaza property, which is 67.9% leased as of June 30, 2016, in the fourth quarter of 2015.
(2) Our 801 Thompson property (51,000 sq ft) was previously 100% occupied by a single tenant and became vacant in the second quarter of 2016.
Notes:
Analysis relates to operating properties owned at the end of the most recent period and reflects TIER REIT’s ownership %.
Occupancy % is as of the last day of the indicated period.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 20

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Leasing Cost Summary
For the Three Months Ended
June 30, 2016
								Weighted Average Leasing Costs
		SF (000’s)			Wtd Avg Term (Yrs)			Per Square Foot												Per Square Foot / Year
Renewal								Comms				TI & Other				Total				Comms				TI & Other				Total
Market
Austin		4			2.0			$	4.72			$	—			$	4.72			$	2.36			$	—			$	2.36
Dallas/Fort Worth		5			4.0			$	9.29			$	21.11			$	30.39			$	1.99			$	4.02			$	6.01
Houston		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Charlotte		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Los Angeles		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Louisville		26			4.9			$	5.26			$	12.84			$	18.10			$	0.79			$	1.33			$	2.12
Nashville		2			5.0			$	2.31			$	8.02			$	10.33			$	0.46			$	1.60			$	2.06
Tampa		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Washington, D.C.		1			7.5			$	12.81			$	16.47			$	29.28			$	1.32			$	1.70			$	3.02
Operating office properties in strategic portfolio		38			4.5			$	5.78			$	12.42			$	18.20			$	1.28			$	2.75			$	4.03
Other operating office properties		23			4.6			$	6.29			$	14.25			$	20.54			$	1.37			$	3.12			$	4.49
Total		61			4.5			$	5.97			$	13.11			$	19.08			$	1.31			$	2.89			$	4.20
Expansion
Market
Austin		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Dallas/Fort Worth		10			0.4			$	—			$	—			$	—			$	—			$	—			$	—
Houston		16			4.9			$	12.13			$	17.00			$	29.13			$	2.46			$	3.45			$	5.91
Charlotte		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Los Angeles		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Louisville		5			6.5			$	7.34			$	18.13			$	25.48			$	1.01			$	1.80			$	2.81
Nashville		4			1.6			$	1.08			$	—			$	1.08			$	0.68			$	—			$	0.68
Tampa		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Washington, D.C.		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Operating office properties in strategic portfolio		35			3.5			$	6.72			$	10.36			$	17.08			$	1.94			$	3.00			$	4.94
Other operating office properties		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Total		35			3.5			$	6.72			$	10.36			$	17.08			$	1.94			$	3.00			$	4.94
New
Market
Austin		50			6.6			$	14.83			$	25.09			$	39.92			$	2.21			$	3.67			$	5.89
Dallas/Fort Worth		31			6.3			$	9.23			$	25.54			$	34.77			$	1.47			$	4.07			$	5.54
Houston		10			5.8			$	10.47			$	25.20			$	35.66			$	1.86			$	4.63			$	6.49
Charlotte		2			5.2			$	10.42			$	—			$	10.42			$	2.02			$	—			$	2.02
Los Angeles		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Louisville		2			2.6			$	2.23			$	8.35			$	10.58			$	0.80			$	2.72			$	3.52
Nashville		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Tampa		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Washington, D.C.		2			7.5			$	23.92			$	85.41			$	109.33			$	3.19			$	11.39			$	14.58
Operating office properties in strategic portfolio		97			6.3			$	12.43			$	25.63			$	38.05			$	1.97			$	4.06			$	6.03
Other operating office properties		—			—			$	—			$	—			$	—			$	—			$	—			$	—
Total		97			6.3			$	12.43			$	25.63			$	38.05			$	1.97			$	4.06			$	6.03
Notes:
Analysis relates to operating properties owned at the end of the period and reflects TIER REIT’s ownership %.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 21

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Leasing Cost Trend Analysis
		Three Months Ended				Three Months Ended				Year to Date				Year Ended				Year Ended
		30-Jun-16				31-Mar-16				30-Jun-16				31-Dec-15				31-Dec-14
Renewal Leasing
Square Feet (in thousands)		61				271				332				1,052				1,298
Weighted Average Term (in years)		4.5				2.9				3.2				6.8				5.7
Commissions per SF		$	5.97			$	3.48			$	3.94			$	7.13			$	4.68
TI and Other Leasing Cost per SF		13.11				6.76				7.92				18.72				4.62
Total Leasing Cost per SF		$	19.08			$	10.24			$	11.86			$	25.85			$	9.30
Commissions per SF per Year		$	1.31			$	1.18			$	1.20			$	1.07			$	0.93
TI and Other Leasing Cost per SF per Year		2.89				2.31				2.42				2.70				0.74
Total Leasing Cost per SF per Year		$	4.20			$	3.49			$	3.62			$	3.77			$	1.67
Expansion Leasing
Square Feet (in thousands)		35				70				105				246				264
Weighted Average Term (in years)		3.5				8.2				6.6				6.3				6.6
Commissions per SF		$	6.72			$	12.87			$	10.82			$	8.73			$	9.41
TI and Other Leasing Cost per SF		10.36				7.39				8.38				24.07				21.39
Total Leasing Cost per SF		$	17.08			$	20.26			$	19.20			$	32.80			$	30.80
Commissions per SF per Year		$	1.94			$	1.56			$	1.69			$	1.41			$	1.41
TI and Other Leasing Cost per SF per Year		3.00				0.90				1.60				3.91				3.11
Total Leasing Cost per SF per Year		$	4.94			$	2.46			$	3.29			$	5.32			$	4.52
New Leasing
Square Feet (in thousands)		97				121				218				480				927
Weighted Average Term (in years)		6.3				7.3				6.9				8.0				8.4
Commissions per SF		$	12.42			$	10.90			$	11.58			$	12.91			$	12.15
TI and Other Leasing Cost per SF		25.63				26.74				26.24				40.55				36.28
Total Leasing Cost per SF		$	38.05			$	37.64			$	37.82			$	53.46			$	48.43
Commissions per SF per Year		$	1.97			$	1.50			$	1.71			$	1.60			$	1.45
TI and Other Leasing Cost per SF per Year		4.06				3.68				3.85				5.05				4.34
Total Leasing Cost per SF per Year		$	6.03			$	5.18			$	5.56			$	6.65			$	5.79
Total Leasing
Square Feet (in thousands)		193				462				655				1,778				2,489
Weighted Average Term (in years)		5.2				4.9				5.0				7.1				6.8
Commissions per SF		$	9.35			$	6.85			$	7.58			$	8.92			$	7.96
TI and Other Leasing Cost per SF		18.90				12.09				14.10				25.35				18.19
Total Leasing Cost per SF		$	28.25			$	18.94			$	21.68			$	34.27			$	26.15
Commissions per SF per Year		$	1.79			$	1.41			$	1.53			$	1.26			$	1.18
TI and Other Leasing Cost per SF per Year		3.61				2.48				2.84				3.50				2.33
Total Leasing Cost per SF per Year		$	5.40			$	3.89			$	4.37			$	4.76			$	3.51
Notes:
Analysis relates to operating properties owned at the end of the indicated period and reflects TIER REIT’s ownership %.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 22

