Provo, UT | Exhibit 99.2 |
Office Properties Income Trust
First Quarter 2024
Financial Results and
Supplemental Information
May 1, 2024
Table of Contents | |
QUARTERLY RESULTS | |
Office Properties Income Trust Announces First Quarter 2024 Financial Results | |
First Quarter 2024 Highlights | |
FINANCIALS | |
Key Financial Data | |
Condensed Consolidated Statements of Income (Loss) | |
Condensed Consolidated Balance Sheets | |
Debt Summary | |
Debt Maturity Schedule | 11 |
Leverage Ratios, Coverage Ratios and Public Debt Covenants | 12 |
Capital Expenditures Summary and Significant Redevelopment Information | 13 |
Property Dispositions | 14 |
Investments in Unconsolidated Joint Ventures | 15 |
PORTFOLIO INFORMATION | |
Summary Same Property Results | 17 |
Occupancy and Leasing Summary | 18 |
Tenant Diversity and Credit Characteristics | 19 |
Tenants Representing 1% or More of Total Annualized Rental Income | 20 |
Lease Expiration Schedule | 21 |
APPENDIX | |
Company Profile and Research Coverage | 23 |
Governance Information | 24 |
Calculation and Reconciliation of NOI and Cash Basis NOI | 25 |
Reconciliation and Calculation of Same Property NOI and Same Property Cash Basis NOI | 26 |
Operating Metrics by Collateral Pool | 27 |
Calculation of EBITDA, EBITDAre and Adjusted EBITDAre | 28 |
Calculation of FFO, Normalized FFO and CAD | 29 |
Non-GAAPFinancial Measures and Certain Definitions | 30 |
WARNING CONCERNING FORWARD-LOOKINGSTATEMENTS | 32 |
Trading Symbols:
Common Shares: OPI
Senior Unsecured Notes due 2050: OPINL
Investor Relations Contact:
Kevin Barry, Senior Director
- 219-1410kbarry@opireit.com ir@opireit.com
Corporate Headquarters:
Two Newton Place
255 Washington Street, Suite 300 Newton, Massachusetts 02458-1634 www.opireit.com
All amounts in this presentation are unaudited.
Unless otherwise noted, all data presented in this presentation excludes three properties, which are encumbered by $82.0 million of mortgage notes, owned by two unconsolidated joint ventures in which OPI owned a 51% and 50% interest. See page 15for information regarding these joint ventures and related mortgage notes.
Please refer to Non-GAAP Financial Measures and Certain Definitions for terms used throughout this presentation.
Q1 2024 | 2 |
Quarterly Results
Q1 2024 3 |
OFFICE PROPERTIES INCOME TRUST ANNOUNCES FIRST QUARTER 2024 FINANCIAL RESULTS
"Despite significant operational headwinds that continue to impact the office sector, during the first quarter OPI completed 488,000 square feet of new and renewal leasing at a 10.2% roll-up in rent and a weighted average lease term of 9.3 years.
Additionally, OPI continued to advance its objectives by refinancing its revolving credit facility with $425 million of new credit facilities, issuing $300 million of senior secured notes to pay off all of its 2024 maturities and generating $39 million from asset sales. Looking ahead, we are focused on addressing $650 million of debt maturing in 2025, executing on select asset sales and continuing to lease space within our portfolio."
Yael Duffy, President and Chief Operating Officer
Newton, MA (May 1, 2024). Office Properties Income Trust (Nasdaq: OPI) today announced its financial results for the quarter ended March 31, 2024.
Dividend
OPI has declared a quarterly dividend on its common shares of $0.01 per share to shareholders of record as of the close of business on April 22, 2024. This dividend will be paid on or about May 16, 2024.
Conference Call
A conference call discussing OPI's first quarter results will be held on Thursday, May 2, 2024 at 10:00 a.m. Eastern Time. The conference call may be accessed by dialing (877) 328-1172 or (412) 317-5418 (if calling from outside the United States and Canada); a pass code is not required. A replay will be available for one week by dialing (412) 317-0088; the replay pass code is 4668950. A live audio webcast of the conference call will also be available in a listen-only-mode on OPI's website, at www.opireit.com. The archived webcast will be available for replay on OPI's website after the call. The transcription, recording and retransmission in any way are strictly prohibited without the prior written consent of OPI.
