OFFICE PROPERTIES INCOME TRUST Management’s Report on Financial Condition and Results of Operations (Form 10-Q)

The following information should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2021 Annual Report.

OVERVIEW (in thousands of dollars, except per share and per square foot data)

We are a real estate investment trust, or REIT, organized under Maryland law. As
of March 31, 2022, our wholly owned properties were comprised of 174 properties
and we had noncontrolling ownership interests of 51% and 50% in two
unconsolidated joint ventures that own three properties containing approximately
444,000 rentable square feet. As of March 31, 2022, our properties are located
in 32 states and the District of Columbia and contain approximately 22,941,000
rentable square feet. As of March 31, 2022, our properties were leased to 298
different tenants with a weighted average remaining lease term (based on
annualized rental income) of approximately 6.1 years. The U.S. government is our
largest tenant, representing approximately 19.4% of our annualized rental income
as of March 31, 2022. The term annualized rental income as used herein is
defined as the annualized contractual base rents from our tenants pursuant to
our lease agreements as of March 31, 2022, plus straight line rent adjustments
and estimated recurring expense reimbursements to be paid to us, and excluding
lease value amortization.

The COVID-19 pandemic and the various governmental and market responses intended
to contain and mitigate the spread of the virus and its detrimental public
health impact have had a significant impact on the global economy, including the
U.S. economy. Many of the restrictions that had been imposed in the United
States during the pandemic have since been lifted and commercial activity in the
United States generally has increasingly returned to pre-pandemic practices and
operations. We are continuing to closely monitor the impact of the COVID-19
pandemic on all aspects of our business. To date, the COVID-19 pandemic has not
had a significant adverse impact on our business and we continue to believe that
our financial resources, the characteristics of our portfolio, including the
diversity of our tenant base, both geographically and by industry, and the
financial strength and resources of our tenants, will enable us to withstand the
COVID-19 pandemic.

The ultimate adverse impact of the COVID-19 pandemic is highly uncertain and
subject to change. As a result, we do not yet know the full extent of potential
impacts on our business and operations, our tenants' businesses and operations
or the global economy as a whole. For more information and risks relating to the
COVID-19 pandemic on us and our business, see Part I, Item 1A, "Risk Factors",
of our 2021 Annual Report.

Property Operations

Unless otherwise noted, the data presented in this section includes properties
classified as held for sale as of March 31, 2022 and excludes three properties
owned by two unconsolidated joint ventures in which we own 51% and 50%
interests. For more information regarding our properties classified as held for
sale and our two unconsolidated joint ventures, see Note 3 to our Condensed
Consolidated Financial Statements included in Part I, Item 1 of this Quarterly
Report on Form 10-Q.

Occupancy data for our properties as of March 31, 2022 and 2021 was as follows
(square feet in thousands):

                                                              All Properties (1)                             Comparable Properties (2)
                                                                  March 31,                                          March 31,
                                                        2022                      2021                     2022                      2021
Total properties (3)                                             174                      180                    163                      163
Total rentable square feet (4)                             22,941                   24,568                    20,503                   20,497
Percent leased (5)                                           88.8  %                  90.8  %                   91.2  %                  91.7  %



(1)Based on properties we owned on March 31, 2022 and 2021, respectively.
(2)Based on properties we owned continuously since January 1, 2021; excludes
properties classified as held for sale and properties undergoing significant
redevelopment, if any, and three properties owned by two unconsolidated joint
ventures in which we own 51% and 50% interests.
(3)Includes one leasable land parcel.
(4)Subject to changes when space is remeasured or reconfigured for tenants.
(5)Percent leased 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, as of the
measurement date.

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The average effective rental rate per square foot of our properties for the three months ended March 31, 2022 and 2021 are as follows:

                                                                      Three 

Months ended March, 31st,

                                                                     2022                      2021

Average effective rental rate per square foot (1):

 All properties (2)                                           $          

$29.40 25.95

 Comparable properties (3)                                    $          

$27.24 26.97



(1)Average effective rental rate per square foot represents annualized total
rental income during the period specified divided by the average rentable square
feet leased during the period specified.
(2)Based on properties we owned on March 31, 2022 and 2021, respectively.
(3)Based on properties we owned continuously since January 1, 2021; excludes
properties classified as held for sale and properties undergoing significant
redevelopment, if any, and three properties owned by two unconsolidated joint
ventures in which we own 51% and 50% interests.

