Financial Data and Key Metrics Changes - For Q4 2024, the company reported normalized FFO of $20.9 million or $0.36 per share, which was $0.01 above guidance, compared to $22.1 million or $0.43 per share in Q3 2024 [30] - Same property cash basis NOI was $60.9 million, representing a 4.9% increase compared to Q4 2023, driven by lower operating expenses and the sale of certain vacant properties [31] Business Line Data and Key Metrics Changes - The portfolio consisted of 128 properties totaling 17.8 million square feet, generating $428 million of annualized revenue, down from $513 million a year ago [13] - Total leasing volume increased more than 20% year-over-year, with 52 leases signed for over 2 million square feet at a weighted average lease term of nearly nine years and a rental rate increase of 6.3% [19] Market Data and Key Metrics Changes - In Washington, D.C., the company's largest MSA, vacancy is nearly 33%, with leasing conditions remaining challenging [16] - The company anticipates that at least one agency, the Department of Safety and Environmental Enforcement, may terminate its lease in Q2 2025, impacting revenue [17] Company Strategy and Development Direction - The company has taken steps to address debt maturities and liquidity constraints, completing $1.8 billion in secured financings and reducing total debt principal by nearly $200 million compared to the prior year [9][10] - The company is evaluating additional disposition opportunities to mitigate occupancy risk and associated carry costs of vacant properties [28] Management's Comments on Operating Environment and Future Outlook - Management noted that while there are positive trends in the office sector, these have not yet materialized in the company's portfolio [14] - The company expects normalized FFO for Q1 2025 to be between $0.08 and $0.10 per share, primarily driven by lower NOI due to asset sales and tenant vacancies [32] Other Important Information - The company has launched a debt exchange offer for up to $175 million of new senior guaranteed unsecured notes to address upcoming debt maturities [12][38] - The company reported a total liquidity of $113 million in cash and projected a cash burn of $60 million to $70 million from operations in 2025 [37] Summary of Q&A Session - The company did not take questions during the call due to the ongoing debt exchange offer [8][40]

Financial Performance - Office Properties Income Trust (OPI) reported a net loss of $148.7 million, or $2.52 per common share, for Q4 2024[16] - Normalized FFO was $20.9 million, or $0.36 per common share[16] - Same property cash basis NOI increased by 4.9% year-over-year, reaching $60.9 million[9, 16] - Total liquidity as of February 13, 2025, was $113.0 million in cash[16] Portfolio & Leasing - Same-property portfolio occupancy grew to 89.4%[9] - OPI completed 359,000 square feet of new and renewal leasing with a 24.3% roll-up in rent and a weighted average lease term of 7.1 years[9] - Lease renewals accounted for 91% of leased square footage[16] - Approximately 58% of OPI's revenues were from investment grade rated tenants as of December 31, 2024[14] Debt & Disposition - OPI sold 17 office properties for approximately $114 million[8] - OPI exchanged $37.8 million of outstanding senior unsecured notes due 2025 for $42.6 million of new 9.0% senior secured notes due 2029 and 4.4 million common shares[16] - OPI issued $445.0 million of new 3.25% senior secured notes due 2027 and 11.5 million common shares in exchange for $340.0 million of the 2025 Notes[16] Covenants - Total unencumbered assets / unsecured debt was 169.2%[33] - Total debt / adjusted total assets was 49.8%[33] - Secured debt / adjusted total assets was 39.7%[33] - Consolidated income available for debt service / debt service was 1.6x[33]

REIT Qualification and Taxation - The company must distribute at least 90% of its annual REIT taxable income to qualify for taxation as a REIT, limiting its ability to retain cash for operations and investments[37] - The company has elected to be taxed as a REIT under Sections 856 through 860 of the IRC, effective from the 2009 taxable year[64] - The company believes it has operated in a manner that qualifies it for REIT taxation since 2009 and will continue to do so[66] - If the company fails to qualify as a REIT, it would be subject to federal income tax as a C corporation, potentially leading to significant tax liabilities and reduced cash available for distribution[68] - The company must distribute at least 85% of its REIT ordinary income and 95% of its REIT capital gain net income to avoid a 4% nondeductible excise tax[70] - The company is subject to various qualification tests under the IRC, and failure to meet these could result in significant tax liabilities[68] - The company’s subsidiaries that are C corporations will be required to pay federal corporate income tax on their earnings[72] - The company has not received a ruling from the IRS regarding its REIT status, which could lead to differing interpretations and potential tax liabilities[60] - The company’s counsel believes it will continue to meet the requirements for qualification and taxation as a REIT based on current operations and investments[66] - Future legislative or regulatory changes could impact the company’s REIT status and tax obligations[61] - The company must derive at least 75% of its gross income from real property-related investments to maintain REIT qualification[84] - At least 95% of the company's gross income must consist of qualifying income for the 75% gross income test[84] - The company is permitted to own up to 20% of the total value of its assets in taxable REIT subsidiaries (TRSs) at the end of each quarter[81] - The company has made protective TRS elections to avoid cascading REIT failures if subsidiary REITs do not qualify[80] - The company is subject to a $50,000 penalty for each excused failure to meet REIT qualification conditions, rather than disqualification[76] - The company must comply with Treasury regulations regarding share ownership to maintain REIT status[74] - The company has invested in real estate through partnerships, treating its proportionate share of income and assets as its own[78] - The company’s TRSs can perform services for tenants without disqualifying rental income under the gross income tests[82] - The company’s subsidiary REITs must meet various qualification requirements to avoid regular U.S. corporate income tax[79] - The company is required to request annual ownership information from significant shareholders to comply with share ownership requirements[74] - The company believes that all or substantially all of its rents and related service charges have qualified as "rents from real property" for purposes of Section 856 of the IRC[87] - The company intends to own its assets for investment with