(1) Section 199A Dividends are a subset of, and included in, the Ordinary Income amount. (2) Qualified Dividends are a subset of, and included in, the Ordinary Income amount. (3) Unrecaptured Section 1250 Gain is a subset of, and included in, the Total Capital Gain amount. ...

REIT Sector Performance - The REIT sector rebounded in November with a +1.02% return, narrowing the year-to-date negative total return to -2.55% for the average REIT [1] - REITs outperformed the broader market in November, exceeding the returns of the Dow Jones Industrial Average (+0.5%), S&P 500 (+0.2%), and NASDAQ (-1.4%) [1] - The Vanguard Real Estate ETF (VNQ) achieved a return of +2.42% in November, significantly outperforming the average REIT [1] - The spread between the 2026 FFO multiples of large cap REITs (16.2x) and small cap REITs (12.8x) widened, with investors paying 26.6% more for large cap REITs [1] Property Type Performance - In November, 9 out of 18 property types averaged positive returns, with a 33.18% total return spread between the best (Advertising +22.32%) and worst (Data Centers -10.86%) performing property types [5][6] - Year-to-date, Health Care (+30.53%) and Advertising (+24.67%) are the only property types with double-digit positive returns, while Office (-18.35%) and Data Centers (-13.93%) have seen significant declines [7][10] Market Capitalization Insights - Mid cap REITs averaged gains of +3.53%, while small cap REITs gained +3.38%, contrasting with large cap REITs which only gained +0.32% [3] - The average P/FFO for the REIT sector increased from 13.5x to 13.7x during November, with 50% of property types experiencing multiple expansion [7] Individual Security Highlights - OUTFRONT Media (OUT) led the sector with a +33.01% return in November after strong Q3 earnings and raised guidance [9] - Office Properties Income Trust (OPI) faced a significant decline of -54.53% in November, following its Chapter 11 bankruptcy filing, bringing its year-to-date total return to -98.25% [10] Dividend Yield Insights - High dividend yields are a key attraction for investors in the REIT sector, with many REITs trading below their NAV, resulting in attractive yields [14][15]

Property Operations and Revenue - The company operates 122 properties with a total rentable area of 17,117 thousand sq. ft. and an expected occupancy rate of 77.3% in 2025, declining to 75.0% by 2027[14]. - The company operates 19 properties with a total rentable area of 3.6 million sq. ft., maintaining an occupancy rate of 93.3%[40]. - The company operates 17 properties with a total rentable area of 2,126 thousand sq. ft., maintaining an occupancy rate of 97.5% in 2025, projected to decrease to 94.3% by 2029[45]. - The company’s portfolio includes 19 properties with a total rentable area of 3,218 thousand sq. ft., with an occupancy rate projected to rise from 80.6% in 2025 to 88.0% by 2030[49]. - The portfolio consists of 35 properties with a total rentable area of 4.125 million sq. ft. and an average property size of 117,851 sq. ft.[53]. - The average property age across the portfolio is 18.8 years, indicating a mature asset base[39]. - The average property age in the portfolio is 16.8 years, indicating a relatively mature asset base[53]. Financial Projections and Performance - Cash Basis NOI is projected to be $216 million in 2025, with a slight decrease to $211 million in 2026, followed by an increase to $231 million in 2028[14]. - Cash Basis NOI is expected to grow from $216.4 million in 2025 to $246.3 million in 2030, with a CAGR of 2.6%[25]. - Cash Basis NOI is projected to increase from $64.4 million in 2025 to $76.2 million in 2030, with a CAGR of 3.4%[40]. - Cash Basis NOI for the 19 properties is projected to increase from $27.948 million in 2025 to $42.894 million in 2030, with a CAGR of 8.9%[49]. - The company anticipates a cash flow before G&A and debt service to increase from $142.9 million in 2025 to $161.3 million in 2030, reflecting a CAGR of 2.4%[25]. - The company anticipates a significant increase in cash flow before G&A and debt service, from $32.922 million in 2025 to $37.402 million in 2030, representing a CAGR of 2.6%[45]. - The company expects a significant increase in cash flow before G&A and debt service for the 19 properties, from $14.138 million in 2025 to $17.680 million in 2030, representing a CAGR of 4.6%[49]. - Total cash flow from operations projected at $15,534,000 for the period ending January 30, 2026[142]. - Net cash flow after financing projected at $17,596,000, indicating a positive liquidity position[141]. Capital Expenditures and Investments - The total capital expenditures (Capex) for 2025 are estimated at $73 million, with $57 million allocated for leasing Capex and $15 million for building Capex[22]. - Total capital expenditures (Capex) are projected to increase from $73.5 million in 2025 to $85.0 million in 2030, with Capex as a percentage of Cash Basis NOI averaging around 34.5%[25]. - A total of $53 million is expected to be spent on Speculative Leasing Capex in 2025-26, aimed at driving NOI growth[23]. - The company plans to manage leasing capex, which is expected to decrease from $18.485 million in 2025 to $15.681 million by 2030[55]. - Total capital expenditures (Capex) forecasted at $2,184,000, indicating significant investment in operational capacity[142]. Leasing and Occupancy - The leasing pipeline totals nearly 2 million sq. ft., with one-third expected to result in positive net absorption[16]. - The company has successfully renewed 60% of the leases expiring in 2026, representing a significant achievement in leasing activity[16]. - Annualized rental income from lease expirations in 2025 is projected at $28.4 million, with 1,210 sq. ft. or 9% of total leased sq. ft. expiring[18]. - Occupancy rates are projected to improve from 77.3% in 2025 to 79.8% by 2030[25]. - The average occupancy for the collateral pools is currently at 82%, with a weighted average lease term (WALT) of 6.8 years[26]. Debt and Financing - The company has $445 million in aggregate principal amount of 3.250% Secured Notes due 2027, with current interest payments at 7.5%[94]. - Total debt amounts to $2.244 billion, with the 2027 Notes representing 18.6% and the March 2029 Notes accounting for 13.4% of the total[98]. - The company plans to seek approval for a DIP Facility within 2 business days following the Petition Date, with a final order expected within 40 days[92]. - The company is seeking a $90 million debtor-in-possession (DIP) credit facility, with an option to increase to $125 million[77]. - The DIP facility will bear an interest rate of 10.5% payable in cash, with an additional 3.00% during any event of default[78]. - The company will provide a 13-week budget statement detailing the anticipated uses of the DIP facility[80]. - The DIP Facility is secured by a perfected junior lien on all now owned or after-acquired assets of the Credit Parties[81]. - The company is obligated to indemnify the Agent and Lenders against all losses and claims related to the DIP Facility[87]. - The company has a plan value of $1.7 billion, which excludes the collateral for the 2027 Notes[104]. Strategic Initiatives and Market Focus - The company is focusing on property dispositions to increase liquidity and reduce negative carry costs associated with vacant properties[16]. - The company has identified potential redevelopment projects among the properties slated for disposition, focusing on challenged markets[29]. - The company is focusing on urban properties, with a significant portion of tenants in investment-grade sectors such as U.S. Government and legal/professional services[53]. - The company is discussing a new management agreement with RMR to incentivize asset sales[120]. Operational Efficiency and Cost Management - The projected margin for Cash Basis NOI is expected to improve from 51.3% in 2025 to 52.1% by 2029[14]. - The company has a cash basis NOI margin of 56.7% in 2025, which is expected to slightly decline to 57.8% by 2030[40]. - The portfolio's cash basis NOI margin is projected to improve from 33.9% in 2025 to 35.5% by 2030[55]. - Cash Basis NOI margin is expected to decline from 51.7% in 2025 to 44.7% in 2026, indicating a tightening operational efficiency[64]. Revenue Trends and Forecasts - Property revenue is projected to grow from $421.7 million in 2025 to $473.6 million in 2030, reflecting a CAGR of 2.3%[25]. - The average property revenue per leased square foot is expected to rise from $30.92 in 2025 to $35.00 in 2030, representing a growth of 13.4%[25]. - Property revenue is expected to grow from $113.6 million in 2025 to $132.0 million in 2030, reflecting a compound annual growth rate (CAGR) of 3.0%[40]. - Property revenue for the 19 properties is expected to grow from $56.218 million in 2025 to $74.864 million in 2030, reflecting a CAGR of 5.9%[49]. - The top six properties contribute 64.0% of the 2026 cash basis NOI, with property revenue expected to grow from $76.4 million in 2025 to $91.4 million in 2030, a CAGR of 3.6%[41].

Core Viewpoint - Office Properties Income Trust has entered into a Restructuring Support Agreement with an ad hoc group of holders of its senior secured notes due September 2029 to restructure its corporate debt and significantly deleverage its balance sheet [1]. Group 1 - The Restructuring Support Agreement aims to facilitate the restructuring of corporate debt [1]. - The agreement involves an ad hoc group known as the September 2029 Ad Hoc Group [1]. - The restructuring is expected to allow the company to substantially reduce its leverage [1].

