PART I. Financial Information This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements and their accompanying notes, providing a snapshot of the company's financial position and performance Condensed Consolidated Balance Sheets Total assets, liabilities, and shareholders' equity all decreased from December 31, 2021, to June 30, 2022, primarily due to reductions in real estate and senior unsecured notes | Metric (in thousands) | Dec 31, 2021 | Jun 30, 2022 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Assets | $4,241,683 | $4,062,658 | $(179,025) | | Total Liabilities | $2,744,974 | $2,647,208 | $(97,766) | | Total Shareholders' Equity | $1,496,709 | $1,415,450 | $(81,259) | | Real Estate Properties, net | $3,415,174 | $3,307,750 | $(107,424) | | Cash and cash equivalents | $83,026 | $26,006 | $(57,020) | | Senior unsecured notes, net | $2,479,772 | $2,184,073 | $(295,699) | Condensed Consolidated Statements of Comprehensive Income (Loss) Net loss significantly improved for the three months ended June 30, 2022, driven by reduced impairment losses, while the six-month net loss slightly increased | Metric (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | Change | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Rental income | $141,316 | $137,099 | $4,217 | $288,670 | $281,623 | $7,047 | | Total expenses | $118,516 | $162,658 | $(44,142) | $252,611 | $293,702 | $(41,091) | | Loss on impairment of real estate | $4,773 | $48,197 | $(43,424) | $21,820 | $55,857 | $(34,037) | | General and administrative | $7,083 | $12,970 | $(5,887) | $12,789 | $24,242 | $(11,453) | | Net loss | $(16,056) | $(66,697) | $50,641 | $(29,463) | $(28,837) | $(626) | | Net loss per common share (basic and diluted) | $(0.33) | $(1.38) | $1.05 | $(0.61) | $(0.60) | $(0.01) | Condensed Consolidated Statements of Shareholders' Equity Total shareholders' equity decreased from December 31, 2021, to June 30, 2022, primarily due to net losses and common shareholder distributions | Metric (in thousands) | Dec 31, 2021 | Jun 30, 2022 | Change | | :-------------------- | :----------- | :----------- | :----- | | Balance at period start | $1,496,709 | $1,496,709 | $0 | | Net loss | - | $(29,463) | $(29,463) | | Distributions to common shareholders | $(53,268) | $(53,268) | $0 | | Share grants | $1,494 | $1,494 | $0 | | Balance at period end | $1,496,709 | $1,415,450 | $(81,259) | Condensed Consolidated Statements of Cash Flows Operating cash flow slightly decreased, investing cash flow significantly improved due to lower acquisitions, and financing cash flow shifted to a net use due to debt repayments | Metric (in thousands) | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | | Net cash provided by operating activities | $108,913 | $117,376 | $(8,463) | | Net cash used in investing activities | $(17,112) | $(400,467) | $383,355 | | Net cash (used in) provided by financing activities | $(148,567) | $246,317 | $(394,884) | | Decrease in cash, cash equivalents and restricted cash | $(56,766) | $(36,774) | $(19,992) | | Cash, cash equivalents and restricted cash at end of period | $27,749 | $20,081 | $7,668 | Notes to Condensed Consolidated Financial Statements These notes provide essential details and context for the condensed consolidated financial statements, covering key accounting policies, property information, and financial instrument specifics Note 1. Basis of Presentation The financial statements are unaudited, condensed, and rely on management estimates, with interim results not necessarily indicative of full-year performance - Financial statements are unaudited and condensed, requiring estimates and assumptions, and interim results may not predict full-year performance2021 Note 2. Per Common Share Amounts Basic EPS uses the two-class method, diluted EPS uses the more dilutive of two-class or treasury stock, with no dilutive shares for the reported periods - Basic EPS uses the two-class method; diluted EPS uses the more dilutive of two-class or treasury stock. No dilutive common shares for Q2/H1 2022 and 202122 Note 3. Real Estate Properties OPI owned 172 properties and interests in two joint ventures as of June 30, 2022, with significant leasing and disposition activities occurring in the first half of the year - As of June 30, 2022, OPI owned 172 wholly-owned properties (22.491M rentable square feet) and noncontrolling interests of 51% and 50% in two unconsolidated joint ventures that own three properties (444k rentable square feet)23 - During the six months ended June 30, 2022, OPI entered into 39 leases for approximately 1,251,000 rentable square feet for a weighted average lease term of 9.9 years, committing approximately $70,117 thousand of leasing related costs23 Disposition Activity (H1 2022) | Disposition Activity (H1 2022) | Number of Properties | Rentable Square Feet | Sales Price (in thousands) | Gain (Loss) on Sale (in