14 unchanged sentences
Other Information
+Added: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
+Added: Not applicable.
Directors, Executive Officers and Corporate Governance
24 unchanged sentences
Equity compensation plans approved by securityholders — 2009 Plan
−Removed: 1,094,909 (1)
Equity compensation plans not approved by securityholders None.
−Removed: 1,094,909 (1)
(1) Consists of common shares available for issuance pursuant to the terms of the 2009 Plan.
Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2009 Plan.
−Removed: Our shareholders approved an amendment to the 2009 Plan at our annual meeting of shareholders held on May 27, 2020 to increase the total number of common shares available for grant by 1,000,000.
Payments by us to RMR LLC employees are described in Notes 6 and 10 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
7 unchanged sentences
The following consolidated financial statements and financial statement schedule of Office Properties Income Trust are included on the pages indicated:
−Removed: Reports of Independent Registered Public Accounting Firm
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Reports of Independent Registered Public Accounting Firm (PCAOB ID No.
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID No.
Consolidated Balance Sheets as of December 31, 2021 and 2020
11 unchanged sentences
(Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2018.)
−Removed: 4.2 Indenture, dated as of August 18, 2014, between the Company and U.S.
−Removed: Bank National Association.
−Removed: (Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 18, 2014.)
−Removed: 4.3 Supplemental Indenture No.
−Removed: 2, dated as of May 26, 2016, between the Company and U.S.
−Removed: Bank National Association, relating to the Company’s 5.875% Senior Notes due 2046, including form thereof.
−Removed: (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 26, 2016.)
−Removed: 4.4 Authentication Order, dated as of June 22, 2016, from the Company to U.S.
−Removed: Bank National Association, relating to the Company’s 5.875% Senior Notes due 2046.
−Removed: (Incorporated by reference to the Company’s Registration Statement on Form 8-A filed on June 30, 2016.)
4.2 Indenture, dated as of July 20, 2017, between the Company and U.S.
7 unchanged sentences
(Incorporated by reference to the Company’s Registration Statement on Form 8-A filed on June 23, 2020.)
+Added: 4.5 Third Supplemental Indenture, dated as of May 18, 2021, between the Company and U.S.
+Added: Bank National Association, relating to the Company’s 2.650% Senior Notes due 2026, including form thereof.
+Added: (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)
+Added: 4.6 Fourth Supplemental Indenture, dated as of August 13, 2021, between the Company and U.S.
+Added: Bank National Association, relating to the Company’s 2.400% Senior Notes due 2027, including form thereof.
+Added: ( Incorporated by reference to the Company ’ s Quarterly Report on Form 10-Q for the quarter en ded Sep tember 30, 2021 .)
+Added: 4.7 Fifth Supplemental Indenture, dated as of September 28, 2021, between the Company and U.S.
+Added: Bank National Association, relating to the Company’s 3.450% Senior Notes due 2031, including form thereof.
+Added: (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)
4.8 Indenture, dated as of February 3, 2015, between the Company (as successor to Select Income REIT) and U.S.
2 unchanged sentences
4.9 First Supplemental Indenture, dated as of February 3, 2015, between the Company (as successor to Select Income REIT) and U.S.
−Removed: Bank National Association, including the forms of 4.15% Senior Notes due 2022 and 4.50% Senior Notes due 2025.
+Added: Bank National Association, including the form of 4.50% Senior Notes due 2025.
(Incorporated by reference to Select Income REIT’s Current Report on Form 8-K filed on February 3, 2015.)
18 unchanged sentences
(+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 31, 2018.)
+Added: 10.3 Second Amendment to Second Amended and Restated Business Management Agreement, effective as of August 1, 2021, between the Company and The RMR Group LLC.
+Added: (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)
10.4 Second Amended and Restated Property Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC.
4 unchanged sentences
(+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.)
−Removed: 10.6 Form of Share Award Agreement.
−Removed: (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.)
10.7 Form of Indemnification Agreement.
−Removed: (+) (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.)
+Added: (+) (Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)
10.8 Summary of Trustee Compensation.
−Removed: (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 28, 2020.)
+Added: (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 21 2021.)
10.9 Amended and Restated Credit Agreement, dated as of December 13, 2018, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions initially a signatory thereto.
38 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Office Properties Income Trust (the "Company") as of December 31, 2020, the related consolidated statements of comprehensive income (loss), shareholders' equity, and cash flows, for the year then ended, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheets of Office Properties Income Trust (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income (loss), shareholders' equity, and cash flows, for the years ended December 31, 2021 and 2020, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements").
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years ended December 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.
1 unchanged sentence
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
4 unchanged sentences
The Company’s investments in real estate assets are evaluated for impairment periodically or when events or changes in circumstances indicate that the carrying amount of a real estate asset may not be recoverable.