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	Development, Leasing, and
	Capital Expenditures Summary
	(in thousands)
			For the Three Months Ended
			30-Jun-16				31-Mar-16				31-Dec-15				30-Sep-15				30-Jun-15
	Recurring capital expenditures
	Leasing costs		$	8,119			$	7,168			$	8,297			$	10,046			$	10,105
	Building improvements		3,256				2,185				2,816				3,749				3,962
	Subtotal recurring capital expenditures		11,375				9,353				11,113				13,795				14,067
	Non-recurring capital expenditures
	Building improvements (1)		596				600				1,185				—				—
	Leasing costs (2)		3,240				3,547				3,258				1,907				4,093
	Development (3)		17,180				1,409				1,790				3,278				3,307
	Redevelopment (4)		4,424				1,028				298				13				4,375
	Subtotal non-recurring capital expenditures		25,440				6,584				6,531				5,198				11,775
	Total capital expenditures		$	36,815			$	15,937			$	17,644			$	18,993			$	25,842
Notes:
All amounts represent TIER REIT’s ownership %.
Beginning in 2016, leasing costs reimbursed to us by tenants when tenant improvement allowances have been exceeded are excluded from the above amounts.
(1)	Non-recurring building improvements include costs identified as deferred capital needs at the acquisition of a property.
(2)	Non-recurring leasing costs include costs incurred within 12 months of acquisition to lease space and costs incurred to lease space that has been vacant for at least 12 months. Cost incurred within 12 months of acquisition to lease space were as follows:
			$	1,814			$	992			$	455			$	534			$	662
(3)	Development includes all new construction costs related to base building and all costs associated with leasing development projects.
(4)	Redevelopment costs are for capital projects where substantial improvements are made to the property that change the character of the asset and are expected to result in development type returns on capital.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 23

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Potential Future Development Sites

June 30, 2016

Approximate Rentable Square Feet

Month of Acquisition

Cost Basis (in millions)

Project

Market (submarket)

Acres

Comments

Hurstbourne Plaza

Louisville (Hurstbourne)

6.1

350,000

Dec -07

n/a

Planned mixed-use redevelopment of the Hurstbourne Business Center

Burnett Plaza

Fort Worth (CBD)

1.4

N/A

Jan-07

$

3.3

Planned mixed-use development and garage for use at Burnett Plaza

Eisenhower II

Tampa

5.2

130,000

Dec-07

$

1.6

Office building

Third + Shoal (95%) (1)

Austin (CBD)

0.8

325,000

Jun-15

$

14.7

Office building

Legacy Land (95%) (1)

Dallas (Plano - Legacy)

4.0

570,000

Jun-15

$

6.8

Office building(s)

Domain B

Austin (Domain)

6.2

300,000-400,000

Jul-15

$

12.7

Office building(s)

Domain C

Austin (Domain)

6.3

400,000-500,000

Jul-15

$

16.8

Office building(s)

Domain D & G

Austin (Domain)

5.6

300,000-400,000

Jul-15

$

9.5

Office building

(1) We own 95% of this project, and the cost basis above represents 100%.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 24

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Summary Development Activity

June 30, 2016

Start Date

Estimated Cost per SF

Square feet (in thousands)

Shell Completion Date

Estimated Total Cost (in millions) (1)

Cost to Date (in millions)

Project

Market

Domain 8 (2)

Austin

291

3Q’15

1Q’17

$

302

$

88.0

$

38.5

(1) Excludes $3.6 million basis adjustment.

(2) We own 50% of this project, and the cost above represents 100%.

 

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 25

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Properties Under Development

Domain 8

Austin, Texas

Property Description

Domain 8 is currently under development as a 9-story, Class A office building located within The Domain in Austin, Texas.  When completed in first quarter 2017, it will offer 291,000 square feet of single-floor and multi-tenant arrangements with dramatic views of the surrounding Domain community and Texas Hill Country.  Domain 8 was designed to achieve a minimum LEED Silver and Energy Star designations.

 

Property Highlights

The Domain is the epitome of upscale “live, work, play”, spread across 300 acres in Northwest Austin.  The community currently includes 1.7 million square feet of office space that command the highest Class A office rents in Austin outside the city’s CBD.  In addition to office space, The Domain will offer up to 4,000 apartment units, 1.8 million square feet of retail and 775 hotel rooms.  Nestled among a full array of amenities and hike & bike trails, Domain 8 will offer onsite showers and locker room and direct elevator access to office floors from every garage level.   