During the three months ended March 31, 2022, changes in rentable square feet
leased and available for lease at our properties were as follows (square feet in
thousands):

                                                                            

Three months completed March 31, 2022

                                                      Leased                          Available for Lease                        Total
Beginning of period                                      20,817                                 2,454                               23,271
Changes resulting from:

Disposition of properties                                  (163)                                 (167)                                (330)
Lease expirations                                          (853)                                  853                                    -
Lease renewals (1)                                          336                                  (336)                                   -
New leases (1)                                              236                                  (236)                                   -

End of period                                            20,373                                 2,568                               22,941


(1) Based on leases entered into during the three months ended March 31, 2022.

Leases at our properties totaling approximately 853,000 rentable square feet
expired during the three months ended March 31, 2022. During the three months
ended March 31, 2022, we entered into new and renewal leases as summarized in
the following table (square feet in thousands):

                                                                     Three 

Months ended March 31, 2022

                                                              New Leases           Renewals            Total
Rentable square feet leased                                         236                336               572
Weighted average rental rate change (by rentable                    6.7  %             3.8  %            5.1  %
square feet)
Tenant leasing costs and concession commitments (1)         $    26,855     

$5,893 $32,748
Tenant Lease Costs and Concession Commitments per Leasable Square Foot (1)

                                    $    113.66           $  17.56          $  57.26
Weighted (by square feet) average lease term (years)               10.4               10.9              10.7

Total lease costs and concession commitments per leasable square foot per year (1)

                           $     10.94     

$1.61 $5.36

(1)Includes commitments made for rental expenses and concessions, such as tenant improvements, rental commissions, tenant reimbursements and free rent.

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During the three months ended March 31, 2022, changes in effective rental rates
per square foot achieved for new leases and lease renewals at our properties
that commenced during the three months ended March 31, 2022, when compared to
prior effective rental rates per square foot in effect for the same space (and
excluding space acquired vacant), were as follows (square feet in thousands):

                                                                        

Three months completed March 31, 2022

                                             Old Effective Rent Per       New Effective Rent Per
                                                Square Foot (1)              Square Foot (1)               Rentable Square Feet
New leases                                   $              8.47          $              7.86                           252
Lease renewals                               $             27.43          $             29.08                           492
Total leasing activity                       $             21.00          $             21.89                           744

(1) Effective rental rates include our tenants’ contractual base rents under our leases, plus estimated straight-line rent adjustments and expense reimbursements payable to us, and exclude depreciation of rental value.

During the three months ended March 31, 2022 and 2021, amounts capitalized at
our properties for lease related costs, building improvements and development,
redevelopment and other activities were as follows:

                                                                        Three Months Ended March 31,
                                                                       2022                      2021

Lease related costs (1)                                        $           8,664          $          6,970
Building improvements (2)                                                  2,783                     4,526
Recurring capital expenditures                                            11,447                    11,496
Development, redevelopment and other activities (3)                       37,524                     4,906
Total capital expenditures                                     $          

48,971 $16,402


(1)Lease related costs generally include capital expenditures used to improve
tenants' space or amounts paid directly to tenants to improve their space and
leasing related costs, such as brokerage commissions and other tenant
inducements.
(2)Building improvements generally include expenditures to replace obsolete
building components and expenditures that extend the useful life of existing
assets.
(3)Development, redevelopment and other activities generally include capital
expenditure projects that reposition a property or result in new sources of
revenue.

In addition to the capital expenditures described above, we contributed $1,070
to one of our unconsolidated joint ventures during the three months ended
March 31, 2022. Also, as of March 31, 2022, we have estimated unspent leasing
related obligations of $128,009, of which we expect to spend $78,134 over the
next 12 months.