About Office Properties Income Trust
OPI is a national REIT focused on owning and leasing office properties to high credit quality tenants in markets throughout the United States. As of March 31, 2024, approximately 62% of OPI's revenues were from investment grade rated tenants. OPI owned 151 properties as of March 31, 2024, with approximately 20.3 million square feet located in 30 states and Washington, D.C. In 2024, OPI was named as an Energy Star® Partner of the Year for the seventh consecutive year. OPI is managed by The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $41 billion in assets under management as of March 31, 2024, and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate. OPI is headquartered in Newton, MA. For more information, visit opireit.com.
Q1 2024 4 |
First Quarter 2024 Highlights
Portfolio
Update
Financial
Results
Investment
Activity
Financing Activities
- Executed 488,000 square feet of total leasing at rental rates that were 10.2% higher than prior rental rates for the same space and a weighted average lease term of 9.3 years.
- Lease renewals accounted for more than 90% of leasing activity, driven by U.S. government and state tenants.
- Same property portfolio occupancy of 88.2% and a weighted average lease term of 6.6 years (by annualized revenue).
- Achieved 2024 Energy Star Partner of the Year for the seventh consecutive year.
- Net loss of $5.2 million, or $0.11 per common share.
- Normalized FFO of $38.3 million, or $0.79 per common share.
- Same property cash basis NOI of $67.9 million.
- Sold one property in Chicago, IL consisting of approximately 248,000 square feet for a sales price of $38.5 million, excluding closing costs.
- In April 2024, entered into an agreement to sell one property in Malden, MA consisting of approximately 126,000 square feet for a sales price of $7.8 million, excluding closing costs.
- Refinanced revolving credit facility with new three-year, $325 million secured revolving credit facility and $100 million secured term loan.
- Issued $300 million of 9.0% senior secured notes due 2029, or the 2029 Notes. The net proceeds from this issuance were approximately $271 million.
- Redeemed, at par plus accrued interest, all of its $350 million of 4.25% senior unsecured notes due 2024 using proceeds from the 2029 Notes and borrowings under OPI's revolving credit facility.
Q1 2024 5 |
Financials
Q1 2024 6 |
Key Financial Data
(dollars in thousands, except per share data)
As of and for the Three Months Ended | |||||||||||||
3/31/2024 | 12/31/2023 | 9/30/2023 | 6/30/2023 | 3/31/2023 | |||||||||
Selected Income Statement Data: | |||||||||||||
Rental income (1) | $ | 139,435 | $ | 133,773 | $ | 133,361 | $ | 133,997 | $ | 132,422 | |||
Net loss (1) | $ | (5,184) | $ | (37,151) | $ | (19,593) | $ | (12,242) | $ | (446) | |||
NOI (1) | $ | 88,248 | $ | 80,871 | $ | 83,698 | $ | 85,720 | $ | 83,772 | |||
Adjusted EBITDAre | $ | 73,799 | $ | 76,216 | $ | 78,910 | $ | 81,013 | $ | 78,487 | |||
FFO (1) | $ | 48,183 | $ | 44,590 | $ | 33,269 | $ | 42,532 | $ | 49,528 | |||
Normalized FFO | $ | 38,317 | $ | 45,872 | $ | 49,404 | $ | 53,713 | $ | 52,746 | |||
CAD (1) | $ | 22,340 | $ | 8,560 | $ | 17,353 | $ | 15,782 | $ | 31,178 | |||
Rolling four quarter CAD (1) | $ | 64,035 | $ | 72,873 | $ | 74,113 | $ | 84,832 | $ | 106,873 | |||
Per Common Share Data (basic and diluted): | |||||||||||||
Net loss (1) | $ | (0.11) | $ | (0.77) | $ | (0.41) | $ | (0.25) | $ | (0.01) | |||
