EX-99.2 3 opi123119exhibit992.htm EXHIBIT 99.2 opi123119exhibit992
Office Properties Income Trust Exhibit 99.2 Tenant: Emory University 12 Executive Park Drive, Atlanta, GA One Building, Square Feet: 125,788 Fourth Quarter 2019 Supplemental Operating and Financial Data All amounts in this report are unaudited.


 
TABLE OF CONTENTS CORPORATE INFORMATION PAGE Company Profile....................................................................................................................................................................................................................................... 4 Investor Information ................................................................................................................................................................................................................................. 5 Research Coverage ................................................................................................................................................................................................................................. 6 FINANCIALS Key Financial Data ................................................................................................................................................................................................................................... 8 Consolidated Balance Sheets .................................................................................................................................................................................................................. 9 Consolidated Statements of Income (Loss) ............................................................................................................................................................................................. 10 Consolidated Statements of Cash Flows ................................................................................................................................................................................................. 12 Debt Summary ......................................................................................................................................................................................................................................... 14 TABLE OF CONTENTS TABLE Debt Maturity Schedule............................................................................................................................................................................................................................ 15 Leverage Ratios, Coverage Ratios and Public Debt Covenants.............................................................................................................................................................. 16 Capital Expenditures Summary................................................................................................................................................................................................................ 17 Property Acquisitions and Dispositions Information Since January 1, 2019............................................................................................................................................. 18 Investments in Unconsolidated Joint Ventures ........................................................................................................................................................................................ 19 Calculation and Reconciliation of Property NOI and Property Cash Basis NOI....................................................................................................................................... 20 Reconciliation and Calculation of Same Property NOI and Same Property Cash Basis NOI .................................................................................................................. 21 Calculation of EBITDA, EBITDAre and Adjusted EBITDAre .................................................................................................................................................................... 22 Calculation of FFO Available for Common Shareholders and Normalized FFO Available for Common Shareholders............................................................................ 24 PORTFOLIO INFORMATION Summary Same Property Results............................................................................................................................................................................................................ 27 Occupancy and Leasing Summary .......................................................................................................................................................................................................... 28 Tenant Diversity and Credit Characteristics ............................................................................................................................................................................................. 29 Tenants Representing 1% or More of Total Annualized Rental Income ................................................................................................................................................... 30 Lease Expiration Schedule ...................................................................................................................................................................................................................... 31 EXHIBITS A Summary Pro Forma Same Property Results.......................................................................................................................................................................................... 33 B Reconciliation and Calculation of Pro Forma Same Property NOI and Same Property Cash Basis NOI ................................................................................................ 34 C Pro Forma Capital Expenditures Summary.............................................................................................................................................................................................. 35 D Pro Forma Calculation of EBITDA, EBITDAre and Adjusted EBITDAre .................................................................................................................................................. 36 E Property Detail ......................................................................................................................................................................................................................................... 37 NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS 42 WARNING CONCERNING FORWARD-LOOKING STATEMENTS 44 Please refer to Non-GAAP Financial Measures and Certain Definitions for terms used throughout this document. Certain pro forma financial information is presented in the Exhibits to this supplemental operating and financial data report, as well as certain property information for Select Income REIT, or SIR, as if the merger of SIR with and into a wholly owned subsidiary of us that was completed on December 31, 2018 had occurred on January 1, 2018. Such pro forma financial information is not necessarily indicative of our expected financial position or results of operations for any future period. Differences could result from numerous factors, including future changes in our portfolio of investments, our capital structure, our property level operating expenses and revenues, including rents expected to be received pursuant to our existing leases or leases we may enter into, changes in interest rates and other reasons. Actual future results are likely to be different from amounts presented in the pro forma financial information and such differences could be significant. Office Properties Income Trust 2 Supplemental Operating and Financial Data, December 31, 2019


 
CORPORATE INFORMATION Primary Tenant: Science Applications International Corp. Liberty Center: 14660, 14668 & 14672 Lee Road, Chantilly, VA Three Buildings, Square Feet: 409,478 Office Properties Income Trust Supplemental Operating and Financial Data, December 31, 2019


 
COMPANY PROFILE The Company: Corporate Headquarters: Office Properties Income Trust, or OPI, we, our, or us, is a real estate investment trust, or REIT, focused on owning, operating Two Newton Place and leasing properties primarily leased to single tenants and those with high credit quality characteristics like government entities. 255 Washington Street, Suite 300 The majority of our properties are office buildings. OPI is a component of 56 market indices and it comprises more than 1% of Newton, MA 02458-1634 the following indices as of December 31, 2019: BI North America Office REIT Valuation Peers (BROFFRTV), Invesco KBW (617) 219-1440 Premium Yield Equity REIT ETF INAV Index (KBWYIV), Bloomberg Reit Office Property Index (BBREOFPY) and Solactive Global Stock Exchange Listing: SuperDividend Index (SOLSDIV). Nasdaq COMPANY PROFILE COMPANY Effective after the close of trading on December 31, 2018, we acquired SIR in a merger transaction, or the Merger, and we changed our name to OPI. The SIR assets and liabilities that we acquired and assumed in the Merger are included in our Trading Symbols: consolidated balance sheet beginning December 31, 2018; however, SIR's results of operations are excluded from our actual Common Shares: OPI historical consolidated statements of income (loss) for all periods prior to and including December 31, 2018. Senior Unsecured Notes due 2046: OPINI Issuer Ratings: Moody’s: Baa3 S&P Global: BBB- Management: OPI is managed by The RMR Group LLC, or RMR LLC, the majority owned operating subsidiary of The RMR Group Inc. (Nasdaq: RMR). RMR is an alternative asset management company that was founded in 1986 to manage real estate companies and Key Data (As of and For the Quarter Ended December 31, 2019): related businesses. RMR primarily provides management services to four publicly traded equity REITs and three real estate related operating businesses. In addition to managing OPI, RMR manages Diversified Healthcare Trust (formerly known as Senior (dollars and sq. ft. in thousands) Housing Properties Trust), a REIT that owns high-quality, private-pay healthcare properties like medical office and life science Total properties (1) 189 properties, senior living communities and wellness centers, Industrial Logistics Properties Trust, a REIT that owns industrial and Total sq. ft. (1) 25,726 logistics properties, and Service Properties Trust, a REIT that owns a diverse portfolio of hotels and net lease service and Percent leased (1) 92.4% necessity-based retail properties. RMR also provides management services to Five Star Senior Living Inc., a publicly traded operator of senior living communities, Sonesta International Hotels Corporation, a privately owned operator and franchisor of Q4 2019 total rental income $ 160,184 hotels and cruise boats, and TravelCenters of America Inc., a publicly traded operator and franchisor of travel centers along the Q4 2019 net income available for U.S. Interstate Highway System, standalone truck service facilities and restaurants. RMR also advises the RMR Real Estate common shareholders $ 65,029 Income Fund, a publicly traded closed end fund that invests in publicly traded securities of real estate companies, and Tremont Q4 2019 Normalized FFO available Mortgage Trust, a publicly traded mortgage REIT that focuses on originating and investing in floating rate first mortgage whole for common shareholders $ 66,443 loans, secured by middle market and transitional commercial real estate, through wholly owned Securities and Exchange (1) Excludes three properties owned by two unconsolidated Commission, or SEC, registered investment advisory subsidiaries, as well as manages the RMR Office Property Fund LP, a joint ventures and includes six properties classified as private, open end core plus fund focused on the acquisition, ownership and leasing of a diverse portfolio of multi-tenant office held for sale. properties throughout the U.S. As of December 31, 2019, RMR had $32.2 billion of real estate assets under management and the combined RMR managed companies had approximately $12 billion of annual revenues, over 2,100 properties and nearly 50,000 employees. We believe that being managed by RMR is a competitive advantage for OPI because of RMR’s depth of management and experience in the real estate industry. We also believe RMR provides management services to us at costs that are lower than we would have to pay for similar quality services if we were self managed. Office Properties Income Trust 4 Supplemental Operating and Financial Data, December 31, 2019


 
INVESTOR INFORMATION Board of Trustees Donna D. Fraiche Barbara D. Gilmore John L. Harrington Independent Trustee Independent Trustee Independent Trustee William A. Lamkin Elena B. Poptodorova Jeffrey P. Somers Independent Trustee Lead Independent Trustee Independent Trustee David M. Blackman Adam D. Portnoy INVESTOR INFORMATION INVESTOR Managing Trustee Chair of the Board & Managing Trustee Senior Management David M. Blackman Matthew C. Brown Christopher J. Bilotto President and Chief Executive Officer Chief Financial Officer and Treasurer Vice President Contact Information Investor Relations Inquiries Office Properties Income Trust Financial inquiries should be directed to Matthew C. Brown, Two Newton Place Chief Financial Officer and Treasurer, 255 Washington Street, Suite 300 at (617) 219-1440 Newton, MA 02458-1634 or mbrown@opireit.com (617) 219-1410 info@opireit.com Investor and media inquiries should be directed to www.opireit.com Olivia Snyder, Manager, Investor Relations, at (617) 219-1410 or osnyder@opireit.com Office Properties Income Trust 5 Supplemental Operating and Financial Data, December 31, 2019


 
RESEARCH COVERAGE Equity Research Coverage B. Riley FBR BofA Securities Bryan Maher James Feldman bmaher@brileyfbr.com James.Feldman@baml.com (646) 885-5423 (646) 855-5808 JMP Securities Mizuho Securities Aaron Hecht Omotayo Okusanya RESEARCH COVERAGE ahecht@jmpsecurities.com Omotayo.Okusanya@mizuhogroup.com (415) 835-3963 (646) 949-9672 Morgan Stanley RBC Capital Markets Vikram Malhotra Michael Carroll vikram.malhotra@morganstanley.com Michael.Carroll@rbccm.com (212) 761-7064 (440) 715-2649 Rating Agencies Moody’s Investors Service S&P Global Lori Marks Nicolas Villa Lori.marks@moodys.com nicolas.villa@spglobal.com (212) 553-0376 (212) 438-1534 OPI is followed by the analysts and its credit is rated by the rating agencies listed above. Please note that any opinions, estimates or forecasts regarding OPI’s performance made by these analysts or agencies do not represent opinions, forecasts or predictions of OPI or its management. OPI does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies. Office Properties Income Trust 6 Supplemental Operating and Financial Data, December 31, 2019


 
FINANCIALS Tenant: Honeywell International, Inc. 9680 Old Bailes Road, Fort Mill, SC One Building, Square Feet: 60,044 Office Properties Income Trust Supplemental Operating and Financial Data, December 31, 2019


 
KEY FINANCIAL DATA (dollars in thousands, except per share data) As of and for the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Selected Balance Sheet Data: Total gross assets $ 4,580,792 $ 4,735,814 $ 5,198,382 $ 5,313,886 $ 5,613,730 Total assets $ 4,193,136 $ 4,360,249 $ 4,804,322 $ 4,927,198 $ 5,238,583 Total liabilities $ 2,487,382 $ 2,693,636 $ 3,107,836 $ 3,140,194 $ 3,459,615 Total shareholders' equity $ 1,705,754 $ 1,666,613 $ 1,696,486 $ 1,787,004 $ 1,778,968 KEY FINANCIAL DATA FINANCIAL KEY Selected Income Statement Data: Rental income $ 160,184 $ 167,411 $ 176,032 $ 174,777 $ 103,656 Net income (loss) available for common shareholders $ 65,029 $ (3,939) $ (64,774) $ 34,019 $ (57,695) Property NOI $ 103,158 $ 108,693 $ 120,723 $ 116,868 $ 62,026 Adjusted EBITDAre $ 96,513 $ 102,886 $ 114,897 $ 111,162 $ 57,901 FFO available for common shareholders $ 66,443 $ 69,455 $ 79,081 $ 72,275 $ 26,340 Normalized FFO available for common shareholders $ 66,443 $ 69,739 $ 79,250 $ 73,273 $ 39,101 Per Common Share Data: Net income (loss) available for common shareholders (basic and diluted) $ 1.35 $ (0.08) $ (1.35) $ 0.71 $ (2.31) FFO available for common shareholders (basic and diluted) $ 1.38 $ 1.44 $ 1.65 $ 1.50 $ 1.05 Normalized FFO available for common shareholders (basic and diluted) $ 1.38 $ 1.45 $ 1.65 $ 1.53 $ 1.56 Dividends: Annualized dividends paid per share during period $ 2.20 $ 2.20 $ 2.20 $ 2.20 $ 6.88 Annualized dividend yield (at end of period) 6.8% 7.2% 8.4% 8.0% 25.0% Normalized FFO available for common shareholders payout ratio 39.9% 37.9% 33.3% 35.9% 110.3% Office Properties Income Trust 8 Supplemental Operating and Financial Data, December 31, 2019