Property Facts

Submarket		The Domain
Floors		9 Floors Office Space/3 Floors Parking
Approximate Rentable SF		291,000
Estimated Operating Expenses per SF		$14.85
Estimated Shell Delivery Date		1Q’17
Estimated Project Cost at Completion (1)		$88,000,000
Percentage Owned		50	%
Percentage Leased at June 30, 2016		—	%
(1) Excludes $3.6 million basis adjustment.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 26

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Acquisition and Disposition Activities
For the Twelve Months Ended June 30, 2016
				Number of Properties			Square Feet (in thousands)			Transaction Date		Price (in thousands)
Acquisitions		Location
Domain 2 (49.84%)		Austin, TX		1			57			7/23/2015		$	9,240
Domain 3		Austin, TX		1			179			7/23/2015		$	46,566
Domain 4		Austin, TX		1			153			7/23/2015		$	32,867
Domain 7 (49.84%)		Austin, TX		1			111			7/23/2015		$	17,545
Domain A (land)		Austin, TX		N/A			N/A			7/23/2015		$	4,087
Domain B, C, D, G, and E (land)		Austin, TX		N/A			N/A			7/23/2015		$	52,682
Domain L, M, and N (land)		Austin, TX		N/A			N/A			7/23/2015		$	22,000
Domain K (multifamily property)		Austin, TX		N/A			N/A			10/16/2015		$	15,000
				4			500
Dispositions
Domain L, M, and N (land)		Austin, TX		N/A			N/A			7/24/2015		$	22,000
Domain K (multi-family property)		Austin, TX		N/A			N/A			10/16/2015		$	15,000
Paces West (10%)		Atlanta, GA		1			65			11/30/2015		$	11,250
Domain A (land)		Austin, TX		N/A			N/A			12/16/2015		$	4,250
Lawson Commons		St. Paul, MN		1			436			3/1/2016		$	68,430
FOUR40 (1)		Chicago, IL		1			1,041			6/17/2016		$	191,000
				3			1,542
(1) The Company is entitled to an additional payment of up to $12.5 million subject to future performance of this property.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 27

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Summary of Financing
June 30, 2016
(in thousands, except percentages and number of years)
							Principal				Weighted Average Effective Interest Rate		% of Total
Fixed Rate Debt
Secured mortgage debt							$	334,605			5.87%		37%
Unsecured term loans (1)							525,000				3.46%		58%
Total fixed rate debt							859,605				4.40%		95%
Variable Rate Debt
Unsecured term loan (1)							50,000				1.99%		5%
Unsecured revolving credit facility (2)							—				—		—
Total variable rate debt							50,000				1.99%		5%
Total debt (3)							909,605				4.27%		100%
unamortized debt issuance costs (4)							(8,310		)
Total notes payable, net							$	901,295
(1) The borrowing rate under $525.0 million of the term loans has been effectively fixed through the use of interest rate hedges. The remaining portion is variable rate.
(2) Additional borrowings of $126.4 million were available under the credit facility.
(3) As of June 30, 2016, we had a non-recourse loan in default which subjects us to incur default interest at a rate that is 500 basis points higher than the stated interest rate which results in an overall effective weighted average interest rate of 4.54%.
(4) Excludes $3.0 million of unamortized debt issuance costs associated with the revolving line of credit because those costs are presented as an asset on our consolidated balance sheet.
	Maturities
	Secured Mortgage Debt						Unsecured Revolving Credit Facility and Term Loans						Total					Annual % Maturing
	Principal				Rate (1)		Principal				Rate (1)		Principal				Rate (1)
2016	$	111,518			5.82%		$	—			—		$	111,518			5.82%	12%
2017	129,097				5.55%		—				—		129,097				5.55%	14%
2018	—				—		—				—		—				—	—
2019	—				—		300,000				3.02%		300,000				3.02%	33%
2020	—				—		—				—		—				—	—
Thereafter	93,990				6.38%		275,000				3.67%		368,990				4.36%	41%
Total debt	$	334,605					$	575,000					909,605				4.27%
unamortized debt issuance costs													(8,310		)
Total notes payable, net													901,295
Weighted average maturity in years	1.8						4.7						3.6
(1) Represents weighted average effective interest rate for debt maturing in this period.
	Maturities
	Consolidated Debt						Our share of unconsolidated debt						Total					Annual % Maturing
	Principal				Rate (1)		Principal				Rate (1)		Principal				Rate (1)
2016	$	111,518			5.82%		$	—			—		$	111,518			5.82%	11%
2017	129,097				5.55%		—				—		129,097				5.55%	13%
2018	—				—		2,062				4.48%		2,062				4.48%	—
2019	300,000				3.02%		39,872				2.15%		339,872				2.92%	34%
2020	—				—		13,374				2.24%		13,374				2.24%	1%
Thereafter	368,990				4.36%		43,076				3.88%		412,066				4.31%	41%
Total debt	909,605						98,384						1,007,989				4.14%
unamortized debt issuance costs	(8,310		)				(1,196		)				(9,506		)
Total notes payable, net	$	901,295					$	97,188					$	998,483
Weighted average maturity in years	3.6						4.7						3.7
(1) Represents weighted average effective interest rate for debt maturing in this period.
Hedging Details:
Type/Description	Notional Value				Index		Strike Rate				Effective Date		Maturity Date				Loan Designation
Interest rate swap - cash flow hedge	$	125,000			one-month LIBOR		1.6775%				31-Dec-14		31-Oct-19				Credit Facility
Interest rate swap - cash flow hedge	$	125,000			one-month LIBOR		1.6935%				30-Apr-15		31-Oct-19				Credit Facility
Interest rate swap - cash flow hedge	$	125,000			one-month LIBOR		1.7615%				30-Jun-15		31-May-22				Credit Facility
Interest rate swap - cash flow hedge	$	150,000			one-month LIBOR		1.7695%				30-Jun-15		31-May-22				Credit Facility