FFO (1) | $ | 0.99 | $ | 0.92 | $ | 0.69 | $ | 0.88 | $ | 1.02 | |||
Normalized FFO | $ | 0.79 | $ | 0.95 | $ | 1.02 | $ | 1.11 | $ | 1.09 | |||
CAD (1) | $ | 0.46 | $ | 0.18 | $ | 0.36 | $ | 0.33 | $ | 0.65 | |||
Rolling four quarter CAD (1) | $ | 1.32 | $ | 1.51 | $ | 1.54 | $ | 1.76 | $ | 2.21 | |||
Dividends: | |||||||||||||
Annualized dividends paid per common share during the period | $ | 0.04 | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 2.20 | |||
Annualized dividend yield (at end of period) | 2.0% | 13.7% | 24.4% | 13.0% | 17.9% | ||||||||
Annualized normalized FFO payout ratio | 1.3% | 26.3% | 24.5% | 22.5% | 50.5% | ||||||||
Rolling four quarter CAD payout ratio (1)(2) | 3.0% | 65.8% | 64.9% | 56.8% | 99.5% | ||||||||
Selected Balance Sheet Data: | |||||||||||||
Total gross assets | $ | 4,637,482 | $ | 4,639,848 | $ | 4,672,646 | $ | 4,633,357 | $ | 4,591,512 | |||
Total assets | $ | 3,957,930 | $ | 3,989,669 | $ | 4,044,990 | $ | 4,027,568 | $ | 4,007,000 | |||
Total liabilities | $ | 2,707,566 | $ | 2,733,990 | $ | 2,740,357 | $ | 2,691,613 | $ | 2,647,359 | |||
Total shareholders' equity | $ | 1,250,364 | $ | 1,255,679 | $ | 1,304,633 | $ | 1,335,955 | $ | 1,359,641 |
As of | ||
3/31/2024 | ||
Capitalization: | ||
Total common shares (at end of period) | 48,754,546 | |
Closing price (at end of period) | $ | 2.04 |
Equity market capitalization (at end of period) | $ | 99,459 |
Debt (principal balance) | 2,629,320 | |
Total market capitalization | $ | 2,728,779 |
Liquidity: | ||
Cash and cash equivalents | $ | 23,513 |
Availability under $325,000 secured revolving | 135,000 | |
credit facility (3) | ||
Total liquidity | $ | 158,513 |
- Amounts presented for the three months ended March 31, 2024 include lease termination fee revenue of $10,524, or $0.22 per common share, related to a property that was sold in March 2024.
- Reflects the annualized dividends paid per common share during the period as a percentage of rolling four quarter CAD per common share.
- Availability under OPI's secured revolving credit facility is subject to ongoing minimum performance and market values of the collateral properties and meeting required financial covenants.
Q1 2024 7 |
Condensed Consolidated Statements of Income (Loss)
(amounts in thousands, except per share data)
Three Months Ended March 31,
20242023
Rental income | $ | 139,435 | $ | 132,422 | |
Expenses: | |||||
Real estate taxes | 15,709 | 15,333 | |||
Utility expenses | 8,151 | 7,260 | |||
Other operating expenses | 27,327 | 26,057 | |||
Depreciation and amortization | 50,341 | 51,692 | |||
Acquisition and transaction related costs (1) | 233 | 3,218 | |||
General and administrative | 5,644 | 5,925 | |||
Total expenses | 107,405 | 109,485 | |||
(Loss) gain on sale of real estate | (2,384) | 2,548 | |||
Interest and other income | 1,357 | 164 | |||
Interest expense (including net amortization of debt premiums, discounts and issuance costs of | (35,476) | (25,231) | |||
$3,444 and $2,205, respectively) | |||||
Loss on early extinguishment of debt | (425) | - | |||
(Loss) income before income tax expense and equity in net losses of investees | (4,898) | 418 | |||
Income tax expense | (56) | (30) | |||
Equity in net losses of investees | (230) | (834) | |||
Net loss | $ | (5,184) | $ | (446) | |
Weighted average common shares outstanding (basic and diluted) | |||||
48,466 | 48,336 | ||||
San Diego, CA