 
CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) December 31, 2019 2018 ASSETS Real estate properties: Land $ 840,550 $ 924,164 Buildings and improvements 2,652,681 3,020,472 Total real estate properties, gross 3,493,231 3,944,636 Accumulated depreciation (387,656) (375,147) Total real estate properties, net 3,105,575 3,569,489 Assets of properties held for sale 70,877 253,501 Investments in unconsolidated joint ventures 39,756 43,665 Acquired real estate leases, net 732,382 1,056,558 Cash and cash equivalents 93,744 35,349 Restricted cash 6,952 3,594 Rents receivable 83,556 72,051 Deferred leasing costs, net 40,107 25,672 Other assets, net 20,187 178,704 Total assets $ 4,193,136 $ 5,238,583 LIABILITIES AND SHAREHOLDERS’ EQUITY CONSOLIDATED BALANCE SHEETS CONSOLIDATED Unsecured revolving credit facility $ — $ 175,000 Unsecured term loans, net — 387,152 Senior unsecured notes, net 2,017,379 2,357,497 Mortgage notes payable, net 309,946 335,241 Liabilities of properties held for sale 14,693 4,271 Accounts payable and other liabilities 125,048 145,536 Due to related persons 7,141 34,887 Assumed real estate lease obligations, net 13,175 20,031 Total liabilities 2,487,382 3,459,615 Commitments and contingencies Shareholders’ equity: Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 48,201,941 and 48,082,903 shares issued and outstanding, respectively 482 481 Additional paid in capital 2,612,425 2,609,801 Cumulative net income 177,217 146,882 Cumulative other comprehensive income (loss) (200) 106 Cumulative common distributions (1,084,170) (978,302) Total shareholders’ equity 1,705,754 1,778,968 Total liabilities and shareholders’ equity $ 4,193,136 $ 5,238,583 Office Properties Income Trust 9 Supplemental Operating and Financial Data, December 31, 2019


 
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (amounts in thousands, except per share data) Three Months Ended December 31, Year Ended December 31, 2019 2018 2019 2018 Rental income $ 160,184 $ 103,656 $ 678,404 $ 426,560 Expenses: Real estate taxes 18,354 12,306 73,717 49,708 Utility expenses 7,933 5,935 34,302 26,425 Other operating expenses 30,739 23,389 120,943 89,610 Depreciation and amortization 63,512 33,044 289,885 162,488 Loss on impairment of real estate (1) 8,150 2,830 22,255 8,630 Acquisition and transaction related costs (2) — 10,695 682 14,508 General and administrative (3) 7,271 (11,516) 32,728 24,922 Total expenses 135,959 76,683 574,512 376,291 Gain on sale of real estate (4) 71,593 3,332 105,131 20,661 Dividend income — 425 1,960 1,337 Loss on equity securities, net (5) — (48,229) (44,007) (7,552) Interest income 198 234 1,045 639 Interest expense (including net amortization of debt premiums, discounts and issuance costs of $2,476, $877, $10,740 and $3,626, respectively) (30,032) (20,421) (134,880) (89,865) Loss on early extinguishment of debt (6) — (709) (769) (709) Income (loss) from continuing operations before income tax (expense) benefit and equity in net losses of investees 65,984 (38,395) 32,372 (25,220) Income tax (expense) benefit (269) 7 (778) (117) Equity in net losses of investees (686) (1,157) (1,259) (2,269) Income (loss) from continuing operations 65,029 (39,545) 30,335 (27,606) Income (loss) from discontinued operations (7) — (18,150) — 5,722 Net income (loss) 65,029 (57,695) 30,335 (21,884) Preferred units of limited partnership distributions — — — (371) Net income (loss) available for common shareholders $ 65,029 $ (57,695) $ 30,335 $ (22,255) Weighted average common shares outstanding (basic and diluted) 48,094 25,027 48,062 24,830 CONSOLIDATED STATEMENTS OF INCOME (LOSS) STATEMENTS CONSOLIDATED Per common share amounts (basic and diluted): Income (loss) from continuing operations $ 1.35 $ (1.58) $ 0.63 $ (1.13) Income (loss) from discontinued operations $ — $ (0.73) $ — $ 0.23 Net income (loss) available for common shareholders $ 1.35 $ (2.31) $ 0.63 $ (0.90) Additional Data: General and administrative expenses / total assets (at end of period) (3) 0.17% (0.22%) 0.78% 0.48% Non-cash straight line rent adjustments included in rental income $ 8,142 $ 2,339 $ 27,507 $ 10,164 Lease value amortization included in rental income $ (82) $ (542) $ (2,710) $ (2,903) Lease termination fees included in rental income $ 2 $ 58 $ 9,185 $ 180 Non-cash amortization included in other operating expenses (8) $ 121 $ 121 $ 484 $ 484 Non-cash amortization included in general and administrative expenses (8) $ 151 $ 151 $ 603 $ 603 Office Properties Income Trust See accompanying notes on the following page. 10 Supplemental Operating and Financial Data, December 31, 2019


 
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (CONTINUED) (dollars in thousands) (1) Loss on impairment of real estate for the three months ended December 31, 2019 includes an adjustment of $9,739 to reduce the carrying value of one property to its estimated fair value less costs to sell and a $250 loss on impairment of real estate related to the sale of three properties, offset by the recovery of impairment losses recorded in previous periods of $1,839 related to the sale of four properties. Loss on impairment of real estate for the year ended December 31, 2019 also includes adjustments totaling $11,479 to reduce the carrying value of 10 properties to their estimated fair value less costs to sell and $2,626 of losses on impairment of real estate related to the sale of 35 properties during the nine months ended September 30, 2019. Loss on impairment of real estate for the three months ended December 31, 2018 includes an adjustment of $2,830 to reduce the carrying value of a portfolio of 34 properties to its estimated fair value less costs to sell. Loss on impairment of real estate for the year ended December 31, 2018 also includes adjustments totaling $6,122 to reduce the carrying value of four properties to their estimated fair value less costs to sell and an adjustment of $322 to increase the carrying value of one property removed from held for sale status to its estimated fair value during the nine months ended September 30, 2018. (2) Acquisition and transaction related costs for the three months ended December 31, 2018 and the years ended December 31, 2019 and 2018 consist of costs incurred in connection with the Merger and other related transactions. (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 expenses in our consolidated statements of income (loss). No business management incentive fee was payable under our business management agreement for the years ended December 31, 2019 or 2018. Net loss available for common shareholders for the three months ended December 31, 2018 includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. SIR's business management incentive fee for 2018 of $25,817 was paid by us in January 2019. Pursuant to GAAP, the business management incentive fee that SIR incurred for 2018 was not recorded in our consolidated statement of income (loss) for the year ended December 31, 2018, but that amount was included in our consolidated balance sheet as of December 31, 2018 within due to related persons. (4) Gain on sale of real estate for the three months ended December 31, 2019 represents a $71,593 gain on the sale of seven properties. Gain on sale of real estate for the year ended December 31, 2019 also includes a $33,538 gain on the sale of three properties during the nine months ended September 30, 2019. Gain on sale of real estate for the three months ended December 31, 2018 represents an aggregate gain of $3,332 on the sale of one property in November 2018 and the sale of a portfolio of 15 properties in December 2018. Gain on sale of real estate for the year ended December 31, 2018 also includes a $17,329 gain on the sale of one property during the nine months ended September 30, 2018. (5) Loss on equity securities, net represents a realized loss for the year ended December 31, 2019 for the sale of our 2.8 million shares of RMR Inc. common stock on July 1, 2019, and unrealized losses in the three months and year ended December 31, 2018 to adjust the carrying value of our former investment in RMR Inc. common stock to its fair value as of the end of the period. (6) Loss on early extinguishment of debt for the three months ended December 31, 2018 and the years ended December 31, 2019 and 2018 includes write-offs of the unamortized portion of certain discounts and issuance costs resulting from the early repayment of debt. (7) Income (loss) from discontinued operations includes operating results related to our former equity method investment in SIR that we sold in October 2018. Income (loss) from discontinued operations also includes a loss of $18,665 on the sale of our SIR shares. (8) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. 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 operating expenses, respectively. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (CONTINUED) STATEMENTS CONSOLIDATED Office Properties Income Trust 11 Supplemental Operating and Financial Data, December 31, 2019


 
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Year Ended December 31, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 30,335 $ (21,884) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 89,400 66,685 Net amortization of debt premiums, discounts and issuance costs 10,740 3,626 Amortization of acquired real estate leases 197,978 94,375 Amortization of deferred leasing costs 5,973 4,833 Gain on sale of real estate (105,131) (20,661) Loss on impairment of real estate 22,255 8,630 Loss on early extinguishment of debt 769 709 Straight line rental income (27,507) (10,164) Other non-cash expenses, net 2,011 250 Loss on equity securities, net 44,007 7,552 Equity in net losses of investees 1,259 2,269 Distribution of earnings from Affiliates Insurance Company 2,438 — Equity in earnings of Select Income REIT included in discontinued operations — (20,873) Net gain on issuance of shares by Select Income REIT included in discontinued operations — (29) Loss on sale of Select Income REIT shares included in discontinued operations — 15,180 Distributions of earnings from Select Income REIT — 20,873 Change in assets and liabilities: Rents receivable 12,586 5,021 Deferred leasing costs (27,971) (9,203) Other assets 3,266 1,127 Accounts payable and other liabilities (19,333) (3,303) CONSOLIDATED STATEMENTS OF CASH FLOWS STATEMENTS CONSOLIDATED Due to related persons (27,746) (97) Net cash provided by operating activities 215,329 144,916 CASH FLOWS FROM INVESTING ACTIVITIES: Real estate acquisitions (2,905) 25,221 Real estate improvements (62,676) (47,500) Distributions in excess of earnings from Select Income REIT — 17,251 Distributions in excess of earnings from unconsolidated joint ventures 2,370 3,751 Distributions in excess of earnings from Affiliates Insurance Company 6,562 — Proceeds from sale of properties, net 829,794 304,808 Proceeds from sale of Select Income REIT shares — 435,125 Proceeds from sale of The RMR Group Inc. common shares, net 104,674 — Net cash provided by investing activities 877,819 738,656 Office Properties Income Trust 12 Supplemental Operating and Financial Data, December 31, 2019


 
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (dollars in thousands) Year Ended December 31, 2019 2018 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of mortgage notes payable (12,054) (3,708) Repayment of unsecured term loans (388,000) (162,000) Repayment of senior unsecured notes (350,000) — Borrowings on unsecured revolving credit facility 430,000 238,000 Repayments on unsecured revolving credit facility (605,000) (741,000) Payment of debt issuance costs — (3,936) Repurchase of common shares (473) (232) Redemption of preferred units of limited partnership — (20,221) Preferred units of limited partnership distributions — (646) Distributions to common shareholders (105,868) (170,566) Net cash used in financing activities (1,031,395) (864,309) Increase in cash, cash equivalents and restricted cash 61,753 19,263 Cash, cash equivalents and restricted cash at beginning of period 38,943 19,680 Cash, cash equivalents and restricted cash at end of period $ 100,696 $ 38,943 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 131,735 $ 65,188 Income taxes paid $ 491 $ 68 NON-CASH INVESTING ACTIVITIES: Working capital assumed $ — $ 25,170 Real estate and investment acquired by issuance of common shares $ — $ (639,809) Real estate and investment acquired by assumption of debt $ — $ (1,719,772) NON-CASH FINANCING ACTIVITIES: Select Income REIT unsecured revolving credit facility $ — $ 108,000 Assumption of mortgage notes payable $ — $ 161,772 Assumption of senior unsecured notes $ — $ 1,450,000 Issuance of common shares $ — $ 639,809 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) STATEMENTS CONSOLIDATED SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows: As of December 31, 2019 2018 Cash and cash equivalents $ 93,744 $ 35,349 Restricted cash 6,952 3,594 Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 100,696 $ 38,943 Office Properties Income Trust 13 Supplemental Operating and Financial Data, December 31, 2019