−Removed: The Company’s evaluation of the recoverability of real estate assets involves the comparison of undiscounted future cash flows expected to be generated by each real estate asset over the Company’s estimated holding period to the respective carrying amount.
−Removed: The Company’s undiscounted future cash flows analysis and the assessment of expected remaining holding period requires management to make significant estimates and assumptions related to future occupancy levels, rental rates, estimated sale proceeds, and capitalization rates.
−Removed: In the event that a real estate asset is not recoverable, the Company will adjust the real estate asset to its fair value based on third-party appraisals, broker selling estimates, sale agreements under negotiation, and/or final selling prices, when available, and recognize an impairment loss for the carrying amount in excess of fair value.
+Added: Impairment indicators may include declining tenant or resident occupancy, weak or declining profitability from the property, decreasing tenant cash flows or liquidity, the Company’s decision to dispose of an asset before the end of its estimated useful life, and legislative, market or industry changes that could permanently reduce the value of an asset.
+Added: If indicators of impairment are identified for any real estate asset, the Company evaluates the recoverability of that real estate asset by comparing undiscounted future cash flows expected to be generated by the real estate asset over the Company’s expected remaining hold period to the respective carrying amount.
+Added: The Company’s undiscounted future cash flows analysis requires management to make significant estimates and assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates.
We identified the impairment of real estate assets as a critical audit matter because of the significant estimates and assumptions management makes to evaluate the recoverability of real estate assets.
−Removed: This required a high degree of auditor judgment and an
−Removed: increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flows analysis and assessment of expected remaining holding period.
+Added: This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of the significant estimates and
+Added: assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates within management’s undiscounted future cash flows analysis which are sensitive to future market or industry considerations.
How the Critical Audit Matter Was Addressed in the Audit
−Removed: Our audit procedures related to the undiscounted cash flows analysis and the assessment of the expected remaining hold period included the following, among others:
−Removed: • We tested the effectiveness of controls over management’s evaluation of the recoverability of real estate property assets, including the key inputs utilized in estimating the undiscounted future cash flows.
−Removed: • We evaluated the undiscounted cash flow analysis including estimates of future occupancy levels, rental rates, estimated sale proceeds, and capitalization rates for each real estate asset or group of assets with possible impairment indicators by (1) evaluating the source information and assumptions used by management and (2) testing the mathematical accuracy of the undiscounted future cash flows analysis.
−Removed: • We evaluated the reasonableness of management’s undiscounted future cash flows analysis by comparing management’s projections to external market sources and evidence obtained in other areas of our audit.
−Removed: • We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the hold period and other cash flow assumptions for the properties.
+Added: Our audit procedures related to the undiscounted cash flows analysis for each real estate asset or group of assets with possible impairment indicators included the following among others:
+Added: • We tested the effectiveness of controls over management’s evaluation of the recoverability of real estate property assets, including the key assumptions utilized in estimating the undiscounted future cash flows.
+Added: • We evaluated the undiscounted cash flow analysis including estimates of expected remaining hold period, market rents, and terminal capitalization rates for each real estate asset or group of assets with possible impairment indicators by (1) evaluating the source information and assumptions used by management and (2) comparing management’s projections to external market sources and evidence obtained in other areas of our audit.
+Added: • We evaluated the reasonableness of management’s undiscounted future cash flows analysis by developing an independent expectation of future undiscounted cash flows based on third party market data and compared that independent estimate to the carrying amount of the real estate asset or group of assets with possible indicators of impairment.
+Added: We compared our analysis of the recoverability of the real estate asset or group of assets to the Company's analysis.
+Added: • We made inquiries of management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the expected remaining hold period and other cash flow assumptions for the properties.
/s/ Deloitte & Touche LLP
30 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Office Properties Income Trust (the Company) as of December 31, 2019, the related consolidated statements of comprehensive income (loss) , shareholders' equity and cash flows for each of the two years in the period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with U.S.
+Added: We have audited the accompanying consolidated statements of comprehensive income (loss) , shareholders' equity and cash flows of Office Properties Income Trust (the Company) for the year ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with U.S.
generally accepted accounting principles.
2 unchanged sentences
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
+Added: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
35 unchanged sentences
Cumulative net income 175,715 183,895
−Removed: Cumulative other comprehensive loss — ( 200 )
Cumulative common distributions ( 1,296,659 ) ( 1,190,291 )
26 unchanged sentences
Equity in net losses of investees ( 2,501 ) ( 1,193 ) ( 1,259 )
−Removed: Income (loss) from continuing operations 6,678 30,335 ( 27,606 )
−Removed: Income from discontinued operations — — 5,722
Net income (loss) ( 8,180 ) 6,678 30,335
4 unchanged sentences
Comprehensive income (loss) $ ( 8,180 ) $ 6,878 $ 30,029
−Removed: Net income (loss) $ 6,678 $ 30,335 $ ( 21,884 )
−Removed: Preferred units of limited partnership distributions — — ( 371 )
−Removed: Net income (loss) available for common shareholders $ 6,678 $ 30,335 $ ( 22,255 )
Weighted average common shares outstanding (basic and diluted) 48,195 48,124 48,062
Per common share amounts (basic and diluted):
−Removed: Income (loss) from continuing operations $ 0.14 $ 0.63 $ ( 1.13 )
−Removed: Income from discontinued operations $ — $ — $ 0.23
−Removed: Net income (loss) available for common shareholders $ 0.14 $ 0.63 $ ( 0.90 )
+Added: Net income (loss) $ ( 0.17 ) $ 0.14 $ 0.63
The accompanying notes are an integral part of these consolidated financial statements.