Core Viewpoint - Office Properties Income Trust (NASDAQ:OPI) is reportedly considering a bankruptcy filing due to significant financial pressures related to its debt obligations [2] Company Summary - OPI's stock price has dropped by 29% following the news of its potential bankruptcy filing [2] - The company is facing over $900 million in debt maturities, which is a critical factor in its financial distress [2]

Market Overview - The market is currently experiencing a calm before a potential storm, balancing hopes for an imminent rate cut against ongoing geopolitical and economic uncertainties [1] - There is a growing confidence in the likelihood of the Federal Reserve easing monetary policies, with a 96% chance of a quarter-point rate cut anticipated [1][15] - The broader market remains upbeat, with the Nasdaq Composite gaining 2% last week and closing at a new all-time high above 22,000 [8] Company-Specific Developments - Nvidia's stock fell approximately 2.5% in pre-market trading due to a regulatory probe from China, which found the company potentially violating antitrust laws [2][9] - Tesla's stock showed strong performance in pre-market trading, gaining about 7.2% and priced around $420.56, reflecting positive investor sentiment ahead of upcoming developments [5][11] - Tesla's surge follows strong earnings reports and optimism regarding growth in electric vehicle sales and energy solutions [12] Economic Indicators - Treasury yields remain a key pressure point, with the 10-year yield holding near recent highs, while oil prices have climbed back above $71 per barrel [6] - The U.S. dollar has strengthened against major currencies, raising concerns for multinational earnings in the coming months [6] - Inflation remains stubbornly near 3.1% year-over-year on core CPI, even as the labor market shows signs of weakness [19] Future Projections - Economists expect as many as six consecutive rate cuts stretching into 2026, potentially lowering policy rates to between 2.75% and 3% [17] - The immediate focus is on the Federal Reserve's decision, with investors seeking clarity on whether the rate cut will be a one-off or the beginning of a series of reductions [25]

Financial Data and Key Metrics Changes - Annualized revenue decreased to $398 million, down $85 million or nearly 18% year-over-year [7] - Interest expense increased to $53 million, up $14 million or 37% year-over-year [7] - Normalized FFO for Q2 was $9.4 million or $0.13 per share, compared to $4.4 million or $0.06 per share for the same quarter last year [11] Business Line Data and Key Metrics Changes - Same property occupancy stood at 85.2% as of June 30, 2025 [5] - Executed 15 leases totaling 416,000 square feet with a weighted average lease term of 5.4 years, at rental rates 6.4% higher than prior rates [8] - Concessions and capital commitments declined by 24% quarter-over-quarter to $3.53 per square foot per year [8] Market Data and Key Metrics Changes - Approximately 59% of revenues come from investment-grade rated tenants or their subsidiaries, with the U.S. Government as the largest tenant, representing 17.1% of annualized revenue [6] - 1.3 million square feet of leases are scheduled to expire through 2026, representing $30 million or 7.6% of annualized rental income [9] Company Strategy and Development Direction - The company suspended the quarterly dividend to preserve approximately $3 million of cash annually [8] - Focus on leasing and operating properties while exploring options to address financial commitments and reduce costs [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that financial performance has materially declined due to ongoing leasing challenges in the office sector [6] - For Q3 2025, normalized FFO is expected to be between $0.07 and $0.09 per share, with a projected decrease in same property cash basis NOI of 7% to 9% compared to 2024 [12] Other Important Information - Total liquidity is currently $90 million in cash, with projected cash from operations being a use of $45 million to $55 million during the remainder of 2025 [14] - The company has three properties under agreement to sell for $28.9 million, with expected closings in September 2025 and 2027 [13] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session.

Financial Results and Supplemental Information SECOND QUARTER 2025 July 30, 2025 Table of Contents QUARTERLY RESULTS | Office Properties Income Trust Announces Second Quarter 2025 Financial Results | | 4 | | --- | --- | --- | | Second Quarter 2025 Summary | | 5 | | FINANCIALS | | | | Key Financial Data | | 7 | | Condensed Consolidated Statements of Income (Loss) | | 8 | | Condensed Consolidated Balance Sheets | | 9 | | Debt Summary | | 10 | | Debt Maturity Schedule | | 11 | | Leverage Ratios, Coverage Ratio ...