 
DEBT SUMMARY (1) As of December 31, 2019 (dollars in thousands) Coupon Interest Principal Maturity Due at Years to Rate (2) Rate (3) Balance Date Maturity Maturity Unsecured Floating Rate Debt: $750,000 unsecured revolving credit facility (4) (5) 2.730% 2.730% $ — 1/31/2023 $ — 3.1 DEBT SUMMARY Unsecured Fixed Rate Debt: Senior unsecured notes due 2020 (6) 3.600% 3.608% 400,000 2/1/2020 400,000 0.1 Senior unsecured notes due 2022 4.150% 4.196% 300,000 2/1/2022 300,000 2.1 Senior unsecured notes due 2022 4.000% 4.000% 300,000 7/15/2022 300,000 2.5 Senior unsecured notes due 2024 4.250% 4.404% 350,000 5/15/2024 350,000 4.4 Senior unsecured notes due 2025 4.500% 4.770% 400,000 2/1/2025 400,000 5.1 Senior unsecured notes due 2046 5.875% 5.875% 310,000 5/1/2046 310,000 26.4 Subtotal / weighted average 4.366% 4.453% 2,060,000 2,060,000 6.4 Secured Fixed Rate Debt: Mortgage debt - One property in Washington, DC 5.720% 3.690% 32,888 7/1/2020 32,462 0.5 Mortgage debt - One property in Philadelphia, PA 3.690% 4.220% 40,062 8/3/2020 39,635 0.6 Mortgage debt - One property in Lakewood, CO 8.150% 6.150% 1,683 3/1/2021 118 1.2 Mortgage debt - One property in Fairfax, VA (7) 5.877% 5.877% 13,166 8/11/2021 12,702 1.6 Mortgage debt - One property in Washington, DC 4.220% 4.190% 26,522 7/1/2022 24,668 2.5 Mortgage debt - Three properties in Seattle, WA 3.550% 4.210% 71,000 5/1/2023 71,000 3.3 Mortgage debt - One property in Chicago, IL 3.700% 4.210% 50,000 6/1/2023 50,000 3.4 Mortgage debt - One property in Washington, DC 4.800% 4.190% 24,108 6/1/2023 22,584 3.4 Mortgage debt - One property in Washington, DC 4.050% 4.440% 66,780 9/1/2030 60,566 10.7 Subtotal / weighted average 4.187% 4.280% 326,209 313,735 4.1 Total / weighted average 4.341% 4.429% $ 2,386,209 $ 2,373,735 6.1 See accompanying notes on the following page. Office Properties Income Trust 14 Supplemental Operating and Financial Data, December 31, 2019


 
DEBT MATURITY SCHEDULE (1) As of December 31, 2019 (dollars in thousands) Unsecured Unsecured Secured Fixed Year Floating Rate Debt Fixed Rate Debt Rate Debt Total Principal Balance 2020 $ — $ 400,000 (6) $ 75,707 $ 475,707 2021 — — 14,420 14,420 2022 — 600,000 25,518 625,518 (8) 2023 — — 143,784 143,784 2024 — 350,000 — 350,000 2025 — 400,000 287 400,287 2026 — — 1,178 1,178 2027 and thereafter — 310,000 65,315 375,315 DEBT MATURITY SCHEDULE DEBT MATURITY Total — 2,060,000 326,209 2,386,209 Unamortized debt premiums, discounts and issuance costs — (42,621) (3,135) (45,756) Total debt, net $ — $ 2,017,379 $ 323,074 $ 2,340,453 Percent of total principal balance —% 86.3% 13.7% 100.0% (1) Excludes two mortgage notes with an aggregate principal balance of $82,000 which are secured by three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for additional information regarding these joint ventures and related mortgage notes. (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 basis points 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 December 31, 2019 and excludes the 25 basis point facility fee. Subject to the payment of an extension fee and meeting certain other conditions, we may extend the maturity date of our revolving credit facility for two additional six month periods. (5) The maximum aggregate borrowing availability under the credit agreement governing our revolving credit facility may be increased to up to $1,950,000 in certain circumstances. (6) In January 2020, we redeemed, at par plus accrued interest, all $400,000 of our 3.60% senior unsecured notes due 2020. We used cash on hand, proceeds from property sales and borrowings under our revolving credit facility to make this repayment. (7) The carrying value of this mortgage debt of $13,128 as of December 31, 2019 is net of unamortized issuance costs totaling $38 and is included in liabilities of properties held for sale in our consolidated balance sheet. (8) Represents the amount, if any, outstanding under our revolving credit facility at December 31, 2019. Office Properties Income Trust 15 Supplemental Operating and Financial Data, December 31, 2019


 
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS As of and for the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Leverage Ratios: Net debt (1) / total gross assets 50.0% 54.2% 56.8% 57.1% 58.4% Net debt (1) / gross book value of real estate assets 48.9% 53.0% 57.0% 57.2% 60.8% Secured debt (1) / total assets 7.8% 7.5% 6.8% 6.7% 6.5% Variable rate debt (1) / net debt (1) —% 8.2% 8.0% 10.4% 17.2% Coverage Ratios: Adjusted EBITDAre / interest expense 3.2x 3.2x 3.3x 3.0x 2.8x Net debt (1) / annualized Adjusted EBITDAre 5.9x 6.2x 6.8x 6.8x nm (2) Public Debt Covenants: Total debt (1) / adjusted total assets (maximum 60.0%) 48.7% 51.2% 54.1% 54.9% 56.8% Secured debt (1) / adjusted total assets (maximum 40.0%) 6.7% 6.4% 6.0% 5.9% 5.8% Consolidated income available for debt service / debt service (minimum 1.50x) 3.5x 3.4x 3.5x 3.2x 3.2x Total unencumbered assets / unsecured debt (1) (minimum 150.0%) 203.0% 192.4% 181.2% 178.5% 171.9% (1) Debt amounts represent the outstanding principal balance as of the date reported. Total debt excludes two mortgage notes with an aggregate principal balance of $82,000 which are secured by three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures and related mortgage notes. (2) For the three months ended December 31, 2018, net debt includes SIR's debt less SIR's cash assumed in the Merger; however, annualized Adjusted EBITDAre excludes SIR's results of operations for the three month period because the Merger occurred on December 31, 2018. On a pro forma basis as if the Merger had occurred on October 1, 2018, net debt / annualized Adjusted EBITDAre would have been 7.5x. See Exhibit D on page 36 for pro forma calculations of EBITDAre and Adjusted EBITDAre as if the Merger had occurred on October 1, 2018. Office Properties Income Trust LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS COVERAGE RATIOS LEVERAGE RATIOS, 16 Supplemental Operating and Financial Data, December 31, 2019


 
CAPITAL EXPENDITURES SUMMARY (dollars and sq. ft. in thousands, except per sq. ft. data) For the Three Months Ended (1)(2) 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Tenant improvements $ 4,806 $ 8,749 $ 7,123 $ 4,912 $ 5,450 Leasing costs 5,545 7,139 6,760 7,325 5,635 Building improvements 10,578 11,180 7,317 4,308 11,250 Recurring capital expenditures 20,929 27,068 21,200 16,545 22,335 Development, redevelopment and other activities 3,489 1,206 959 226 1,148 Total capital expenditures $ 24,418 $ 28,274 $ 22,159 $ 16,771 $ 23,483 Average rentable sq. ft. during period (3) 26,508 28,300 29,722 31,017 16,204 Building improvements per average sq. ft. during period $ 0.40 $ 0.40 $ 0.25 $ 0.14 $ 0.69 (1) The data presented as of December 31, 2018 excludes capital expenditures activity of the SIR properties acquired in the Merger. See Exhibit C on page 35 for a summary CAPITAL EXPENDITURES SUMMARY CAPITAL of capital expenditures activity of the SIR properties prior to the Merger as well as a pro forma combined capital expenditures summary. (2) Excludes capital expenditures related to three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures. (3) Rentable square footage is subject to changes when space is remeasured or reconfigured for tenants. Average rentable square footage for the three months ended December 31, 2018 excludes rentable square feet from properties acquired from SIR on December 31, 2018. Office Properties Income Trust 17 Supplemental Operating and Financial Data, December 31, 2019


 
PROPERTY ACQUISITIONS AND DISPOSITIONS INFORMATION SINCE JANUARY 1, 2019 (dollars and sq. ft. in thousands) ACQUISITIONS: On November 8, 2019, we acquired a land parcel near one of our properties in Boston, MA for $2,900, excluding acquisition related costs. DISPOSITIONS: Date Number of Gross Sold Location Properties Sq. Ft. Sales Price 2/8/2019 Northern Virginia and Maryland 34 1,636 $ 198,500 3/18/2019 Washington, D.C. 1 129 70,000 5/29/2019 Buffalo, NY 1 122 16,900 5/31/2019 Maynard, MA 1 287 5,000 6/19/2019 Kapolei, HI 1 417 7,100 7/12/2019 San Jose, CA 1 72 14,000 7/30/2019 Nashua, NH 1 322 25,000 8/8/2019 Arlington, TX 1 182 14,900 8/8/2019 Rochester, NY 1 95 4,765 8/14/2019 Hanover, PA 1 502 5,500 8/19/2019 San Antonio, TX 1 618 198,000 9/20/2019 Topeka, KS 1 144 15,600 9/20/2019 Falling Waters, WV 1 40 650 9/23/2019 San Diego, CA 1 44 8,950 10/31/2019 Columbia, SC 3 181 10,750 11/15/2019 Metro DC - MD 3 373 61,938 12/16/2019 San Diego, CA 1 148 23,750 12/18/2019 Phoenix, AZ 1 123 12,850 12/19/2019 Houston, TX 1 497 130,000 12/27/2019 Kansas City, KS 1 171 11,700 12/30/2019 San Jose, CA 1 76 13,000 1/8/2020 Stafford, VA 2 65 14,063 1/24/2020 Windsor, CT 1 97 7,000 Total 61 6,341 $ 869,916 Office Properties Income Trust 18 PROPERTY ACQUISITIONS AND DISPOSITIONS INFORMATION SINCE JANUARY 1, 2019 SINCE JANUARY AND DISPOSITIONS INFORMATION ACQUISITIONS PROPERTY Supplemental Operating and Financial Data, December 31, 2019