8 unchanged sentences
Balance at December 31, 2018 48,082,903 $ 481 $ 2,609,801 $ 146,882 $ 106 $ ( 978,302 ) $ 1,778,968
−Removed: Cumulative adjustment upon adoption of ASU No.
−Removed: 2016-01 — — — 60,281 ( 60,281 ) — —
−Removed: Adjustment upon adoption of ASU No.
−Removed: 2014-09 — — — 712 — — 712
−Removed: Balance at January 1, 2018 24,786,479 248 1,968,960 169,137 146 ( 807,736 ) 1,330,755
−Removed: Issuance of shares, net 23,281,738 233 639,550 — — — 639,783
Share grants 136,100 1 3,097 — — — 3,098
Share forfeitures and repurchases ( 17,062 ) — ( 473 ) — — — ( 473 )
−Removed: Equity in unrealized loss of investees — — — — ( 40 ) — ( 40 )
−Removed: Net loss available for common shareholders — — — ( 22,255 ) — — ( 22,255 )
−Removed: Distributions to common shareholders — — — — — ( 170,566 ) ( 170,566 )
−Removed: Balance at December 31, 2018 48,082,903 481 2,609,801 146,882 106 ( 978,302 ) 1,778,968
−Removed: Share grants 136,100 1 3,097 — — — 3,098
−Removed: Share forfeitures and repurchases ( 17,062 ) — ( 473 ) — — — ( 473 )
Amounts reclassified from cumulative other comprehensive income to net income — — — — ( 196 ) — ( 196 )
1 unchanged sentence
Unrealized loss on financial instrument — — — — ( 200 ) — ( 200 )
−Removed: Net income available for common shareholders — — — 30,335 — — 30,335
+Added: Net income — — — 30,335 — — 30,335
Distributions to common shareholders — — — — — ( 105,868 ) ( 105,868 )
4 unchanged sentences
Unrealized gain on financial instruments — — — — 115 — 115
−Removed: Net income available for common shareholders — — — 6,678 — — 6,678
+Added: Net income — — — 6,678 — — 6,678
Distributions to common shareholders — — — — — ( 106,121 ) ( 106,121 )
Balance at December 31, 2020 48,318,366 483 2,615,305 183,895 — ( 1,190,291 ) 1,609,392
+Added: Share grants 145,800 1 2,872 — — — 2,873
+Added: Share forfeitures and repurchases ( 38,501 ) — ( 1,008 ) — — — ( 1,008 )
+Added: Net loss — — — ( 8,180 ) — — ( 8,180 )
+Added: Distributions to common shareholders — — — — — ( 106,368 ) ( 106,368 )
+Added: Balance at December 31, 2021 48,425,665 $ 484 $ 2,617,169 $ 175,715 $ — $ ( 1,296,659 ) $ 1,496,709
The accompanying notes are an integral part of these consolidated financial statements.
19 unchanged sentences
Distribution of earnings from Affiliates Insurance Company — — 2,438
−Removed: Equity in earnings of Select Income REIT included in discontinued operations — — ( 20,873 )
−Removed: Net gain on issuance of shares by Select Income REIT included in discontinued operations — — ( 29 )
−Removed: Loss on sale of Select Income REIT shares included in discontinued operations — — 15,180
−Removed: Distributions of earnings from Select Income REIT — — 20,873
Change in assets and liabilities:
8 unchanged sentences
Real estate improvements ( 100,141 ) ( 81,762 ) ( 62,676 )
−Removed: Distributions in excess of earnings from Select Income REIT — — 17,251
Distributions in excess of earnings from unconsolidated joint ventures 612 612 2,370
1 unchanged sentence
Proceeds from sale of properties, net 219,980 102,211 829,794
−Removed: Proceeds from sale of Select Income REIT shares — — 435,125
Proceeds from sale of The RMR Group Inc.