PART I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited Q2 2025 financials show declining assets, a net loss, negative operating cash flow, and substantial going concern doubt [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Balance Sheet Items | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total real estate properties, net | 2,990,023 | 3,038,909 | -1.6% | | Cash and cash equivalents | 78,176 | 261,318 | -70.1% | | **Total assets** | **3,560,949** | **3,822,286** | **-6.8%** | | Unsecured debt, net | 488,754 | 662,277 | -26.2% | | Secured debt, net | 1,876,439 | 1,872,357 | +0.2% | | **Total liabilities** | **2,495,021** | **2,669,482** | **-6.5%** | | **Total shareholders' equity** | **1,065,928** | **1,152,804** | **-7.5%** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Income Statement Items | Three Months Ended June 30, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Rental income | 114,499 | 123,686 | 228,114 | 263,121 | | Total expenses | 104,051 | 235,053 | 205,948 | 342,458 | | **Net (loss) income** | **(41,186)** | **76,171** | **(87,053)** | **70,987** | | **Net (loss) income per share** | **($0.58)** | **$1.56** | **($1.24)** | **$1.45** | - The company experienced a significant swing from a net income of **$76.2 million** in Q2 2024 to a net loss of **$41.2 million** in Q2 2025, primarily due to lower rental income and the absence of a large gain on early extinguishment of debt that occurred in the prior-year period[11](index=11&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) - Total shareholders' equity decreased from **$1.15 billion** at the end of 2024 to **$1.07 billion** as of June 30, 2025, primarily driven by a net loss of **$87.1 million** for the six-month period[13](index=13&type=chunk)[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Items (Six Months Ended June 30) | 2025 ($ thousands) | 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 3,811 | 58,499 | | Net cash provided by (used in) investing activities | 4,506 | (21,282) | | Net cash used in financing activities | (191,528) | (29,544) | | **(Decrease) increase in cash** | **(183,211)** | **7,673** | | Cash, cash equivalents and restricted cash at end of period | 91,954 | 34,387 | - Net cash from operating activities plummeted by **93.5% YoY** for the first six months of 2025, dropping from **$58.5 million** to **$3.8 million**, reflecting deteriorating operational performance[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company has concluded that there is substantial doubt about its ability to continue as a going concern due to adverse market conditions, limited financing alternatives for upcoming debt obligations, and the possibility of considering a bankruptcy reorganization if refinancing is unsuccessful[22](index=22&type=chunk)[23](index=23&type=chunk) - During the first six months of 2025, OPI sold three properties for an aggregate price of **$26.9 million**, with three additional properties under agreement to be sold for a total of **$28.9 million** as of July 29, 2025[29](index=29&type=chunk)[31](index=31&type=chunk) - On July 10, 2025, the company announced the suspension of its quarterly distribution on common shares in order to preserve cash[57](index=57&type=chunk) - In March 2025, the company initiated an "at the market" (ATM) offering program to sell up to **$100 million** in common shares, selling approximately **4.2 million shares** for net proceeds of **$1.1 million** through June 30, 2025[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses severe market headwinds, declining occupancy, and constrained liquidity, raising substantial doubt about going concern [Overview](index=21&type=section&id=Overview) - As of June 30, 2025, OPI's portfolio consisted of **125 wholly-owned properties**, with the U.S. government as the largest tenant, accounting for **17.1%** of annualized rental income[79](index=79&type=chunk) - Management reiterates substantial doubt about the company's ability to continue as a going concern due to limited financing alternatives, illiquid assets, and covenant constraints, with bankruptcy reorganization a possibility if refinancing efforts fail[81](index=81&type=chunk) [Property Operations](index=21&type=section&id=Property%20Operations) | Occupancy Metrics | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Properties | 125 | 151 | | Total Rentable Square Feet (thousands) | 17,270 | 20,293 | | Percent Leased | 81.2% | 83.5% | - For the six months ended June 30, 2025, the company entered into new and renewal leases for **639,000 square feet** with a weighted average rental rate increase of **8.8%** and committed **$18.6 million** in tenant leasing costs and concessions[89](index=89&type=chunk) - A significant portion of leases are set to expire in the near to medium term, with **12.6%** of annualized rental income expiring in 2027 and **38.1%** expiring in 2034 and thereafter[97](index=97&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) | Metric (Three Months Ended June 30) | 2025 ($ thousands) | 2024 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Rental Income | 114,499 | 123,686 | -7.4% | | Total Operating Expenses | 49,031 | 47,640 | +2.9% | | Net Operating Income (NOI) | 65,468 | 76,046 | -13.9% | | Net (Loss) Income | (41,186) | 76,171 | -154.1% | - The decrease in Q2 2025 rental income was driven by property dispositions and increased vacancies, while the significant drop in net income was largely due to the absence of a **$225.8 million** gain on early debt extinguishment recorded in Q2 2024[110](index=110&type=chunk)[119](index=119&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) | Per Share Data (Three Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net (loss) income | ($0.58) | $1.56 | | FFO | $0.08 | $5.32 | | Normalized FFO | $0.13 | $0.68 | - Normalized Funds from Operations (Normalized FFO), a key metric of operating performance for REITs, declined sharply to **$0.13 per share** in Q2 2025 from **$0.68 per share** in Q2 2024, reflecting the deterioration in core operations[142](index=142&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) - As of July 30, 2025, the company's liquidity consisted of **$90.1 million** in cash, with its **$325 million** revolving credit facility fully drawn[148](index=148&type=chunk)[156](index=156&type=chunk) Debt Maturities ($ thousands) | Debt Maturities ($ thousands) | Amount | | :--- | :--- | | 2025 | 13,000 | | 2026 | 279,460 | | 2027 | 346,298 | | 2028 | 123,487 | | 2029 | 910,278 | | 2030 and thereafter | 332,395 | | **Total** | **2,004,918** | - The company is in compliance with its debt covenants as of June 30, 2025, but notes its ability to incur additional debt is limited due to the narrow margin of compliance[162](index=162&type=chunk)[163](index=163&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a smaller reporting company, is not required to provide disclosures under this item - As a smaller reporting company, OPI is not required to make disclosures under Item 3 regarding market risk[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter, with no material changes to internal control over financial reporting during the period - Management's evaluation concluded that the company's disclosure controls and procedures are effective as of June 30, 2025[172](index=172&type=chunk) PART II. Other Information [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors from the 2024 Annual Report were reported[183](index=183&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter ended June 30, 2025, the company purchased a total of 18,065 of its own common shares at a weighted average price of $0.31 per share to satisfy tax withholding obligations for a former officer and certain former employees of RMR in connection with the vesting of share awards Unregistered Sales of Equity Securities and Use of Proceeds | Calendar Month (2025) | Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April | 5,300 | $0.41 | | May | 7,406 | $0.33 | | June | 5,359 | $0.20 | | **Total** | **18,065** | **$0.31** | [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, indentures related to various senior notes, and officer certifications

[Quarterly Results](index=3&type=section&id=QUARTERLY%20RESULTS) This section provides an overview of Office Properties Income Trust's (OPI) financial performance and operational highlights for the second quarter of 2025 [Q2 2025 Financial Results Announcement](index=4&type=section&id=Office%20Properties%20Income%20Trust%20Announces%20Second%20Quarter%202025%20Financial%20Results) OPI announced Q2 2025 financial results, notably suspending its quarterly cash distribution on common shares to preserve cash - On July 10, 2025, OPI suspended its quarterly cash distribution on common shares to preserve cash[11](index=11&type=chunk) - OPI is a national REIT focused on owning and leasing office properties to high credit quality tenants, owning **125 properties** with approximately **17.3 million square feet** as of June 30, 2025[13](index=13&type=chunk) - Approximately **59% of OPI's revenues** were from investment-grade rated tenants as of the end of the quarter[13](index=13&type=chunk) [Second Quarter 2025 Summary](index=5&type=section&id=Second%20Quarter%202025%20Summary) OPI reported a **net loss of $41.2 million** and **Normalized FFO of $9.4 million** in Q2 2025, with **85.2% same property occupancy** and **$90.1 million in cash**, while expressing substantial doubt about its going concern ability Q2 2025 Key Metrics | Metric | Value | | :--- | :--- | | Net Loss | $41.2 million ($0.58/share) | | Normalized FFO | $9.4 million ($0.13/share) | | Same Property Cash Basis NOI | $55.0 million | | Total Leasing Executed | 416,000 sq. ft. | | Same Property