Per common share amounts (basic and diluted): | |||
Net loss | $ | (0.11) | $ |
Additional Data: | |||
General and administrative expenses / total assets (at end of period) | 0.14% | ||
Non-cash straight line rent adjustments included in rental income | $ | 7,379 | $ |
Lease value amortization included in rental income | $ | 33 | $ |
Lease termination fees included in rental income | $ | 12,445 | $ |
Non-cash amortization included in other operating expenses (2) | $ | 121 | $ |
Non-cash amortization included in general and administrative expenses (2) | $ | 151 | $ |
(1) | Acquisition and transaction related costs consist of costs related to OPI's | |
(0.01) | evaluation of potential acquisitions, dispositions, financing and other | |
strategic transactions, including costs incurred in connection with OPI's | ||
terminated merger with Diversified Healthcare Trust and related | ||
0.15% | transactions. | |
(2) | OPI recorded a liability for the amount by which the estimated fair value for | |
4,173 | ||
accounting purposes exceeded the price OPI paid for its former | ||
79 | ||
investment in The RMR Group Inc., or RMR Inc., common stock in June | ||
99 | ||
2015. This liability is being amortized on a straight line basis through | ||
121 | December 31, 2035 as an allocated reduction to business management |
151 fee expense and property management fee expense, which are included in general and administrative and other operating expenses, respectively.
Q1 2024 | 8 |
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share data) | March 31, | December 31, | |||
2024 | 2023 | ||||
ASSETS | |||||
Real estate properties: | |||||
Land | $ | 782,660 | $ | 786,310 | |
Buildings and improvements | 3,296,591 | 3,279,369 | |||
Total real estate properties, gross | 4,079,251 | 4,065,679 | |||
Accumulated depreciation | (678,278) | (650,179) | |||
Total real estate properties, net | 3,400,973 | 3,415,500 | |||
Assets of properties held for sale | 11,888 | 37,310 | |||
Investments in unconsolidated joint ventures | 17,898 | 18,128 | |||
Acquired real estate leases, net | 244,502 | 263,498 | |||
Cash and cash equivalents | 23,513 | 12,315 | |||
Restricted cash | 20,593 | 14,399 | |||
Rents receivable | 137,489 | 133,264 | |||
Deferred leasing costs, net | 85,828 | 86,971 | |||
Other assets, net | 15,246 | 8,284 | |||
Total assets | $ | 3,957,930 | $ | 3,989,669 | |
Washington, D.C.
LIABILITIES AND SHAREHOLDERS' EQUITY Unsecured debt, net
Secured debt, net
Liabilities of properties held for sale Accounts payable and other liabilities Due to related persons
Assumed real estate lease obligations, net Total liabilities
Commitments and contingencies
$ | 1,847,664 | $ | 2,400,478 |
731,563 | 172,131 | ||
324 | 2,525 | ||
109,665 | 140,166 | ||
7,259 | 7,025 | ||
11,091 | 11,665 | ||
2,707,566 | 2,733,990 |
Shareholders' equity: | ||||
Common shares of beneficial interest, $.01 par value: 200,000,000 shares authorized, | 488 | 488 | ||
48,754,546 and 48,755,415 shares issued and outstanding, respectively | ||||
Additional paid in capital | 2,621,849 | 2,621,493 | ||
Cumulative net income | 94,990 | 100,174 | ||
Cumulative common distributions | (1,466,963) | (1,466,476) | ||
Total shareholders' equity | 1,250,364 | 1,255,679 | ||
Total liabilities and shareholders' equity | $ | 3,957,930 | $ | 3,989,669 |
Q1 2024 | 9 |
Debt Summary
As of March 31, 2024 (dollars in thousands)
Coupon | Interest | Principal | Maturity | Due at | Years to | ||||||||