17 unchanged sentences
Repurchase of common shares ( 1,003 ) ( 434 ) ( 473 )
−Removed: Redemption of preferred units of limited partnership — — ( 20,221 )
−Removed: Preferred units of limited partnership distributions — — ( 646 )
Distributions to common shareholders ( 106,368 ) ( 106,121 ) ( 105,868 )
−Removed: Net cash used in financing activities ( 254,482 ) ( 1,031,395 ) ( 864,309 )
−Removed: (Decrease) increase in cash, cash equivalents and restricted cash ( 43,841 ) 61,753 19,263
+Added: Net cash provided by (used in) financing activities 249,153 ( 254,482 ) ( 1,031,395 )
+Added: Increase (decrease) in cash, cash equivalents and restricted cash 27,660 ( 43,841 ) 61,753
Cash, cash equivalents and restricted cash at beginning of period 56,855 100,696 38,943
5 unchanged sentences
Real estate improvements accrued, not paid $ 18,492 $ 11,981 $ 11,457
−Removed: Working capital assumed $ — $ — $ 25,170
−Removed: Real estate and investment acquired by issuance of common shares $ — $ — $ ( 639,809 )
−Removed: Real estate and investment acquired by assumption of debt $ — $ — $ ( 1,719,772 )
−Removed: NON-CASH FINANCING ACTIVITIES:
−Removed: Select Income REIT unsecured revolving credit facility $ — $ — $ 108,000
−Removed: Assumption of mortgage notes payable $ — $ — $ 161,772
−Removed: Assumption of senior unsecured notes $ — $ — $ 1,450,000
−Removed: Issuance of common shares $ — $ — $ 639,809
+Added: Real estate acquisition $ ( 13,031 ) $ — $ —
+Added: Capitalized interest $ 795 $ 199 $ 26
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
10 unchanged sentences
Office Properties Income Trust, or OPI, we, us or our, is a real estate investment trust, or REIT, formed in 2009 under Maryland law.
−Removed: As of December 31, 2020, our wholly owned properties were comprised of 181 properties containing approximately 24,889,000 rentable square feet and we had a noncontrolling ownership interest in three properties totaling approximately 444,000 rentable square feet through two unconsolidated joint ventures in which we own 51 % and 50 % interests.
−Removed: Merger with Select Income REIT
−Removed: On December 31, 2018, we completed our acquisition of Select Income REIT, or SIR, a REIT that owned properties primarily net leased to single tenants, pursuant to a merger transaction, or the SIR Merger.
−Removed: As a result of the SIR Merger, we acquired SIR’s property portfolio of 99 properties with approximately 16,500,000 rentable square feet.
−Removed: The aggregate transaction value, based on the closing price of our common shares on December 31, 2018 of $ 6.87 per share (prior to the Reverse Share Split, as defined below), was $ 2,409,740 , excluding closing costs of $ 27,497 ($ 14,508 of which was paid by us and $ 12,989 of which was paid by SIR) and including the repayment or assumption of $ 1,719,772 of SIR debt.
−Removed: In connection with the SIR Merger, SIR shareholders received 1.04 , or 23,282,704 in the aggregate, of our newly issued common shares for each common share of SIR, with cash paid in lieu of fractional shares.
−Removed: As a condition of the SIR Merger, on October 9, 2018, we sold all of the 24,918,421 common shares of SIR we then owned, or the Secondary Sale, in an underwritten public offering at a price of $ 18.25 per share, raising net proceeds of $ 435,125 after deducting underwriting discounts and offering expenses.
−Removed: We used the net proceeds from the Secondary Sale to repay amounts then outstanding under our revolving credit facility.
−Removed: In addition, as a condition of the SIR Merger, on December 27, 2018, SIR paid a pro rata distribution to SIR’s shareholders of record as of the close of business on December 20, 2018 of all 45,000,000 common shares of beneficial interest of Industrial Logistics Properties Trust, or ILPT, that SIR owned, or the ILPT Distribution.
−Removed: The SIR Merger and the other transactions in connection with the SIR Merger, including the Secondary Sale and the ILPT Distribution, are collectively referred to herein as the SIR Transactions.
−Removed: Following completion of the SIR Merger and the other SIR Transactions, on December 31, 2018, we effected a reverse share split of our common shares, or the Reverse Share Split, pursuant to which every four of our common shares issued and outstanding as of the effective time of the Reverse Share Split were converted and reclassified into one of our common shares.
−Removed: All impacted amounts and share information included in the consolidated financial statements and notes hereto for the periods presented prior to January 1, 2019 have been retroactively adjusted for the Reverse Share Split as if the Reverse Share Split occurred on the first day of the first period presented.
+Added: As of December 31, 2021, our wholly owned properties were comprised of 178 properties containing approximately 23,271,000 rentable square feet and we had noncontrolling ownership interests of 51 % and 50 % in two unconsolidated joint ventures that own three properties totaling approximately 444,000 rentable square feet.
Summary of Significant Accounting Policies
6 unchanged sentences
however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: We allocate the purchase prices of our properties to land, building and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant.