a view to long-term income production and capital appreciation[92] - The company aims to satisfy the 75% and 95% gross income tests on a continuing basis beginning with its first taxable year as a REIT[94] - At least 75% of the value of the company's total assets must consist of "real estate assets" as defined by the IRC[96] - Not more than 25% of the value of the company's total assets may be represented by securities other than those that count favorably toward the 75% asset test[96] - The company may utilize its TRSs in transactions to avoid recognizing dealer gains subject to a 100% penalty tax[89] - The company believes that any gain recognized in connection with asset dispositions will generally qualify as income satisfying the 75% and 95% gross income tests[90] - The company must satisfy asset percentage tests at the close of each calendar quarter to qualify for taxation as a REIT[94] - The company has established restrictions to maintain its qualification for taxation as a REIT under the IRC[86] - The company cannot guarantee that it will be able to monitor and enforce ownership restrictions effectively[86] - The company has maintained records of asset values to comply with REIT asset tests and intends to take corrective actions within thirty days if tests are not satisfied[99] - To qualify as a REIT, the company must distribute at least 90% of its "real estate investment trust taxable income" to shareholders, which is defined under Section 857 of the IRC[100] - The company has made an election to be treated as a real property trade or business, thus not subject to limitations on net interest expense deductions[101] - If the company fails to meet distribution requirements, it may be subject to a 4% nondeductible excise tax on undistributed amounts[102] - The company may need to arrange new debt or equity financing to meet distribution requirements if it lacks sufficient cash or liquid assets[104] - The company can rectify a failure to pay sufficient dividends by issuing "deficiency dividends" in a later year, which may incur an interest charge[105] - Following a corporate acquisition, the company must distribute all inherited C corporation earnings and profits by the end of the taxable year[110] - The company may elect to retain some net capital gain and pay income tax on retained amounts, allowing shareholders to include their share in taxable income[107] - The company expects to make distributions that may include cash and property, with tax treatment varying based on shareholder status[114] - Distributions not designated as capital gain dividends will generally be treated as ordinary income dividends to the extent of available earnings and profits[117] Environmental and Sustainability Efforts - As of December 31, 2024, the company had 50 properties with LEED designations, totaling 7.6 million rentable square feet, representing 37.6% of total properties[51] - The company achieved approximately $2.1 million in annual savings through its real-time energy monitoring program, which covers 42 properties and accounts for 73% of its annual electricity spend[48] - The company was recognized as an Energy Star Partner of the Year for the seventh consecutive year and a Sustained Excellence honoree for the fifth consecutive year as of December 31, 2024[49] - The company focuses on minimizing its environmental impact and enhancing operational efficiency through sustainability practices[46] Corporate Governance - The Board of Trustees consists of nine members, with seven independent trustees, four (approximately 44%) being female, and one (approximately 11%) from under-represented communities[52] - The company relies on RMR for management and administrative services, with RMR employing approximately 1,000 full-time employees as of December 31, 2024[41] Market Competition - The company competes against various public and private REITs and financial institutions, with no dominant position in any geographic market[53] Lease Agreements - The company has leases with government entities, including the U.S. government, which may allow tenants to vacate leased premises early under certain conditions[54] Shareholder Tax Implications - Distributions to shareholders are generally included in their income as dividends, with no portion eligible for the dividends received deduction for corporate shareholders[65] - U.S. shareholders recognizing a loss exceeding $10 million in a single year may trigger reporting requirements to the IRS[125] - Non-U.S. shareholders generally will not be subject to U.S. federal income taxation on gains from the sale of shares if the shares are listed on a U.S. national securities exchange[137] - A distribution to a non-U.S. shareholder not designated as a capital gain dividend will be treated as ordinary income and subject to a 30% withholding tax[131] - Tax-exempt U.S. shareholders receiving distributions from the company should not have those amounts treated as UBTI if certain conditions are met[128] - U.S. shareholders are subject to a 3.8% Medicare tax on net investment income, including dividends and gains from the sale of shares[122] - Noncorporate U.S. shareholders may face limitations on interest deductions related to borrowed funds for acquiring shares[126] - The company expects to maintain its status as a "domestically controlled" REIT, ensuring non-U.S. shareholders are not taxed on gains from share sales[139] - Shareholders recognizing capital gains will increase their adjusted basis in shares by the amount of retained net capital gains[123] - The maximum penalty for failing to disclose a reportable transaction is $10,000 for individuals and $50,000 for other entities[125] - Non-U.S. shareholders may seek refunds from the IRS for amounts withheld on distributions exceeding their allocable share of current and accumulated earnings[132] - Non-U.S. shareholders may be subject to backup withholding unless they certify their non-U.S. status using IRS Form W-8[143] - A 30% U.S. withholding tax may apply to payments to non-U.S. persons if they fail to comply with reporting and certification requirements[144] - Legislative changes could retroactively affect tax treatment for the company and its shareholders, impacting REIT qualification[145] ERISA Compliance - Fiduciaries of ERISA Plans must ensure investments in the company's shares meet diversification and prudence requirements[147] - The company’s shares are expected to remain "widely held" and "freely transferable," satisfying regulatory definitions[152][156] - The company is not an investment company registered under the Investment Company Act of 1940, which affects asset classification[150] - The company’s shares have been registered under the Exchange Act within the required timeframe, ensuring compliance[151] - Restrictions on share transfer do not impede the shares from being considered "freely transferable" under regulations[154] - The company’s counsel believes that its shares will not be deemed "plan assets" for ERISA Plans or Non-ERISA Plans acquiring shares in a public offering[156] - As a smaller reporting company, the company is not required to disclose quantitative and qualitative market risk information[352]