thousands) | | :----------------------------- | :------------------- | :------------------- | :------------------------- | :--------------------------------- | | Properties Sold | 6 | 778,000 | $77,720 | $(9,488) | | Properties Held for Sale (under agreement) | 10 | 1,322,000 | $119,600 | $19,636 (Loss on Impairment) | Note 4. Leases Rental income from operating leases is recognized straight-line, with adjustments and variable payments contributing to total rental income for the reported periods | Metric (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Straight line rent adjustments | $2,775 | $3,847 | $5,461 | $9,204 | | Variable payments (total) | $22,101 | $17,488 | $44,637 | $36,348 | | Tenant reimbursements | $21,009 | $16,639 | $42,484 | $34,442 | Note 5. Concentration Government tenants, particularly the U.S. government, represent a significant portion of annualized rental income, with geographic concentrations in key states Tenant Type Concentration | Tenant Type | % of Annualized Rental Income (Jun 30, 2022) | % of Annualized Rental Income (Jun 30, 2021) | | :---------- | :------------------------------------------- | :------------------------------------------- | | U.S. Government, 11 state governments, and 4 other government tenants | 28.4% | 31.9% | | U.S. Government only | 18.5% | 22.0% | - Top 5 geographic concentrations by annualized rental income as of June 30, 2022: Virginia (11.8%), California (11.3%), Illinois (10.5%), the District of Columbia (10.2%), and Georgia (8.7%)37 Note 6. Indebtedness OPI's debt portfolio includes revolving credit, senior unsecured notes, and mortgage notes, with significant debt prepayments and redemptions occurring in the first half of 2022 Debt Type (in thousands) | Debt Type (in thousands) | Jun 30, 2022 | Dec 31, 2021 | | :----------------------- | :----------- | :----------- | | Unsecured revolving credit facility | $230,000 | $0 | | Senior unsecured notes, net | $2,184,073 | $2,479,772 | | Mortgage notes payable, net | $72,936 | $98,178 | - In April 2022, OPI prepaid a mortgage note secured by one property with an outstanding principal balance of $24,863 thousand, an annual interest rate of 4.22%, and a maturity date in July 202241 - In June 2022, OPI redeemed all $300,000 thousand of its 4.00% senior unsecured notes due July 2022, resulting in a loss on early extinguishment of debt of $77 thousand42 Note 7. Fair Value of Assets and Liabilities Fair values of most financial instruments approximated carrying values, though senior unsecured and mortgage notes showed differences, and impairment charges were recorded for properties held for sale Financial Instrument Fair Values (in thousands) | Financial Instrument (in thousands) | Carrying Value (Jun 30, 2022) | Fair Value (Jun 30, 2022) | Carrying Value (Dec 31, 2021) | Fair Value (Dec 31, 2021) | | :---------------------------------- | :------------------------------ | :------------------------ | :------------------------------ | :------------------------ | | Senior unsecured notes, 4.25% due 2024 | $345,722 | $340,008 | $344,581 | $365,449 | | Senior unsecured notes, 4.50% due 2025 | $641,094 | $623,292 | $639,370 | $687,749 | | Senior unsecured notes, 2.650% due 2026 | $297,526 | $255,234 | $297,213 | $298,502 | | Senior unsecured notes, 2.400% due 2027 | $347,156 | $287,004 | $346,845 | $339,764 | | Senior unsecured notes, 3.450% due 2031 | $395,961 | $300,416 | $395,744 | $388,458 | | Senior unsecured notes, 6.375% due 2050 | $156,614 | $158,760 | $156,519 | $177,098 | | Mortgage notes payable | $72,936 | $72,313 | $98,178 | $100,294 | - OPI recorded impairment charges totaling $19,636 thousand and $2,184 thousand to reduce the carrying value of properties classified as held for sale to their estimated fair value less costs to sell4445 Note 8. Shareholders' Equity OPI declared and paid regular quarterly distributions totaling $53,268 thousand in H1 2022 and purchased common shares to satisfy tax withholding obligations Distributions to Common Shareholders | Distribution Period | Distributions Per Common Share | Total Distributions (in thousands) | | :------------------ | :----------------------------- | :--------------------------------- | | H1 2022 | $1.10 | $53,268 | | July 2022 (declared) | $0.55 | ~$26,700 | - During the six months ended June 30, 2022, OPI purchased an aggregate of 790 common shares at a weighted average share price of $20.59 per share to satisfy tax withholding and payment obligations51 Note 9. Business and Property Management Agreements with RMR OPI relies on RMR for management services, with net business management fees decreasing due to the absence of incentive fees, while property management fees increased Management Fees (in thousands) | Fee Type (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net business management fees | $4,492 | $10,551 | $9,202 | $20,025 | | Accrued estimated incentive fees (included above) | $0 | $5,911 | $0 | $11,111 | | Net property management and