+Added: We allocate the purchase prices of our properties to land, buildings and improvements based on determinations of the relative fair values of these assets assuming the properties are vacant.
We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others.
11 unchanged sentences
If a lease is terminated prior to its stated expiration, we write off the unamortized amounts relating to that lease.
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
As of December 31, 2021 and 2020, our acquired real estate leases and assumed real estate lease obligations, excluding properties classified as held for sale, were as follows:
12 unchanged sentences
As of December 31, 2021, the weighted average amortization periods for capitalized above market leases, lease origination value and capitalized below market lease values were 3.3 years, 6.3 years and 10.3 years, respectively.
−Removed: Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2020
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: are estimated to be $ 131,357 in 2021, $ 112,709 in 2022, $ 91,420 in 2023, $ 69,178 in 2024, $ 45,150 in 2025 and $ 88,541 thereafter.
+Added: Future amortization of net intangible lease assets and liabilities, to be recognized over the current terms of the associated leases as of December 31, 2021 are estimated to be $ 121,814 in 2022, $ 99,643 in 2023, $ 77,107 in 2024, $ 56,168 in 2025, $ 41,393 in 2026 and $ 92,470 thereafter.
We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of long lived assets.
10 unchanged sentences
Deferred Leasing Costs .
−Removed: Deferred leasing costs include brokerage costs, inducements and, until January 1, 2019, legal fees associated with our entering leases.
+Added: Deferred leasing costs include brokerage costs and inducements associated with our entering leases.
We amortize deferred leasing costs, which are included in depreciation and amortization expense, and inducements, which are included as a reduction to rental income, on a straight line basis over the terms of the respective leases.
+Added: Legal costs associated with the execution of our leases are expensed as incurred and included in general and administrative expenses in our consolidated statements of comprehensive income (loss).
We recorded amortization of deferred leasing costs of $ 6,691 , $ 5,985 and $ 5,216 , and reductions to rental income related to the amortization of inducements of $ 1,187 , $ 902 and $ 757 for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: Effective January 1, 2019, in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, No.
−Removed: 2016-02, Leases , legal costs associated with the execution of our leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred and included in general and administrative expenses in our consolidated statements of comprehensive income (loss).
Deferred leasing costs, excluding properties classified as held for sale, totaled $ 74,469 and $ 59,691 at December 31, 2021 and 2020, respectively, and accumulated amortization of deferred leasing costs totaled $ 20,586 and $ 17,065 at December 31, 2021 and 2020, respectively.
Future amortization of deferred leasing costs to be recognized during the current terms of our existing leases as of December 31, 2021 are estimated to be $ 8,536 in 2022, $ 7,798 in 2023, $ 6,739 in 2024, $ 5,784 in 2025, $ 5,132 in 2026 and $ 19,894 thereafter.
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
Debt Issuance Costs .
−Removed: Debt issuance costs include capitalized issuance or assumption costs related to borrowings, which are amortized to interest expense over the terms of the respective loans.
+Added: Costs related to the issuance or assumption of debt are capitalized and amortized to interest expense over the terms of the respective loans.
Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets in our consolidated balance sheets.
3 unchanged sentences
Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, senior unsecured notes and mortgage notes as of December 31, 2021 are estimated to be $ 3,514 in 2022, $ 2,217 in 2023, $ 2,155 in 2024, $ 1,669 in 2025, $ 1,335 in 2026 and $ 6,276 thereafter.
−Removed: Mortgage Notes Receivable.
−Removed: In connection with a property we sold in July 2016, we provided $ 3,600 of mortgage financing to the buyer.
−Removed: The mortgage note required interest to be paid at an annual rate of LIBOR plus 4.0 %, subject to a minimum annual interest rate of 5.0 %, and required monthly payments of interest only until it was repaid in full in March 2020.
−Removed: The mortgage note receivable was included in other assets in our consolidated balance sheet at December 31, 2019.
Equity Securities.
−Removed: We previously owned 2,801,060 common shares of class A common stock of The RMR Group Inc., or RMR Inc., including 1,586,836 common shares acquired from SIR on December 31, 2018 in connection with the SIR Merger, that we sold on July 1, 2019 for net proceeds of $ 104,674 , after deducting underwriting discounts and commissions and other offering expenses.
+Added: We previously owned 2,801,060 common shares of class A common stock of The RMR Group Inc., or RMR Inc.
Prior to the sale of our shares of RMR Inc.
2 unchanged sentences
class A common stock.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
Equity Method Investments.
−Removed: We previously accounted for our investments in Affiliates Insurance Company, or AIC, until AIC was dissolved on February 13, 2020, and SIR, until we sold the SIR common shares we owned on October 9, 2018, using the equity method of accounting.
−Removed: Significant influence was present through common representation on the boards of trustees or directors of us, AIC and SIR.
−Removed: As of December 31, 2020 and 2019, our investment in AIC had a carrying value of $ 11 and $ 298 , respectively.