[Quarterly Results](index=3&type=section&id=Quarterly%20Results) OPI announced Q4 2024 financial results, showing progress in asset disposition and refinancing despite ongoing sector headwinds and liquidity concerns [Fourth Quarter 2024 Financial Results Announcement](index=4&type=section&id=Office%20Properties%20Income%20Trust%20Announces%20Fourth%20Quarter%202024%20Financial%20Results) OPI announced Q4 2024 financial results, highlighting asset disposition, debt refinancing, and leasing progress amidst sector headwinds - OPI advanced asset disposition and refinancing objectives by selling 17 office properties for approximately **$114 million** and closing private debt exchanges for all 2025 debt maturities[7](index=7&type=chunk) - During Q4 2024, OPI completed **359,000 square feet** of new and renewal leasing at a **24.3% roll-up in rent** and a weighted average lease term of **7.1 years**[8](index=8&type=chunk) - Same-property portfolio occupancy grew to **89.4%**, and same-property cash basis NOI increased **4.9% year over year**[8](index=8&type=chunk) - OPI continues to face sector headwinds and pending debt maturities, remaining focused on tenant retention, attracting new tenants, and evaluating strategies for future debt maturities amidst liquidity concerns and debt covenant constraints[9](index=9&type=chunk) [Fourth Quarter 2024 Highlights](index=5&type=section&id=Fourth%20Quarter%202024%20Highlights) OPI's Q4 2024 highlights include significant leasing activity, improved same-property occupancy, a net loss, and substantial debt exchanges - Executed **359,000 square feet** of total leasing at a weighted average lease term of **7.1 years**, with lease renewals accounting for **91%** of leased square footage[15](index=15&type=chunk) - Ended the quarter with same property portfolio occupancy of **89.4%** and a weighted average lease term of **7.4 years** (by annualized revenue)[15](index=15&type=chunk) Q4 2024 Financial Results Highlights | Metric | Value | | :-------------------------------- | :------------------- | | Net loss | $(148.7) million | | Net loss per common share | $(2.52) | | Normalized FFO | $20.9 million | | Normalized FFO per common share | $0.36 | | Same property cash basis NOI | $60.9 million | | Same property cash basis NOI YoY increase | 4.9% | - Sold **17 properties**, totaling approximately **1,791,000 square feet**, for an aggregate sales price of **$114.5 million**[15](index=15&type=chunk) - As of February 13, 2025, OPI's total available liquidity was **$113.0 million** of cash, and the company continues to conclude there is substantial doubt about its ability to continue as a going concern[15](index=15&type=chunk) - Exchanged **$37.8 million** of 2025 senior unsecured notes for **$42.6 million** of new 9.0% senior secured notes due 2029 and **4.4 million** common shares[15](index=15&type=chunk) - Issued **$445.0 million** of new 3.25% senior secured notes due 2027 and **11.5 million** common shares in exchange for **$340.0 million** of 2025 notes[15](index=15&type=chunk) [Financials](index=6&type=section&id=FINANCIALS) OPI's financial performance for Q4 2024 reflects significant losses, increased debt, and a shift in debt structure, alongside reduced asset values [Key Financial Data](index=7&type=section&id=Key%20Financial%20Data) OPI's Q4 2024 key financial data indicates a net loss, negative FFO and CAD, decreased assets, and substantial liabilities Selected Income Statement Data (Q4 2024 vs. Q4 2023, in thousands) | Metric | 12/31/2024 | 12/31/2023 | | :-------------------- | :------------------------ | :------------------------ | | Rental income | $118,238 | $133,773 | | Net (loss) income | $(148,680) | $(37,151) | | NOI | $71,244 | $80,871 | | Adjusted EBITDAre | $68,152 | $76,216 | | FFO | $(78,679) | $44,590 | | Normalized FFO | $20,946 | $45,872 | | CAD | $(16,296) | $8,560 | Selected Per Common Share Data (Q4 2024 vs. Q4 2023) | Metric | 12/31/2024 | 12/31/2023 | | :-------------------- | :--------- | :--------- | | Net (loss) income | $(2.52) | $(0.77) | | FFO | $(1.34) | $0.92 | | Normalized FFO | $0.36 | $0.95 | | CAD | $(0.28) | $0.18 | Selected Balance Sheet Data (as of 12/31/2024 vs. 12/31/2023, in thousands) | Metric | 12/31/2024 | 12/31/2023 | | :-------------------- | :------------------------ | :------------------------ | | Total assets | $3,822,286 | $3,989,669 | | Total liabilities | $2,669,482 | $2,733,990 | | Total shareholders' equity | $1,152,804 | $1,255,679 | | Cash and cash equivalents | $261,318 | $12,315 | [Consolidated Statements of Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) OPI reported a significant net loss of **$148.7 million** for Q4 2024, primarily due to debt extinguishment and real estate sales losses, with declining rental income Consolidated Statements of Income (Loss) (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :------------------------------------------------------------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------- | :---------------------- | | Rental income | $118,238 | $133,773 | $501,979 | $533,553 | | Total expenses | $108,391 | $124,479 | $595,823 | $474,592 | | (Loss) gain on sale of real estate | $(13,418) | $3,293 | $(7,410) | $3,780 | | Interest expense | $(47,340) | $(30,056) | $(163,745) | $(110,647) | | (Loss) gain on early extinguishment of debt | $(99,452) | $- | $126,185 | $- | | Net loss | $(148,680) | $(37,151) | $(136,107) | $(69,432) | | Weighted average common shares outstanding (basic and diluted) | 58,888 | 48,463 | 51,806 | 48,389 | | Net loss per common share | $(2.52) | $(0.77) | $(2.63) | $(1.44) | [Consolidated Balance Sheets](index=9&type=section&id=Consolidated%20Balance%20Sheets) OPI's balance sheet shows total assets decreased to **$3.82 billion**, a significant shift from unsecured to secured debt, and a decline in shareholders' equity Consolidated Balance Sheets (in thousands) | Metric | December 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------------ | :------------------ | | Total real estate properties, gross | $3,657,559 | $4,065,679 | | Total real estate properties, net | $3,038,909 | $3,415,500 | | Cash and cash equivalents | $261,318 | $12,315 | | Total assets | $3,822,286 | $3,989,669 | | Unsecured debt, net | $662,277 | $2,400,478 | | Secured debt, net | $1,872,357 | $172,131 | | Total liabilities | $2,669,482 | $2,733,990 | | Total shareholders' equity | $1,152,804 | $1,255,679 | [Debt Summary](index=10&type=section&id=Debt%20Summary) As of December 31, 