 
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES (dollars in thousands) Unconsolidated Joint Ventures: OPI OPI Investment at Number of Square Occupancy at Weighted Average Joint Venture Ownership December 31, 2019 Properties Location Feet December 31, 2019 Lease Term (1) Prosperity Metro Plaza 51% $ 22,483 2 Fairfax, VA 328,456 72.6% 3.9 years 1750 H Street, NW 50% 17,273 1 Washington, D.C. 115,411 100.0% 1.3 years Total / Weighted Average $ 39,756 3 443,867 79.7% 2.7 years Outstanding Unconsolidated Debt: Principal OPI Share of Balance at Principal Balance (4) OPI Interest Maturity December 31, Annualized at December 31, Joint Venture Ownership Rate (2) Date 2019 (3) Debt Service Balance at Maturity (3) 2019 Prosperity Metro Plaza (5) 51% 4.090% 12/1/2029 $ 50,000 $ 2,045 $ 45,246 $ 25,500 1750 H Street, NW 50% 3.690% 8/1/2024 32,000 1,181 32,000 16,000 Total / Weighted Average 3.934% $ 82,000 $ 3,226 $ 77,246 $ 41,500 Results of Operations - Unconsolidated Joint Ventures: (6) For the Three Months Ended December 31, 2019 For the Year Ended December 31, 2019 Prosperity 1750 H Prosperity 1750 H Metro Plaza Street, NW Total Metro Plaza Street, NW Total Equity in losses of affiliates $ (93) $ (257) $ (350) $ (490) $ (1,051) $ (1,541) Depreciation and amortization 685 660 1,345 3,263 2,640 5,903 Other expenses, net (7) 244 158 402 971 682 1,653 NOI (8) 836 561 1,397 3,744 2,271 6,015 Lease value amortization included in rental income (9) (10) 34 24 (49) 136 87 Non-cash straight line rent adjustments included in rental income (9) 6 8 14 (13) (4) (17) Cash Basis NOI (8) $ 832 $ 603 $ 1,435 $ 3,682 $ 2,403 $ 6,085 Distributions received by OPI $ 281 $ 116 $ 397 $ 995 $ 1,375 $ 2,370 (1) Lease term is weighted based on annualized rental income. Annualized rental income is calculated using the annualized contractual base rents from the unconsolidated joint ventures' tenants pursuant to the lease agreements as of December 31, 2019, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to the joint ventures by their tenants, and excluding lease value amortization. (2) Includes the effect of interest rate protection and mark to market accounting. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES INVESTMENTS IN UNCONSOLIDATED (3) Reflects the entire balance of the debt secured by the properties and is not adjusted to reflect the part of the joint venture arrangement interests we do not own. (4) Reflects our proportionate share of the principal debt balances based on our ownership percentage of the applicable joint venture; none of the debt is recourse to us. (5) The mortgage loan requires interest-only payments through December 2024, at which time the loan requires principal and interest payments through its maturity date. (6) Reflects our proportionate share of operating results for the three months and year ended December 31, 2019 based on our ownership percentage of the respective joint ventures. (7) Includes interest expense, net of other income. (8) We calculate NOI and Cash Basis NOI for our unconsolidated joint ventures in the same manner that we calculate Property NOI and Property Cash Basis NOI. (9) Our unconsolidated joint ventures report rental income on a straight line basis over the terms of the respective leases; accordingly, rental income includes non-cash straight line rent adjustments. Rental income also includes expense reimbursements, tax escalations, parking revenues, service income and other fixed and variable charges paid to the unconsolidated joint ventures by their tenants, as well as the net effect of non- cash amortization of intangible lease assets and liabilities. Office Properties Income Trust 19 Supplemental Operating and Financial Data, December 31, 2019


 
CALCULATION AND RECONCILIATION OF PROPERTY NOI AND PROPERTY CASH BASIS NOI (1) (dollars in thousands) For the Three Months Ended For the Year Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Calculation of Property NOI and Property Cash Basis NOI: Rental income $ 160,184 $ 167,411 $ 176,032 $ 174,777 $ 103,656 $ 678,404 $ 426,560 Property operating expenses (57,026) (58,718) (55,309) (57,909) (41,630) (228,962) (165,743) Property NOI 103,158 108,693 120,723 116,868 62,026 449,442 260,817 Non-cash straight line rent adjustments included in rental income (8,142) (6,904) (5,667) (6,794) (2,339) (27,507) (10,164) Lease value amortization included in rental income 82 35 1,446 1,147 542 2,710 2,903 Lease termination fees included in rental income (2) (22) (8,867) (294) (58) (9,185) (180) Non-cash amortization included in property operating expenses (2) (121) (121) (121) (121) (121) (484) (484) Property Cash Basis NOI $ 94,975 $ 101,681 $ 107,514 $ 110,806 $ 60,050 $ 414,976 $ 252,892 Reconciliation of Net Income (Loss) Available for Common Shareholders to Property NOI and Property Cash Basis NOI: Net income (loss) available for common shareholders $ 65,029 $ (3,939) $ (64,774) $ 34,019 $ (57,695) $ 30,335 $ (22,255) Preferred units of limited partnership distributions — — — — — — 371 Net income (loss) 65,029 (3,939) (64,774) 34,019 (57,695) 30,335 (21,884) (Income) loss from discontinued operations — — — — 18,150 — (5,722) Income (loss) from continuing operations 65,029 (3,939) (64,774) 34,019 (39,545) 30,335 (27,606) Equity in net losses of investees 686 196 142 235 1,157 1,259 2,269 Income tax (benefit) expense 269 156 (130) 483 (7) 778 117 Loss on early extinguishment of debt — 284 71 414 709 769 709 Interest expense 30,032 32,367 35,348 37,133 20,421 134,880 89,865 Interest income (198) (358) (241) (248) (234) (1,045) (639) (Gain) loss on equity securities, net — — 66,135 (22,128) 48,229 44,007 7,552 Dividend income — — (980) (980) (425) (1,960) (1,337) (Gain) loss on sale of real estate (71,593) (11,463) 17 (22,092) (3,332) (105,131) (20,661) General and administrative 7,271 7,990 8,744 8,723 (11,516) 32,728 24,922 Acquisition and transaction related costs — — 98 584 10,695 682 14,508 Loss on impairment of real estate 8,150 8,521 2,380 3,204 2,830 22,255 8,630 Depreciation and amortization 63,512 74,939 73,913 77,521 33,044 289,885 162,488 Property NOI 103,158 108,693 120,723 116,868 62,026 449,442 260,817 Non-cash amortization included in property operating expenses (2) (121) (121) (121) (121) (121) (484) (484) Lease termination fees included in rental income (2) (22) (8,867) (294) (58) (9,185) (180) Lease value amortization included in rental income 82 35 1,446 1,147 542 2,710 2,903 Non-cash straight line rent adjustments included in rental income (8,142) (6,904) (5,667) (6,794) (2,339) (27,507) (10,164) Property Cash Basis NOI $ 94,975 $ 101,681 $ 107,514 $ 110,806 $ 60,050 $ 414,976 $ 252,892 (1) Excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures. (2) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR 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. Office Properties Income Trust CALCULATION AND RECONCILIATION OF PROPERTY NOI AND PROPERTY CASH BASIS NOI AND PROPERTY NOI OF PROPERTY AND RECONCILIATION CALCULATION 20 Supplemental Operating and Financial Data, December 31, 2019


 
RECONCILIATION AND CALCULATION OF SAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI (1) (dollars in thousands) For the Three Months Ended For the Year Ended CASH BASIS NOI 12/31/2019 12/31/2018 12/31/2019 12/31/2018 Reconciliation of Property NOI to Same Property NOI: Rental income $ 160,184 $ 103,656 $ 678,404 $ 426,560 Property operating expenses (57,026) (41,630) (228,962) (165,743) Property NOI 103,158 62,026 449,442 260,817 Less: NOI of properties not included in same property results: SIR assets acquired (56,040) — (242,314) — Historical OPI assets (1,698) (16,199) (22,945) (68,289) Same Property NOI $ 45,420 $ 45,827 $ 184,183 $ 192,528 Calculation of Same Property Cash Basis NOI: Same Property NOI $ 45,420 $ 45,827 $ 184,183 $ 192,528 Add: Lease value amortization included in rental income 330 621 1,400 2,425 Less: Non-cash straight line rent adjustments included in rental income (4,263) (1,907) (8,682) (8,319) Lease termination fees included in rental income (2) (45) (1,543) (68) Non-cash amortization included in property operating expenses (2) (111) (95) (405) (376) Same Property Cash Basis NOI $ 41,374 $ 44,401 $ 174,953 $ 186,190 (1) See Exhibit A on page 33 for summary pro forma same property results that include the SIR properties acquired in the Merger and Exhibit B on page 34 for a reconciliation and calculation of pro forma Same Property NOI and Same Property Cash Basis NOI. Excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures. (2) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR 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 other operating expenses. RECONCILIATION AND CALCULATION OF SAME PROPERTY NOI AND SAME PROPERTY NOI OF SAME PROPERTY AND CALCULATION RECONCILIATION Office Properties Income Trust 21 Supplemental Operating and Financial Data, December 31, 2019


 
re CALCULATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre (dollars in thousands) For the Three Months Ended For the Year Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net income (loss) $ 65,029 $ (3,939) $ (64,774) $ 34,019 $ (57,695) $ 30,335 $ (21,884) Add (less): Interest expense 30,032 32,367 35,348 37,133 20,421 134,880 89,865 Income tax (benefit) expense 269 156 (130) 483 (7) 778 117 Depreciation and amortization 63,512 74,939 73,913 77,521 33,044 289,885 162,488 EBITDA 158,842 103,523 44,357 149,156 (4,237) 455,878 230,586 Add (less): Loss on impairment of real estate 8,150 8,521 2,380 3,204 2,830 22,255 8,630 (Gain) loss on sale of real estate (71,593) (11,463) 17 (22,092) (3,332) (105,131) (20,661) AND ADJUSTED EBITDA AND Distributions received from unconsolidated joint ventures 397 852 600 521 705 2,370 3,751 re Distributions received from SIR — — — — — — 38,124 Equity in earnings of SIR included in discontinued operations — — — — (515) — (24,358) Equity in losses of unconsolidated joint ventures 350 280 272 639 791 1,541 2,785 Net gain on issuance of shares by SIR included in discontinued operations — — — — — — (29) Loss on sale of SIR shares included in discontinued operations (1) — — — — 18,665 — 18,665 EBITDAre 96,146 101,713 47,626 131,428 14,907 376,913 257,493 Add (less): Acquisition and transaction related costs (2) — — 98 584 10,695 682 14,508 General and administrative expense paid in common shares (3) 367 889 967 864 334 3,087 1,337 Estimated business management incentive fees (4) — — — — (16,973) — — Loss on early extinguishment of debt — 284 71 414 709 769 709 (Gain) loss on equity securities, net (5) — — 66,135 (22,128) 48,229 44,007 7,552 Adjusted EBITDAre $ 96,513 $ 102,886 $ 114,897 $ 111,162 $ 57,901 $ 425,458 $ 281,599 CALCULATION OF EBITDA, EBITDA CALCULATION See accompanying notes on the following page. Office Properties Income Trust 22 Supplemental Operating and Financial Data, December 31, 2019


 
CALCULATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre (CONTINUED) (dollars in thousands) (CONTINUED) (1) On October 9, 2018, we sold our investment in SIR at a loss. (2) Acquisition and transaction related costs represent costs incurred in connection with the Merger and other related transactions. re (3) Amounts represent equity based compensation to our Trustees, our officers and certain other employees of RMR LLC. (4) 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, if any, is determined. No business management incentive fee was payable under our business management agreement for 2019 or 2018. Net loss available for common shareholders for the three months ended December 31, 2018 includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. We paid SIR's business management incentive fee for 2018 of $25,817 in January 2019. Pursuant to GAAP, the business management incentive fee that SIR incurred for 2018 was not recorded in our consolidated statement of income (loss) for the year ended December 31, 2018, but that amount was included in our consolidated balance sheet as of December 31, 2018 within due to related persons. (5) (Gain) loss on equity securities, net represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common shares to its fair value as AND ADJUSTED EBITDA AND of the end of the period. On July 1, 2019, we sold our investment in RMR Inc. common stock. re CALCULATION OF EBITDA, EBITDA CALCULATION Office Properties Income Trust 23 Supplemental Operating and Financial Data, December 31, 2019


 
CALCULATION OF FFO AVAILABLE FOR COMMON SHAREHOLDERS AND NORMALIZED FFO AVAILABLE FOR COMMON SHAREHOLDERS (amounts in thousands, except per share data) For the Three Months Ended For the Year Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 12/31/2019 12/31/2018 Net income (loss) available for common shareholders $ 65,029 $ (3,939) $ (64,774) $ 34,019 $ (57,695) $ 30,335 $ (22,255) Add (less): Depreciation and amortization: Consolidated properties 63,512 74,939 73,913 77,521 33,044 289,885 162,488 Unconsolidated joint venture properties 1,345 1,397 1,410 1,751 1,920 5,903 8,203 FFO attributable to SIR investment — — — — 1,859 — 51,773 Loss on impairment of real estate 8,150 8,521 2,380 3,204 2,830 22,255 8,630 Equity in earnings of SIR included in discontinued operations — — — — (515) — (24,358) (Gain) loss on sale of real estate (71,593) (11,463) 17 (22,092) (3,332) (105,131) (20,661) (Gain) loss on equity securities, net (1) — — 66,135 (22,128) 48,229 44,007 7,552 FFO available for common shareholders 66,443 69,455 79,081 72,275 26,340 287,254 171,372 Add (less): Acquisition and transaction related costs (2) — — 98 584 10,695 682 14,508 Loss on early extinguishment of debt — 284 71 414 709 769 709 Normalized FFO attributable to SIR investment — — — — 1,524 — 44,006 FFO attributable to SIR investment — — — — (1,859) — (51,773) Net gain on issuance of shares by SIR included in discontinued operations — — — — — — (29) Estimated business management incentive fees (3) — — — — (16,973) — — Loss on sale of SIR shares included in discontinued operations (4) — — — — 18,665 — 18,665 Normalized FFO available for common shareholders $ 66,443 $ 69,739 $ 79,250 $ 73,273 $ 39,101 $ 288,705 $ 197,458 Weighted average common shares outstanding (basic) 48,094 48,073 48,049 48,031 25,027 48,062 24,830 Weighted average common shares outstanding (diluted) 48,094 48,073 48,049 48,046 25,027 48,062 24,830 Per common share amounts (basic and diluted): Net income (loss) available for common shareholders $ 1.35 $ (0.08) $ (1.35) $ 0.71 $ (2.31) $ 0.63 $ (0.90) FFO available for common shareholders $ 1.38 $ 1.44 $ 1.65 $ 1.50 $ 1.05 $ 5.98 $ 6.90 Normalized FFO available for common shareholders $ 1.38 $ 1.45 $ 1.65 $ 1.53 $ 1.56 $ 6.01 $ 7.95 NORMALIZED FFO AVAILABLE FOR COMMON SHAREHOLDERS AVAILABLE NORMALIZED FFO CALCULATION OF FFO AVAILABLE FOR COMMON SHAREHOLDERS AND FOR COMMON SHAREHOLDERS AVAILABLE OF FFO CALCULATION See accompanying notes on the following page. Office Properties Income Trust 24 Supplemental Operating and Financial Data, December 31, 2019


