| 1 OFFICE PROPERTIES INCOME TRUST INVESTOR PRESENTATIONQ32022 Detroit, MI |
| 2 OFFICE PROPERTIES INCOME TRUST This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995and other securities laws. Also, whenever we use words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Forward-looking statements in this presentation relate to various aspects of our business, including: certain changes in office space utilization, including increased remote work arrangements, will continue and the impact that may have on demand for office space at our properties; our expectations about the financial strength of our tenants; our expectations regarding the costs and timing of development, redevelopment and repositioning activities; the likelihood that our tenants will renew or extend theirleases and not exercise early termination options or that we will obtain replacement tenants on terms as favorable to us as our prior leases; our belief that we are in a position to opportunistically recycle and deploy capital;the likelihood that our tenants will pay rent or be negatively affected by cyclical economic conditions or government budget constraints; our abilitytopay distributions to our shareholders and to maintain or increase the amount of such distributions; our expectations regarding occupancy at our properties; our expectations regardingour cash available for distribution payout ratio; our expectations regarding our future financial performance including funds from operations, or FFO, normalized funds from operations, or Normalized FFO, net operating income, or NOI, and cash basis NOI; our expectations regarding demand for leased space; our expectations regarding capital expenditures, including as a result of inflation or supply chain challenges; our expectations regarding possible acquisitions and sales of properties, including the targeted proceeds of the properties we are currently marketing for sale; our policies and plans regarding investments, financings and dispositions; our ability to raise and balance our use of debt and equity capital; our ability to make required payments on our debt; our ability to maintain sufficient liquidity, including the availability of borrowings under our revolving credit facility, and otherwise manage our leverage at levels we believe appropriate; our credit ratings; our expectation that we benefit from our relationships with The RMR Group LLC, or RMR LLC, and Sonesta InternationalHotels Corporation, or Sonesta; our qualification for taxation as a real estate investment trust, or REIT; changes in federal or state tax laws; and other matters.Our actual results may differ materially from those contained in or implied by our forward-looking statements as a result of various factors, such as: the impact of economic conditions, including increasing interest rates,inflation, geopolitical risksanda possible recession, and the capital markets on us and our tenants; competition within the real estate industry; the impact of changes in the real estate needs and financial conditions of our tenants; compliance with, and changes to, federal,state and local laws and regulations, accounting rules, tax laws and similar matters; the impact of any U.S. government shutdown on our ability to collect rents or pay our operating expenses, debt obligations and distributions to shareholders on a timely basis; actual and potential conflicts of interest with our related parties, including RMR LLC and others affiliated with them; limitations imposed by and our ability to satisfy complex rules to maintain our qualification for taxation as a REIT for U.S. federal income tax purposes; and acts of terrorism, war or other hostilities, outbreaks of pandemics, or other man-made or natural disasters beyond our control. Our Annual Report on Form 10-K for the year ended December 31, 2021 and our other filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors”, identify other important factors that could cause differences from our forward-looking statements. Our filings with the SEC are available on the SEC’s website at www.sec.gov. You should not place undue reliance upon our forward-looking statements. Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.Notes Regarding Certain Information in this PresentationThis presentation contains industry and statistical data that we obtained from various third party sources. Nothing in the data used or derived from third party sources should be construed as investment advice. Some data and other information presented are also based on our good faith estimates and beliefs, derived from our review of internal surveys and independent sources and our experience. We believe that these external sources, estimates and beliefs are reliable and reasonable, but wehave not independently verified them. Although we are not aware of any misstatements regarding the data presented herein, these estimates and beliefs involve inherent risks and uncertainties and are based on assumptions that are subject to change.Unless otherwise expressly noted, (1) all data presented are as of or for the three months ended September30, 2022, (2) references to “weighted average” mean a weighted average by annualized rental