2024, OPI's total debt was **$2.45 billion** with a **6.67%** weighted average coupon, showing a significant shift towards secured debt Debt Summary as of December 31, 2024 (in thousands) | Debt Type | Principal Balance | Weighted Average Coupon Rate | Weighted Average Years to Maturity | | :-------------------------- | :------------------ | :--------------------------- | :-------------------------------- | | Secured Floating Rate Debt | $425,000 | 7.910% | 2.1 | | Secured Fixed Rate Debt | $1,532,311 | 7.190% | 4.0 | | Unsecured Fixed Rate Debt | $497,627 | 4.006% | 10.6 | | **Total / Weighted Average** | **$2,454,938** | **6.669%** | **4.8** | [Debt Maturity Schedule](index=11&type=section&id=Debt%20Maturity%20Schedule) OPI's debt maturity schedule reveals substantial maturities in **2027** and **2029**, primarily secured fixed rate debt, indicating concentrated refinancing risk Debt Maturity Schedule (in thousands) | Year | Secured Floating Rate Debt | Secured Fixed Rate Debt | Unsecured Fixed Rate Debt | Total | | :--- | :------------------------- | :---------------------- | :------------------------ | :---------- | | 2025 | $- | $- | $140,488 | $140,488 | | 2026 | $- | $- | $80,784 | $80,784 | | 2027 | $425,000 | $267,992 | $217,286 | $910,278 | | 2028 | $- | $123,487 | $- | $123,487 | | 2029 | $- | $910,278 | $- | $910,278 | | 2030 and thereafter | $- | $151,000 | $276,355 | $427,355 | [Leverage Ratios, Coverage Ratios and Public Debt Covenants](index=12&type=section&id=Leverage%20Ratios,%20Coverage%20Ratios%20and%20Public%20Debt%20Covenants) OPI's leverage ratios show increased secured debt and declining coverage ratios, yet the company remains compliant with public debt covenants Leverage Ratios (as of 12/31/2024) | Metric | 12/31/2024 | 12/31/2023 | | :----------------------------------- | :--------- | :--------- | | Net debt / total gross assets | 53.3% | 55.6% | | Net debt / gross book value of real estate assets | 50.7% | 49.3% | | Secured debt / total assets | 51.2% | 4.4% | | Variable rate debt / net debt | 18.0% | 7.9% | Coverage Ratios (as of 12/31/2024) | Metric | 12/31/2024 | 12/31/2023 | | :------------------------------------------------------ | :--------- | :--------- | | Rolling four quarter Adjusted EBITDAre / rolling four quarter interest expense | 1.7x | 2.8x | | Net debt / rolling four quarter Adjusted EBITDAre | 8.5x | 8.2x | Public Debt Covenants (as of 12/31/2024) | Covenant | 12/31/2024 | Minimum/Maximum | | :------------------------------------------------ | :--------- | :-------------- | | Total unencumbered assets / unsecured debt | 169.2% | 150.0% (minimum) | | Total debt / adjusted total assets | 49.8% | 60.0% (maximum) | | Secured debt / adjusted total assets | 39.7% | 40.0% (maximum) | | Consolidated income available for debt service / debt service | 1.6x | 1.50x (minimum) | [Capital Expenditures Summary](index=13&type=section&id=Capital%20Expenditures%20Summary) OPI's Q4 2024 capital expenditures decreased to **$36.1 million**, with lease-related costs as the largest component, alongside reduced rentable square footage Capital Expenditures Summary (in thousands) | Category | For the Three Months Ended 12/31/2024 | For the Three Months Ended 12/31/2023 | | :----------------------------------- | :------------------------------------ | :------------------------------------ | | Lease related costs | $27,107 | $18,497 | | Building improvements | $6,229 | $10,877 | | Recurring capital expenditures | $33,336 | $29,374 | | Development, redevelopment and other activities | $2,813 | $19,371 | | **Total capital expenditures** | **$36,149** | **$48,745** | | Average rentable sq. ft. during period | 18,653 | 20,623 | [Property Dispositions](index=14&type=section&id=Property%20Dispositions) Since January 1, 2024, OPI disposed of **25 properties** totaling **2.89 million square feet** for **$205.1 million**, averaging **$70.99 per square foot** Property Dispositions Since January 1, 2024 (in thousands) | Metric | Value | | :-------------------- | :------------------ | | Total Number of Properties Sold | 25 | | Total Sq. Ft. Sold | 2,889 | | Aggregate Gross Sales Price | $205,101 | | Average Gross Sales Price Per Sq. Ft. | $70.99 | - Key dispositions include properties in Chicago, IL (**248k sq. ft.** for **$38.5M**), Colorado Springs, CO (**156k sq. ft.** for **$26.2M**), and Sacramento, CA (**338k sq. ft.** for **$21.0M**)[31](index=31&type=chunk) [Investment in Unconsolidated Joint Venture](index=15&type=section&id=Investment%20in%20Unconsolidated%20Joint%20Venture) OPI holds a **51%** stake in the Prosperity Metro Plaza joint venture, reporting **$17.37 million** investment, **73.5%** occupancy, and Q4 2024 equity in losses Unconsolidated Joint Venture Details (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Joint Venture | Prosperity Metro Plaza | | OPI Ownership | 51% | | OPI Investment | $17,370 (in thousands) | | Sq. Ft. | 346 (in thousands) | | Occupancy | 73.5% | | Weighted Average Remaining Lease Term | 3.1 years | | Outstanding Unconsolidated Debt (Principal Balance) | $50,000 (in thousands) | | OPI Share of Principal Balance | $25,500 (in thousands) | Results of Operations - Prosperity Metro Plaza (in thousands) | Metric | For the Three Months Ended Dec 31, 2024 | For the Year Ended Dec 31, 2024 | | :-------------------------- | :------------------------------------ | :---------------------------- | | Equity in losses | $(182) | $(758) | | NOI | $676 | $2,662 | | Cash Basis NOI | $670 | $2,549 | [Portfolio Information](index=16&type=section&id=PORTFOLIO%20INFORMATION) OPI's portfolio information details same-property performance, occupancy, leasing trends, 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 slight decrease in occupancy to **89.4%**, with quarterly NOI and Cash Basis NOI increases, but full-year declines Summary Same Property Results (in thousands, except percentages) | Metric | For the Three Months Ended 12/31/2024 | For the Three Months Ended 12/31/2023 | For the Year Ended 12/31/2024 | For the Year Ended 12/31/2023 | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------- | :---------------------------- | | Properties (end of period) | 118 | 118 | 118 | 118 | | Rentable sq. ft. | 16,455 | 16,444 | 16,455 | 16,444 | | Percent leased | 89.4% | 91.7% | 89.4% | 91.7% | | Rental income | $108,771 | $109,930 | $430,752 | $441,813 | | Same Property NOI | $67,308 | $66,295 | $264,487 | $277,954 | | Same Property Cash Basis NOI | $60,873 | $58,007 | $241,194 | $249,008 | | Same Property NOI % change | 1.5% | - | (4.8%) | - | | Same Property Cash Basis NOI % change | 4.9% | - | (3.1%) | - | [Occupancy and Leasing Summary](index=18&type=section&id=Occupancy%20and%20Leasing%20Summary) OPI's Q4 2024 leasing activity totaled **359,000 square feet**, with **91%** renewals, an overall portfolio occupancy