 
CALCULATION OF FFO AVAILABLE FOR COMMON SHAREHOLDERS AND NORMALIZED FFO AVAILABLE FOR COMMON SHAREHOLDERS (CONTINUED) (amounts in thousands) (1) (Gain) loss on equity securities, net represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common stock to its fair value as of the end of the period. On July 1, 2019, we sold our investment in RMR Inc. common stock. (2) Acquisition and transaction related costs represent costs incurred in connection with the Merger and other related transactions. (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) available for common shareholders 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) available for common shareholders, we do not include such expense in the calculation of Normalized FFO available for common shareholders until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined. No business management incentive fee was payable under our business management agreement for 2019 or 2018. Net loss available for common shareholders for the three months ended December 31, 2018 includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. We paid SIR's business management incentive fee for 2018 of $25,817 in January 2019. Pursuant to GAAP, the business management incentive fee that SIR incurred for 2018 was not recorded in our consolidated statement of income (loss) for the year ended December 31, 2018, but that amount was included in our consolidated balance sheet as of December 31, 2018 within due to related persons. (4) On October 9, 2018, we sold our investment in SIR at a loss. CALCULATION OF FFO AVAILABLE FOR COMMON SHAREHOLDERS AND FOR COMMON SHAREHOLDERS AVAILABLE OF FFO CALCULATION NORMALIZED FFO AVAILABLE FOR COMMON SHAREHOLDERS (CONTINUED) AVAILABLE NORMALIZED FFO Office Properties Income Trust 25 Supplemental Operating and Financial Data, December 31, 2019


 
PORTFOLIO INFORMATION Tenant: Compass Group USA, Inc. Coliseum Centre: 2300 & 2400 Yorkmont Road, Charlotte, NC Two Buildings, Square Feet: 284,039 Office Properties Income Trust Supplemental Operating and Financial Data, December 31, 2019


 
SUMMARY SAME PROPERTY RESULTS (1) (dollars and sq. ft. in thousands) For the Three Months Ended For the Year Ended 12/31/2019 12/31/2018 12/31/2019 12/31/2018 Properties (end of period) (2) 96 96 96 96 Total sq. ft. (3) 11,515 11,507 11,515 11,507 Percent leased 92.9 % 94.0% 92.9% 94.0% Rental income $ 78,128 $ 77,547 $ 311,664 $ 315,845 Same Property NOI $ 45,420 $ 45,827 $ 184,183 $ 192,528 Same Property Cash Basis NOI $ 41,374 $ 44,401 $ 174,953 $ 186,190 Same Property NOI % margin 58.1% 59.1% 59.1% 61.0% Same Property Cash Basis NOI % margin 55.8% 58.3% 57.8% 60.1% Same Property NOI % change (0.9%) (4.3%) Same Property Cash Basis NOI % change (6.8%) (6.0%) (1) Excludes the SIR properties acquired in the Merger. See Exhibit A on page 33 for summary pro forma same property results as if the SIR properties acquired in the Merger were owned SUMMARY SAME PROPERTY RESULTS SAME PROPERTY SUMMARY continuously since January 1, 2018. (2) Includes one leasable land parcel as of December 31, 2019. (3) Subject to changes when space is remeasured or reconfigured for tenants. Office Properties Income Trust 27 Supplemental Operating and Financial Data, December 31, 2019


 
OCCUPANCY AND LEASING SUMMARY (1) (2) (dollars and sq. ft. in thousands, except per sq. ft. data) As of and for the Three Months Ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Properties (end of period) (3) 189 200 209 212 247 (4) Total sq. ft. (3)(5) 25,726 27,290 29,309 30,134 31,900 (4) Percentage leased (3) 92.4% 93.3% 91.6% 89.6% 91.0% (4) Leasing Activity (sq. ft.): (5) New leases 41 95 122 121 117 Renewals 738 664 449 704 407 Total 779 759 571 825 524 % Change in GAAP Rent: (6) New leases 1.2% 3.7% (11.1%) 3.6% 1.8% Renewals 0.3% 5.2% (3.9%) 14.3% (9.9%) Total 0.4% 5.0% (5.3%) 12.8% (8.2%) Weighted Average Lease Term by Sq. Ft. (years): New leases 5.6 9.2 8.0 8.8 7.0 Renewals 7.2 13.2 6.4 7.3 7.6 Total 7.1 12.7 6.7 7.5 7.5 Leasing Cost and Concession Commitments: (7) New leases $ 2,171 $ 8,275 $ 8,709 $ 13,591 $ 5,334 OCCUPANCY AND LEASING SUMMARY AND LEASING SUMMARY OCCUPANCY Renewals 13,622 9,292 6,668 15,213 10,514 Total $ 15,793 $ 17,567 $ 15,377 $ 28,804 $ 15,848 Leasing Cost and Concession Commitments per Sq. Ft.: (7) New leases $ 53.34 $ 87.46 $ 71.66 $ 112.00 $ 45.75 Renewals $ 18.45 $ 13.98 $ 14.84 $ 21.60 $ 25.82 Total $ 20.28 $ 23.14 $ 26.94 $ 34.89 $ 30.25 Leasing Cost and Concession Commitments per Sq. Ft. per Year: (7) New leases $ 9.55 $ 9.52 $ 8.92 $ 12.79 $ 6.51 Renewals $ 2.57 $ 1.06 $ 2.34 $ 2.98 $ 3.38 Total $ 2.86 $ 1.82 $ 4.01 $ 4.67 $ 4.03 (1) Excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures. (2) The data presented as of December 31, 2018 excludes the SIR properties acquired in the Merger, unless otherwise stated. (3) Includes one leasable land parcel as of December 31, 2019, September 30, 2019 and June 30, 2019, and two leasable land parcels as of March 31, 2019 and December 31, 2018. (4) Includes the SIR properties acquired in the Merger. (5) Rentable square footage is subject to changes when space is remeasured or reconfigured for tenants. (6) Percent difference in prior rents charged for same space or, in the case of space acquired vacant, market rental rates for similar space in the building at the date of acquisition. Rents include estimated recurring expense reimbursements paid to us, exclude lease value amortization and are net of lease concessions. (7) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. The above leasing summary is based on leases entered during the periods indicated. Office Properties Income Trust 28 Supplemental Operating and Financial Data, December 31, 2019


 
TENANT DIVERSITY AND CREDIT CHARACTERISTICS As of December 31, 2019 Percentage of Total Annualized Rental Income Tenant Industry Tenant Credit Characteristics (1) Energy Services: 1.3% Manufacturing & Transportation: 4.6% Retail & Food: 5.9% (4) Real Estate & (3) Not Rated: 24.2% Financial: 11.7% Other: 0.8% Government: 39.2%(2) Legal & Consulting: 15.3% Non-Investment Investment Grade: Grade: 12.9% 62.9% Technology & Education and Communications: 17.5% Social Services: 1.5% Life Sciences and TENANT DIVERSITY AND CREDIT CHARACTERISTICS TENANT DIVERSITY Medical: 2.2% (1) We consider investment grade tenants to 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 53.4% of annualized rental income were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 9.5% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities are not liable for the payment of rents). (2) Includes the U.S. Government, state governments, municipalities and government contractors. Office Properties Income Trust 29 Supplemental Operating and Financial Data, December 31, 2019


 
TENANTS REPRESENTING 1% OR MORE OF TOTAL ANNUALIZED RENTAL INCOME As of December 31, 2019 (dollars in thousands) Annualized % of Total Annualized Tenant Credit Rating (1) Rental Income Rental Income 1 U.S. Government Investment Grade $ 149,491 25.0% 2 State of California Investment Grade 19,092 3.2% 3 Shook, Hardy & Bacon L.L.P. Not Rated 18,854 3.2% 4 Bank of America Corporation Investment Grade 16,604 2.8% 5 F5 Networks, Inc. Not Rated 14,416 2.4% 6 WestRock Company Investment Grade 12,865 2.2% 7 CareFirst Inc. Non Investment Grade 11,619 1.9% 8 Northrop Grumman Corporation Investment Grade 11,346 1.9% 9 Tyson Foods, Inc. Investment Grade 10,253 1.7% 10 Technicolor SA Non Investment Grade 10,034 1.7% 11 Commonwealth of Massachusetts Investment Grade 9,693 1.6% 12 Micro Focus International plc Non Investment Grade 8,710 1.5% 13 CommScope Holding Company Inc Non Investment Grade 7,931 1.3% 14 PNC Bank Investment Grade 6,897 1.2% 15 State of Georgia Investment Grade 6,790 1.1% 16 ServiceNow, Inc . Not Rated 6,335 1.1% 17 Allstate Insurance Co. Investment Grade 6,270 1.0% 18 Compass Group plc Investment Grade 6,264 1.0% 19 Church & Dwight Co., Inc. Investment Grade 6,018 1.0% $ 339,482 56.8% (1) We consider investment grade tenants to include: (a) investment grade rated tenants; (b) tenants with investment grade rated parent entities that guarantee the tenant's lease obligations; and (c) tenants with investment grade rated parent entities that do not guarantee the tenant's lease obligations. Tenants contributing 53.4% of annualized rental income were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 9.5% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities were not liable for the payment of rents). Office Properties Income Trust 30 TENANTS REPRESENTING 1% OR MORE OF TOTAL ANNUALIZED RENTAL INCOME ANNUALIZED RENTAL TENANTS REPRESENTING 1% OR MORE OF TOTAL Supplemental Operating and Financial Data, December 31, 2019


 
LEASE EXPIRATION SCHEDULE (1) As of December 31, 2019 (dollars and sq. ft. in thousands) % of Total Cumulative % of Cumulative % of Leased Total Leased % of Total Total Annualized Number of Leased Square Square Feet Square Feet Annualized Rental Annualized Rental Rental Income Year (2) Leases Expiring Feet Expiring Expiring Expiring Income Expiring Income Expiring Expiring 2020 81 1,896 8.0% 8.0% $ 55,982 9.4% 9.4% 2021 56 1,692 7.1% 15.1% 39,660 6.6% 16.0% 2022 82 2,378 10.0% 25.1% 64,085 10.7% 26.7% 2023 62 2,624 11.1% 36.2% 69,639 11.6% 38.3% 2024 54 3,692 15.5% 51.7% 96,072 16.1% 54.4% 2025 42 2,045 8.6% 60.3% 44,264 7.4% 61.8% 2026 30 1,711 7.2% 67.5% 45,754 7.7% 69.5% 2027 29 1,953 8.2% 75.7% 48,872 8.2% 77.7% LEASE EXPIRATION SCHEDULE LEASE EXPIRATION 2028 12 872 3.7% 79.4% 24,724 4.1% 81.8% 2029 and thereafter 47 4,897 20.6% 100.0% 108,761 18.2% 100.0% Total 495 23,760 100.0% $ 597,813 100.0% Weighted average remaining lease term (in years) 6.0 5.7 (1) Excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures. (2) The year of lease expiration is pursuant to current contract terms. Some of our government tenants have the right to vacate their space before the stated expirations of their leases. In addition, certain of our government tenants have the right to terminate their leases if their respective legislature or other funding authority does not appropriate rent in their respective annual budgets. Office Properties Income Trust 31 Supplemental Operating and Financial Data, December 31, 2019