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 28

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	Principal Payments by Year
	as of June 30, 2016
	(in thousands, except percentages)
					Stated Interest Rate			Effective Interest Rate
			Maturity								Total				2016				2017				2018				2019				2020				Thereafter
Fifth Third Center			1-Jul-16		6.09	%		6.17	%		$	48,727			$	48,727			$	—			$	—			$	—			$	—			$	—
Three Parkway (1)			1-Nov-16		5.48	%		5.55	%		62,791				62,791				—				—				—				—				—
One & Two Eldridge			11-Jan-17		5.41	%		5.49	%		70,297				603				69,694				—				—				—				—
500 E. Pratt			1-May-17		5.55	%		5.63	%		58,800				—				58,800				—				—				—				—
Unsecured - Revolving Line of Credit			18-Dec-18		—			—			—				—				—				—				—				—				—
Unsecured - Term Loan			18-Dec-19		2.98	%		3.02	%		300,000				—				—				—				300,000				—				—
One BriarLake Plaza - mezzanine			1-Aug-21		9.80	%		9.94	%		14,623				56				110				121				134				144				14,058
One BriarLake Plaza			1-Aug-21		5.65	%		5.72	%		79,367				774				1,417				1,501				1,589				1,670				72,416
Unsecured - Term Loan			30-Jun-22		3.62	%		3.67	%		275,000				—				—				—				—				—				275,000
Total					4.21	%		4.27	%		909,605				$	112,951			$	130,021			$	1,622			$	301,723			$	1,814			$	361,474
unamortized debt issuance costs (2)											(8,310		)
Consolidated notes payable, net											$	901,295
Notes associated with investments in unconsolidated entities and excluded from the consolidated balance above (at ownership share):
Wanamaker Building - office (60%) (1)			1-Jul-18		4.75	%		4.82	%		$	1,754			$	389			$	806			$	559			$	—			$	—			$	—
Wanamaker Building - office (60%)			7-Feb-23		3.83	%		3.88	%		43,076				453				937				974				1,013				1,049				38,650
1325 G Street (10%)			30-Jun-20		2.21	%		2.24	%		9,909				—				—				—				—				9,909				—
Colorado Building (10%)			30-Jun-20		2.21	%		2.24	%		3,465				—				—				—				—				3,465				—
Domain 2 & 7 (49.84%)			28-Apr-19		2.12	%		2.15	%		39,872				—				—				—				39,872				—				—
Domain 8 (50%)			28-Aug-18		2.52	%		2.55	%		308				—				—				308				—				—				—
Total					2.93	%		2.97	%		98,384				$	842			$	1,743			$	1,841			$	40,885			$	14,423			$	38,650
unamortized debt issuance costs											(1,196		)
Total unconsolidated notes payable, net											$	97,188
Total notes payable					4.08	%		4.14	%		1,007,989				$	113,793			$	131,764			$	3,463			$	342,608			$	16,237			$	400,124
unamortized debt issuance costs											(9,506		)
Total notes payable, net											$	998,483
% of principal payments due by year											100		%		11		%		13		%		—		%		34		%		2		%		40		%
(1)	This loan was paid off subsequent to quarter end.
(2)	Excludes $3.0 million of unamortized debt issuance costs associated with the revolving line of credit because those costs are presented as an asset on our consolidated balance sheet.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 29

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Definitions of Non-GAAP Financial Measures

We use non-GAAP financial measures in our public filings and other public disclosures. These non-GAAP financial measures are defined below.

Funds from Operations (FFO)

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate diminishes predictably over time.  Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient for evaluating operating performance.  FFO is a non-GAAP financial measure that is widely recognized as a measure of a REIT’s operating performance.  We use FFO as defined by the National Association of Real Estate Investment Trusts (NAREIT) in the April 2002 “White Paper on Funds From Operations” which is net income (loss), computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains (or losses) from sales of property and impairments of depreciable real estate (including impairments of investments in unconsolidated entities which resulted from measurable decreases in the fair value of the depreciable real estate held by the unconsolidated entity), plus depreciation and amortization of real estate assets, and after related adjustments for unconsolidated entities and noncontrolling interests.  The determination of whether impairment charges have been incurred is based partly on anticipated operating performance and hold periods.  Estimated undiscounted cash flows from a property, derived from estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred.  While impairment charges for depreciable real estate are excluded from net income (loss) in the calculation of FFO as described above, impairments reflect a decline in the value of the applicable property which we may not recover.

We believe that the use of FFO, together with the required GAAP presentations, is helpful in understanding our operating performance because it excludes real estate-related depreciation and amortization, gains and losses from property dispositions, impairments of depreciable real estate assets, and extraordinary items, and as a result, when compared period to period, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which are not immediately apparent from net income.  Factors that impact FFO include fixed costs, yields on cash held in accounts, income from portfolio properties and other portfolio assets, interest rates on debt financing, and operating expenses.

We also evaluate FFO, excluding certain items. The items excluded relate to certain non-operating activities or certain non-recurring activities that may create significant FFO volatility. We believe it is useful to evaluate FFO excluding these items because it provides useful information in analyzing comparability between reporting periods and in assessing the sustainability of our operating performance.

FFO and FFO, excluding certain items, should not be considered as alternatives to net income (loss), or as indicators of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make distributions.  Additionally, the exclusion of impairments limits the usefulness of FFO and FFO, excluding certain items, as historical operating performance measures since an impairment charge indicates that operating performance has been permanently affected.  FFO and FFO, excluding certain items, are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO and FFO, excluding certain items.  FFO and FFO, excluding certain items, are non-GAAP measurements and should be reviewed in connection with other GAAP measurements.  Our FFO and FFO, excluding certain items, as presented may not be comparable to amounts calculated by other REITs that do not define FFO in accordance with the current NAREIT definition, or interpret it differently, or that identify and exclude different items related to non-operating activities or certain non-recurring activities.

Net Operating Income (NOI)

NOI is a non-GAAP financial measure equal to rental revenue, less property operating expenses, real estate taxes, and property management expenses.   Our management uses NOI internally as a performance measure and believes NOI is useful to investors as a performance measure because NOI reflects only those income and expense items that are incurred at the property level and is therefore a useful measure for evaluating a property’s performance. Using NOI on a comparative basis allows investors to evaluate property level performance to compare the operating performance of our properties in a given market with the operating performance of other real estate companies in the same market, and consequently allocate their own investment capital accordingly.

Further, we use NOI internally as a performance measure and believe NOI is useful to investors as a performance measure because, when compared year over year, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and general and administrative expenses on an un-leveraged basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. Certain items such as interest expense, while included in net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. In addition, it is useful to our management and investors that depreciation and amortization are excluded from NOI because historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time, and, instead, real estate values have historically risen or fallen with market conditions.

NOI presented by us may not be comparable to NOI reported by other REITs that do not define NOI exactly as we do. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income as presented in our consolidated financial statements and notes thereto. NOI should not be considered as an alternative to net income as an indication of our performance or to cash flows as a measure of liquidity or our ability to make distributions.

