EX-99.1 2 opi2024-350spectrumlp_exx9.htm EX-99.1 Document

Exhibit 99.1


Office Properties Income Trust
Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements

On November 1, 2024, Office Properties Income Trust and its consolidated subsidiaries, or OPI, completed the sale of an office property with approximately 155,808 rentable square feet located at 350 Spectrum Loop, Colorado Springs, Colorado, or 350 Spectrum Loop, to The Mitre Corporation for $26.2 million, excluding closing costs.

The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2024 reflects OPI's financial position as if the sale of 350 Spectrum Loop was completed as of September 30, 2024. The following unaudited pro forma condensed consolidated statements of income (loss) for the year ended December 31, 2023 and nine months ended September 30, 2024, reflect OPI's results of operations as if the sale of 350 Spectrum Loop was completed on January 1, 2023. These unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) OPI's unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 and the notes thereto included in OPI's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, or SEC, on October 30, 2024 and (ii) OPI's consolidated financial statements for the year ended December 31, 2023, and the notes thereto, included in OPI's Annual Report on Form 10-K filed with the SEC on February 15, 2024.

These unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and are not necessarily indicative of OPI's expected financial position or results of operations for any future period. Differences could result from numerous factors, including future changes in OPI's portfolio of investments, changes in interest rates, changes in OPI's capital structure, changes in property level operating expenses, changes in property level revenues, including rents expected to be received pursuant to OPI's existing leases or leases OPI has entered into or may enter into after December 31, 2023, and other reasons. Actual future results are likely to be different from amounts presented in these unaudited pro forma condensed consolidated financial statements and such differences may be significant. In the opinion of management, all adjustments necessary to reflect, in all material respects, the effects of the sale of 350 Spectrum Loop have been included.
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Office Properties Income Trust
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 2024
(amounts in thousands, except per share data)


HistoricalTransaction Accounting AdjustmentsPro Forma
(1)
ASSETS
Real estate properties:
Land $716,254 $— $716,254 
Buildings and improvements 2,980,356 — 2,980,356 
Total real estate properties, gross3,696,610 — 3,696,610 
Accumulated depreciation (619,474)— (619,474)
Total real estate properties, net3,077,136 — 3,077,136 
Assets of properties held for sale125,781 (11,503)(A)114,278 
Investment in unconsolidated joint ventures17,552 — 17,552 
Acquired real estate leases, net209,943 — 209,943 
Cash and cash equivalents22,363 24,152 (B)46,515 
Restricted cash13,906 — 13,906 
Rents receivable146,580 — 146,580 
Deferred leasing costs, net95,395 — 95,395 
Other assets, net17,295 — 17,295 
Total assets $3,725,951 $12,649 $3,738,600 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured debt, net$980,125 $— $980,125 
Secured debt, net1,341,844 — 1,341,844 
Liabilities of properties held for sale3,419 (314)(A)3,105 
Accounts payable and other liabilities105,923 — 105,923 
Due to related persons5,906 — 5,906 
Assumed real estate lease obligations, net10,148 — 10,148 
Total liabilities2,447,365 (314)2,447,051 
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, 53,910,981 shares issued and outstanding539 — 539 
Additional paid in capital 2,633,253 — 2,633,253 
Cumulative net income 112,747 12,963 (C)125,710 
Cumulative common distributions(1,467,953)— (1,467,953)
Total shareholders' equity 1,278,586 12,963 1,291,549 
Total liabilities and shareholders' equity $3,725,951 $12,649 $3,738,600 

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
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Office Properties Income Trust
Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss)
For the Year Ended December 31, 2023
(amounts in thousands, except per share data)

HistoricalTransaction Accounting AdjustmentsPro Forma
(2)
Rental income$533,553 $(2,515)(D)$531,038 
Expenses:
Real estate taxes 62,831 (385)(D)62,446 
Utility expenses26,778 — 26,778 
Other operating expenses 109,883 (165)(D)109,718 
Depreciation and amortization 209,254 (1,414)(D)207,840 
Loss on impairment of real estate 11,299 — 11,299 
Acquisition and transaction related costs31,816 — 31,816 
General and administrative 22,731 — 22,731 
Total expenses 474,592 (1,964)472,628 
Gain on sale of real estate3,780 12,963 (E)16,743 
Interest and other income1,039 — 1,039 
Interest expense(110,647)— (110,647)
Loss before income tax expense and equity in net losses of investees(46,867)12,412 (34,455)
Income tax expense(351)— (351)
Equity in net losses of investees(3,031)— (3,031)
Loss on impairment of equity method investment(19,183)— (19,183)
Net loss$(69,432)$12,412 $(57,020)
Weighted average common shares outstanding (basic and diluted)48,389 48,389 
Per common share amounts (basic and diluted):
Net loss$(1.44)$(1.19)


The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
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Office Properties Income Trust
Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss)
For the Nine Months Ended September 30, 2024
(amounts in thousands, except per share data)

HistoricalTransaction Accounting AdjustmentsPro Forma
(2)
Rental income$383,741 $(1,994)(D)$381,747 
Expenses:
Real estate taxes 47,363 (331)(D)47,032 
Utility expenses21,782 — 21,782 
Other operating expenses 81,097 (105)(D)80,992 
Depreciation and amortization 146,779 (354)(D)146,425 
Loss on impairment of real estate 173,579 — 173,579 
Transaction related costs971 — 971 
General and administrative 15,861 — 15,861 
Total expenses 487,432 (790)486,642 
Gain on sale of real estate6,008 — 6,008 
Interest and other income1,779 — 1,779 
Interest expense(116,405)— (116,405)
Gain on early extinguishment of debt225,637 — 225,637 
Income before income tax expense and equity in net losses of investees13,328 (1,204)12,124 
Income tax expense(179)— (179)
Equity in net losses of investees(576)— (576)
Net income$12,573 $(1,204)$11,369 
Weighted average common shares outstanding (basic and diluted)49,444 49,444 
Per common share amounts (basic and diluted):
Net income$0.25 $0.23 


The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
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Office Properties Income Trust
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars in thousands)

(1) Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet Adjustments

(A)The adjustments represent the effect of the sale of 350 Spectrum Loop, which was classified as held for sale in OPI's consolidated balance sheet as of September 30, 2024.
(B)The adjustment represents $24,152 of net proceeds from the sale of 350 Spectrum Loop.
(C)The adjustment represents an increase of $12,963 for the gain on sale of real estate related to the sale of 350 Spectrum Loop.
(2) Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss) Adjustments
(D)The adjustments represent the historical revenues and expenses of 350 Spectrum Loop for the year ended December 31, 2023 and nine months ended September 30, 2024 as if this transaction had occurred on January 1, 2023.
(E)The adjustment reflects a $12,963 gain on sale of real estate related to the sale of 350 Spectrum Loop.

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