 
EXHIBITS Tenant: Day Pitney LLP One Jefferson Road, Parsippany, NJ One Building, Square Feet: 100,010 Office Properties Income Trust Supplemental Operating and Financial Data, December 31, 2019


 
SUMMARY PRO FORMA SAME PROPERTY RESULTS (1) EXHIBIT A (dollars and sq. ft. in thousands) For the Three Months Ended OPI (Excluding SIR Properties): 12/31/2019 12/31/2018 Leasable properties 96 96 Total sq. ft. (2) 11,515 11,507 Percent leased 92.9 % 94.0% Same Property Cash Basis NOI $ 41,374 $ 44,401 Same Property Cash Basis NOI % change (6.8%) For the Three Months Ended SIR Properties: 12/31/2019 12/31/2018 Less: Less: SIR Properties Dispositions (3) Held for Sale Pro Forma SIR Leasable properties (3) 86 99 (11) (2) 86 Total sq. ft. (2) 13,201 16,538 (3,013) (320) 13,205 Percent leased 93.7% 89.3% —% —% 96.3% Same Property Cash Basis NOI $ 49,456 $ 58,216 $ (6,066) $ (663) $ 51,487 Same Property Cash Basis NOI % change (3.9%) For the Three Months Ended Pro Forma Combined: 12/31/2019 12/31/2018 Leasable properties (4) 182 182 Total sq. ft. (2) 24,716 24,712 Percent leased 93.3% 95.2% Same Property Cash Basis NOI $ 90,830 $ 95,888 Same Property Cash Basis NOI % change (5.3%) (1) OPI (excluding SIR properties) same property results for the three months ended December 31, 2019 and 2018 are based on properties owned continuously since October 1, 2018. SIR properties same property results for the three months ended December 31, 2019 and 2018 are based on properties SIR owned immediately prior to the Merger and which it had owned continuously since October 1, 2018 and SUMMARY PRO FORMA SAME PROPERTY RESULTS SAME PROPERTY PRO FORMA SUMMARY which OPI owned continuously since the Merger. Pro forma combined same property results combine the same property results of OPI and SIR for the three months ended December 31, 2019 and 2018, as if the Merger had occurred on January 1, 2018. See calculation of pro forma Same Property Cash Basis NOI for the three months ended December 31, 2019 on page 34. (2) Subject to changes when space is remeasured or reconfigured for tenants. (3) Includes 11 former SIR properties OPI sold during the year ended December 31, 2019. (4) Includes one leasable land parcel. Office Properties Income Trust 33 Supplemental Operating and Financial Data, December 31, 2019


 
RECONCILIATION AND CALCULATION OF PRO FORMA EXHIBIT B SAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI (1) (dollars in thousands) For the Three Months Ended December 31, 2019 OPI (Excluding SIR Pro Forma SIR Properties) Properties Combined Reconciliation of Property NOI to Same Property NOI: Rental income $ 83,638 $ 76,546 $ 160,184 Property operating expenses (36,520) (20,506) (57,026) Property NOI 47,118 56,040 103,158 Less: NOI of properties not included in same property results (1,698) (2,663) (4,361) Same Property NOI $ 45,420 $ 53,377 $ 98,797 Calculation of Same Property Cash Basis NOI: Same Property NOI $ 45,420 $ 53,377 $ 98,797 Add: Lease value amortization included in rental income 330 (236) 94 Less: Non-cash straight line rent adjustments included in rental income (4,263) (3,685) (7,948) Lease termination fees included in rental income (2) — (2) Non-cash amortization included in property operating expenses (2) (111) — (111) Same Property Cash Basis NOI $ 41,374 $ 49,456 $ 90,830 RECONCILIATION AND CALCULATION OF PRO FORMA OF PRO FORMA AND CALCULATION RECONCILIATION (1) OPI (excluding SIR properties) same property results for the three months ended December 31, 2019 are based on properties owned continuously since October 1, 2018. SIR properties same property results for the three months ended December 31, 2019 are based on properties SIR owned immediately prior to the Merger and which it had owned continuously since October 1, 2018 and which OPI owned continuously since that time. Pro forma combined same property results combine the same property results of OPI and SIR for the three months ended December 31, 2019, as if the Merger had occurred on January 1, 2018. (2) We recorded a liability for the amount by which the estimated fair value for accounting purposes exceeded the price we paid for our investment in RMR Inc. common stock in June 2015. A portion of SAME PROPERTY NOI AND SAME PROPERTY CASH BASIS NOI AND SAME PROPERTY NOI SAME PROPERTY this liability is being amortized on a straight line basis through December 31, 2035 as a reduction to property management fees expense, which is included in property operating expenses. Office Properties Income Trust 34 Supplemental Operating and Financial Data, December 31, 2019


 
PRO FORMA CAPITAL EXPENDITURES SUMMARY (1)(2) EXHIBIT C (dollars in thousands) For the Three Months Ended OPI: 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Tenant improvements $ 4,806 $ 8,749 $ 7,123 $ 4,912 $ 5,450 Leasing costs 5,545 7,139 6,760 7,325 5,635 Building improvements 10,578 11,180 7,317 4,308 11,250 Recurring capital expenditures 20,929 27,068 21,200 16,545 22,335 Development, redevelopment and other activities 3,489 1,206 959 226 1,148 Total capital expenditures $ 24,418 $ 28,274 $ 22,159 $ 16,771 $ 23,483 SIR Properties: Tenant improvements $ — $ — $ — $ — $ 1,109 Leasing costs — — — — 893 Building improvements — — — — 1,261 Recurring capital expenditures — — — — 3,263 Development, redevelopment and other activities — — — — 392 Total capital expenditures $ — $ — $ — $ — $ 3,655 Pro Forma Combined: Tenant improvements $ 4,806 $ 8,749 $ 7,123 $ 4,912 $ 6,559 Leasing costs 5,545 7,139 6,760 7,325 6,528 Building improvements 10,578 11,180 7,317 4,308 12,511 Recurring capital expenditures 20,929 27,068 21,200 16,545 25,598 Development, redevelopment and other activities 3,489 1,206 959 226 1,540 Total capital expenditures $ 24,418 $ 28,274 $ 22,159 $ 16,771 $ 27,138 (1) The data presented for December 31, 2018 excludes capital expenditures for the SIR properties acquired in the Merger. PRO FORMA CAPITAL EXPENDITURES SUMMARY EXPENDITURES SUMMARY CAPITAL PRO FORMA (2) The OPI data presented excludes capital expenditures of three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for additional information regarding these joint ventures. Office Properties Income Trust 35 Supplemental Operating and Financial Data, December 31, 2019


 
re PRO FORMA CALCULATION OF EBITDA, EBITDAre AND ADJUSTED EBITDAre AS IF THE MERGER HAD OCCURRED ON OCTOBER 1, 2018 EXHIBIT D (dollars in thousands) For the Three Months Ended December 31, 2018 Sale of OPI ILPT SIR Pro Forma OPI SIR Shares Adjusted SIR Distribution (1) Adjusted Adjustments Pro Forma Net loss $ (57,695) $ (139) $ (57,834) $ (51,551) $ (17,493) $ (69,044) $ (4,744) $ (131,622) Add (less): Interest expense 20,421 (376) 20,045 23,701 (4,472) 19,229 241 39,515 Income tax (benefit) expense (7) — (7) 10 (8) 2 — (5) Depreciation and amortization 33,044 — 33,044 36,220 (7,327) 28,893 5,782 67,719 EBITDA (4,237) (515) (4,752) 8,380 (29,300) (20,920) 1,279 (24,393) and ADJUSTED EBITDA and Add (less): Loss on impairment of real estate 2,830 — 2,830 — — — — 2,830 re Gain on sale of real estate (3,332) — (3,332) — — — — (3,332) Distributions received from unconsolidated joint ventures 705 — 705 — — — — 705 Equity in earnings of SIR included in discontinued operations (515) 515 — — — — — — Equity in losses of unconsolidated joint ventures 791 — 791 — — — — 791 Loss on sale of SIR common shares included in discontinued operations (2) 18,665 — 18,665 — — — — 18,665 EBITDAre 14,907 — 14,907 8,380 (29,300) (20,920) 1,279 (4,734) Add (less): Acquisition and transaction related costs (3) 10,695 — 10,695 9,193 — 9,193 — 19,888 General and administrative expense paid in common shares (4) 334 — 334 842 (235) 607 — 941 Estimated business management incentive fees (5) (16,973) — (16,973) (21,479) — (21,479) — (38,452) Loss on extinguishment of debt 709 — 709 — — — — 709 Loss on equity securities (6) 48,229 — 48,229 63,029 — 63,029 — 111,258 Adjusted EBITDAre $ 57,901 $ — $ 57,901 $ 59,965 $ (29,535) $ 30,430 $ 1,279 $ 89,610 (1) Until December 27, 2018, Industrial Logistics Properties Trust, or ILPT, was a consolidated subsidiary of SIR. On December 27, 2018, SIR distributed its 45,000,000 common shares of ILPT to its shareholders prior to the Merger. (2) On October 9, 2018, we sold our equity investment in SIR at a loss. (3) Acquisition and transaction related costs include costs incurred in connection with the Merger and other related transactions. (4) Amounts represent equity compensation awarded to our trustees, officers and certain other employees of RMR LLC. (5) 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 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, if any, is determined. No incentive management fee was payable under our business management agreement for the year ended December 31, 2018. Net loss available for common shareholders for the three months ended December 31, 2018 includes the reversal of $16,973 of previously accrued estimated business management incentive fee expense. As successor to SIR as a result of the Merger, we assumed the obligation to pay SIR's business management incentive fee for 2018. We paid SIR's business management incentive fee for 2018 of $25,817 in January 2019 and that fee is reflected in the pro forma calculation of Adjusted EBITDAre as shown above in the SIR and SIR Adjusted columns. (6) Loss on equity securities represents the adjustment required to adjust the carrying value of our investment in RMR Inc. common shares to its fair value as of the end of the period. On July 1, 2019, we sold our investment in RMR Inc. common stock. Office Properties Income Trust 36 PRO FORMA CALCULATION OF EBITDA, EBITDA CALCULATION PRO FORMA Supplemental Operating and Financial Data, December 31, 2019