Same Store GAAP NOI and Same Store Cash NOI

Same Store GAAP NOI is equal to rental revenue, less lease termination fee income, property operating expenses (excluding tenant improvement demolition costs), real estate taxes, and property management expenses for our same store properties and is considered a non-GAAP financial measure. Same Store Cash NOI is equal to Same Store GAAP NOI less non-cash revenue items including straight-line rent adjustments and the amortization of above- and below-market rent. The same store properties include our operating office properties owned and operated for the entirety of both periods being compared and include our comparable ownership percentage in each period for properties in which we own an unconsolidated interest.  We view Same Store GAAP NOI and Same Store Cash NOI as important measures of the operating performance of our properties because they allow us to compare operating results of properties owned and operated for the entirety of both periods being compared and therefore eliminate variations caused by acquisitions or dispositions during such periods.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 30

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Same Store GAAP NOI and Same Store Cash NOI presented by us may not be comparable to Same Store GAAP NOI or Same Store Cash NOI reported by other REITs that do not define Same Store GAAP NOI or Same Store Cash NOI exactly as we do. We believe that in order to facilitate a clear understanding of our operating results, Same Store GAAP NOI and Same Store Cash NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements and notes thereto. Same Store GAAP NOI and Same Store Cash NOI should not be considered as an indicator of our ability to make distributions, as alternatives to net income (loss) as an indication of our performance, or as a measure of cash flows or liquidity.

Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA, a non-GAAP financial measure, is defined as net income (loss), plus interest expense, income tax expense, and depreciation and amortization expense, and after related adjustments for unconsolidated partnerships, joint ventures and subsidiaries, and noncontrolling interests. EBITDA is not intended to represent cash flow for the period, is not presented as an alternative to operating income as an indicator of operating performance, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP, and is not indicative of operating income or cash provided by operating activities as determined under GAAP. EBITDA is presented solely as a supplemental disclosure with respect to liquidity because we believe it provides useful information regarding our ability to service or incur debt.

We also evaluate Normalized EBITDA, which is EBITDA excluding certain revenues and operating expenses. The items excluded relate to certain non-operating activities or certain non-recurring activities that create significant EBITDA volatility. Further, we evaluate Normalized Estimated Full Period EBITDA, which is EBITDA excluding certain revenues and operating expenses and adjusted to show the pro forma impact of properties that were either acquired or disposed during the period. We believe it is useful to evaluate EBITDA excluding these items and as adjusted for property acquisitions and dispositions because it provides useful information in analyzing comparability between reporting periods and in assessing the sustainability of our operating performance.

Supplemental Operating and Financial Data	TIER REIT	2nd Quarter Page 31

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Exhibit 99.2

TIER REIT Announces Second Quarter 2016 Financial Results

- Reports Net Loss of $0.20 per Diluted Share -

- Reports Second Quarter FFO, Excluding Certain Items, of $0.43 Per Diluted Share -

- Increases 2016 Guidance for FFO, Excluding Certain Items, Per Diluted Share -

Dallas, Texas - August 8, 2016 - TIER REIT, Inc. (NYSE: TIER), a Dallas-based real estate investment trust that specializes in owning and operating best-in-class office properties in select U.S. markets, today announced financial and operating results for the second quarter ended June 30, 2016.

 

Second Quarter 2016 Highlights

•	Reported net loss of $0.20 per diluted share for the second quarter 2016, as compared to $0.02 per diluted share for the second quarter 2015

•	Reported Funds from Operations (FFO), excluding certain items, for the second quarter 2016 of $0.43 per diluted share, as compared to $0.34 per diluted share for the second quarter 2015

•	Announced Same Store Cash NOI for the second quarter 2016 of $28.2 million, as compared to $26.5 million for the second quarter 2015, an increase of 6.5%

•	Sold FOUR40, a 39-story office building in Chicago, Illinois, for $191 million, utilizing net proceeds to pay off debt

“We are very pleased with our second quarter results as well as our year to date progress on the strategic goals we have outlined,” stated Scott Fordham, Chief Executive Officer and President of TIER REIT.  “We exited the Chicago market with our sale of FOUR40 in June, utilizing the proceeds to repay debt, and we anticipate completing additional dispositions outside of our target growth markets totaling up to $250 million prior to year-end.”

“Our high quality portfolio is performing in line with our expectations and we continue to make progress in addressing our 2017 Houston lease expirations,” added Mr. Fordham.  “Year to date, we have completed leases for over 120,000 square feet of space in Houston that was otherwise set to expire in 2017. As a result of our strong performance, we have increased our full year guidance for FFO, excluding certain items, and remain on track to execute on our strategy through the remaining half of 2016, which we believe will yield meaningful benefits in the years to come.” 

Second Quarter Financial Results

Net loss attributable to common stockholders was $9.4 million, or $0.20 per diluted share for the quarter ended June 30, 2016, as compared to $1.2 million, or $0.02 per diluted share, for the quarter ended June 30, 2015.

NAREIT-defined FFO attributable to common stockholders for the quarter ended June 30, 2016, was $18.1 million, or $0.38 per diluted share, as compared to $(18.1) million, or $(0.36) per diluted share, for the quarter ended June 30, 2015. FFO attributable to common stockholders, excluding certain items, for the quarter ended June 30, 2016, was $20.7 million, or $0.43 per diluted share, as compared to $17.2 million, or $0.34 per diluted share, for the quarter ended June 30, 2015.

Leasing Update

Occupancy was 90.4% at June 30, 2016, an increase of 150 basis points from March 31, 2016. The sale of FOUR40 increased occupancy by 170 basis points, which was partially offset by an expected decrease in occupancy in the remaining portfolio of 20 basis points due to known tenant move-outs.

During the second quarter of 2016, the Company leased 193,000 square feet, which included 61,000 square feet of renewals, 35,000 square feet of expansion space, and 97,000 square feet of new leasing.

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Dispositions

On June 17, 2016, FOUR40, a 39-story office building in Chicago, Illinois, was sold for $191.0 million. The Company is entitled to an additional payment of up to $12.5 million subject to future performance of the property. The sale of FOUR40 marks the Company’s exit from the Chicago market.