income, (3) references to “annualized rental income” mean the annualized contractual rents, as of September30, 2022, including straight line rent adjustments and excluding lease value amortization, adjusted for tenant concessions, including free rent and amounts reimbursed to tenants, plusestimated recurring expense reimbursements from tenants (annualized rental income may differ from actual historical rental revenues calculated pursuant to U.S. Generally Accepted Accounting Principles, or GAAP), and (4) all data presented excludes three properties, which are encumbered by $82.0 million of mortgage notes, owned by two unconsolidated joint ventures in which we own 51% and 50% interests.Non-GAAP Financial MeasuresThis presentation contains non-GAAP financial measures including FFO, Normalized FFO, Cash Available for Distribution, EBITDA, EBITDAre, Adjusted EBITDAre, NOI and Cash Basis NOI. Calculations of, and reconciliations for these metrics to the closest GAAP metrics, are included in an Appendix hereto.Please refer to Non-GAAP Financial Measures and Certain Definitions in the Appendix for terms used throughout this presentation.WARNING REGARDING FORWARD LOOKING STATEMENTS, DISCLAIMERS AND NON-GAAP FINANCIAL MEASURES |
| 3 OFFICE PROPERTIES INCOME TRUST a.Total gross assets.b.Based on annualized rental income. See Appendix herein for our definition of investment grade tenants. OPI AT A GLANCE21.2MILLION SQUARE FEET$629MillionTOTAL LIQUIDITY $4.5 BillionINVESTMENT PORTFOLIO(1)90.7%OCCUPANCY162PROPERTIES IN PORTFOLIO63%REVENUE FROM INVESTMENTGRADE TENANTS(2) Office Properties Income Trust (Nasdaq: OPI) is an investment grade rated real estate investment trust (REIT) focused on owning and leasing high quality office properties to credit quality tenants in select growth-oriented U.S. markets. In 2022, OPI was named as an Energy Star® Partner of the Year for the fifth consecutive year and a Green Lease Leader.1.Total gross assets.2.Based on annualized rental income. See Appendix herein for our definition of investment grade tenants. 3 |
| 4 OFFICE PROPERTIES INCOME TRUST RECENT COMPANY HIGHLIGHTS Q32022 Year to Date Full Year 2021•Executed 1.9 million square feet of leasing activity at an 11% roll-up in rent and 9 year WALT.•Ended the third quarter at 90.7% portfolio occupancy, a 170 basis point increase over the prior year.•Completed a new 84,000 square foot lease to anchor our Seattle Life Science development.•Sold 16 properties consisting of 2.1 million square feet at a weighted average cap rate of 6.8% for more than $195 million.•Executed 2.5 million SF of new and renewal leasing for a 6.3% roll-up in rent and WALT of 9.5 years.•Sold six non-core properties consisting of 2.6 million SF for more than $225 million.•Acquired two core properties in Chicago and Atlanta for $550 million, adding Google as a top tenant.•Launched the redevelopment of two properties in Washington, D.C. and Seattle, WA.•Issued $1.1 billion of senior notes, reducing cost of debt and increasing average debt maturity.Chicago, IL |
| 5 OFFICE PROPERTIES INCOME TRUST 1.Based on annualized rental income. See Appendix herein for our definition of investment grade tenants. 2.A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.COMPELLING INVESTMENT OPPORTUNITY 5 Diversified Portfolio Secure and Stable Income Investment GradeBalance Sheet Capital Recycling Strategy Dividend Security Commitment to ESG•By geography, tenant and industry.•A focus on strong, growing markets.•63% of annualized rental income comes from investment grade rated tenants. •Diversified portfolio with single and multi-tenant assets.•Baa3/BBB-credit rating.•More than $600million of liquidity. •Well-laddered debt maturities.•Enhance portfolio quality.•Generate CAD accretion.•Manage leverage levels.•Rolling four quarter CAD payout ratio of 67%.•2022 ENERGY STAR® Partner of the Year.•Named a Gold Level 2022 Green Lease Leader. •Designated a 2020 Women on Boards “Winning” company.(2)(1) |
| 6 OFFICE PROPERTIES INCOME TRUST Phoenix DIVERSIFIED ACROSS STRATEGIC U.S. MARKETS Chicago11% D.C. Metro1,222% Atlanta9% Silicon Valley/Sacramento10% Dallas5%OPI Strategic Markets% Annualized Rental Income Focused on markets with strong economics and favorable long-term demand outlook. Boston4% Seattle11% Denver3% Kansas City4% Top Markets Based on Annualized Rental Income% Total Annualized Rental IncomeNo. of Properties Property SF (‘000)Weighted Average Remaining Lease TermChicago, IL11.1%51,6746.1District of Columbia10.3%71,3109.9Atlanta, GA8.8%112,0248.3Northern Virginia8.4%131,7415.1Silicon Valley, CA5.6%118274.6Dallas, TX4.6%81,4913.3Kansas City, MO4.3%377010.1Sacramento, CA4.0%78823.5Boston, MA3.8%88052.9Maryland3.7%57536.5Provo, UT2.8%35379.0Denver, CO2.6%66882.4Total70.0%8713,5026.0LEED, BOMA, and/or ENERGY STAR Certified BuildingSeattle, WASacramento, CATampa, FLChicago, IL Malden, MALakewood, CO 1.Redevelopment project in process.2.Includes the District of Columbia, Northern Virginia and Maryland. |