As of March 31, 2022, we had leases at our properties totaling approximately
1,482,000 rentable square feet that were scheduled to expire through March 31,
2023. As of April 27, 2022, we expect tenants with leases totaling approximately
543,000 rentable square feet that are scheduled to expire through March 31,
2023, to not renew their leases upon expiration and we cannot be sure as to
whether other tenants will renew their leases upon expiration. As a result of
the COVID-19 pandemic, its economic impact and the uncertainty of whether
certain market practices and trends in response to the pandemic will be
sustained or increased, overall leasing activity has been volatile and may
remain so until office property market conditions meaningfully improve and
stabilize for a sustained period. However, we remain focused on proactive
dialogues with our existing tenants and overall tenant retention. Prevailing
market conditions and government and other tenants' needs at the time we
negotiate and enter leases or lease renewals will generally determine rental
rates and demand for leased space at our properties, and market conditions and
our tenants' needs are beyond our control. Whenever we renew or enter into new
leases for our properties, we intend to seek rents which are equal to or higher
than our historical rents for the same properties; however, our ability to
maintain or increase the rents for our current properties will depend in large
part upon market conditions, which are beyond our control. We cannot be sure of
the rental rates which will result from our ongoing negotiations regarding lease
renewals or any new or renewed leases we may enter; also, we may experience
material declines in our rental income due to vacancies upon lease expirations
or early terminations or lower rents upon lease renewal or reletting.
Additionally, we may incur significant costs to renew our leases with current
tenants or lease our properties to new tenants.

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As of March 31, 2022, our lease expirations by year are as follows (square feet
in thousands):

                                                                                                                                         Annualized
                                 Number of Leases                  Leased                   Percent of            Cumulative            Rental Income         Percent of            Cumulative
         Year (1)                    Expiring             Square Feet Expiring (2)            Total            Percent of Total           Expiring               Total           Percent of Total
2022                                       53                       1,167                         5.7  %                  5.7  %       $     28,607                 5.0  %                  5.0  %
2023                                       63                       2,531                        12.4  %                 18.1  %             82,679                14.5  %                 19.5  %
2024                                       55                       3,232                        15.9  %                 34.0  %             85,660                15.0  %                 34.5  %
2025                                       48                       2,122                        10.4  %                 44.4  %             45,395                 7.9  %                 42.4  %
2026                                       39                       1,831                         9.0  %                 53.4  %             48,635                 8.5  %                 50.9  %
2027                                       33                       1,926                         9.5  %                 62.9  %             50,265                 8.8  %                 59.7  %
2028                                       17                       1,288                         6.3  %                 69.2  %             50,050                 8.7  %                 68.4  %
2029                                       20                       1,038                         5.1  %                 74.3  %             30,196                 5.3  %                 73.7  %
2030                                       14                         520                         2.6  %                 76.9  %             15,562                 2.7  %                 76.4  %
2031 and thereafter                        50                       4,718                        23.1  %                100.0  %            134,980                23.6  %                100.0  %
Total                                     392                      20,373                       100.0  %                               $    572,029               100.0  %

Weighted average remaining lease term (in years)                    5.9                                                                      6.1



(1)The year of lease expiration is pursuant to current contract terms. Some of
our leases allow the tenants to vacate the leased premises before the stated
expirations of their leases with little or no liability. As of March 31, 2022,
tenants occupying approximately 4.2% of our rentable square feet and responsible
for approximately 4.6% of our annualized rental income as of March 31, 2022
currently have exercisable rights to terminate their leases before the stated
terms of their leases expire. Also, in 2022, 2023, 2024, 2025, 2026, 2027, 2028,
2029, 2030, 2031, 2035, 2037 and 2040, early termination rights become
exercisable by other tenants who currently occupy an additional approximately
1.1%, 2.9%, 2.6%, 3.9%, 1.2%, 0.7%, 1.2%, 0.5%, 0.7%, 0.1%, 0.4%, 0.1% and 0.3%
of our rentable square feet, respectively, and contribute an additional
approximately 1.2%, 4.0%, 2.9%, 7.6%, 1.5%, 1.2%, 1.4%, 1.0%, 0.8%, 0.1%, 0.5%,
0.2% and 0.4% of our annualized rental income, respectively, as of March 31,
2022. In addition, as of March 31, 2022, pursuant to leases with 14 of our
tenants, these tenants have rights to terminate their leases if their respective
legislature or other funding authority does not appropriate rent amounts in
their respective annual budgets. These 14 tenants occupy approximately 6.0% of
our rentable square feet and contribute approximately 6.8% of our annualized
rental income as of March 31, 2022.
(2)Leased square feet is pursuant to leases existing as of March 31, 2022, and
includes (i) space being fitted out for tenant occupancy pursuant to our lease
agreements, if any, and (ii) space which is leased, but is not occupied or is
being offered for sublease by tenants, if any. Square feet measurements are
subject to changes when space is remeasured or reconfigured for new tenants.