of **85.0%**, and a **24.3%** increase in GAAP rent Occupancy and Leasing Summary (Q4 2024 vs. Q4 2023) | Metric | 12/31/2024 | 12/31/2023 | | :------------------------------------------ | :--------- | :--------- | | Properties (end of period) | 128 | 152 | | Rentable sq. ft. (in thousands) | 17,763 | 20,541 | | Percentage leased | 85.0% | 86.9% | | Leasing Activity (Sq. Ft. in thousands): | | | | New leases | 33 | 11 | | Renewals | 326 | 185 | | Total | 359 | 196 | | % Change in GAAP Rent (Total) | 24.3% | 0.6% | | Weighted Average Lease Term by Sq. Ft. (years) (Total) | 7.1 | 7.0 | | Leasing Cost and Concession Commitments (Total in thousands) | $15,060 | $7,458 | [Tenant Diversity and Credit Characteristics](index=19&type=section&id=Tenant%20Diversity%20and%20Credit%20Characteristics) OPI's annualized rental income is diversified across industries, with **57.9%** from investment-grade tenants and significant exposure to Real Estate & Financial, Legal, and Technology sectors Percentage of Total Annualized Rental Income by Tenant Credit Character (as of 12/31/2024) | Credit Character | Percentage | | :----------------------- | :--------- | | Investment Grade | 57.9% | | Not Rated | 37.1% | | Non-Investment Grade | 5.0% | - Top tenant industries by annualized rental income include U.S. Government (**17.0%**), Real Estate & Financial (**16.3%**), Legal & Other Professional Services (**15.1%**), Technology & Communications (**14.4%**), and Government Contractors (**8.2%**)[40](index=40&type=chunk) [Tenants Representing 1% or More of Total Annualized Rental Income](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 at **16.6%** of leased square footage, with the top **25 tenants** accounting for **60.7%** of the portfolio Top Tenants by Leased Square Footage (as of 12/31/2024) | Tenant | Credit Rating | % of Leased Sq. Ft. | | :------------------------------------------ | :-------------- | :------------------ | | U.S. Government | Investment Grade | 16.6% | | Alphabet Inc. (Google) | Investment Grade | 2.6% | | Shook, Hardy & Bacon L.L.P. | Not Rated | 3.9% | | Bank of America Corporation | Investment Grade | 3.8% | | Northrop Grumman Corporation | Investment Grade | 2.2% | | State of California | Investment Grade | 2.4% | | State of Georgia | Investment Grade | 2.0% | | Automatic Data Processing, Inc. | Investment Grade | 1.9% | | Allstate Insurance Corporation | Investment Grade | 3.0% | | Compass Group plc | Investment Grade | 1.8% | | Church & Dwight Co., Inc. | Investment Grade | 1.7% | | Leidos Holdings Inc. | Investment Grade | 1.1% | | Primerica, Inc. | Investment Grade | 2.3% | | BAE Systems plc | Investment Grade | 1.1% | | **Total for Top 25 Tenants** | | **60.7%** | [Lease Expiration Schedule](index=21&type=section&id=Lease%20Expiration%20Schedule) OPI faces significant lease expirations in **2025** (**13.7%** of leased square feet), with a weighted average remaining lease term of **7.4 years** by rental income Lease Expiration Schedule (as of 12/31/2024) | Year | % of Total Leased Square Feet Expiring | % of Total Annualized Rental Income Expiring | | :--- | :------------------------------------- | :------------------------------------------- | | 2025 | 13.7% | 9.9% | | 2026 | 3.5% | 4.2% | | 2027 | 11.9% | 10.8% | | 2028 | 3.8% | 6.8% | | 2029 | 7.1% | 7.6% | | 2030 | 6.8% | 6.3% | | 2031 | 9.6% | 8.1% | | 2032 | 3.3% | 4.1% | | 2033 | 7.1% | 4.8% | | 2034 and thereafter | 33.2% | 37.4% | | **Total** | **100.0%** | **100.0%** | | Weighted average remaining lease term (in years) | 6.9 (by Sq. Ft.) | 7.4 (by Rental Income) | [Appendix](index=22&type=section&id=APPENDIX) The appendix provides detailed calculations for non-GAAP financial measures, property collateral pool information, company profile, and forward-looking statement warnings [Company Profile and Governance Information](index=23&type=section&id=Company%20Profile%20and%20Governance%20Information) OPI is managed by The RMR Group, with a Board of Trustees and executive officers, and its credit is rated by Moody's and S&P Global - OPI is managed by The RMR Group, an alternative asset management company focused on commercial real estate with over **$40 billion** in assets under management as of December 31, 2024[47](index=47&type=chunk) - The Board of Trustees includes Donna D. Fraiche, William A. Lamkin, Mark A. Talley, Barbara D. Gilmore, Elena B. Poptodorova (Lead Independent Trustee), and Jennifer B. Clark (Managing Trustee)[48](index=48&type=chunk) - Executive Officers are Yael Duffy (President and Chief Operating Officer) and Brian E. Donley (Chief Financial Officer)[48](index=48&type=chunk) - OPI's credit is rated by Moody's Investors Service and S&P Global[48](index=48&type=chunk)[49](index=49&type=chunk) [Calculation and Reconciliation of NOI and Cash Basis NOI](index=24&type=section&id=Calculation%20and%20Reconciliation%20of%20NOI%20and%20Cash%20Basis%20NOI) For Q4 2024, OPI reported **NOI of $71.2 million** and **Cash Basis NOI of $62.7 million**, reconciled from net loss by adjusting for non-cash expenses Calculation of NOI and Cash Basis NOI (in thousands) | Metric | For the Three Months Ended 12/31/2024 | | :------------------------------------------------------ | :------------------------------------ | | Rental income | $118,238 | | Property operating expenses | $(46,994) | | **NOI** | **$71,244** | | Non-cash straight line rent adjustments included in rental income | $(7,306) | | Lease value amortization included in rental income | $(372) | | Lease termination fees included in rental income | $(744) | | Non-cash amortization included in other operating expenses | $(121) | | **Cash Basis NOI** | **$62,701** | Reconciliation of Net (Loss) Income to NOI and Cash Basis NOI (in thousands) | Metric | For the Three Months Ended 12/31/2024 | | :------------------------------------------------------ | :------------------------------------ | | Net (loss) income | $(148,680) | | Add back: Interest expense | $47,340 | | Add back: Loss on early extinguishment of debt | $99,452 | | Add back: Loss on impairment of real estate | $7,999 | | Add back: Depreciation and amortization | $47,958 | | **NOI** | **$71,244** | | Adjustments for Cash Basis NOI | $(8,543) | | **Cash Basis NOI** | **$62,701** | [Reconciliation and Calculation of Same Property NOI and Same Property Cash Basis NOI](index=25&type=section&id=Reconciliation%20and%20Calculation%20of%20Same%20Property%20NOI%20and%20Same%20Property%20Cash%20Basis%20NOI) For Q4 2024, OPI's Same Property NOI was **$67.3 million** and Same Property Cash Basis NOI was **$60.9 million**, derived by excluding non-same-property NOI and adjusting for non-cash items Reconciliation of NOI to Same Property NOI (in thousands) | Metric | For the Three Months Ended 12/31/2024 | For the Year Ended 12/31/2024 | | :------------------------------------------------------ | :------------------------------------ | :---------------------------- | | NOI | $71,244 | $304,743 | | Less: NOI of properties not included in same property results | $(3,936) | $(40,256) | | **Same Property NOI** | **$67,308** | **$264,487** | Calculation of Same Property Cash Basis NOI (in thousands) | Metric | For the Three Months Ended 12/31/2024 | For the Year Ended 12/31/2024 | | :------------------------------------------------------ | :------------------------------------ | :---------------------------- | | Same Property NOI | $67,308 | $264,487 | | Adjustments for Cash Basis NOI | $(6,435) | $(23,293) | | **Same Property Cash Basis NOI** | **$60,873** | **$241,194** | [Property Details (by Collateral Pool)](index=26&type=section&id=Property%20Details%20(by%20Collateral%20Pool)) OPI's property portfolio, totaling **128 properties** and **17.76 million square feet** with **85.0%** occupancy, is detailed by various secured and unencumbered collateral pools Summary of Properties by Collateral Pool (as of 12/31/2024) | Collateral Pool | Number of Properties | Sq. Ft. (in thousands) | Occupancy | Annualized Rental Income (in thousands) | | :-------------------------------- | :------------------- | :--------------------- | :-------- | :------------------------------------ | | Credit Agreement | 19 | 3,603 | 98.4% | $117,566 | | $445M Senior Notes due 2027 | 37 | 4,521 | 83.8% | $97,331 | | $300M Senior Notes due 2029 | 17 | 2,126 | 97.5% | $67,630 | | $610M Senior Notes due 2029 | 19 | 3,218 | 82.8% | $65,628 | | Mortgage Notes | 7 | 1,334 | 100.0% | $34,284 | | **Subtotal Secured** | **99** | **14,802** | **90.6%** | **$382,439** | | Unencumbered Properties | 25 | 2,712 | 62.2% | $45,508 | | Unencumbered Properties Held for Sale | 4 | 249 | 0.0% | $- | | **Subtotal Unencumbered** | **29** | **2,961** | **57.0%** | **$45,508** | | **Total / Weighted Average** | **128** | **17,763** | **85.0%** | **$427,947** | [Encumbered Properties - Credit Agreement](index=26&type=section&id=Encumbered%20Properties%20-%20Credit%20Agreement) Properties under the Credit Agreement collateral pool comprise **19 properties** with **3.6 million square feet** and **98.4%** occupancy Credit Agreement Properties (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 19 | | Sq. Ft. (in thousands) | 3,603 | | Occupancy | 98.4% | | Weighted Average Remaining Lease Term | 6.8 years | | Annualized Rental Income (in thousands) | $117,566 | | Trailing Twelve Months NOI (in thousands) | $70,671 | [Encumbered Properties - $445M Senior Notes due 2027](index=27&type=section&id=Encumbered%20Properties%20-%20%24445M%20Senior%20Notes%20due%202027) Properties collateralizing the **$445 million** Senior Notes due 2027 include **37 properties** totaling **4.52 million square feet** with **83.8%** occupancy $445M Senior Notes due 2027 Properties (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 37 | | Sq. Ft. (in thousands) | 4,521 | | Occupancy | 83.8% | | Weighted Average Remaining Lease Term | 6.9 years | | Annualized Rental Income (in thousands) | $97,331 | | Trailing Twelve Months NOI (in thousands) | $63,241 | [Encumbered Properties - $300M Senior Notes due 2029](index=29&type=section&id=Encumbered%20Properties%20-%20%24300M%20Senior%20Notes%20due%202029) Properties collateralizing the **$300 million** Senior Notes due 2029 consist of **17 properties** totaling **2.13 million square feet** with **97.5%** occupancy $300M Senior Notes due 2029 Properties (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 17 | | Sq. Ft. (in thousands) | 2,126 | | Occupancy | 97.5% | | Weighted Average Remaining Lease Term | 9.1 years | | Annualized Rental Income (in thousands) | $67,630 | | Trailing Twelve Months NOI (in thousands) | $46,005 | [Encumbered Properties - $610M Senior Notes due 2029](index=30&type=section&id=Encumbered%20Properties%20-%20%24610M%20Senior%20Notes%20due%202029) Properties collateralizing the **$610 million** Senior Notes due 2029 include **19 properties** totaling **3.22 million square feet** with **82.8%** occupancy $610M Senior Notes due 2029 Properties (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 19 | | Sq. Ft. (in thousands) | 3,218 | | Occupancy | 82.8% | | Weighted Average Remaining Lease Term | 7.7 years | | Annualized Rental Income (in thousands) | $65,628 | | Trailing Twelve Months NOI (in thousands) | $42,569 | [Encumbered Properties - Mortgage Notes](index=31&type=section&id=Encumbered%20Properties%20-%20Mortgage%20Notes) Properties under Mortgage Notes collateral comprise **7 properties** totaling **1.33 million square feet** with **100.0%** occupancy Mortgage Notes Properties (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 7 | | Sq. Ft. (in thousands) | 1,334 | | Occupancy | 100.0% | | Weighted Average Remaining Lease Term | 11.8 years | | Annualized Rental Income (in thousands) | $34,284 | | Trailing Twelve Months NOI (in thousands) | $25,094 | [Unencumbered Properties](index=31&type=section&id=Unencumbered%20Properties) Unencumbered properties consist of **25 properties** totaling **2.71 million square feet** with **62.2%** occupancy Unencumbered Properties (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 25 | | Sq. Ft. (in thousands) | 2,712 | | Occupancy | 62.2% | | Weighted Average Remaining Lease Term | 3.5 years | | Annualized Rental Income (in thousands) | $45,508 | | Trailing Twelve Months NOI (in thousands) | $26,892 | [Unencumbered Properties Held for Sale](index=33&type=section&id=Unencumbered%20Properties%20Held%20for%20Sale) Unencumbered properties held for sale include **4 properties** totaling **249,000 square feet** with **0.0%** occupancy Unencumbered Properties Held for Sale (as of 12/31/2024) | Metric | Value | | :-------------------------- | :------------------ | | Number of Properties | 4 | | Sq. Ft. (in thousands) | 249 | | Occupancy | 0.0% | | Annualized Rental Income (in thousands) | $- | | Trailing Twelve Months NOI (in thousands) | $(199) | [Calculation of EBITDA, EBITDAre and Adjusted EBITDAre](index=34&type=section&id=Calculation%20of%20EBITDA,%20EBITDAre%20and%20Adjusted%20EBITDAre) For Q4 2024, OPI reported negative EBITDA of **$53.4 million**, EBITDAre of **$31.8 million**, and Adjusted EBITDAre of **$68.2 million**, reconciled from net loss Calculation of EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) | Metric | For the Three Months Ended 12/31/2024 | | :------------------------------------------------------ | :------------------------------------ | | Net (loss) income | $(148,680) | | Add: Interest expense | $47,340 | | Add: Income tax expense (benefit) | $24 | | Add: Depreciation and amortization | $47,958 | | **EBITDA** | **$(53,358)** | | Add (less): Loss on impairment of real estate | $7,999 | | Add (less): Loss (gain) on sale of real estate | $13,418 | | Add (less): Equity in