| 7 OFFICE PROPERTIES INCOME TRUST SECURE AND STABLE INCOME U.S. Government 19.2%Other Government 8.6%Government Contractors 6.5%Real Estate & Financing 16.9%Technology & Communications 16.4%Legal & Other Professional Services 11.4%Manufacturing & Transportation 10.5%Life Science and Medical 3.2%Other 7.3% Tenant Credit Profile% Total Annualized Rental Income Top 20 Tenants% Total Annualized Rental Income1U.S. Government19.1%2Alphabet Inc. (Google)4.3%3Shook, Hardy & Bacon L.L.P.3.5%4IG Investments Holdings LLC3.0%5Bank of America Corporation2.9%6State of California2.9%7Commonwealth of Massachusetts2.2%8CareFirst Inc.2.1%9Northrop Grumman Corporation2.1%10Tyson Foods, Inc.2.0%11Sonesta International Hotels Corporation2.0%12CommScope Holding Company Inc1.7%13Sonoma Biotherapeutics, Inc.(2)1.4%14State of Georgia1.3%15PNC Bank1.3%16Micro Focus International plc1.3%17Compass Group plc1.2%18ServiceNow, Inc.1.2%19Allstate Insurance Co.1.2%20Leidos Holdings Inc1.1%Total57.8% Tenant Industry% Total Annualized Rental Income 1.In June 2021, we entered into a 30-year lease with Sonesta. The lease relates to the redevelopment of a property we own in Washington, D.C to a mixed use and Sonesta's lease relates to the planned hotel component of the property. The term of the lease commences upon our delivery of the completed hotel, which is estimated to occur in the second quarter of 2023.2.In August 2022, we entered into an approximately 10-year lease with Sonoma Biotherapeutics, Inc. The lease is at a property we own in Seattle, WA that is currently undergoing redevelopment. The term of the lease is estimated to commence in the fourth quarter of 2023. (1) Non-Investment Grade7.6%Not Rated29.4%Investment Grade63.0% Total Government34.3% |
| 8 OFFICE PROPERTIES INCOME TRUST GROWTH STRATEGY 8 Positioned to advance core business strategies focused on enhancing the overall quality and geographic footprint of the portfolio. Organic Growth•Maintain high occupancy through best-in-class operations and service centered tenant relationships.•Drive portfolio absorption through proactive asset management and leasing.•Focus on retention and opportunities to roll up rents.Capital Recycling•Sell properties older in age, capital intensive, or that have maximized value.•Exit markets with limited future rent growth.•Reinvest proceeds into higher quality properties with strong cash flows.•Target modern and highly functional properties in growing markets.•Manage leverage levels.Development•Create user-centered experiences through select development opportunities.•Focus on markets with strong economic growth providing for enhanced risk-adjusted returns.•Deliver sustainable buildings with an emphasis on LEED, wellness, and reduction of the portfolio carbon footprint.•Enhance buildings and local communities through a people centric “place-making” approach. |
| 9 OFFICE PROPERTIES INCOME TRUST 2.6M SFNew and renewal leasing Leasing Activity (SF in 000s)PROACTIVE ASSET MANAGEMENT AND LEASING Staggered Lease Expirations% Total Annualized Rental Income Expiring 9.4%Roll up in rent 8.1 yearsWALTTrailing Twelve MonthsCompleted Activity 3.2M SFincluding 1.3M SF of new leasing 720K SFPotential to absorb vacant spaceLeasing Pipeline 7%Mark to market potentialCompleted more than 850thousand SF of new leasing activity over the past four quartersUpcoming lease expirations represent attractive opportunity to increase rentsin current inflationary environment2,9341,9652,4841,857 0.8%14.0%14.4%7.9%7.5%55.4%202220232024202520262027+ 4.2%6.9%6.3%11.0%0.0%2.0%4.0%6.0%8.0%10.0%12.0%05001000150020002500300035002019202020212022 YTD Renewals New Leasing Leasing Roll-up/down |
| 10 OFFICE PROPERTIES INCOME TRUST STRATEGIC CAPITAL RECYCLING Since 2019, OPI has sold approximately $1.5 billion of assetsand redeployed proceeds into more attractive markets. Property Acquisitions & Dispositions ($ millions) Potential BenefitsReduce the average age of our portfolio. Reshape geographic and tenant diversification.Lengthen the weighted average term of our leases. Enhance leasing prospects and tenant retention.Manage ongoing capital requirements. 2019 2020 2021 2022 •Completed $849 million of property sales.•Sold all common shares of The RMR Group for $105 million.•Completed $110 million of property sales. •Acquired RoundPoint Mortgage HQ in the Charlotte MSA for $35 million and an acquisition in the Boston CBD.•Completed $227 million of property sales.•Redeployed proceeds into three acquisitions of office properties in Chicago, Atlanta and Boston for $577 million.•Completed $196million of property sales year to date.(1)•Targeted annual proceeds of $100 million to $200 million primarily to be used for deleveraging.•Five properties under agreement for $20.5 million1.Reflects activity through September 30,2022. $3 $47 $577 $849 $110 $227 $196 2019202020212022 YTD Acquisitions Dispositions- |
| 11 OFFICE PROPERTIES INCOME TRUST Phoenix RECENT PORTFOLIO RESHAPING Investing in newer, less capital-intensive properties that improve geographic diversification, rent growth, portfolio metrics and the long-term stability of cash flows. Reducing ExposureIncreasing Exposure•Huntsville, AL•Birmingham, AL•Fresno, CA•Richmond, VA•Chesapeake, VA•Chicago, IL•Atlanta, GA•Boston, MA 3.5WALT (Years) 2022 YTD Disposition Highlights2.1MSF16Properties 532K SF 1,819K SF 697K SF 531KSF 49KSF 346KSF 96%Occupancy 2021 Disposition Highlights 6Properties1.2 WALT (Years)2.6M SF Key Activity21Average Age (Years) |