−Removed: These amounts are included in other assets in our consolidated balance sheets.
−Removed: We recognized income of $ 281 and $ 516 related to our investment in AIC for the years ended December 31, 2019 and 2018, respectively.
−Removed: These amounts are included in equity in net losses of investees in our consolidated statements of comprehensive income (loss).
−Removed: Our other comprehensive income (loss) includes our proportionate share of unrealized losses on securities which were owned and held for sale by AIC of $ 90 and $( 69 ) related to our investment in AIC for the years ended December 31, 2019 and 2018, respectively.
−Removed: See Notes 1, 3, 6, 11 and 12 for more information regarding our investments in AIC and SIR.
−Removed: We also own 51 % and 50 % interests in two unconsolidated joint ventures which own three properties.
+Added: We previously accounted for our investment in Affiliates Insurance Company, or AIC, until AIC was dissolved on February 13, 2020, using the equity method of accounting.
+Added: Significant influence was present through common representation on the boards of trustees or directors of us and AIC.
+Added: See Note 6 for more information regarding our investment in AIC.
+Added: We also have noncontrolling ownership interests of 51 % and 50 % in two unconsolidated joint ventures that own three properties.
The properties owned by these joint ventures are encumbered by an aggregate of $ 82,000 of mortgage indebtedness.
−Removed: We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investment in these joint ventures under the equity method of accounting.
+Added: We do not control the activities that are most significant to these joint ventures and, as a result, we account for our investments in these joint ventures under the equity method of accounting.
See Note 3 for more information regarding our unconsolidated joint ventures.
19 unchanged sentences
therefore, we have determined to evaluate our leases as lease arrangements.
−Removed: In February 2016, the FASB issued ASU No.
−Removed: 2016-02, Leases .
−Removed: In July 2018, the FASB issued ASU No.
−Removed: 2018-10, Codification Improvements to Topic 842, Leases and ASU No.
−Removed: 2018-11, Leases (Topic 842):
−Removed: Targeted Improvements .
−Removed: In December 2018, the FASB issued ASU No.
−Removed: 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors .
−Removed: Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors).
−Removed: 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee.
−Removed: This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease.
−Removed: 2016-02 requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases.
−Removed: These standards were effective as of January 1, 2019.
−Removed: Upon adoption, we applied the package of practical expedients that allowed us to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases.
−Removed: Furthermore, we applied the optional transition method in ASU No.
−Removed: 2018-11, which allowed us to initially apply the new leases standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the adoption period, although we did not have an adjustment.
−Removed: Additionally, our leases met the criteria in ASU No.
−Removed: 2018-11 to not separate non-lease components from the related lease component;
−Removed: therefore, the accounting for these leases remained largely unchanged from the previous standard.
−Removed: The adoption of ASU No.
−Removed: 2016-02 and the related improvements did not have a material impact in our
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: consolidated financial statements.
−Removed: Upon adoption, (i) allowances for bad debts are recognized as a direct reduction of rental income, and (ii) legal costs associated with the execution of our leases, which were previously capitalized and amortized over the life of their respective leases, are expensed as incurred.
Our leases provide for base rent payments and in addition may include variable payments.
1 unchanged sentence
Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term.
+Added: Allowances for bad debts are recognized as a direct reduction of rental income.
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
Certain of our leases contain non-lease components, such as property level operating expenses and capital expenditures reimbursed by our tenants as well as other required lease payments.
−Removed: We have determined that all of our leases qualify for the practical expedient to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components.
+Added: We have made the policy election to not separate the lease and non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern of recognition of the non-lease components are the same as those of the lease components.
We apply Accounting Standards Codification 842, Leases , to the combined component.
8 unchanged sentences
Cumulative Other Comprehensive Income (Loss).
−Removed: Cumulative other comprehensive income (loss) represents our share of the cumulative comprehensive income and losses of our equity method investees and, prior to January 1, 2018, unrealized gains and losses related to our former investment in RMR Inc.
+Added: Cumulative other comprehensive income (loss) represents our share of the cumulative comprehensive income and losses of our equity method investees.
Per Common Share Amounts.
−Removed: We calculate basic earnings per common share by dividing net income (loss) available for common shareholders by the weighted average number of our common shares of beneficial ownership, $ .01 par value, or our common shares, outstanding during the period.
+Added: We calculate basic earnings per common share by dividing net income (loss) by the weighted average number of our common shares of beneficial ownership, $ .01 par value, or our common shares, outstanding during the period.
We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.
1 unchanged sentence
For the years ended December 31, 2021, 2020 and 2019, there were no dilutive common shares.
−Removed: In addition, for the years ended December 31, 2020, 2019 and 2018, 14 , 12 and four unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.
+Added: In addition, for the years ended December 31, 2021, 2020 and 2019, 34 , 14 and 12 unvested common shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.