Financing and Capital Markets Activity

During the second quarter of 2016, the Company paid off (without penalty) the $23.2 million loan secured by Plaza at MetroCenter that was scheduled to mature in July 2016. This loan had an effective interest rate of 6.14%. In addition, the Company paid off $108.0 million outstanding balance on its revolving line of credit with proceeds from the sale of FOUR40. As of June 30, 2016, borrowings of $126.4 million were available under the credit facility.

Subsequent to quarter end, the Company paid off (without penalty) the $62.8 million loan secured by Three Parkway that was scheduled to mature in November 2016. This loan had an effective interest rate of 5.55%.

Distributions

For the second quarter of 2016, the Company’s board of directors authorized a distribution in the amount of $0.18 per share on its common stock to stockholders of record as of the close of business on June 30, 2016, which was paid on July 8, 2016.

On August 4, 2016, the Company’s board of directors authorized a distribution for the third quarter of 2016 in the amount of $0.18 per share on its common stock to stockholders of record as of the close of business on September 30, 2016, payable on October 7, 2016.

2016 Outlook

The Company is narrowing its 2016 outlook for NAREIT-defined FFO as well as increasing its 2016 outlook for FFO, excluding certain items. This updated outlook reflects management’s view of current and future market conditions, including assumptions such as disposition activity, rental rates, occupancy levels, operating and general and administrative expenses, weighted average diluted shares outstanding, and interest rates.

The Company’s updated 2016 outlook and assumptions are as follows:

	Previous 2016 Guidance	Updated 2016 Guidance
NAREIT-defined FFO	$1.51 - $1.57	$1.52 - $1.56
FFO, excluding certain items	$1.51 - $1.57	$1.56 - $1.60
Dispositions of non-strategic properties	$200 - $400 million	$300 - $500 million
Same Store Cash NOI growth	1.0% - 3.0%	2.0% - 3.0%
Same Store GAAP NOI growth	1.0% - 3.0%	1.0% - 2.0%
Straight line rent and lease incentive revenue	$11.0 - $13.0 million	$9.5 - $11.0 million
Lease termination fees	$1.0 - $2.0 million	$1.5 - $2.0 million
Above- and below-market rent amortization	$4.4 - $5.0 million	$4.4 - $5.0 million
General & administrative expenses, excluding certain items	$23.5 - $24.5 million	$23.5 - $24.5 million
Year-end occupancy	89.5% - 90.5%	89.5% - 90.5%
Weighted avg shares of common stock outstanding	47.9 million	47.9 million

Supplemental Information

A copy of the Company’s supplemental information regarding its financial results and operations for the quarter ended June 30, 2016, is available in the “Investor Relations” section of the Company’s website at www.tierreit.com. A copy may also be obtained by contacting the Investor Relations department by email to ir@tierreit.com.

Conference Call

A conference call will be held on Tuesday, August 9, 2016, at 11:00 AM Eastern time / 10:00 AM Central time. TIER REIT will host the conference call to discuss matters related to the Company’s financial results and operating performance, as well as business highlights and outlook. In addition, the Company may discuss business and financial developments and trends and other matters affecting the Company, some of which may not have been previously

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disclosed. A live audio webcast can be accessed through the Company’s website at www.tierreit.com under the “Investor Relations” section. A replay of the call will also be available on the website for 30 days.

To Participate in the Telephone Conference Call

Dial in at least five minutes prior to start time.

Domestic Call-In Number: 877.407.0789

International Call-In Number: 201.689.8562

Conference Call Playback

Call-in Number: 877.870.5176

International: 858.384.5517

Passcode: 13641377

The audio playback can be accessed through August 23, 2016.

About TIER REIT, Inc.

TIER REIT, Inc. is a self-managed, Dallas-based real estate investment trust focused on delivering outsized stockholder return through stock price appreciation and dividend growth while offering unparalleled tenant service. TIER REIT’s investment strategy is to acquire, develop and operate a portfolio of best-in-class office properties in select U.S. markets that consistently lead the nation in both population and office-using employment growth. Within these markets, we target TIER1 submarkets, which are primarily urban and amenity-rich locations. For additional information regarding TIER REIT, please visit www.tierreit.com or call 972.483.2400.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws relating to the business and financial outlook of TIER REIT that are based on our current expectations, estimates, forecasts and projections and are not guarantees of future performance. These forward-looking statements include discussion and analysis of the financial condition of us and our subsidiaries, including our ability to rent space on favorable terms, our ability to address debt maturities and fund our capital requirements, our intentions to sell certain properties, our intentions with respect to development activity, the value of our assets, our anticipated capital expenditures, the amount and timing of any anticipated future cash distributions to our stockholders, and other matters. Words such as “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “objectives,” “strategies,” “goals,” and variations of these words and similar expressions are intended to identify forward-looking statements.

Actual results may differ materially from those expressed in these forward-looking statements, and you should not place undue reliance on any such statements. Factors that could cause actual results to vary materially from those expressed in forward-looking statements include changes in real estate conditions and in the capital markets, as well as the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Forward-looking statements in this press release speak only as of the date on which such statements were made and, except as required by law, we undertake no obligation to update any such statements that may become untrue because of subsequent events.

Contact Information

TIER REIT, Inc.

Scott McLaughlin, 972.483.2465

smclaughlin@tierreit.com

Financial Tables Follow

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TIER REIT, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