Occupancy | 85.2% | | Weighted Average Lease Term | 6.8 years | - In July 2025, OPI sold one property of approximately **56,000 square feet** for **$2.2 million**[14](index=14&type=chunk) - As of July 30, 2025, total available liquidity was **$90.1 million in cash**, and the company continues to conclude there is substantial doubt about its ability to continue as a going concern[14](index=14&type=chunk) [Financials](index=6&type=section&id=FINANCIALS) This section details OPI's financial performance, including key financial data, income statements, balance sheets, debt summaries, capital expenditures, property dispositions, and joint venture investments [Key Financial Data](index=7&type=section&id=Key%20Financial%20Data) OPI's Q2 2025 key financial data shows a **net loss of $41.2 million** and **Normalized FFO of $9.4 million**, with **$78.2 million in total liquidity** from fully drawn credit facilities Selected Financial Data (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Rental Income | $114.5M | $123.7M | | Net (Loss) Income | ($41.2M) | $76.2M | | Normalized FFO | $9.4M | $33.2M | | CAD | ($6.2M) | ($1.1M) | | Net (Loss) Income per Share | ($0.58) | $1.56 | | Normalized FFO per Share | $0.13 | $0.68 | - Total liquidity as of June 30, 2025, was **$78.2 million**, comprised solely of cash and cash equivalents, with the **$325 million** secured revolving credit facility being fully drawn[18](index=18&type=chunk) [Condensed Consolidated Statements of Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) OPI reported a **net loss of $41.2 million** for Q2 2025, a significant decline from Q2 2024's net income, primarily due to lower rental income and higher interest expense Income Statement Highlights (Three Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Rental Income | $114,499 | $123,686 | | Total Expenses | $104,051 | $235,053 | | Interest Expense | ($52,507) | ($38,349) | | Net Gain (Loss) on Early Extinguishment of Debt | $148 | $225,798 | | **Net (Loss) Income** | **($41,186)** | **$76,171** | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, OPI's **total assets were $3.56 billion**, **total liabilities $2.50 billion**, and **total shareholders' equity $1.07 billion**, all showing decreases from year-end 2024 Balance Sheet Summary | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Real Estate Properties, net | $2,990,023 | $3,038,909 | | Cash and Cash Equivalents | $78,176 | $261,318 | | **Total Assets** | **$3,560,949** | **$3,822,286** | | Total Debt, net (Unsecured + Secured) | $2,365,193 | $2,534,634 | | **Total Liabilities** | **$2,495,021** | **$2,669,482** | | **Total Shareholders' Equity** | **$1,065,928** | **$1,152,804** | [Debt Summary](index=10&type=section&id=Debt%20Summary) As of June 30, 2025, OPI's total debt was approximately **$2.43 billion** with a **weighted average interest rate of 8.40%** and **4.5 years to maturity**, primarily composed of secured debt Total Debt Overview (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Principal Balance | $2,429,918 thousand | | Weighted Average Interest Rate | 8.395% | | Weighted Average Years to Maturity | 4.5 years | - The debt is comprised of **$425 million** in secured floating-rate debt, **$1.51 billion** in secured fixed-rate debt, and **$491 million** in unsecured fixed-rate debt[25](index=25&type=chunk) - The **$325 million** secured revolving credit facility was fully drawn as of June 30, 2025[26](index=26&type=chunk) [Debt Maturity Schedule](index=11&type=section&id=Debt%20Maturity%20Schedule) OPI's debt maturity schedule indicates significant upcoming maturities in **2026, 2027, and 2029**, with **79.8% of debt secured** and **82.5% fixed-rate** as of Q2 2025 Debt Maturities by Year (Principal in thousands) | Year | Amount Due | | :--- | :--- | | 2026 | $145,531 | | 2027 | $910,278 | | 2028 | $123,487 | | 2029 | $267,992 | | 2030 and thereafter | $278,841 | - Debt composition is **79.8% secured** and **20.2% unsecured**, with **82.5% fixed-rate** and **17.5% variable-rate** by type[28](index=28&type=chunk) [Leverage and Debt Covenants](index=12&type=section&id=Leverage%20Ratios%2C%20Coverage%20Ratios%20and%20Public%20Debt%20Covenants) OPI's leverage ratios deteriorated in Q2 2025, with **net debt to Adjusted EBITDAre at 9.3x**, yet the company remains in compliance with public debt covenants, albeit with minimal margin on some Key Ratios and Covenants (as of June 30, 2025) | Ratio / Covenant | Q2 2025 Value | Requirement | | :--- | :--- | :--- | | Net debt / total gross assets | 55.6% | N/A | | Net debt / rolling four quarter Adjusted EBITDAre | 9.3x | N/A | | Total unencumbered assets / unsecured debt | 161.6% | min 150.0% | | Secured debt / adjusted total assets | 39.8% | max 40.0% | | Consolidated income available for debt service / debt service | 1.51x | min 1.50x | [Capital Expenditures