net losses of investees | $182 | | **EBITDAre** | **$(31,759)** | | Add (less): Transaction related costs | $173 | | Add (less): General and administrative expense paid in common shares | $286 | | Add (less): Loss (gain) on early extinguishment of debt | $99,452 | | **Adjusted EBITDAre** | **$68,152** | [Calculation of FFO, Normalized FFO and CAD](index=35&type=section&id=Calculation%20of%20FFO,%20Normalized%20FFO%20and%20CAD) For Q4 2024, OPI reported negative FFO of **$78.7 million**, Normalized FFO of **$20.9 million**, and negative CAD of **$16.3 million**, with full-year figures also provided Calculation of FFO, Normalized FFO and CAD (in thousands) | Metric | For the Three Months Ended 12/31/2024 | For the Year Ended 12/31/2024 | | :------------------------------------------------------ | :------------------------------------ | :---------------------------- | | Net (loss) income | $(148,680) | $(136,107) | | Add (less): Depreciation and amortization (consolidated) | $47,958 | $194,737 | | Add (less): Depreciation and amortization (unconsolidated JV) | $626 | $2,495 | | Add (less): Loss on impairment of real estate | $7,999 | $181,578 | | Add (less): Loss (gain) on sale of real estate | $13,418 | $7,410 | | **FFO** | **$(78,679)** | **$250,113** | | Add (less): Transaction related costs | $173 | $1,144 | | Add (less): Loss (gain) on early extinguishment of debt | $99,452 | $(126,185) | | **Normalized FFO** | **$20,946** | **$114,548** | | Add (less): Non-cash expenses | $14 | $(394) | | Add (less): Non-cash straight line rent adjustments | $(7,306) | $(31,102) | | Add (less): Net amortization of debt premiums, discounts and issuance costs | $4,202 | $13,463 | | Add (less): Recurring capital expenditures | $(33,336) | $(119,001) | | **CAD** | **$(16,296)** | **$(14,101)** | [Non-GAAP Financial Measures and Certain Definitions](index=36&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Certain%20Definitions) This section defines OPI's non-GAAP financial measures (NOI, FFO, CAD, EBITDAre) and key terms, explaining their calculation and purpose as supplemental REIT performance indicators - OPI presents non-GAAP financial measures (NOI, Cash Basis NOI, EBITDAre, Adjusted EBITDAre, FFO, Normalized FFO, CAD) as supplemental indicators of operating performance for a REIT, not as alternatives to net income (loss) or liquidity measures[73](index=73&type=chunk) - NOI and Cash Basis NOI exclude certain components of net income (loss) to focus on property-level operations, with Cash Basis NOI further excluding non-cash straight-line rent adjustments, lease value amortization, and lease termination fees[74](index=74&type=chunk) - FFO and Normalized FFO are calculated based on Nareit's definition, adjusting net income (loss) for depreciation, amortization, and gains/losses on real estate sales, with Normalized FFO further adjusting for transaction-related costs and early debt extinguishment[76](index=76&type=chunk) - CAD (Cash Available for Distribution) is defined as Normalized FFO minus real estate-related capital expenditures and adjusted for certain recurring items and cash-settled amounts excluded from Normalized FFO[77](index=77&type=chunk) - Investment grade tenants include those with investment-grade ratings or investment-grade parent entities, accounting for **57.9%** of annualized rental income as of December 31, 2024[82](index=82&type=chunk) - Net debt is defined as total debt less cash[82](index=82&type=chunk) - Weighted average remaining lease term is the average remaining lease term in years, weighted based on annualized rental income[85](index=85&type=chunk) [Warning Concerning Forward-Looking Statements](index=38&type=section&id=WARNING%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the presentation contains forward-looking statements subject to inherent uncertainties and risks, including OPI's ability to address going concern doubts and manage liquidity - The presentation contains forward-looking statements subject to inherent uncertainties and risks, which could cause OPI's actual results to differ materially from expectations[86](index=86&type=chunk)[87](index=87&type=chunk) - Key risks include OPI's ability to address substantial doubt about its going concern, comply with debt agreements and meet financial covenants, make required debt payments, maintain sufficient liquidity, and effectively raise and balance debt and equity capital[87](index=87&type=chunk) - Other risks involve tenant retention, future leasing activity, demand for office space, asset dispositions, unfavorable market and commercial real estate industry conditions, competition, and the impact of economic downturns or changes in real estate utilization[87](index=87&type=chunk) - Readers should not place undue reliance on forward-looking statements, and OPI does not intend to update or change them unless required by law[89](index=89&type=chunk)

Core Viewpoint - Office Properties Income Trust (OPI) reported quarterly funds from operations (FFO) of $0.43 per share, missing the Zacks Consensus Estimate of $0.47 per share, and down from $1.02 per share a year ago, indicating a significant decline in performance [1] Financial Performance - OPI's revenues for the quarter ended September 2024 were $120.62 million, surpassing the Zacks Consensus Estimate by 0.58%, but down from $133.36 million year-over-year [2] - The company has surpassed consensus revenue estimates four times over the last four quarters [2] - The current consensus FFO estimate for the coming quarter is $0.43 on revenues of $115.82 million, and for the current fiscal year, it is $2.35 on revenues of $498.87 million [7] Stock Performance - OPI shares have lost approximately 74.3% since the beginning of the year, contrasting with the S&P 500's gain of 22.3% [3] - The estimate revisions trend for OPI is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell) for the stock, indicating expected underperformance in the near future [6] Industry Outlook - The REIT and Equity Trust - Residential industry, to which OPI belongs, is currently in the top 37% of over 250 Zacks industries, suggesting a relatively strong industry performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in estimate revisions, which could impact OPI's stock performance [5]