Rate (3) | Rate (4) | Balance | Date | Maturity | Maturity | ||||||||
Secured Floating Rate Debt: | |||||||||||||
$325,000 secured revolving credit facility (1) | 8.910% | 8.910% | $ 190,000 | 1/29/2027 | $ 190,000 | 2.8 | |||||||
$100,000 secured term loan (1) | 8.910% | 8.910% | 100,000 | 1/29/2027 | 100,000 | 2.8 | |||||||
Subtotal / weighted average | 8.910% | 8.910% | 290,000 | 290,000 | 2.8 | ||||||||
Secured Fixed Rate Debt: | |||||||||||||
Mortgage debt - One property | 8.272% | 8.272% | 42,700 | 7/1/2028 | 42,700 | 4.3 | |||||||
Mortgage debt - One property | 8.139% | 8.139% | 26,340 | 7/1/2028 | 26,340 | 4.3 | |||||||
Mortgage debt - Two properties | 7.671% | 7.671% | 54,300 | 10/6/2028 | 54,300 | 4.5 | (1) | OPI's secured revolving credit facility and term loan are | |||||
Senior secured notes due 2029 (2) | 9.000% | 10.589% | 300,000 | 3/31/2029 | 300,000 | 5.0 | |||||||
Mortgage debt - One property | 7.210% | 7.210% | 30,680 | 7/1/2033 | 29,105 | 9.3 | governed by an amended and restated credit agreement, or | ||||||
the Credit Agreement. OPI is required to pay interest under | |||||||||||||
Mortgage debt - One property | 7.305% | 7.305% | 8,400 | 7/1/2033 | 8,400 | 9.3 | the Credit Agreement at a rate of SOFR plus a margin of 350 | ||||||
Mortgage debt - One property | 7.717% | 7.717% | 14,900 | 9/1/2033 | 14,900 | 9.4 | basis points. OPI also pays an unused commitment fee of 25 | ||||||
to 35 basis points per annum based on amounts | |||||||||||||
Subtotal / weighted average | 8.551% | 9.550% | 477,320 | 475,745 | 5.3 | outstanding under its secured revolving credit facility. | |||||||
Subject to the payment of an extension fee and meeting | |||||||||||||
certain other conditions, OPI can extend the maturity date of | |||||||||||||
Unsecured Fixed Rate Debt: | the secured revolving credit facility by one year. The Credit | ||||||||||||
Senior unsecured notes due 2025 | 4.500% | 4.521% | 650,000 | 2/1/2025 | 650,000 | 0.8 | Agreement is secured by first-priority liens on 19 properties. | ||||||
See Page 27for additional information regarding these | |||||||||||||
Senior unsecured notes due 2026 | 2.650% | 2.815% | 300,000 | 6/15/2026 | 300,000 | 2.2 | |||||||
collateral properties. | |||||||||||||
Senior unsecured notes due 2027 | 2.400% | 2.541% | 350,000 | 2/1/2027 | 350,000 | 2.8 | (2) | These notes are guaranteed by certain of OPI's subsidiaries | |||||
and secured by first-priority liens on 17 properties. See Page | |||||||||||||
Senior unsecured notes due 2031 | 3.450% | 3.550% | 400,000 | 10/15/2031 | 400,000 | 7.5 | |||||||
27for additional information regarding these collateral | |||||||||||||
Senior unsecured notes due 2050 | 6.375% | 6.375% | 162,000 | 6/23/2050 | 162,000 | 26.2 | properties. | ||||||
(3) | Reflects the interest rate stated in, or determined pursuant | ||||||||||||
Subtotal / weighted average | 3.745% | 3.827% | 1,862,000 | 1,862,000 | 5.1 | ||||||||
to, the contract terms. | |||||||||||||
(4) | Includes the effect of discounts and premiums on senior | ||||||||||||
Total / weighted average | 5.187% | 5.426% | $2,629,320 | $2,627,745 | 4.9 | notes. Excludes the effect of debt issuance costs | |||||||
amortization. | |||||||||||||
Q1 2024 10 | |||||||||||||
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Office Properties Income Trust published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 11:52:41 UTC.