Summary](index=13&type=section&id=Capital%20Expenditures%20Summary) Total capital expenditures for Q2 2025 amounted to **$13.7 million**, predominantly comprising **$13.2 million in recurring capital expenditures** for lease-related costs and building improvements Capital Expenditures (Three Months Ended June 30, 2025) | Category | Amount (in thousands) | | :--- | :--- | | Lease related costs | $8,830 | | Building improvements | $4,327 | | **Recurring capital expenditures** | **$13,157** | | Development, redevelopment and other | $565 | | **Total capital expenditures** | **$13,722** | [Property Dispositions](index=14&type=section&id=Property%20Dispositions) Since January 1, 2025, OPI has sold three properties totaling **305,000 square feet** for a gross sales price of **$29.05 million**, averaging **$95.25 per square foot** Dispositions Since January 1, 2025 | Date Sold | Location | Sq. Ft. (thousands) | Gross Sales Price (thousands) | | :--- | :--- | :--- | :--- | | 2/7/2025 | Parsippany, NJ | 100 | $5,750 | | 2/26/2025 | Santa Clara, CA | 149 | $21,150 | | 7/8/2025 | Detroit, MI | 56 | $2,150 | | **Total** | | **305** | **$29,050** | [Investment in Unconsolidated Joint Venture](index=15&type=section&id=Investment%20in%20Unconsolidated%20Joint%20Venture) OPI holds a **51% interest** in the Prosperity Metro Plaza joint venture, valued at **$17.0 million**, with the JV having a **$49.6 million mortgage** where OPI's proportionate share is **$25.3 million** - OPI owns a **51% interest** in the Prosperity Metro Plaza joint venture, with an investment of **$16,990 thousand**[39](index=39&type=chunk) - The joint venture property is **346,000 sq. ft.**, has an occupancy of **77.6%**, and a weighted average remaining lease term of **3.8 years**[39](index=39&type=chunk) - The JV has a **$49.6 million** mortgage note with a **4.090% interest rate**, maturing in December 2029, where OPI's share of this principal is **$25.3 million**, though the debt is non-recourse to OPI[40](index=40&type=chunk) [Portfolio Information](index=16&type=section&id=PORTFOLIO%20INFORMATION) This section provides detailed information on OPI's property portfolio, including same-property results, occupancy, leasing activity, tenant diversity, and lease expiration schedules [Summary Same Property Results](index=17&type=section&id=Summary%20Same%20Property%20Results) OPI's same-property portfolio experienced a decline in Q2 2025, with **Same Property NOI decreasing by 6.1%** and **Cash Basis NOI by 10.3%**, driven by a drop in occupancy to **85.2%** Same Property Performance (Three Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Percent Leased | 85.2% | 91.4% | N/A | | Same Property NOI | $62.4M | $66.4M | (6.1%) | | Same Property Cash Basis NOI | $55.0M | $61.3M | (10.3%) | [Occupancy and Leasing Summary](index=18&type=section&id=Occupancy%20and%20Leasing%20Summary) As of Q2 2025, OPI's total portfolio was **81.2% leased**, with **416,000 square feet of leasing executed** during the quarter at a **6.4% positive change in GAAP rent** Q2 2025 Leasing Activity | Leasing Metric | New Leases | Renewals | Total | | :--- | :--- | :--- | :--- | | Square Feet | 138,000 | 278,000 | 416,000 | | % Change in GAAP Rent | 8.5% | 5.2% | 6.4% | | W.A. Lease Term (Years) | 4.7 | 5.8 | 5.4 | - Total portfolio occupancy was **81.2%** at the end of Q2 2025, slightly down from **81.3%** in the prior quarter[47](index=47&type=chunk) [Tenant Diversity and Credit Characteristics](index=19&type=section&id=Tenant%20Diversity%20and%20Credit%20Characteristics) OPI's tenant base as of June 30, 2025, shows **58.7% of rental income from investment-grade tenants**, with the **U.S. Government as the largest tenant** category at **17.1%** - By credit rating, tenants are segmented as: **Investment Grade (58.7%)**, Not Rated (**34.5%**), and Non-Investment Grade (**6.8%**)[51](index=51&type=chunk) - The top tenant industries by annualized rental income are **U.S. Government (17.1%)**, Real Estate & Financial (**16.0%**), and Technology & Communications (**15.4%**)[51](index=51&type=chunk) [Top Tenants](index=20&type=section&id=Tenants%20Representing%201%25%20or%20More%20of%20Total%20Annualized%20Rental%20Income) The **U.S. Government** is OPI's largest tenant, contributing **17.1% of total annualized rental income**, with the top 21 tenants collectively representing **60.5%** Top 5 Tenants by Annualized Rental Income | Tenant | Credit Rating | % of Total Annualized Rental Income | | :--- | :--- | :--- | | U.S. Government | Investment Grade | 17.1% | | Alphabet Inc. (Google) | Investment Grade | 5.8% | | IG Investments Holdings LLC | Not Rated | 4.7% | | Bank of America Corporation | Investment Grade | 4.4% | | Shook, Hardy & Bacon L.L.P. | Not Rated | 3.4% | [Lease Expiration Schedule](index=21&type=section&id=Lease%20Expiration%20Schedule) OPI faces significant lease expirations, with **20.2% of