We generally will seek to renew or extend the terms of leases at properties with
tenants when they expire. Because of the capital many of our single tenants have
invested in the properties they lease from us and because many of these
properties appear to be of strategic importance to such tenants' businesses, we
believe that it is likely that these tenants will renew or extend their leases
prior to when they expire. However, recent shifts in workplace practices,
including as a result of the COVID-19 pandemic, have resulted in a significant
increase in alternative work arrangements, including work from home practices.
It is uncertain to what extent and how long work from home arrangements may
continue, or if other hybrid work arrangements will continue or increase.
Despite these shifts in workplace practices, our recent leasing activity and
negotiations for vacant or expiring space may suggest that there is an improving
demand environment for office space. However, if these arrangements continue or
increase, our tenants may not seek to renew or extend their leases when they
expire, or may seek to renew their leases for less space than they currently
occupy. If we are unable to extend or renew our leases, or we renew leases for
reduced space, it may be time consuming and expensive to relet some of these
properties.

We believe that recent government budgetary and spending priorities and
enhancements in technology have resulted in a decrease in government office use
for employees. Furthermore, over the past several years, government tenants have
reduced their space utilization per employee and consolidated government tenants
into existing government owned properties. This activity has reduced the demand
for government leased space. Our historical experience with respect to
properties of the type we own that are majority leased to government tenants has
been that government tenants frequently renew leases to avoid the costs and
disruptions that may result from relocating their operations. However, efforts
to manage space utilization rates may result in our tenants exercising early
termination rights under our leases, vacating our properties upon expiration of
our leases in order to relocate, or renewing their leases for less space than
they currently occupy. Also, our government tenants' desire to reconfigure
leased office space to manage utilization per employee may require us to spend
significant amounts for tenant improvements, and tenant relocations are often
more prevalent in those circumstances. Increasing uncertainty with respect to
government agency budgets and funding to implement relocations, consolidations
and reconfigurations has resulted in delayed decisions by some of our government
tenants and their reliance on short term lease renewals; however, activity prior
to the outbreak of the COVID-19 pandemic suggested that the U.S. government had
begun to shift its leasing strategy to include longer term leases and was
actively exploring 10 to 20 year lease terms at renewal, in some instances.
However, the COVID-19

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pandemic and its aftermath have had negative impacts on government budgets and
resources. Although there have been indications that certain of those impacts
may not have been as negative as originally expected, it is unclear what the
effect of these impacts will be on government demand for leasing office space.
Given the significant uncertainties, including as to the COVID-19 pandemic and
its economic impact and the extent to which certain market trends, such as work
from home practices, may continue or increase, we are unable to reasonably
project what the financial impact of market conditions or changing government
circumstances will be on the demand for leased space at our properties and our
financial results for future periods.

As of March 31, 2022, we derive 22.2% of our annualized rental income from our
properties located in the metropolitan Washington, D.C. market area, which
includes Washington, D.C., Northern Virginia and suburban Maryland. A downturn
in economic conditions in this area could result in reduced demand from tenants
for our properties or reduce the rents that our tenants in this area are willing
to pay when our leases expire or terminate and when renewal or new terms are
negotiated. Additionally, in recent years there has been a decrease in demand
for new leased office space by the U.S. government in the metropolitan
Washington, D.C. market area, and that could increase competition for government
tenants and adversely affect our ability to retain government tenants when our
leases expire.

Our manager, RMR, employs a tenant review process for us. RMR assesses tenants
on an individual basis based on various applicable credit criteria. In general,
depending on facts and circumstances, RMR evaluates the creditworthiness of a
tenant based on information concerning the tenant that is provided by the tenant
and, in some cases, information that is publicly available or obtained from
third party sources. 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. As of March 31, 2022, tenants contributing 52.6% 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 11.0% of annualized rental income were subsidiaries of an investment
grade rated parent (although these parent entities were not liable for the
payment of rents).