Use of Estimates.
1 unchanged sentence
The actual results could differ from these estimates.
+Added: Significant estimates in the consolidated financial statements include purchase price allocations, useful lives of fixed assets and assessment of impairment of real estate and the related intangibles.
Segment Reporting.
2 unchanged sentences
New Accounting Pronouncements.
−Removed: In June 2016, the FASB issued ASU No.
−Removed: 2016-13, Financial Instruments - Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments, or ASU No.
−Removed: 2016-13, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses.
−Removed: The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.
−Removed: We adopted ASU No.
−Removed: 2016-13 on January 1, 2020 using the modified retrospective approach.
−Removed: The implementation of this standard did not have a material impact in our consolidated financial statements.
+Added: In October 2021, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No.
+Added: 2021-08, Business Combinations (Topic 805):
+Added: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , or ASU No.
+Added: 2021-08, which requires that an acquirer account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.
+Added: The acquiring entity shall recognize and measure the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements, rather than at fair value at the acquisition date.
+Added: 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.
+Added: On October 1, 2021, we early adopted ASU No.
+Added: The adoption of ASU No.
+Added: 2021-08 did not have an impact on our consolidated financial statements.
Real Estate Properties
−Removed: As of December 31, 2020, our wholly owned properties were comprised of 181 properties containing approximately 24,889,000 rentable square feet, with an aggregate undepreciated carrying value of $ 3,577,232 , including $ 55,089 classified as
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: held for sale, and we had noncontrolling ownership interests in three properties totaling approximately 444,000 rentable square feet through two unconsolidated joint ventures in which we own 51 % and 50 % interests.
+Added: As of December 31, 2021, our wholly owned properties were comprised of 178 properties containing approximately 23,271,000 rentable square feet, with an aggregate undepreciated carrying value of $ 3,938,876 , including $ 27,790 classified as held for sale.
+Added: We also had noncontrolling ownership interests of 51 % and 50 % in two unconsolidated joint ventures that own three properties totaling approximately 444,000 rentable square feet.
We generally lease space at our properties on a gross lease, modified gross lease or net lease basis pursuant to fixed term contracts expiring between 2022 and 2053.
2 unchanged sentences
As of December 31, 2021, we have estimated unspent leasing related obligations of $ 121,754 .
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
2021 Acquisition Activities
−Removed: During the year ended December 31, 2020, we acquired two properties containing a combined approximately 163,000 rentable square feet for an aggregate purchase price of $ 47,215 , including capitalized acquisition related costs of $ 590 .
+Added: During the year ended December 31, 2021, we acquired three properties containing approximately 926,000 rentable square feet for an aggregate purchase price of $ 576,478 , including net purchase price adjustments of $ 1,761 and acquisition related costs of $ 1,264 .
These acquisitions were accounted for as asset acquisitions.
+Added: We allocated the purchase prices of these acquisitions based on the relative estimated fair values of the acquired assets and assumed liabilities as follows:
+Added: Acquisition Date Location Number of Properties Rentable Square Feet Purchase Price Land Buildings and Improvements Acquired Real Estate Leases Assumed Real Estate Lease Obligations
+Added: June 2021 Chicago, IL (1)
+Added: 1 531,000 $ 368,331 $ 42,935 $ 258,348 $ 76,136 $ ( 9,088 )
+Added: June 2021 Atlanta, GA 1 346,000 180,602 13,040 135,459 32,103 —
+Added: August 2021 Boston, MA 1 49,000 27,545 16,103 10,217 1,225 —
+Added: 3 926,000 $ 576,478 $ 72,078 $ 404,024 $ 109,464 $ ( 9,088 )
+Added: (1) Purchase price includes an adjustment of $ 13,031 to record an estimated real estate tax liability as of the acquisition date.
+Added: 2020 Acquisition Activities
+Added: During the year ended December 31, 2020, we acquired two properties containing approximately 163,000 rentable square feet for an aggregate purchase price of $ 47,215 , including capitalized acquisition related costs of $ 590 .
+Added: These acquisitions were accounted for as asset acquisitions.
We allocated the purchase prices of these acquisitions based on the relative estimated fair values of the acquired assets as follows:
3 unchanged sentences
2 163,000 $ 47,215 $ 7,649 $ 31,772 $ 7,794
−Removed: In November 2020, we entered into an agreement to acquire a property adjacent to a property we own in Boston, MA for a purchase price of $ 26,975 , excluding acquisition related costs.
−Removed: This acquisition is expected to occur before the end of the first quarter.
−Removed: However, this acquisition is subject to conditions;
−Removed: accordingly, we cannot be sure that we will complete this acquisition or that this acquisition will not be delayed or the terms will not change.