| 12 OFFICE PROPERTIES INCOME TRUST ACQUISITION FOCUS Focused on acquiring office properties in markets that have strong economic fundamentals to support rent growth. Properties in strong and growing markets with characteristics to attract and retain tenants.•Strategic to tenants.•Minimum remaining lease term of seven years.•Effective age of 10 years or less.•Specialty uses where remote work is less likely.•Characteristics supporting ESG initiatives. Primarily first-generation properties.•High probability of renewing the tenants in place.•Modest ongoing capital needs.•Single and multi-tenant opportunities. Atlanta, GA |
| 13 OFFICE PROPERTIES INCOME TRUST RECENT ACQUISITIONS 1000 W. Fulton Street, Chicago, IL –“1K Fulton”$355.0 MillionPurchase Price 4.7%GAAP Cap Rate531,190Square Feet99.2%Percent Leased6.6 YearsWALTGoogle (73%)Primary Tenant 1224 Hammond Dr., Atlanta, GA -“Twelve24” $195.0 MillionPurchase Price 6.3%GAAP Cap Rate345,917Square Feet98.4%Percent Leased14.2YearsWALTInsight Global (96%)Primary Tenant 446 Wrenplace RoadFort Mill, SC$35.1 MillionPurchase Price 8.1%GAAP Cap Rate150,000Square Feet100%Percent Leased10.8YearsWALTRoundPoint MortgagePrimary Tenant LEED, BOMA, and/or ENERGY STAR Certified BuildingNote: Data as of the acquisition date of each property. |
| 14 OFFICE PROPERTIES INCOME TRUST VALUE CREATION THROUGH SELECT REDEVELOPMENT “20 Mass”20 Massachusetts Avenue, Washington, D.C. “Unison”351, 401, 501 Elliott Ave, Seattle, WA ~$215 MillionTotal Project Cost 8% -10%Stabilized Returns54%Pre-Leased427,000Square FeetMixed UseUse Q2 2023Estimated Delivery~$162MillionTotal Project Cost 10% -12%Stabilized Returns300,000Square FeetLife ScienceUse Q2 2023Estimated Delivery 28%Pre-Leased |
| 15 OFFICE PROPERTIES INCOME TRUST STRONG AND FLEXIBLE FINANCIAL HEALTH Debt Profile Liquidity Position $615MAvailable Revolving Credit Facility $14MCash on Hand 3.9%Weighted Average Interest Rate on Debt Debt Metrics 47.7%Net Debt to Gross Book Value of Real Estate Assets Baa3Moody’s (2) BBB-S&P Global (2) Maturity Schedule 7.0xNet Debt to Rolling Four Quarter Adjusted EBITDAre 5.3 YearsWeighted Average Debt Maturity TermFort Mill, SC 1.In October 2022, we prepaid $22.9 million of secured fixed rate debt with a June 2023 maturity, at a discounted amount of $22.2 million plus accrued interest. Includes $135.0 million outstanding on OPI’s revolving credit facility. Subject to the payment of an extension fee and meeting certainother conditions, we may extend the maturity date of our revolving credit facility by two additional six month periods, the first of which we exercised on November 10, 2022.2.A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. $-$208 $350 $650 $300 $912 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000202220232024202520262027+($M)(1) Variable Rate5.6%94.4%Fixed Rate Secured 3.0%Unsecured97.0% |
| 16 OFFICE PROPERTIES INCOME TRUST For more information, please read The RMR Group’s 2021 Sustainability Report here ..COMMITMENT TO SUSTAINABILITY◦2022 ENERGY STAR® Partner of the Year Award (fifth consecutive year).◦2022 Gold Level Green Lease Leader.◦2021 Green Lease Leader, Silver (earned in 2015, 2016, 2017, 2019 and 2020).◦OPI’s Board comprised of 44% women and 11% members of underrepresented communities.◦Designated a 2020 Women on Boards “Winning” company. ESG HIGHLIGHTS ACHIEVEMENTS CONTINUED ADVANCEMENT OF INITIATIVES ◦Encouraging consideration of ESG criteria in the broader context of investment and property management through Internal Sustainability Reporting Committee.◦Leveraging diversity professional associations, such as Commercial Real Estate Women (CREW) and The Partnership, Inc., to attract a more diverse pool of candidates.◦Supporting employee health and wellness with activities such as LiveWell Week, Work Out at Home, Good Eats and Pay it Forward competitions.◦Anticipating new LEED Certification of 1.3 million SF in 2022.◦Planning to integrate wellness initiatives across the portfolio. Plantation, FLAtlanta, GAEwing, NJLEED Certified Properties6,242,919 square feetBOMA 360 Certified Properties5,185,692 square feetENERGY STAR Certified Properties7,421,861 square feet393747 |
| 17 OFFICE PROPERTIES INCOME TRUST Appendix Colorado Springs, CO |
| 18 OFFICE PROPERTIES INCOME TRUST RMR’s Operations Include: National Multi-Sector Investment Platform OFFICEINDUSTRIALGOVERNMENTMEDICAL OFFICELIFE SCIENCESENIOR LIVINGHOTELSRETAIL RMR Managed Companies 2,100 Properties Approximately$12 Billionin Annual Revenues Over$37 Billionin AUM Over600CRE Professionals More than 30Offices Throughout the U.S. Financial Services:Real Estate Services:Business Services:AccountingAcquisitions/ DispositionsAdministrationCapital MarketsAsset ManagementHuman ResourcesCompliance/ AuditConstruction/DevelopmentInformation Technology (IT)Finance/ PlanningEngineeringInvestor RelationsTreasuryLeasingMarketingTaxProperty ManagementLegal/Risk Management OPI IS MANAGED BY THE RMR GROUP, AN ALTERNATIVE ASSET MANAGERThe RMR Group, LLC Over38,000Employees |