construction supervision fees | $6,394 | $4,914 | $12,522 | $9,526 | Note 10. Related Person Transactions OPI maintains ongoing related person transactions with RMR and its affiliates, including rental income from RMR and a significant lease agreement with a Sonesta subsidiary - OPI has relationships and historical and continuing transactions with RMR, The RMR Group Inc., and others related to them, including other companies with shared trustees, directors, or officers58 Related Party Rental Income (in thousands) | Related Party Transaction | 3 Months Ended Jun 30, 2022 (in thousands) | 6 Months Ended Jun 30, 2022 (in thousands) | | :------------------------ | :----------------------------------------- | :----------------------------------------- | | Rental income from RMR | $285 | $569 | - In June 2021, OPI entered into a 30-year lease agreement with a subsidiary of Sonesta International Hotels Corporation for a planned full-service hotel component of a redeveloped property in Washington, D.C., with estimated annual base rent of approximately $6,436 thousand commencing in Q2 202361 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes OPI's financial condition and results of operations, covering property portfolio, market conditions, and strategic activities, highlighting economic impacts OVERVIEW OPI, a REIT, owns 172 properties and joint venture interests, with the U.S. government as its largest tenant, facing risks from rising interest rates and potential recession - As of June 30, 2022, OPI's wholly owned properties comprised 172 properties (approximately 22,491,000 rentable square feet) and noncontrolling ownership interests in two unconsolidated joint ventures that own three properties (approximately 444,000 rentable square feet)65 - The U.S. government is OPI's largest tenant, representing approximately 18.5% of annualized rental income as of June 30, 202265 - The COVID-19 pandemic has not had a significant adverse impact on OPI's business to date, but rising interest rates and a potential recession could adversely affect financial condition, tenant rent payments, and property values6667 Property Operations Portfolio occupancy remained stable, comparable properties' leased percentage increased, rental rates improved, and capital expenditures significantly rose due to development activities Property Portfolio Metrics | Metric | Jun 30, 2022 | Jun 30, 2021 | Change | | :----- | :----------- | :----------- | :----- | | All Properties - Total rentable square feet | 22,491,000 | 24,091,000 | (1,600,000) | | All Properties - Percent leased | 89.4% | 89.5% | (0.1%) | | Comparable Properties - Percent leased | 94.3% | 93.0% | 1.3% | Average Effective Rental Rate per Square Foot | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :----- | :------ | :------ | :------ | :------ | | Average effective rental rate per square foot (All properties) | $28.80 | $26.46 | $29.11 | $26.20 | | Average effective rental rate per square foot (Comparable properties) | $27.71 | $26.85 | $27.57 | $27.09 | Leasing Activity (Q2 2022) | Leasing Activity (Q2 2022) | New Leases | Renewals | Total | | :------------------------- | :--------- | :------- | :---- | | Rentable square feet leased (in thousands) | 126 | 553 | 679 | | Weighted average rental rate change | 8.7% | 4.0% | 4.9% | | Weighted average lease term (years) | 8.3 | 9.4 | 9.2 | Capital Expenditures (in thousands) | Capital Expenditures (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Lease related costs | $16,131 | $11,215 | $24,795 | $18,185 | | Building improvements | $4,702 | $7,765 | $7,485 | $12,291 | | Development, redevelopment and other activities | $40,302 | $12,738 | $77,826 | $17,644 | | Total capital expenditures | $61,135 | $31,718 | $110,106 | $48,120 | - As of June 30, 2022, OPI had estimated unspent leasing related obligations of $130,726 thousand, of which $82,543 thousand is expected to be spent over the next 12 months80 - Approximately 1,913,000 rentable square feet are scheduled to expire through June 30, 2023, with 817,000 rentable square feet expected not to renew81 Disposition Activities OPI sold six properties in H1 2022 and has agreements to sell nine more by Q3 2022, though the pace of dispositions is expected to moderate due to rising interest rates - During the six months ended June 30, 2022, OPI sold six properties containing approximately 778,000 rentable square feet for an aggregate sales price of $77,720 thousand, excluding closing costs90 - As of July 27, 2022, OPI has entered into agreements to sell nine properties containing approximately 1,116,000 rentable square feet for an aggregate sales price of $109,800 thousand, excluding closing costs, with sales expected to occur before the end of Q3 202291 Financing Activities OPI prepaid a mortgage note in April 2022 and redeemed $300,000 thousand of senior unsecured notes in June 2022 using cash and revolving credit - In April 2022, OPI prepaid a mortgage note secured by one property with an outstanding principal balance of $24,863 thousand93 - In June 2022, OPI redeemed all $300,000 thousand of its 4.00% senior unsecured notes due July 2022 using cash on hand and borrowings under its revolving credit facility93 Segment Information OPI operates solely within the business segment of real estate property ownership - OPI operates in one business segment: ownership of real estate properties94 RESULTS OF OPERATIONS (Q2 2022 vs. Q2 2021) Net loss significantly decreased in Q2 2022, driven by reduced impairment losses and lower general and administrative expenses, despite a net loss on property sales Results of Operations (Q2, in thousands) | Metric (in thousands) | Q2 2022 | Q2 2021 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Rental income | $141,316 | $137,099 | $4,217 | 3.1% | | Total expenses | $118,516 | $162,658 | $(44,142) | (27.1%) | | Loss on impairment of real estate | $4,773 | $48,197 | $(43,424) | (90.1%) | | General and administrative | $7,083 | $12,970 | $(5,887) | (45.4%) | | Gain (loss) on sale of real estate | $(11,637) | $114 | $(11,751) | n/m | | Net loss | $(16,056) | $(66,697) | $50,641 | (75.9%) | | Net loss per common share | $(0.33) | $(1.38) | $1.05 | (76.1%) | - The increase in rental income reflects an increase of $11,637 thousand related to acquired properties and $3,399 thousand related to comparable properties, offset by decreases from property disposition activities and properties undergoing significant redevelopment98 - The decrease in general and administrative expenses is primarily the result of $5,911 thousand of estimated business management incentive fees recorded in the 2021 period, which were not present in 2022105 RESULTS OF OPERATIONS (H1 2022 vs. H1 2021) Net loss slightly increased in H1 2022, primarily due to a net loss on property sales and higher equity losses, partially offset by reduced impairment and administrative expenses Results of Operations (H1, in thousands) | Metric (in thousands) | H1 2022 | H1 2021 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Rental income | $288,670 | $281,623 | $7,047 | 2.5% | | Total expenses | $252,611 | $293,702 | $(41,091) | (14.0%) | | Loss on impairment of real estate | $21,820 | $55,857 | $(34,037) | (60.9%) | | General and administrative | $12,789 | $24,242 | $(11,453) | (47.2%) | | Gain (loss) on sale of real estate | $(9,488) | $54,118 | $(63,606) | (117.5%) | | Net loss | $(29,463) | $(28,837) | $(626) | 2.2% | | Net loss per common share | $(0.61) | $(0.60) | $(0.01) | 1.7% | - The increase in rental income reflects increases of $23,479 thousand for acquired properties and $2,830 thousand for comparable properties, offset by decreases related to property disposition activities and properties undergoing significant redevelopment115 - The decrease in general and administrative expenses is primarily due to $11,111 thousand of estimated business management incentive fees recorded in the 2021 period, a state franchise tax refund received in 2022, and the expiration of an office lease123 Non-GAAP Financial Measures This section presents non-GAAP financial measures like NOI, FFO, and Normalized FFO, used to evaluate operating performance and inform distribution decisions Net Operating Income (NOI) NOI, a non-GAAP measure for property-level performance, increased for both Q2 and H1 2022 compared to prior periods Net Operating Income (in thousands) | Metric (in thousands) | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :-------------------- | :------ | :------ | :------ | :------ | | NOI | $92,416 | $90,979 | $188,897 | $187,478 | - NOI is a non-GAAP measure defined as income from rental of real estate less property operating expenses, used to evaluate individual and company-wide property level performance132 Funds From Operations (FFO) and Normalized Funds From Operations FFO and Normalized FFO, non-GAAP measures adjusting net loss for real estate items, both increased for Q2 and H1 2022, indicating improved operating performance FFO and Normalized FFO (in thousands) | Metric (in thousands) | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :-------------------- | :------ | :------ | :------ | :------ | | FFO | $58,622 | $37,680 | $121,344 | $94,289 | | Normalized FFO | $58,923 | $55,385 | $121,645 | $117,194 | | FFO per common share | $1.21 | $0.78 | $2.52 | $1.96 | | Normalized FFO per common share | $1.22 | $1.15 | $2.52 | $2.43 | - FFO and Normalized FFO are non-GAAP measures that adjust net income (loss) for real estate depreciation and amortization, impairment charges, and gains/losses on sale of real estate, with Normalized FFO further adjusting for acquisition costs, early debt extinguishment, and business management incentive fees135 LIQUIDITY AND CAPITAL RESOURCES OPI's liquidity, primarily from operating cash flows, property sales, and its revolving credit facility, supports ongoing operations, capital