 
EXHIBIT E PROPERTY DETAIL(1) As of December 31, 2019 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Properties Sq. Ft. % Leased Income Carrying Value (2) Carrying Value (2) Acquired (3) Renovation Inverness Center Birmingham, AL 3 448 25.1% $ 2,452 $ 19,377 $ 18,952 12/31/2018 2018 445 Jan Davis Drive Huntsville, AL 1 57 100.0% 1,038 2,993 2,953 12/31/2018 2007 4905 Moores Mill Road Huntsville, AL 1 1,371 100.0% 10,034 42,543 41,450 12/31/2018 2007 PROPERTY DETAIL PROPERTY 131 Clayton Street Montgomery, AL 1 58 100.0% 1,580 10,220 8,278 6/22/2011 2007 4344 Carmichael Road Montgomery, AL 1 49 100.0% 1,527 13,265 11,513 12/17/2013 2009 15451 North 28th Avenue Phoenix, AZ 1 67 100.0% 1,473 9,958 8,904 9/10/2014 2013 16001 North 28th Avenue Phoenix, AZ 1 106 100.0% 1,914 3,811 3,797 12/31/2018 2007 711 S 14th Avenue Safford, AZ 1 36 94.4% 923 8,518 8,064 6/16/2010 1992 Regents Center Tempe, AZ 2 101 100.0% 2,130 7,163 7,014 12/31/2018 1988 Campbell Place Carlsbad, CA 2 91 100.0% 2,448 10,189 10,074 12/31/2018 2007 Folsom Corporate Center Folsom, CA 1 96 100.0% 2,965 8,487 8,313 12/31/2018 2009 Bayside Technology Park Fremont, CA 1 101 100.0% 2,325 11,431 11,410 12/31/2018 1990 5045 East Butler Street Fresno, CA 1 532 100.0% 8,384 68,533 41,967 8/29/2002 1971 10949 N. Mather Boulevard Rancho Cordova, CA 1 94 100.0% 2,609 18,401 15,746 10/30/2013 2012 11020 Sun Center Drive Rancho Cordova, CA 1 83 100.0% 2,024 11,664 10,856 12/20/2016 2016 100 Redwood Shores Parkway Redwood City, CA 1 63 100.0% 3,214 22,175 21,961 12/31/2018 2014 3875 Atherton Road Rocklin, CA 1 19 100.0% 431 1,030 1,007 12/31/2018 1991 801 K Street Sacramento, CA 1 338 90.1% 9,924 73,769 65,463 1/29/2016 2002 9815 Goethe Road Sacramento, CA 1 88 100.0% 1,953 12,438 10,131 9/14/2011 1992 Capitol Place Sacramento, CA 1 164 93.0% 4,934 48,003 35,922 12/17/2009 1988 4560 Viewridge Road San Diego, CA 1 93 100.0% 3,350 26,904 15,437 3/31/1997 1996 2115 O’Nel Drive San Jose, CA 1 99 100.0% 3,352 17,367 17,227 12/31/2018 2013 North First Street San Jose, CA 1 64 100.0% 2,204 12,502 12,386 12/31/2018 2013 Rio Robles Drive San Jose, CA 3 186 100.0% 5,657 37,999 37,596 12/31/2018 2011 2450 and 2500 Walsh Avenue Santa Clara, CA 2 132 100.0% 4,803 30,025 29,564 12/31/2018 2014 3250 and 3260 Jay Street Santa Clara, CA 2 149 100.0% 6,335 33,950 33,560 12/31/2018 2013 603 San Juan Avenue Stockton, CA 1 22 100.0% 971 6,033 5,018 7/20/2012 2012 350 West Java Drive Sunnyvale, CA 1 96 100.0% 3,128 25,092 25,078 12/31/2018 2012 7958 South Chester Street Centennial, CO 1 168 100.0% 5,202 13,940 13,740 12/31/2018 2000 350 Spectrum Loop Colorado Springs, CO 1 156 100.0% 2,686 11,468 11,249 12/31/2018 2000 333 Inverness Drive South Englewood, CO 1 140 100.0% 3,018 10,254 10,118 12/31/2018 1998 12795 West Alameda Parkway Lakewood, CO 1 167 100.0% 4,374 27,756 21,561 1/15/2010 1988 Corporate Center Lakewood, CO 3 213 100.0% 4,843 34,313 20,904 10/11/2002 2004 11 Dupont Circle, NW Washington, DC 1 153 68.0% 6,433 78,093 74,727 10/2/2017 2004 1211 Connecticut Avenue, NW Washington, DC 1 133 80.3% 5,110 57,223 55,430 10/2/2017 2014 1401 K Street, NW Washington, DC 1 123 85.6% 5,930 68,332 65,422 10/2/2017 2016 20 Massachusetts Avenue Washington, DC 1 334 77.4% 14,882 85,291 48,068 3/31/1997 1996 440 First Street, NW Washington, DC 1 142 98.4% 8,551 67,859 65,520 10/2/2017 2013 625 Indiana Avenue Washington, DC 1 165 95.1% 7,646 60,446 51,752 8/17/2010 1989 840 First Street, NE Washington, DC 1 253 98.2% 13,765 118,227 113,924 10/2/2017 2003 See notes on page 41. Office Properties Income Trust 37 Supplemental Operating and Financial Data, December 31, 2019


 
EXHIBIT E PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2019 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Properties Sq. Ft. % Leased Income Carrying Value (2) Carrying Value (2) Acquired (3) Renovation 10350 NW 112th Avenue Miami, FL 1 79 100.0% 3,184 7,555 7,479 12/31/2018 2002 7850 Southwest 6th Court Plantation, FL 1 136 100.0% 4,604 35,775 28,967 5/12/2011 1999 8900 Grand Oak Circle Tampa, FL 1 68 100.0% 2,058 13,300 10,513 10/15/2010 2008 180 Ted Turner Drive SW Atlanta, GA 1 91 100.0% 3,671 26,029 22,282 7/25/2012 2007 Corporate Square Atlanta, GA 5 378 100.0% 8,572 61,720 46,278 7/16/2004 2018 Executive Park Atlanta, GA 1 126 100.0% 1,612 17,388 10,951 7/16/2004 2014 One Georgia Center Atlanta, GA 1 376 96.4% 8,008 47,410 40,764 9/30/2011 2008 One Primerica Parkway Duluth, GA 1 344 100.0% 5,398 29,878 29,242 12/31/2018 2013 4712 Southpark Boulevard Ellenwood, GA 1 352 100.0% 3,131 21,143 17,490 7/25/2012 2005 91-209 Kuhela Street Kapolei, HI 1 109 —% — 2,008 2,008 12/31/2018 Land 8305 NW 62nd Avenue Johnston, IA 1 199 100.0% 3,283 10,646 10,425 12/31/2018 2011 1185, 1249 & 1387 S. Vinnell Way Boise, ID 3 181 100.0% 4,647 33,351 27,667 9/11/2012 2002 2020 S. Arlington Heights Arlington Heights, IL 1 58 100.0% 2,057 15,482 12,015 12/29/2009 2002 PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY 400 South Jefferson Street Chicago, IL 1 248 100.0% 10,253 39,494 38,936 12/31/2018 2012 1415 West Diehl Road Naperville, IL 1 820 78.2% 14,361 33,695 33,059 12/31/2018 2001 440 North Fairway Drive Vernon Hills, IL 1 100 100.0% 1,842 4,906 4,893 12/31/2018 2009 7601 and 7635 Interactive Way Indianapolis, IN 2 275 100.0% 4,603 17,885 17,509 12/31/2018 2008 Intech Park Indianapolis, IN 3 434 84.4% 8,528 80,979 65,202 10/14/2011 2008 The Atrium at Circleport II Erlanger, KY 1 86 100.0% 1,259 3,729 3,649 12/31/2018 1999 7125 Industrial Road Florence, KY 1 168 100.0% 2,599 13,713 11,639 12/31/2012 2002 251 Causeway Street Boston, MA 1 141 95.3% 4,414 28,719 24,011 8/17/2010 1988 300 and 330 Billerica Road Chelmsford, MA 2 209 —% — 5,158 5,155 12/31/2018 2006 75 Pleasant Street Malden, MA 1 126 100.0% 4,972 32,992 25,492 5/24/2010 2008 25 Newport Avenue Quincy, MA 1 93 100.0% 2,114 13,778 11,314 2/16/2011 2009 One Montvale Avenue Stoneham, MA 1 98 88.9% 2,656 15,398 12,297 6/16/2010 1987 314 Littleton Road Westford, MA 1 175 100.0% 3,801 14,219 13,981 12/31/2018 2013 Annapolis Commerce Center Annapolis, MD 2 101 100.0% 2,461 12,092 11,569 10/2/2017 1990 4201 Patterson Avenue Baltimore, MD 1 85 100.0% 1,272 13,012 7,611 10/15/1998 2014 7001 Columbia Gateway Drive Columbia, MD 1 120 100.0% 4,059 15,994 15,689 12/31/2018 2008 Hillside Center Columbia, MD 2 87 92.3% 1,753 8,241 7,964 10/2/2017 2014 TenThreeTwenty Columbia, MD 1 140 96.1% 3,876 21,024 19,847 10/2/2017 2013 3300 75th Avenue Landover, MD 1 266 100.0% 4,879 41,994 32,684 2/26/2010 2004 2115 East Jefferson Street Rockville, MD 1 129 84.6% 3,057 14,937 13,122 8/27/2013 2003 Redland 520/530 Rockville, MD 3 357 97.7% 12,416 75,835 72,294 10/2/2017 2017 See notes on page 41. Office Properties Income Trust 38 Supplemental Operating and Financial Data, December 31, 2019


 
EXHIBIT E PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2019 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Properties Sq. Ft. % Leased Income Carrying Value (2) Carrying Value (2) Acquired (3) Renovation Redland 540 Rockville, MD 1 131 85.9% 3,733 34,455 32,546 10/2/2017 2017 Rutherford Business Park Windsor Mill, MD 1 80 100.0% 1,986 12,289 10,444 11/16/2012 2011 3550 Green Court Ann Arbor, MI 1 82 100.0% 1,721 8,487 8,345 12/31/2018 1998 11411 E. Jefferson Avenue Detroit, MI 1 56 100.0% 2,514 19,083 14,681 4/23/2010 2009 Rosedale Corporate Plaza Roseville, MN 1 61 100.0% 1,126 8,243 4,484 12/1/1999 1987 1300 Summit Street Kansas City, MO 1 87 100.0% 2,392 15,989 13,590 9/27/2012 1998 2555 Grand Boulevard Kansas City, MO 1 596 100.0% 18,860 55,956 54,548 12/31/2018 2003 4241-4300 NE 34th Street Kansas City, MO 1 98 100.0% 1,882 11,816 7,293 3/31/1997 1996 1220 Echelon Parkway Jackson, MS 1 110 100.0% 3,986 26,156 21,396 7/25/2012 2009 2300 and 2400 Yorkmont Road Charlotte, NC 2 284 100.0% 6,619 21,796 21,209 12/31/2018 1995 18010 and 18020 Burt Street Omaha, NE 2 203 100.0% 4,223 19,477 19,131 12/31/2018 2012 500 Charles Ewing Boulevard Ewing, NJ 1 250 100.0% 6,018 30,810 30,089 12/31/2018 2012 PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY 299 Jefferson Road Parsippany, NJ 1 151 100.0% 4,053 7,950 7,865 12/31/2018 2011 One Jefferson Road Parsippany, NJ 1 100 100.0% 4,362 9,674 9,531 12/31/2018 2009 Airline Corporate Center Colonie, NY 1 64 81.9% 897 7,596 6,343 6/22/2012 2004 5000 Corporate Court Holtsville, NY 1 264 85.7% 6,410 28,040 23,548 8/31/2011 2000 8687 Carling Road Liverpool, NY 1 38 100.0% 859 566 566 12/31/2018 2007 1212 Pittsford - Victor Road Pittsford, NY 1 55 100.0% 1,057 1,216 1,211 12/31/2018 2003 2231 Schrock Road Columbus, OH 1 42 100.0% 765 1,034 1,024 12/31/2018 1999 4600 25th Avenue Salem, OR 1 233 86.7% 4,908 31,141 25,237 12/20/2011 2007 8800 Tinicum Boulevard Philadelphia, PA 1 441 100.0% 6,897 28,259 27,630 12/31/2018 2000 9680 Old Bailes Road Fort Mill, SC 1 60 100.0% 793 3,778 3,696 12/31/2018 2007 One Memphis Place Memphis, TN 1 205 73.5% 3,001 14,710 11,714 9/17/2010 1985 16001 North Dallas Parkway Addison, TX 2 554 100.0% 15,138 73,525 71,655 12/31/2018 1996 Research Park Austin, TX 2 149 100.0% 3,266 18,541 17,706 12/31/2018 1999 10451 Clay Road Houston, TX 1 97 100.0% 2,257 15,748 15,464 12/31/2018 2013 202 North Castlegory Road Houston, TX 1 84 100.0% 2,883 5,887 5,756 12/31/2018 2016 6380 Rogerdale Road Houston, TX 1 206 100.0% 5,854 18,755 18,585 12/31/2018 2006 4221 W. John Carpenter Freeway Irving, TX 1 54 100.0% 857 5,515 5,392 12/31/2018 1995 8675,8701-8711 Freeport Pkwy and 8901 Esters Boulevard Irving, TX 3 458 100.0% 6,270 41,751 40,876 12/31/2018 1990 1511 East Common Street New Braunfels, TX 1 63 100.0% 1,092 6,298 6,263 12/31/2018 2005 2900 West Plano Parkway Plano, TX 1 191 100.0% 1,475 15,650 15,406 12/31/2018 1998 3400 West Plano Parkway Plano, TX 1 235 100.0% 1,542 20,828 20,377 12/31/2018 1994 3600 Wiseman Boulevard San Antonio, TX 1 100 100.0% 3,399 10,292 10,098 12/31/2018 2004 See notes on page 41. Office Properties Income Trust 39 Supplemental Operating and Financial Data, December 31, 2019