| 19 OFFICE PROPERTIES INCOME TRUST A WINNING TRADITIONEPA’S ENERGY STAR Partner of the Year 2019 -2022. 70 properties with EPA ENERGY STAR certifications60 properties with BOMAdesignations. Ranked #1 for portfolio with most designations56 properties with LEEDdesignations SUSTAINABILITYRanked Boston Globe’s Top Places to Work2020 & 2021Women on Boards; Winning Organization 2020 Fortune Magazine’s Fastest Growing Companies ranked 75th2019 RMR RECOGNITIONin Retail Real Estate Ownershipin Hotel Real Estate Ownershipin Senior Living Real Estate Ownershipin OfficeReal Estate Ownershipin IndustrialReal Estate OwnershipSenior LivingOperatorHotel Operator #7#8#8#13#4#5#3 #3TruckStopOperator |
| 20 OFFICE PROPERTIES INCOME TRUST 1.Source: S&P Global Market Intelligence. Data is for the most recently reported twelve months as of November 1, 2022.RELATIONSHIP WITH RMR PROVIDES SCALE AND EFFICIENCY Key Benefits•RMR provides all the employees; OPI has no employees.•RMR’s acquisitions team has visibility to properties marketed for sale across the United States.•The depth and breadth of the RMR platform attracts strong real estate professionals.•Career advancement opportunities at RMR drives employee engagement and retention. •RMR property management employees focus only on assets managed by RMR.•RMR platform provides centralized support services, including procurement,banking and capital markets.G&A % of Total Revenue(1) 3.8%4.7%4.7%5.2%5.4%7.5%8.3%8.8%OPIBXPOFCHIWPDMCIODEAFSP |
| 21 OFFICE PROPERTIES INCOME TRUST RMR base management fee tied to OPI share price performance.• Consists of an annual fee equal to generally 50 bps multiplied by the lower of : (1) OPI’s historical cost of real estate, or (2) OPI’s total market capitalization. •There is no incentive for RMR to complete any transaction that could reduce share price.RMR incentive fees contingent on total shareholder return outperformance.•Incentive management Fee: 12% of the outperformance of our total return per share compared to the MSCI U.S. Office REIT Index over a three year period multiplied by equity market capitalization. •Outperformance must be positive to be earned.•Shareholders keep 100% of benchmarkreturns and at least 88% of returns in excess of the benchmark. Other fees.•Property management fee: consists of an annual fee based on 3.0% of rents collected at OPI’s managed properties.•Construction management fee based on 5.0% of project costs. Alignment of InterestsIf OPI’s share price goes up and its total market cap exceeds its historical cost of real estate; RMR base management fee is capped at 50 bps of historical cost of real estate.If OPI’s stock price goes down and its historical cost of real estate exceeds its total market cap; RMR gets less base management fees (50 bps on equity market cap plus debt). Incentive fee structure keeps RMR focused on increasing total shareholder return. Members of RMR senior management are holders of OPI common shares, some subject to long term lock up agreements.OPI shareholders have visibility into RMR, a publicly traded company.OPI benefits from RMR’s national footprint and economies of scale of $37.3billion platform.FEES THAT OPI PAYS TO RMR ARE PRIMARILY PERFORMANCE BASED WHICH ALIGNS INTERESTS WITH SHAREHOLDERS |
| 22 OFFICE PROPERTIES INCOME TRUST San Jose, CAFinancials |
| 23 OFFICE PROPERTIES INCOME TRUST KEY FINANCIAL DATA (dollars in thousands, except per share data)As of and for the Three Months Ended9/30/20226/30/20223/31/202212/31/20219/30/2021 Selected Balance Sheet Data: Total gross assets$4,507,422$4,578,277$4,703,791$4,737,595$4,699,286Total assets$3,968,986$4,062,658$4,197,693$4,241,683$4,239,878Total liabilities$2,562,821$2,647,208$2,740,611$2,744,974$2,733,898Total shareholders' equity$1,406,165$1,415,450$1,457,082$1,496,709$1,505,980 Selected Income Statement Data: Rental income$137,683$141,316$147,354$147,287$147,572Net income (loss)$16,964$(16,056)$(13,407)$16,945$3,712NOI$85,546$92,416$96,481$92,379$93,579Adjusted EBITDAre$79,957$86,422$91,241$86,304$87,604FFO$53,802$58,622$62,722$62,567$63,951Normalized FFO$53,802$58,923$62,722$58,083$59,598CAD$28,072$37,823$51,006$42,649$30,877Rolling four quarter CAD$159,550$162,355$158,363$155,009$154,704 Per Common Share Data (basic and diluted): Net income (loss)$0.35$(0.33)$(0.28)$0.35$0.08FFO$1.11$1.21$1.30$1.30$1.33Normalized FFO$1.11$1.22$1.30$1.20$1.24CAD$0.58$0.78$1.06$0.88$0.64Rolling four quarter CAD$3.30$3.36$3.28$3.21$3.21 Dividends: Annualized dividends paid per share during the period$2.20$2.20$2.20$2.20$2.20Annualized dividend yield (at end of period)15.7%11.0%8.6%8.9%8.7%Normalized FFO payout ratio49.5%45.1%42.3%45.8%44.4%Rolling four quarter CAD payout ratio66.7%65.5%67.1%68.5%68.5% |