annualized rental income** set to expire by the end of **2027**, and a **weighted average remaining lease term of 6.8 years** Cumulative Lease Expirations (% of Annualized Rental Income) | Year | % Expiring in Year | Cumulative % Expiring | | :--- | :--- | :--- | | 2025 | 3.6% | 3.6% | | 2026 | 4.0% | 7.6% | | 2027 | 12.6% | 20.2% | | 2028 | 7.2% | 27.4% | | 2029 | 8.3% | 35.7% | - The weighted average remaining lease term is **6.6 years** based on square footage and **6.8 years** based on annualized rental income[55](index=55&type=chunk) [Appendix](index=22&type=section&id=APPENDIX) This section includes supplementary information such as company profile, governance details, and reconciliations of non-GAAP financial measures [Company Profile and Governance Information](index=23&type=section&id=Company%20Profile%20and%20Governance%20Information) OPI is externally managed by The RMR Group, an alternative asset management company with approximately **$40 billion in real estate assets under management** - OPI is managed by The RMR Group, which had approximately **$40 billion** of real estate assets under management as of June 30, 2025[62](index=62&type=chunk) [Reconciliation of NOI and Cash Basis NOI](index=24&type=section&id=Calculation%20and%20Reconciliation%20of%20NOI%20and%20Cash%20Basis%20NOI) This section reconciles GAAP Net (Loss) Income to non-GAAP measures, showing a **Q2 2025 Net Loss of $41.2 million** reconciled to an **NOI of $65.5 million** and a **Cash Basis NOI of $58.1 million** Q2 2025 Reconciliation Summary (in thousands) | Metric | Value | | :--- | :--- | | Net (Loss) Income | ($41,186) | | **NOI** | **$65,468** | | **Cash Basis NOI** | **$58,078** | [Reconciliation of Same Property NOI](index=25&type=section&id=Reconciliation%20and%20Calculation%20of%20Same%20Property%20NOI%20and%20Same%20Property%20Cash%20Basis%20NOI) This section reconciles total NOI to Same Property NOI, adjusting **Q2 2025 total NOI of $65.5 million** to a **Same Property NOI of $62.4 million** and a **Same Property Cash Basis NOI of $55.0 million** Q2 2025 Same Property Reconciliation (in thousands) | Metric | Value | | :--- | :--- | | NOI | $65,468 | | Less: NOI of properties not in same property results | ($3,066) | | **Same Property NOI** | **$62,402** | | **Same Property Cash Basis NOI** | **$55,016** | [Property Details (by Collateral Pool)](index=26&type=section&id=Property%20Details%20%28by%20Collateral%20Pool%29) This section details OPI's **125 properties** by collateral pool, indicating **98 encumbered properties** totaling **14.46 million square feet** and **27 unencumbered properties** totaling **2.81 million square feet** Portfolio Summary by Collateral Status | Category | Number of Properties | Sq. Ft. (thousands) | Occupancy | Gross Book Value (thousands) | | :--- | :--- | :--- | :--- | :--- | | Subtotal Secured | 98 | 14,459 | 85.0% | $3,944,894 | | Subtotal Unencumbered | 27 | 2,811 | 61.4% | $657,207 | | **Total** | **125** | **17,270** | **81.2%** | **$4,602,101** | [Reconciliation of EBITDA, EBITDAre, and Adjusted EBITDAre](index=34&type=section&id=Calculation%20of%20EBITDA%2C%20EBITDAre%20and%20Adjusted%20EBITDAre) This section details the calculation of EBITDA, EBITDAre, and Adjusted EBITDAre, reconciling OPI's **Q2 2025 Net Loss of $41.2 million** to an **Adjusted EBITDAre of $61.6 million** Q2 2025 EBITDAre Reconciliation (in thousands) | Metric | Value | | :--- | :--- | | Net (Loss) Income | ($41,186) | | EBITDA | $55,253 | | EBITDAre | $57,648 | | **Adjusted EBITDAre** | **$61,645** | [Reconciliation of FFO, Normalized FFO, and CAD](index=35&type=section&id=Calculation%20of%20FFO%2C%20Normalized%20FFO%20and%20CAD) This section calculates FFO, Normalized FFO, and CAD, reporting **Q2 2025 FFO of $5.6 million**, **Normalized FFO of $9.4 million**, and a **CAD deficit of $6.2 million** Q2 2025 FFO and CAD Reconciliation (in thousands) | Metric | Per Share | Total Amount | | :--- | :--- | :--- | | Net (Loss) Income | ($0.58) | ($41,186) | | FFO | $0.08 | $5,627 | | Normalized FFO | $0.13 | $9,419 | | CAD | ($0.09) | ($6,208) | [Non-GAAP Financial Measures and Certain Definitions](index=36&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Certain%20Definitions) This section defines key non-GAAP financial measures like NOI, FFO, and CAD, explaining their utility for performance evaluation, along with other important report terms - Provides definitions for key non-GAAP metrics such as NOI, FFO, and CAD, explaining that they are used to provide results more closely related to property-level operations and to facilitate performance comparisons[85](index=85&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - Defines other key terms used in the report, such as Annualized Rental Income, Gross Book Value, and Same Properties criteria[92](index=92&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk)