opi-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

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

Commission File Number 1-34364

OFFICE PROPERTIES INCOME TRUST

(Exact Name of Registrant as Specified in Its Charter)


Maryland						26-4273474
(State or Other Jurisdiction of Incorporation or Organization)						(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634

(Address of Principal Executive Offices) (Zip Code)

617-219-1440

(Registrant’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name Of Each Exchange On Which Registered

Common Shares of Beneficial Interest

OPI

The Nasdaq Stock Market LLC

6.375% Senior Notes due 2050

OPINL

The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of April 30, 2024: 48,749,942

Table of Contents

OFFICE PROPERTIES INCOME TRUST

FORM 10-Q

March 31, 2024

INDEX


		Page
PART I.	Financial Information

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets — March 31, 2024 and December 31, 2023	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) — Three Months Ended March 31, 2024 and 2023	4

	Condensed Consolidated Statements of Shareholders’ Equity — Three Months Ended March 31, 2024 and 2023	5

	Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2024 and 2023	6

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	31

	Warning Concerning Forward-Looking Statements	31

	Statement Concerning Limited Liability	32

PART II.	Other Information



Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 6.	Exhibits	33

	Signatures	35

References in this Quarterly Report on Form 10-Q to “the Company”, “OPI”, “we”, “us” or “our” include Office Properties Income Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

Table of Contents

PART I. Financial Information

Item 1. Financial Statements

OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(unaudited)



	March 31, 2024		December 31, 2023
ASSETS
Real estate properties:
Land	$	782,660	$	786,310
Buildings and improvements	3,296,591		3,279,369
Total real estate properties, gross	4,079,251		4,065,679
Accumulated depreciation	(678,278)		(650,179)
Total real estate properties, net	3,400,973		3,415,500
Assets of properties held for sale	11,888		37,310
Investments in unconsolidated joint ventures	17,898		18,128
Acquired real estate leases, net	244,502		263,498
Cash and cash equivalents	23,513		12,315
Restricted cash	20,593		14,399
Rents receivable	137,489		133,264

Deferred leasing costs, net	85,828		86,971
Other assets, net	15,246		8,284
Total assets	$	3,957,930	$	3,989,669

LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured debt, net	$	1,847,664	$	2,400,478
Secured debt, net	731,563		172,131




Liabilities of properties held for sale	324		2,525
Accounts payable and other liabilities	109,665		140,166
Due to related persons	7,259		7,025
Assumed real estate lease obligations, net	11,091		11,665
Total liabilities	2,707,566		2,733,990

Commitments and contingencies

Shareholders’ equity:
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,754,546 and 48,755,415 shares issued and outstanding, respectively	488		488
Additional paid in capital	2,621,849		2,621,493
Cumulative net income	94,990		100,174

Cumulative common distributions	(1,466,963)		(1,466,476)
Total shareholders’ equity	1,250,364		1,255,679
Total liabilities and shareholders’ equity	$	3,957,930	$	3,989,669

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2024		2023

Rental income	$	139,435	$	132,422

Expenses:
Real estate taxes	15,709		15,333
Utility expenses	8,151		7,260
Other operating expenses	27,327		26,057
Depreciation and amortization	50,341		51,692

Acquisition and transaction related costs	233		3,218
General and administrative	5,644		5,925
Total expenses	107,405		109,485

(Loss) gain on sale of real estate	(2,384)		2,548


Interest and other income	1,357		164
Interest expense (including net amortization of debt premiums, discounts and issuance costs of $3,444 and $2,205, respectively)	(35,476)		(25,231)
Loss on early extinguishment of debt	(425)		—
(Loss) income before income tax expense and equity in net losses of investees	(4,898)		418
Income tax expense	(56)		(30)
Equity in net losses of investees	(230)		(834)



Net loss	$	(5,184)	$	(446)














Weighted average common shares outstanding (basic and diluted)	48,466		48,336


Per common share amounts (basic and diluted):



Net loss	$	(0.11)	$	(0.01)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(dollars in thousands)

(unaudited)


	Number of Shares	Common Shares		Additional Paid In Capital		Cumulative Net Income		Cumulative Common Distributions		Total Shareholders’ Equity
Balance at December 31, 2023	48,755,415	$	488	$	2,621,493	$	100,174	$	(1,466,476)	$	1,255,679
Common share grants	—	—		362		—		—		362
Common share forfeitures and repurchases	(869)	—		(6)		—		—		(6)
Net loss	—	—		—		(5,184)		—		(5,184)
Distributions to common shareholders	—	—		—		—		(487)		(487)
Balance at March 31, 2024	48,754,546	$	488	$	2,621,849	$	94,990	$	(1,466,963)	$	1,250,364


	Number of Shares	Common Shares		Additional Paid In Capital		Cumulative Net Income		Cumulative Common Distributions		Total Shareholders’ Equity
Balance at December 31, 2022	48,565,644	$	486	$	2,619,532	$	169,606	$	(1,403,289)	$	1,386,335
Common share grants	—	—		477		—		—		477
Common share forfeitures and repurchases	(1,935)	—		(15)		—		—		(15)
Net loss	—	—		—		(446)		—		(446)
Distributions to common shareholders	—	—		—		—		(26,710)		(26,710)
Balance at March 31, 2023	48,563,709	$	486	$	2,619,994	$	169,160	$	(1,429,999)	$	1,359,641

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

OFFICE PROPERTIES INCOME TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,184)	$	(446)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	29,699		24,947
Net amortization of debt premiums, discounts and issuance costs	3,444		2,205
Amortization of acquired real estate leases and assumed real estate lease obligations, net	17,669		24,614
Amortization of deferred leasing costs	3,408		2,365
Loss (gain) on sale of real estate	2,384		(2,548)

Loss on early extinguishment of debt	425		—

Straight line rental income	(7,379)		(4,173)
Other non-cash expenses, net	90		204

SEC Form 10-Q filed by Office Properties Income Trust