 
EXHIBIT E PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2019 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Properties Sq. Ft. % Leased Income Carrying Value (2) Carrying Value (2) Acquired (3) Renovation 701 Clay Road Waco, TX 1 139 100.0% 3,481 20,188 14,837 12/23/1997 1997 1800 Novell Place Provo, UT 1 406 100.0% 8,710 50,974 49,673 12/31/2018 2000 4885-4931 North 300 West Provo, UT 2 125 100.0% 3,916 13,365 13,089 12/31/2018 2009 14660, 14672 & 14668 Lee Road Chantilly, VA 3 409 98.7% 13,673 83,458 77,579 12/22/2016 2006 1434 Crossways Chesapeake, VA 2 214 100.0% 4,075 25,154 23,405 10/2/2017 2002 Greenbrier Towers Chesapeake, VA 2 172 94.0% 3,352 16,135 15,055 10/2/2017 1987 Enterchange at Meadowville Chester, VA 1 228 40.5% 644 11,355 9,797 8/28/2013 2011 Pender Business Park Fairfax, VA 4 171 83.6% 3,263 25,000 21,470 11/4/2013 2000 Three Flint Hill Fairfax, VA 1 184 80.4% 4,725 34,424 32,366 10/2/2017 2011 7987 Ashton Avenue Manassas, VA 1 69 100.0% 1,654 10,509 9,792 1/3/2017 1989 Two Commercial Place Norfolk, VA 1 289 100.0% 5,925 26,391 25,828 12/31/2018 2016 1759 & 1760 Business Center Drive Reston, VA 2 406 32.3% 4,505 91,817 80,425 5/28/2014 1996 1775 Wiehle Avenue Reston, VA 1 130 62.8% 3,237 31,704 30,121 10/2/2017 2001 PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY 501 South 5th Street Richmond, VA 1 311 100.0% 12,865 54,098 52,964 12/31/2018 2009 9201 Forest Hill Avenue Richmond, VA 1 50 100.0% 1,232 1,869 1,857 12/31/2018 1985 9960 Mayland Drive Richmond, VA 1 174 99.0% 3,578 20,984 18,425 5/20/2014 1994 Parham Place Richmond, VA 3 89 100.0% 1,631 2,027 1,996 12/31/2018 2014 1751 Blue Hills Drive Roanoke, VA 1 399 100.0% 1,949 10,450 10,235 12/31/2018 2003 Atlantic Corporate Park Sterling, VA 2 221 90.8% 5,565 37,123 35,433 10/2/2017 2008 Orbital Sciences Campus Sterling, VA 3 337 100.0% 11,346 31,620 31,050 12/31/2018 2001 Sterling Business Park Lots 8 and 9 Sterling, VA 1 167 100.0% 5,550 53,553 51,060 10/2/2017 2016 65 Bowdoin Street S. Burlington, VT 1 27 100.0% 1,141 9,256 7,166 4/9/2010 2009 840 North Broadway Everett, WA 2 112 100.0% 2,704 21,385 17,669 6/28/2012 1990 Stevens Center Richland, WA 2 140 100.0% 2,924 25,461 14,803 3/31/1997 1995 351, 401, 501 Elliott Ave West Seattle, WA 3 300 100.0% 14,450 80,034 78,567 12/31/2018 2000 11050 West Liberty Drive Milwaukee, WI 1 29 100.0% 807 5,587 4,589 6/9/2011 2006 5353 Yellowstone Road Cheyenne, WY 1 106 92.9% 2,003 11,478 6,571 3/31/1997 1995 Total 183 24,991 92.3% 583,922 3,493,231 3,105,575 See notes on page 41. Office Properties Income Trust 40 Supplemental Operating and Financial Data, December 31, 2019


 
EXHIBIT E PROPERTY DETAIL (CONTINUED) (1) As of December 31, 2019 (dollars and square feet in thousands) Annualized Year Built or No. of Rentable Rental Undepreciated Depreciated Date Most Recent Property City, State Properties Sq. Ft. % Leased Income Carrying Value (2) Carrying Value (2) Acquired (3) Renovation Held for Sale: 1 Targeting Center Windsor, CT 1 97 100.0% 1,281 2,016 2,003 12/31/2018 1999 475 Bond Street Lincolnshire, IL 1 223 100.0% 1,693 5,316 5,305 12/31/2018 2000 50 West State Street Trenton, NJ 1 267 84.2% 6,653 27,917 27,917 12/30/2010 1989 3920 Pender Drive Fairfax, VA 1 83 100.0% 2,415 16,312 14,516 3/21/2014 2011 Aquia Commerce Center Stafford, VA 2 65 100.0% 1,849 10,339 8,606 6/22/2011 1999 6 735 94.3% 13,891 61,900 58,347 Grand Total 189 25,726 92.4% $ 597,813 $ 3,555,131 $ 3,163,922 PROPERTY DETAIL (CONTINUED) DETAIL PROPERTY (1) Excludes three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. See page 19 for more information regarding these joint ventures. (2) Carrying values exclude intangible and other assets. (3) Date acquired is the date we acquired the property or the date our former parent entity acquired the property for those properties that our former parent entity contributed to us in June 2009 in connection with our initial public offering. Office Properties Income Trust 41 Supplemental Operating and Financial Data, December 31, 2019


 
NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS Non-GAAP Financial Measures We present certain “Non-GAAP Financial measures” within the meaning of applicable SEC rules, including Property NOI, Property Cash Basis NOI, Same Property NOI, Same Property Cash Basis NOI, Pro Forma Same Property NOI, Pro Forma Same Property Cash Basis NOI, EBITDA, EBITDAre, Adjusted EBITDAre, Pro Forma EBITDA, Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDAre, FFO available for common shareholders and Normalized FFO available for common shareholders. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to income (loss) from continuing operations, net income (loss) or net income (loss) available for common shareholders as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with income (loss) from continuing operations, net income (loss) and net income (loss) available for common shareholders 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 income (loss) from continuing operations, net income (loss) and net income (loss) available for common shareholders. 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 Property NOI, Property Cash Basis NOI, Same Property NOI, Same Property Cash Basis NOI, Pro Forma Same Property NOI and Pro Forma Same Property 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. Property NOI and Property Cash Basis NOI The calculations of Property net operating income, or NOI, and Cash Basis NOI exclude certain components of net income (loss) available for common shareholders in order to provide results that are more closely related to our property level results of operations. We calculate Property NOI and Property Cash Basis NOI as shown on page 20, Same Property NOI and Same Property Cash Basis NOI as shown on page 21, and Pro Forma Same Property NOI and Pro Forma Same Property Cash Basis NOI as shown in Exhibit B. We define Property NOI as income from our rental of real estate less our property operating expenses. Property NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization expense. We define Property Cash Basis NOI as Property 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 calculate Same Property NOI and Same Property Cash Basis NOI in the same manner that we calculate the corresponding Property NOI and Property Cash Basis NOI amounts, except that we only include same properties in calculating Same Property NOI and Same Property Cash Basis NOI. We calculate Pro Forma Same Property NOI and Pro Forma Same Property Cash Basis NOI in the same manner we calculate the corresponding Same Property NOI and Same Property Cash Basis NOI, except that we calculate Pro Forma Same Property NOI and Pro Forma Same Property Cash Basis NOI as if the Merger had been completed on January 1, 2018. We use Property NOI, Property Cash Basis NOI, Same Property NOI, Same Property Cash Basis NOI, Pro Forma Same Property NOI and Pro Forma Same Property Cash Basis NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate Property NOI, Property Cash Basis NOI, Same Property NOI, Same Property Cash Basis NOI, Pro Forma Same Property NOI and Pro Forma Same Property Cash Basis NOI differently than we do. EBITDA, EBITDAre and Adjusted EBITDAre We calculate earnings before interest, taxes, depreciation and amortization, or EBITDA, EBITDA for real estate, or EBITDAre, and Adjusted EBITDAre as shown on page 22. EBITDAre is 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 and our former equity method investment in SIR included in discontinued operations. In calculating Adjusted EBITDAre, we adjust for the items shown on page 22 and include business management incentive fees only in the fourth quarter versus 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 contingencies for determining such fees are known at the end of the calendar year. Other real estate companies and REITs may calculate EBITDA, EBITDAre and Adjusted EBITDAre differently than we do. FFO and Normalized FFO We calculate funds from operations, or FFO, available for common shareholders and Normalized FFO available for common shareholders as shown on page 24. FFO available for common shareholders is calculated on the basis defined by Nareit, which is net income (loss) available for common shareholders, 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, and the difference between FFO attributable to an equity investment and equity in earnings of SIR included in discontinued operations, but excluding impairment charges on and increases in the carrying value of real estate assets, any gain or loss on sale of real estate and equity securities, NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS AND CERTAIN MEASURES FINANCIAL NON-GAAP as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO available for common shareholders, we adjust for the difference between Normalized FFO attributable to an equity investment and FFO attributable to an equity investment and for the other items shown on page 24 and include business management incentive fees, if any, only in the fourth quarter versus the quarter when they are recognized as an 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 contingencies for determining such fees are known at the end of the calendar year. FFO available for common shareholders and Normalized FFO available for common shareholders 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 available for common shareholders and Normalized FFO available for common shareholders differently than we do. Office Properties Income Trust 42 Supplemental Operating and Financial Data, December 31, 2019


 
NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS (CONTINUED) Adjusted total assets and total unencumbered assets include original cost of real estate assets calculated in accordance with GAAP before impairment writedowns, if any, and the lower of cost or market of our former equity investment in SIR for the applicable periods, and exclude depreciation and amortization, accounts receivable and intangible assets. Annualized dividend yield is annualized dividend per share paid during the period divided by the closing price of our common shares at the end of the period. Annualized rental income is calculated using the annualized contractual base rents from our tenants pursuant to our lease agreements as of December 31, 2019, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization. Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, loss on asset impairment, unrealized appreciation on assets held for sale, unrealized gains or losses on equity securities, gains and losses on early extinguishment of debt, gains and losses on sales of properties and gains or losses on equity issuance by SIR and equity in earnings of SIR and including distributions received from SIR and our unconsolidated joint ventures, if any, determined together with debt service for the period presented. Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenue. 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 the gross contract price, includes purchase price adjustments, if any, and excludes closing costs. Leased square feet is pursuant to leases existing as of December 31, 2019, 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. Leasing costs include leasing related costs, such as brokerage commissions and tenant inducements. 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. Same property cash basis NOI margin is Same Property Cash Basis NOI as a percentage of cash basis rental income. Cash basis rental income excludes non-cash straightline rent adjustments, the net effect of non-cash amortization of intangible lease assets and liabilities and lease termination fees, if any. Same property NOI margin is Same Property NOI as a percentage of rental income. Same properties for the three months ended December 31, 2019 is based on properties we owned continuously since October 1, 2018; excludes properties classified as held for sale, properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. Same properties for the year ended December 31, 2019 is based on properties we owned continuously since January 1, 2018; excludes properties classified as held for sale, properties undergoing significant redevelopment, if any, and three properties owned by two unconsolidated joint ventures in which we own 51% and 50% interests. Tenant improvements include capital expenditures used to improve tenants' space or amounts paid directly to tenants to improve their space. Total gross assets is total assets plus accumulated depreciation. NON-GAAP FINANCIAL MEASURES AND CERTAIN DEFINITIONS (CONTINUED) AND CERTAIN MEASURES FINANCIAL NON-GAAP Office Properties Income Trust 43 Supplemental Operating and Financial Data, December 31, 2019


 
WARNING CONCERNING FORWARD-LOOKING STATEMENTS This supplemental operating and financial data may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. 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. Actual results may differ materially from those contained in or implied by our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. The information contained in our filings with the SEC, including under “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause our actual results to differ materially from those stated in or implied by 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 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. WARNING CONCERNING FORWARD-LOOKING STATEMENTS CONCERNING FORWARD-LOOKING WARNING Office Properties Income Trust 44 Supplemental Operating and Financial Data, December 31, 2019