recycling, and redevelopment projects Our Operating Liquidity and Resources OPI's operating liquidity, derived from cash flows, property sales, and credit facilities, is deemed sufficient for future needs and supports a capital recycling program - OPI's principal sources of funds are operating cash flows, net proceeds from property sales, and borrowings under its revolving credit facility, which are believed to be sufficient for operating and capital expenses, debt service, and distributions for the next 12 months and foreseeable future137 - OPI expects to accretively grow its property portfolio through a capital recycling program, involving selective property sales to fund future acquisitions, improve asset quality, lengthen lease terms, and increase cash available for distribution140 Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | H1 2022 | H1 2021 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net cash provided by operating activities | $108,913 | $117,376 | $(8,463) | | Net cash used in investing activities | $(17,112) | $(400,467) | $383,355 | | Net cash (used in) provided by financing activities | $(148,567) | $246,317 | $(394,884) | Our Investment and Financing Liquidity and Resources OPI maintains a $750,000 thousand revolving credit facility and faces upcoming debt maturities, while also undertaking significant redevelopment projects in Washington, D.C. and Seattle - OPI maintains a $750,000 thousand revolving credit facility, with $230,000 thousand outstanding and $520,000 thousand available for borrowing as of June 30, 2022143 Debt Maturities (in thousands) | Year | Debt Maturities (in thousands) | | :--- | :----------------------------- | | 2022 | $234 | | 2023 | $72,784 | | 2024 | $350,000 | | 2025 | $650,000 | | 2026 | $300,000 | | 2027 and thereafter | $912,000 | | Total | $2,285,018 | - OPI is redeveloping a property in Washington, D.C. (estimated total project costs of $215,000 thousand, $103,198 thousand incurred as of June 30, 2022) and a three-property campus in Seattle, WA (estimated total project costs of $144,000 thousand, $16,707 thousand incurred as of June 30, 2022), both expected to complete in Q2 2023149150 Debt Covenants OPI's debt obligations are subject to financial covenants, with the company believing it was in compliance as of June 30, 2022, and credit ratings influencing interest rates - OPI's principal debt obligations are subject to covenants that restrict the ability to incur debts and require compliance with certain financial covenants156 - OPI believes it was in compliance with the terms and conditions of the respective covenants under its credit agreement and senior unsecured notes indentures and their supplements at June 30, 2022156 - Credit ratings determine the fees and interest rates paid under the credit agreement, but do not contain provisions for acceleration triggered by credit ratings157 Related Person Transactions OPI maintains ongoing relationships and transactions with RMR, RMR Inc., and other affiliated entities, as detailed in the financial statement notes - OPI has relationships and historical and continuing transactions with RMR, RMR Inc., and others related to them159 Critical Accounting Estimates Significant accounting estimates include purchase price allocations, asset useful lives, and real estate impairment, with no material changes since December 31, 2021 - Significant estimates in the Condensed Consolidated Financial Statements include purchase price allocations, useful lives of fixed assets, and assessment of impairment of real estate and the related intangibles160 - There have been no significant changes in OPI's critical accounting estimates since the year ended December 31, 2021161 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details OPI's exposure to interest rate market risk, analyzing the impact of fluctuations on fixed and floating-rate debt, and addressing the LIBOR phase-out Fixed Rate Debt OPI held $2,285,018 thousand in fixed-rate debt as of June 30, 2022, with a hypothetical one percentage point interest rate increase impacting annual costs and fair value Fixed Rate Debt Portfolio | Debt Type | Principal Balance (in thousands) | Annual Interest Rate | Maturity | | :-------- | :------------------------------- | :------------------- | :------- | | Senior unsecured notes | $2,212,000 | Varies | 2024-2050 | | Mortgage notes | $73,018 | Varies | 2023 | | Total | $2,285,018 | | | - If fixed-rate debts were refinanced at interest rates one percentage point higher, annual interest cost would increase by approximately $22,850 thousand164 - A hypothetical immediate one percentage point increase in interest rates would change the fair value of fixed-rate debt obligations by approximately $(97,584) thousand165 Floating Rate Debt OPI had $230,000 thousand outstanding on its revolving credit facility, with a one percentage point interest rate increase significantly impacting annual interest expense and EPS Floating Rate Debt Impact (in thousands) | Scenario | Outstanding Debt (in thousands) | Annual Interest Rate | Total Interest Expense Per Year (in thousands) | Annual Earnings Per Share Impact | | :------- | :------------------------------ | :------------------- | :--------------------------------------------- | :------------------------------- | | Jun 30, 2022 | $230,000 | 2.4% | $5,520 | $0.11 | | One percentage point increase | $230,000 | 3.4% | $7,820 | $0.16 | | Fully drawn (Jun 30, 2022) | $750,000 | 2.4% | $18,000 | $0.37 | | Fully drawn (one percentage point increase) | $750,000 | 3.4% | $25,500 | $0.53 | LIBOR Phase Out LIBOR is phasing out by June 30, 2023, and OPI expects its revolving credit facility's interest rate determination to be revised, though the outcome and potential cost impact are uncertain - LIBOR is being phased out for new contracts and is expected to be phased out for pre-existing contracts by June 30, 2023176 - OPI expects the determination of interest under its revolving credit facility to be revised to approximate the existing LIBOR-based interest rate, but cannot be sure that any changes will approximate the current calculation or that an alternative index will not result in increased interest176 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - Management, under the supervision and with the participation of Managing Trustees and officers, concluded that disclosure controls and procedures were effective as of June 30, 2022177 - There have been no changes in internal control over financial reporting during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting178 Warning Concerning Forward-Looking Statements This section warns that forward-looking statements in the report are not guaranteed, and actual results may differ materially due to various known and unknown risks and uncertainties - This Quarterly Report contains statements that constitute forward-looking statements based upon present intent, beliefs, or expectations, but these statements are not guaranteed to occur and may not occur180 - Actual results may differ materially from forward-looking statements due to known and unknown risks, uncertainties, and other factors, including the impact of conditions in the economy (COVID-19, increasing interest rates, inflation, possible recession) and capital markets183191 Statement Concerning Limited Liability The declaration of trust states that no individual associated with Office Properties Income Trust shall be personally liable for its obligations, with recourse limited to Trust assets - The amended and restated declaration of trust provides that no trustee, officer, shareholder, employee, or agent of Office Properties Income Trust shall be held to any personal liability for any obligation of, or claim against, the Trust; all persons dealing with the Trust shall look only to its assets for payment195 PART II. Other Information This section provides additional information, including risk factors, equity security sales, and a list of exhibits filed with the report Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report - There have been no material changes to the risk factors from those previously disclosed in OPI's 2021 Annual Report196 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2022, OPI purchased 790 common shares at a weighted average price of $20.59 per share to satisfy tax withholding obligations related to share awards Common Share Purchases (Q2 2022) | Calendar Month | Number of Shares Purchased | Average Price Paid per Share | | :------------- | :------------------------- | :--------------------------- | | April 2022 | 265 | $24.07 | | June 2022 | 525 | $18.84 | | Total | 790 | $20.59 | - These common share withholdings and purchases were made to satisfy tax withholding and payment obligations of one of OPI's Trustees and a former employee of RMR in connection with the vesting of awards of common shares197 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, debt indentures, compensation summaries, and various certifications - Exhibits include the Composite Copy of Amended and Restated Declaration of Trust, Amended and Restated Bylaws, various Indentures for Senior Notes, Summary of Trustee Compensation, Rule 13a-14(a) Certifications, Section 1350 Certification, and XBRL Instance, Schema, Calculation, Definition, and Label Linkbase Documents198200202 SIGNATURES This section contains the official signatures of the company's President, COO, CFO, and Treasurer, certifying the report's submission Signatures The report was signed by the President, COO, CFO, and Treasurer on July 28, 2022, certifying its submission under the Securities Exchange Act of 1934 - The report was signed by Christopher J. Bilotto, President and Chief Operating Officer, and Matthew C. Brown, Chief Financial Officer and Treasurer, on July 28, 2022205
Office Properties me Trust(OPI) - 2022 Q2 - Quarterly Report