	June 30, 2016				December 31, 2015
Assets
Real estate
Land	$	159,736			$	179,989
Land held for development	45,059				45,059
Buildings and improvements, net	1,108,255				1,348,200
Real estate under development	7,725				—
Total real estate	1,320,775				1,573,248
Cash and cash equivalents	78,599				12,248
Restricted cash	10,778				10,712
Accounts receivable, net	66,328				76,228
Prepaid expenses and other assets	5,356				6,712
Investments in unconsolidated entities	77,606				88,998
Deferred financing fees, net	2,999				3,111
Lease intangibles, net	68,338				83,548
Other intangible assets, net	9,887				10,086
Total assets	$	1,640,666			$	1,864,891
Liabilities and equity
Liabilities
Notes payable, net	$	901,295			$	1,071,571
Accounts payable and accrued liabilities	61,721				71,597
Payables to related parties	—				292
Acquired below-market leases, net	8,961				11,934
Distributions payable	8,601				8,596
Other liabilities	35,170				23,082
Total liabilities	1,015,748				1,187,072
Commitments and contingencies
Series A Convertible Preferred Stock	—				2,700
Equity
Preferred stock, $.0001 par value per share; 17,500,000 and 17,490,000 shares authorized at June 30, 2016, and December 31, 2015, respectively, none outstanding	—				—
Convertible stock, $.0001 par value per share; 1,000 shares authorized, none outstanding	—				—
Common stock, $.0001 par value per share; 382,499,000 shares authorized, 47,412,705 and 47,362,372 shares issued and outstanding at June 30, 2016, and December 31, 2015, respectively	5				5
Additional paid-in capital	2,604,614				2,600,193
Cumulative distributions and net loss attributable to common stockholders	(1,961,968		)		(1,922,721		)
Accumulated other comprehensive loss	(19,262		)		(3,860		)
Stockholders’ equity	623,389				673,617
Noncontrolling interests	1,529				1,502
Total equity	624,918				675,119
Total liabilities and equity	$	1,640,666			$	1,864,891

 

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TIER REIT, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share amounts)

(unaudited)

	Three Months Ended
	June 30, 2016				June 30, 2015
Rental revenue	$	64,267			$	70,038
Expenses
Property operating expenses	19,805				20,877
Interest expense	13,447				15,460
Real estate taxes	9,429				10,198
Property management fees	226				2,105
General and administrative	5,820				19,470
Depreciation and amortization	30,797				31,081
Total expenses	79,524				99,191
Interest and other income	344				141
Loss on early extinguishment of debt	—				(21,412		)
Loss from continuing operations before income taxes, equity in operations of investments, and gain on sale of assets	(14,913		)		(50,424		)
Provision for income taxes	(281		)		(1,338		)
Equity in operations of investments	823				69
Loss from continuing operations before gain on sale of assets	(14,371		)		(51,693		)
Discontinued operations
Loss from discontinued operations	—				(121		)
Gain on sale of discontinued operations	—				6,077
Discontinued operations	—				5,956
Gain on sale of assets	5,010				44,564
Net loss	(9,361		)		(1,173		)
Noncontrolling interests in continuing operations	9				33
Noncontrolling interests in discontinued operations	—				(11		)
Net loss attributable to common stockholders	$	(9,352	)		$	(1,151	)
Basic and diluted weighted average common shares outstanding	47,405,767				49,893,330
Basic and diluted earnings (loss) per common share:
Continuing operations	$	(0.20	)		$	(0.14	)
Discontinued operations	—				0.12
Basic and diluted loss per common share	$	(0.20	)		$	(0.02	)
Distributions declared per common share	$	0.18			$	0.18
Net income (loss) attributable to common stockholders:
Continuing operations	$	(9,352	)		$	(7,096	)
Discontinued operations	—				5,945
Net loss attributable to common stockholders	$	(9,352	)		$	(1,151	)
Comprehensive income (loss):
Net loss	$	(9,361	)		$	(1,173	)
Other comprehensive income (loss): unrealized income (loss) on interest rate derivatives	(2,532		)		6,146
Comprehensive income (loss)	(11,893		)		4,973
Comprehensive loss attributable to noncontrolling interests	11				11
Comprehensive income (loss) attributable to common stockholders	$	(11,882	)		$	4,984

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Calculation of FFO and FFO, excluding certain items
(in thousands, except per share amounts)
	Three Months Ended
	June 30, 2016				June 30, 2015
Net loss	$	(9,361	)		$	(1,173	)
Net loss attributable to noncontrolling interests	9				22
Net loss attributable to common stockholders	(9,352		)		(1,151		)
Adjustments (1):
Real estate depreciation and amortization from consolidated properties	30,519				31,081
Real estate depreciation and amortization from unconsolidated properties	2,005				1,367
Gain on sale of depreciable real estate	(5,010		)		(50,641		)
Taxes associated with sale of depreciable real estate	—				1,264
Noncontrolling interests	(18		)		29
FFO attributable to common stockholders	18,144				(18,051		)
Acquisition expenses	—				1,193
Tender offer and listing costs	—				2,488
Interest rate hedge ineffectiveness expense (2)	1,941				—
Loss on early extinguishment of debt	—				21,412
Default interest (3)	616				—
BHT Advisors termination fee and HPT Management buyout fee	—				10,200
Noncontrolling interests	(1		)		(61		)
FFO attributable to common stockholders, excluding certain items	$	20,700			$	17,181
Weighted average common shares outstanding - basic	47,406				49,893
Weighted average common shares outstanding - diluted (4)	47,826				50,085
Net loss per common share - basic and diluted (4)	$	(0.20	)		$	(0.02	)
FFO per common share - diluted	$	0.38			$	(0.36	)
FFO, excluding certain items, per common share - diluted	$	0.43			$	0.34

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(1)    Reflects the adjustments of continuing operations, as well as discontinued operations.

(2)    Interest rate swaps are adjusted to fair value through other comprehensive income (loss). However, because our interest rate swaps do not have a LIBOR

floor while the hedged debt is subject to a LIBOR floor, the portion of the change in fair value of our interest rate swaps attributable to this mismatch is reclassified to interest rate hedge ineffectiveness expense.

(3)	We have a non-recourse loan in default which subjects us to incur default interest at a rate that is 500 basis points higher than the stated interest rate. Although there can be no assurance, we anticipate that when this property is sold or when ownership of this property is conveyed to the lender, this default interest will be forgiven.

(4)    There are no dilutive securities for purposes of calculating net loss or negative FFO per common share.