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From March 31, 2022tenants representing 1% or more of our total annualized rental income were as follows (square feet in thousands):

                                                                                                                                               % of Total
                                                                                                  % of Leased           Annualized          Annualized Rental
                   Tenant                         Credit Rating                 Sq. Ft.             Sq. Ft.           Rental Income              Income
  1    U.S. Government                           Investment Grade               4,100                   20.1  %       $   110,949                      

19.4%

  2    Alphabet Inc. (Google)                    Investment Grade                 386                    1.9  %            23,713                      

4.1%

  3    Shook, Hardy & Bacon L.L.P.                  Not Rated                     596                    2.9  %            19,187                      

3.4%

  4    IG Investments Holdings LLC                  Not Rated                     333                    1.6  %            15,991                      

2.8%

  5    Bank of America Corporation               Investment Grade                 577                    2.8  %            15,766                       2.8  %
  6    State of California                       Investment Grade                 523                    2.6  %            15,696                       2.7  %
  7    Commonwealth of Massachusetts             Investment Grade                 311                    1.5  %            12,260                       2.1  %
  8    CareFirst Inc.                               Not Rated                     207                    1.0  %            11,498                       2.0  %
  9    Northrop Grumman Corporation              Investment Grade                 337                    1.7  %            11,465                       2.0  %
 10    Tyson Foods, Inc.                         Investment Grade                 248                    1.2  %            11,042                       1.9  %

Sonesta International Hotels

 11    Corporation (1)                              Not Rated                     230                    1.1  %            10,745                      

1.9%

 12    CommScope Holding Company Inc           Non Investment Grade               228                    1.1  %             9,370                       1.6  %
 13    State of Georgia                          Investment Grade                 308                    1.5  %             7,383                       1.3  %
 14    PNC Bank                                  Investment Grade                 441                    2.2  %             6,924                       1.2  %
 15    Micro Focus International plc           Non Investment Grade               215                    1.1  %             6,905                       1.2  %
 16    Compass Group plc                         Investment Grade                 267                    1.3  %             6,703                       1.2  %
 17    ServiceNow, Inc.                          Investment Grade                 149                    0.7  %             6,637                       1.2  %
 18    Allstate Insurance Co.                    Investment Grade                 468                    2.3  %             6,479                      

1.1%

Automatic data processing,

 19    Inc.                                      Investment Grade                 289                    1.4  %             6,087                      

1.1%

 20    Church & Dwight Co., Inc.                 Investment Grade                 250                    1.2  %             6,037                       1.1  %

       Total                                                                   10,463                   51.2  %       $   320,837                      56.1  %


(1)In June 2021, we entered into a 30-year lease with Sonesta. The lease relates
to the redevelopment of a property we own in Washington, D.C to a mixed use and
Sonesta's lease relates to the planned hotel component of the property. The term
of the lease commences upon our delivery of the completed hotel, which is
estimated to occur in the first quarter of 2023. For more information about our
lease with Sonesta, see Note 10 to our Condensed Consolidated Financial
Statements included in Part I, Item I of this Quarterly Report on Form 10-Q.

Disposal activities

In the three months ended March 31, 2022we sold four properties of approximately 330,000 leasable square feet for a total selling price of
$29,470excluding closing costs.

We continue to evaluate our portfolio to strategically recycle capital and are
currently in various stages of marketing for sale more than 30 properties
containing over 3,000,000 rentable square feet. As of April 27, 2022, we have
entered into agreements to sell two properties containing approximately 470,000
rentable square feet, including one property that was classified as held for
sale as of March 31, 2022, for an aggregate sales price of $38,300, excluding
closing costs. These sales are expected to occur before the end of the second
quarter of 2022. However, these sales are subject to conditions; accordingly, we
cannot be sure that we will complete these sales or that these sales will not be
delayed or the terms will not change.

For more information on our disposal activities, see Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Fundraising activities

In April 2022we prepaid, at par plus accrued interest, a mortgage note secured by property with an outstanding principal balance of $24,863an annual interest rate of 4.22% and a maturity in July 2022 using cash on hand.

Segment information

We operate in one line of business: the ownership of real estate.

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