| 24 OFFICE PROPERTIES INCOME TRUST DEBT SUMMARY(1)1.Excludes two mortgage notes with an aggregate principal balance of $82,000 which are secured by three properties owned by twounconsolidated joint ventures in which we own 51% and 50% interests.2.Reflects the interest rate stated in, or determined pursuant to, the contract terms.3.Includes the effect of mark to market accounting for certain mortgages and discounts on senior unsecured notes. Excludes the effect of debt issuance costs amortization.4.We are required to pay interest on borrowings under our revolving credit facility at a rate of LIBOR plus a premium of 110 basispoints per annum. We also pay a facility fee of 25 basis points per annum on the total amount of lending commitments under our revolving credit facility. Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings. The interest rate listed is as of September 30, 2022 and excludes the 25 basis point facility fee. Subject to the payment of an extension fee and meeting certain other conditions, wemay extend the maturity date of our revolving credit facility by two additional six month periods, the first of which we exercised on November 10, 2022.5.The maximum aggregate borrowing availability under the credit agreement governing our revolving credit facility may be increasedto up to $1,950,000 in certain circumstances.6.In October 2022, we prepaid this mortgage at a discounted amount of $22,176 plus accrued interest.As of September30, 2022: (dollars in thousands)Coupon Rate(2)Interest Rate (3)Principal BalanceMaturity DateDue at MaturityYears to Maturity Unsecured Floating Rate Debt: $750,000 unsecured revolving credit facility (4) (5)3.918%3.918%$135,0001/31/2023$135,0000.3 Unsecured Fixed Rate Debt: Senior unsecured notes due 2022Senior unsecured notes due 20244.250%4.404%350,0005/15/2024350,0001.6Senior unsecured notes due 20254.500%4.521%650,0002/1/2025650,0002.3Senior unsecured notes due 20262.650%2.815%300,0006/15/2026300,0003.7Senior unsecured notes due 20272.400%2.541%350,0002/1/2027350,0004.3Senior unsecured notes due 20313.450%3.550%400,00010/15/2031400,0009.0Senior unsecured notes due 20506.375%6.375%162,0006/23/2050162,00027.7Subtotal / weighted average3.825%3.918%2,212,0002,212,0005.8 Secured Fixed Rate Debt: Mortgage debt -One property in Chicago, IL3.700%4.210%50,0006/1/202350,0000.7Mortgage debt -One property in Washington, DC(6)4.800%4.190%22,9016/1/202322,5840.7Subtotal / weighted average4.046%4.204%72,90172,5840.7Total / weighted average3.837%3.927%$2,419,901$2,419,5845.3 |
| 25 OFFICE PROPERTIES INCOME TRUST CALCULATION OF NOI AND CASH BASIS NOI(1)1.Excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. 2.We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our former investment in The RMR Group Inc. common stock in June 2015. A portion of this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees expense, which are included in property operating expenses.3.Acquisition and transaction related costs represent costs related to an acquisition opportunity that did not materialize. (dollars in thousands)For the Three Months Ended9/30/20226/30/20223/31/202212/31/20219/30/2021 Calculation of NOI and Cash Basis NOI: Rental income$137,683$141,316$147,354$147,287$147,572Property operating expenses(52,137) (48,900) (50,873)(54,908) (53,993) NOI85,54692,41696,48192,37993,579Non-cash straight line rent adjustments included in rental income(1,765) (2,775) (2,686)(2,240) (3,924) Lease value amortization included in rental income204233343452447Lease termination fees included in rental income(83) (2,175) (4942)(761) (55) Non-cash amortization included in property operating expenses(2)(121) (121) (121)(121) (121) Cash Basis NOI$83,781$87,578$89,075$89,709$89,926 Reconciliation of Net Income (Loss) to NOI and Cash Basis NOI: Net income (loss)$16,964 $ (16,056) $(13,407)$16,945$3,712Equity in net losses of investees952833846837688Income tax expense (benefit)90 (190) 531(97)34Income (loss) before income tax expense (benefit) and equity in net losses of investees18,006 (15,413) (12,030)17,6854,434Loss on early extinguishment of debt—77——2,274Interest expense24,96926,51527,43927,65726,929Interest and other income(56) (16) (1)——(Gain)loss on sale of real estate(16,925)11,637(2,149)(24,200) (36) General and administrative6,5647,0835,7062,168448Acquisition and transaction related costs (3)— 224 ———Loss on impairment of real estate—4,77317,0476,566 (3) Depreciation and amortization52,98857,53660,46962,50359,533NOI85,54692,41696,48192,37993,579Non-cash amortization included in property operating expenses (2)(121) (121) (121)(121) (121) Lease termination fees included in rental income(83) (2,175) (4,942)(761) (55) Lease value amortization included in rental income204233343452447Non-cash straight line rent adjustments included in rental income(1,765) (2,775) (2,686)(2,240) (3,924) Cash Basis NOI$83,781$87,578$89,075$89,709$89,926 |
| 26 OFFICE PROPERTIES INCOME TRUST CALCULATION OF EBITDA, EBITDAreAND ADJUSTED EBITDAre1.Acquisition and transaction related costs represent costs related to an acquisition opportunity that did not materialize.2.Amounts represent equity based compensation to our Trustees, our officers and certain other employees of RMR LLC. 3.Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our consolidated statements of income (loss). In calculating net income (loss) in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss), we do not include such expense in the calculation of Adjusted EBITDAre until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, ifany, is determined. (dollars in thousands)For the Three Months Ended9/30/20226/30/20223/31/202212/31/20219/30/2021Net income (loss)$16,964 $ (16,056) $ (13,407) $16,945$3,712Add (less): Interest expense24,96926,51527,43927,65726,929Income tax expense (benefit)90 (190) 531(97)34Depreciation and amortization52,98857,53660,46962,50359,533EBITDA95,01167,80575,032107,00890,208Add (less): Loss on impairment of real estate—4,77317,0476,566(3)(Gain) loss on sale of real estate (16,925) 11,637 (2,149) (24,200)(36)Distributions received from unconsolidated joint ventures——51153153Equity in losses of unconsolidated joint ventures952833846837688EBITDAre79,03885,04890,82790,36491,010Add (less): Acquisition and transaction related costs (1)—224———General and administrative expense paid in common shares (2)9191,073414424947Estimated business management incentive fees (3)—224—(4,484)(6,627)Loss on early extinguishment of debt—77——2,274Adjusted EBITDAre$79,957$86,422$91,241$86,304$87,604 |
| 27 OFFICE PROPERTIES INCOME TRUST CALCULATION OF FFO, NORMALIZED FFO AND CAD1.Acquisition and transaction related costs represent costs related to an acquisition opportunity that did not materialize2.Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our consolidated statements of income (loss). In calculating net income (loss) in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income (loss), we do not include such expense in the calculation of Normalized FFO until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any,isdetermined.3.Non-cash expenses include equity based compensation, adjustments recorded to capitalize interest expense and amortization of theliability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our former investment in RMR Inc.’s common stock in June 2015. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to business management fee expense and property management fee expense, which are included in general and administrative and other operatingexpenses, respectively. (dollars in thousands, except per share data)For the Three Months Ended9/30/20226/30/20223/31/202212/31/20219/30/2021Net income (loss)$16,964 $ (16,056) $(13,407)$16,945$3,712Add (less): Depreciation and amortization:Consolidated properties52,98857,53660,46962,50359,533Unconsolidated joint venture properties775732762753745Loss on impairment of real estate—4,77317,0476,566(3)(Gain) loss on sale of real estate (16,925) 11,637(2,149)(24,200)(36)FFO53,80258,62262,72262,56763,951Add (less): Acquisition and transaction related costs(1)—224———Loss on early extinguishment of debt—77——2,274Estimated business management incentive fees (2)———(4,484)(6,627)Normalized FFO53,80258,92362,72258,08359,598Add (less): Non-cash expenses (3) (640) (192) (465)(251)433Distributions from unconsolidated joint ventures——51153153Depreciation and amortization -unconsolidated joint ventures (775) (732) (762)(753)(745)Equity in net losses of investees952833846837688Loss on early extinguishment of debt settled in cash————(1,874)Non-cash straight line rent adjustments included in rental income (1,765) (2,775) (2,686)(2,240)(3,924)Lease value amortization included in rental income204233343452447Net amortization of debt premiums, discounts and issuance costs2,1762,3662,4042,4052,442Recurring capital expenditures (25,882) (20,833) (11,447)(16,037)(26,341)CAD$28,072$37,823$51,006$42,649$30,877Weighted average common shares outstanding (basic)48,28648,24948,24348,24348,211Weighted average common shares outstanding (diluted)48,28648,24948,24348,25148,244Per common share amounts (basic and diluted):Net income (loss)$0.35 $ (0.33) $(0.28)$0.35$0.08FFO$1.11$1.21$1.30$1.30$1.33Normalized FFO$1.11$1.22$1.30$1.20$1.24CAD$0.58$0.78$1.06$0.88$0.64 |
| 28 OFFICE PROPERTIES INCOME TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Non-GAAP Financial Measures We present certain “non-GAAP financial measures” within the meaning of applicable rules of the SEC, including NOI, Cash Basis NOI, EBITDA, EBITDAre, Adjusted EBITDAre, FFO, Normalized FFO and CAD. These measures do not represent cash generated by operating activities in accordance with GAAPand should not be considered alternatives to net income (loss) as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net income (loss) as presented in our consolidated statements of income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net income (loss). We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI and Cash Basis NOI reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties. NOI and Cash Basis NOI The calculations of net operating income, or NOI, and Cash Basis NOI exclude certain components of net income (loss) in ordertoprovide results that are more closely related to our property level results of operations. We calculate NOI and Cash Basis NOI as shown on page 25. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization expense. We define Cash Basis NOI as NOI excluding non-cash straight line rent adjustments, lease value amortization, lease termination fees, if any, and non-cash amortization included in other operating expenses. We use NOI and Cash Basis NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI and Cash Basis NOI differently than we do. EBITDA, EBITDA reand Adjusted EBITDAre We calculate earnings before interest, taxes, depreciation and amortization, or EBITDA, EBITDA for real estate, or EBITDAre, and Adjusted EBITDAreas shown on page 26. EBITDAreis calculated on the basis defined by The National Association of Real Estate Investment Trusts, or Nareit, which is EBITDA, excluding gains and losses on the sale of real estate, loss on impairment of real estate assets and adjustments to reflect our share of EBITDAre of our unconsolidated joint ventures. In calculating Adjusted EBITDAre, we adjust for the items shown on page 26 and include business management incentive fees, if any, only in the fourth quarterversus the quarter when they are recognized as expense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingenciesfor determining such fees are known at the end of the calendar year. Other real estate companies and REITs may calculate EBITDA, EBITDAreand Adjusted EBITDAredifferently than we do. FFO and Normalized FFO We calculate funds from operations, or FFO, and Normalized FFO as shown on page 27. FFO is calculated on the basis defined byNareit, which is net income (loss), calculated in accordance with GAAP, plus real estate depreciation and amortization of consolidated properties and our proportionate share of the real estate depreciation and amortization of unconsolidated joint venture properties, but excluding impairment charges on real estate assetsand any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the other items shown on page 27 and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized asanexpense in accordance with GAAP due to their quarterly volatility not necessarily being indicative of our core operating performance and the uncertainty as to whether any such business management incentive fees will be payable when all contingencies for determining such fees are known at the end of the calendar year. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do. Cash Available for Distribution (CAD) We calculate cash available for distribution, or CAD, as shown on page 27. We define CAD as Normalized FFO minus recurring real estate related capital expenditures and adjusted for other non-cash and non-recurring items plus certain amounts excluded from Normalized FFO but settled in cash. CAD is among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other real estate companies and REITs may calculate CAD differently than we do. |
| 29 OFFICE PROPERTIES INCOME TRUST NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Annualized dividend yield is the annualized dividend per share paid during the period divided by the closing price of our common shares at the end of theperiod. Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of September30,2022, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. Cap Rate represents the ratio of (x) annual straight line rental income, excluding the impact of above and below market lease amortization, based on existing leases at the acquisition date, less estimated annual property operating expenses as of the date of the acquisition, excluding depreciation and amortization expense, to (y) the acquisition purchase price, including the principal amount of assumed debt, if any, and excluding purchase price adjustments and acquisition related costs. GAAP is U.S. generally accepted accounting principles. Gross book value of real estate assets is real estate properties at cost, plus certain acquisition costs, if any, before depreciation and purchase price allocations, less impairment writedowns, if any. Gross sales price is equal to the gross contract price and excludes closing costs. Investment grade tenants include: (a)investment grade rated tenants; (b)tenants with investment grade rated parent entities that guarantee the tenant's lease obligations; and/or (c)tenants with investment grade rated parent entities that do not guarantee the tenant's lease obligations. Tenants contributing 52.4% of annualized rental income as of September30, 2022 were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 10.6% of annualized rental income as of September30, 2022 were subsidiaries of an investment grade rated parent (although these parent entities are not liable for the payment of rents). Leased square feet is pursuant to leases existing as of September30, 2022, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any. Square footage measurements are subject to changes when space is remeasured or reconfigured for new tenants. Net debt is total debt less cash. Percent leased includes (i) space being fitted out for occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date. Purchase price represents the gross purchase price, including assumed debt, if any, and excludes acquisition related costs and purchase price adjustments and allocations. Rolling four quarter CAD represents CAD for the preceding twelve month period as of the respective quarter end date. Total debt represents the outstanding principal balance as of the date reported. Total gross assets is total assets plus accumulated depreciation. Weighted average remaining lease term (or “WALT”) is the average remaining lease term in years weighted based on annualized rental income. |
| 30 OFFICE PROPERTIES INCOME TRUST INVESTOR PRESENTATIONQ32022 Washington, D.C. Two Newton Place255 Washington Street, Suite 300Newton, MA 02458OPIREIT.COM |