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Same Store GAAP NOI and Same Store Cash NOI
(in thousands, except percentages)
			Three Months Ended
			June 30, 2016				June 30, 2015
Same Store Revenue:
	Rental revenue		$	51,142			$	51,168
		Less:
		Lease termination fees	(667		)		(125		)
			50,475				51,043
Same Store Expenses:
		Property operating expenses (less tenant improvement demolition costs)	15,053				13,648
		Real estate taxes	7,148				7,090
		Property management fees	140				1,519
	Property Expenses		22,341				22,257
Same Store GAAP NOI - consolidated properties			28,134				28,786
Same Store GAAP NOI - unconsolidated properties (at ownership %)			2,727				2,137
Same Store GAAP NOI			30,861				30,923
Increase (decrease) in Same Store GAAP NOI			(0.2		)%
		Less:
		Straight-line rent revenue adjustment	(1,438		)		(2,652		)
		Amortization of above- and below-market rents, net	(852		)		(1,512		)
Same Store Cash NOI - consolidated properties			25,844				24,622
Same Store Cash NOI - unconsolidated properties (at ownership %)			2,391				1,881
Same Store Cash NOI			$	28,235			$	26,503
Increase in Same Store Cash NOI			6.5		%
Reconciliation of net loss to Same Store GAAP NOI and Same Store Cash NOI
	Net loss		$	(9,361	)		$	(1,173	)
		Adjustments:
		Interest expense	13,447				15,460
		Tenant improvement demolition costs	76				80
		General and administrative	5,820				19,470
		Depreciation and amortization	30,797				31,081
		Interest and other income	(344		)		(141		)
		Loss on early extinguishment of debt	—				21,412
		Provision for income taxes	281				1,338
		Equity in operations of investments	(823		)		(69		)
		Loss from discontinued operations	—				121
		Gain on sale of discontinued operations	—				(6,077		)
		Gain on sale of assets	(5,010		)		(44,564		)
		Net operating income of non-same store properties	(6,082		)		(8,027		)
		Lease termination fees	(667		)		(125		)
		Same store GAAP NOI unconsolidated properties (at ownership %)	2,727				2,137
Same Store GAAP NOI			30,861				30,923
		Straight-line rent revenue adjustment	(1,438		)		(2,652		)
		Amortization of above- and below-market rents, net	(852		)		(1,512		)
		Cash NOI adjustments for unconsolidated properties (at ownership %)	(336		)		(256		)
Same Store Cash NOI			$	28,235			$	26,503

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Non-GAAP Financial Measures

We compute our financial results in accordance with accounting principles generally accepted in the United States of America (GAAP). Although Funds from Operations and Funds from Operations, excluding certain items, are non-GAAP financial measures, we believe that these calculations are helpful to stockholders and potential investors and are widely recognized measures of real estate investment trust performance. We have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure in tables included in this press release.

Funds from Operations (FFO)

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate diminishes predictably over time.  Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient for evaluating operating performance.  FFO is a non-GAAP financial measure that is widely recognized as a measure of a REIT’s operating performance.  We use FFO as defined by the National Association of Real Estate Investment Trusts (NAREIT) in the April 2002 “White Paper on Funds From Operations” which is net income (loss), computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains (or losses) from sales of property and impairments of depreciable real estate (including impairments of investments in unconsolidated entities which resulted from measurable decreases in the fair value of the depreciable real estate held by the unconsolidated entity), plus depreciation and amortization of real estate assets, and after related adjustments for unconsolidated entities and noncontrolling interests.  The determination of whether impairment charges have been incurred is based partly on anticipated operating performance and hold periods.  Estimated undiscounted cash flows from a property, derived from estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred.  While impairment charges for depreciable real estate are excluded from net income (loss) in the calculation of FFO as described above, impairments reflect a decline in the value of the applicable property which we may not recover.

We believe that the use of FFO, together with the required GAAP presentations, is helpful in understanding our operating performance because it excludes real estate-related depreciation and amortization, gains and losses from property dispositions, impairments of depreciable real estate assets, and extraordinary items, and as a result, when compared period to period, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which are not immediately apparent from net income.  Factors that impact FFO include fixed costs, yields on cash held in accounts, income from portfolio properties and other portfolio assets, interest rates on debt financing, and operating expenses.

We also evaluate FFO, excluding certain items. The items excluded relate to certain non-operating activities or certain non-recurring activities that may create significant FFO volatility. We believe it is useful to evaluate FFO excluding these items because it provides useful information in analyzing comparability between reporting periods and in assessing the sustainability of our operating performance.

FFO and FFO, excluding certain items, should not be considered as alternatives to net income (loss), or as indicators of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make distributions.  Additionally, the exclusion of impairments limits the usefulness of FFO and FFO, excluding certain items, as historical operating performance measures since an impairment charge indicates that operating performance has been permanently affected.  FFO and FFO, excluding certain items, are not useful measures in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining FFO and FFO, excluding certain items.  FFO and FFO, excluding certain items, are non-GAAP measurements and should be reviewed in connection with other GAAP measurements.  Our FFO and FFO, excluding certain items, as presented may not be comparable to amounts calculated by other REITs that do not define FFO in accordance with the current NAREIT definition, or interpret it differently, or that identify and exclude different items related to non-operating activities or certain non-recurring activities.

Same Store GAAP NOI and Same Store Cash NOI

Same Store GAAP NOI is equal to rental revenue, less lease termination fee income, property operating expenses (excluding tenant improvement demolition costs), real estate taxes, and property management expenses for our same store properties and is considered a non-GAAP financial measure. Same Store Cash NOI is equal to Same Store GAAP NOI less non-cash revenue items including straight-line rent adjustments and the amortization of above- and below-market rent. The same store properties include our operating office properties owned and operated for the entirety of both periods being compared and include our comparable ownership percentage in each period for properties in which we own an unconsolidated interest.  We view Same Store GAAP NOI and Same Store Cash NOI as important measures of the operating performance of our properties because they allow us to compare

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operating results of properties owned and operated for the entirety of both periods being compared and therefore eliminate variations caused by acquisitions or dispositions during such periods.

Same Store GAAP NOI and Same Store Cash NOI presented by us may not be comparable to Same Store GAAP NOI or Same Store Cash NOI reported by other REITs that do not define Same Store GAAP NOI or Same Store Cash NOI exactly as we do. We believe that in order to facilitate a clear understanding of our operating results, Same Store GAAP NOI and Same Store Cash NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements and notes thereto. Same Store GAAP NOI and Same Store Cash NOI should not be considered as an indicator of our ability to make distributions, as alternatives to net income (loss) as an indication of our performance, or as a measure of cash flows or liquidity.