Core Viewpoint - Office Properties Income Trust (OPI) faces a significant $500 million debt repayment due in February 2025, which constitutes 21% of its total debt of $2.14 billion, marking it as one of the largest single-year debt maturities for the REIT [1][2] Debt Profile - The February 2025 debt repayment has decreased by $150 million due to a private debt exchange, which allowed bondholders to swap existing debt for new 9% senior secured notes due in 2029 [2][3] - Only 23% of existing 2025 bondholders accepted the exchange offer, indicating a low acceptance rate compared to other tranches [2] Financial Performance - OPI reported fiscal 2024 second-quarter revenue of $123.68 million, a decline of 7.7% year-over-year but in line with consensus expectations [5] - Funds from Operations (FFO) were $0.68 per share, down from $1.11 per share a year ago, although it beat consensus estimates [7] Leasing Activity - The REIT's total occupancy rate fell to 88.5% from 90.6% a year ago, with 13% of leases set to expire by the end of 2024 [7] - OPI leased 208,000 square feet during the second quarter, but anticipates a dip in operating performance due to upcoming lease expirations [8] Cash and Interest Expenses - OPI held only $13.5 million in cash and cash equivalents at the end of the quarter, while quarterly interest expenses surged to $38.3 million, a 45% increase from the previous year [8] - The new quarterly interest expense is projected to reach $51 million, nearly double the prior expense of $27.4 million [8] Market Sentiment - Despite a recent rally where OPI's stock rose 35% from summer lows, concerns remain regarding the looming February maturity and the REIT's overall risk profile [4][5] - The current trading price of OPINL is at 52 cents on the dollar, reflecting a 12.2% yield, which may not sufficiently compensate for the increased solvency risk compared to the previous year [9]

Core Viewpoint - Office Properties Income Trust (OPI) has faced significant financial challenges, with a substantial drop in stock price and concerns over its ability to manage debt and generate cash flow [1][2][18]. Financial Results - For Q2-2024, OPI reported a net income of $76.2 million, or $1.56 per common share, largely due to financial maneuvers involving debt restructuring [3][4]. - Normalized Funds from Operations (FFO) were $33.2 million, or $0.68 per common share, indicating ongoing operational struggles [4]. - Same property cash basis Net Operating Income (NOI) was $65.1 million, reflecting a decline in property performance [4][11]. Debt Management - OPI exchanged $865 million of senior unsecured notes for a lower amount of senior secured notes, which resulted in a gain but increased the overall debt burden with higher interest rates [3][4]. - The company has a total debt of approximately $2.32 billion, with a debt-to-EBITDA ratio around 9.0X, raising concerns about financial sustainability [12][13][14]. Portfolio and Leasing Activity - OPI executed 208,000 square feet of leases in Q2-2024, with a weighted average lease term of 4.0 years, but occupancy rates dropped to 89.9% from 95.3% year-over-year [4][15]. - The company is under agreement to sell 12 properties totaling approximately 1.4 million square feet for $93.5 million, which may help alleviate some debt pressures [4][19]. Cash Flow and Dividends - The rolling four-quarter Cash Available for Distribution (CAD) fell to $0.97 per share, with negative CAD reported for the current quarter [11][18]. - Despite ongoing financial difficulties, OPI continues to pay a nominal dividend of $0.01 per share, which may not be sustainable given the rising interest expenses [18][20]. Market Outlook - The market perceives significant refinancing risks for OPI, with speculation that common shares may face a decline of over 95% [18][19]. - Unsecured bonds are yielding high returns, indicating investor skepticism about OPI's ability to manage its debt effectively [19][20].

Group 1 - Office Properties Income Trust (OPI) reported quarterly funds from operations (FFO) of $0.68 per share, exceeding the Zacks Consensus Estimate of $0.64 per share, but down from $1.11 per share a year ago, representing an FFO surprise of 6.25% [1] - The company posted revenues of $123.69 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.20%, but down from $134 million year-over-year [2] - OPI shares have declined approximately 66.1% since the beginning of the year, contrasting with the S&P 500's gain of 14% [3] Group 2 - The current consensus FFO estimate for the upcoming quarter is $0.52 on revenues of $122.25 million, and for the current fiscal year, it is $2.42 on revenues of $505.28 million [7] - The estimate revisions trend for OPI is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] - The REIT and Equity Trust - Residential industry is ranked in the top 24% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]

Core Viewpoint - Office Properties Income Trust (OPI) is facing significant challenges due to declining occupancy rates, upcoming lease expirations, and a heavy debt maturity schedule, leading to a high-risk investment environment [1][3][7]. Financial Performance - OPI reported revenue of $139.44 million for the first quarter of fiscal 2024, a 5.3% increase year-over-year, exceeding consensus estimates by $9.67 million [11]. - The REIT's normalized Funds From Operations (FFO) for the first quarter was $38.3 million, equating to $0.79 per share, indicating a low trading multiple due to solvency and refinancing risks [8][11]. Debt and Liquidity - OPI has a total outstanding debt of $2.6 billion, with a weighted average maturity of 4.9 years and an average interest rate of 5.4% [3][5]. - The REIT is facing a liquidity crunch, particularly with $650 million in unsecured fixed-rate debt maturing in February 2025, which poses a significant solvency risk if not refinanced [7][9]. - OPI has initiated debt exchange offers to issue up to $610 million in new 9% senior secured notes, which will be secured by first-priority liens on 19 office properties [9][10]. Occupancy and Leasing - The portfolio consists of 151 properties across 20 million square feet, with a same-property occupancy rate of 88.2%, down from 93.3% in the previous quarter [11][13]. - A total of 333 leases are set to expire, with 13.1% in 2024 and 10.8% in 2025, indicating potential further declines in occupancy [11][13]. Market Position - OPI's market capitalization has decreased by 70% year-to-date, with common shares trading at $2.20, reflecting the market's concerns over the REIT's financial health [3][11]. - The REIT has a high debt-to-equity ratio of 2.063, which has moderated slightly due to $39 million generated from property sales in the first quarter [13][15]. Short Interest - OPI is the fourth most shorted REIT, with 17.6% of its float currently shorted, reflecting investor skepticism regarding its financial stability [15].

FangXiaNuo Last week, Office Properties Income Trust (NASDAQ:OPI) reported first quarter earnings. The commercial office REIT surprised analysts to the positive on the revenue side, but disappointed on FFO. Along with the earnings announcement, Office Properties announced a proposed debt exchange. Due to the debt exchange proposal, shares rallied, and short-term bonds tanked. The latest earnings report, combined with the need for a debt exchange is keeping me out of investing in Office Properties’ stock ...