2019 Acquisition Activities
3 unchanged sentences
(dollars in thousands, except per share amounts)
−Removed: 2018 Acquisition Activities
−Removed: As described in Note 1, on December 31, 2018, we completed the SIR Merger, pursuant to which we acquired SIR’s property portfolio of 99 properties with approximately 16,500,000 rentable square feet.
−Removed: The total consideration transferred and assumed debt for the SIR Merger was $ 2,409,740 , including the assumption of $ 1,719,772 of debt and excluding acquisition related costs.
−Removed: The following table summarizes the consideration transferred and liabilities assumed:
−Removed: Total Purchase Price (excluding acquisition related costs):
−Removed: OPI common shares issued (1)
−Removed: Closing price of OPI common shares on December 31, 2018 (1)
−Removed: Value of consideration transferred $ 639,809
−Removed: Cash consideration for fractional shares 8
−Removed: Equity issuance costs ( 239 )
−Removed: Value of consideration transferred 639,578
−Removed: Assumed working capital 50,390
−Removed: Assumed senior unsecured notes, principal balance 1,450,000
−Removed: Assumed mortgage notes payable, principal balance 161,772
−Removed: Select Income REIT unsecured revolving credit facility repaid at closing
−Removed: Non-cash portion of purchase price 1,770,162
−Removed: Total consideration transferred and liabilities assumed $ 2,409,740
−Removed: (1) OPI common shares issued and the closing price of OPI common shares on December 31, 2018 is after giving effect to the Reverse Share Split.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: As of December 31, 2019, we finalized the purchase price allocation for the SIR Merger from the preliminary amounts reported as of December 31, 2018.
−Removed: The adjustments made during the year ended December 31, 2019 to the fair value of acquired assets and liabilities assumed did not have a significant impact on our consolidated balance sheets or our consolidated statements of comprehensive income (loss).
−Removed: The following table summarizes the final purchase price allocation for SIR based on estimated fair values as of the December 31, 2018:
−Removed: Purchase Price Allocation:
−Removed: Land $ 477,977
−Removed: Buildings and improvements 956,801
−Removed: Assets of properties held for sale 6,846
−Removed: Acquired real estate leases 854,431
−Removed: Restricted cash 476
−Removed: Rents receivable 11,370
−Removed: Other assets (1)
−Removed: Total assets 2,421,303
−Removed: Unsecured revolving credit facility (2)
−Removed: Senior unsecured notes (3)
+Added: Disposition Activities
+Added: The sales completed during the years ended December 31, 2021, 2020 and 2019, as presented in the tables below, do not represent significant dispositions individually (unless otherwise noted) or in the aggregate, nor do they represent a strategic shift in our business.
+Added: As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of comprehensive income (loss).
+Added: 2021 Disposition Activities
+Added: During the year ended December 31, 2021, we sold six properties, a warehouse facility adjacent to a property we own located in Kansas, MO and two vacant land parcels adjacent to properties we own located in Sterling, VA containing approximately 2,565,000 rentable square feet for an aggregate sales price of $ 226,915 , excluding closing costs.
+Added: Date of Sale Number of Properties Location Rentable Square Feet Gross
+Added: Sales Price (1)
+Added: Gain (Loss) on Sale of Real Estate Loss on Impairment of Real Estate
+Added: January 2021 — Kansas City, MO (2) (3)
10,000 $ 845 $ ( 63 ) $ —
−Removed: Mortgage notes payable (4)
−Removed: Accounts payable and other liabilities ( 61,289 )
−Removed: Assumed real estate lease obligations ( 11,879 )
−Removed: Due to related persons ( 30,120 )
−Removed: Net assets acquired 639,578
−Removed: Assumed working capital 50,390
−Removed: Select Income REIT unsecured revolving credit facility repaid at closing (2)
−Removed: Assumed senior unsecured notes, principal balance 1,450,000
−Removed: Assumed mortgage notes payable, principal balance 161,772
−Removed: Consideration transferred and liabilities assumed (5)
−Removed: (1) Other assets include $ 84,229 for SIR’s investment in shares of class A common stock of RMR Inc.
−Removed: which was recorded at fair value as of December 31, 2018.
−Removed: (2) We repaid the outstanding balance under SIR’s revolving credit facility at the closing of the SIR Merger with borrowings under our revolving credit facility.
−Removed: (3) The aggregate principal balance of the senior unsecured notes was $ 1,450,000 as of December 31, 2018.
−Removed: (4) The aggregate principal balance of the mortgage notes payable was $ 161,772 as of December 31, 2018.
−Removed: (5) Purchase price excludes acquisition related costs.
−Removed: We were the accounting acquirer of SIR and accounted for the SIR Merger as a business combination because substantially all of the fair value of the gross assets acquired was not concentrated in a single identifiable asset or a group of similar identifiable assets and we acquired inputs and a substantive process that together significantly contributed to the ability to create outputs.
−Removed: As we have and SIR had no employees, the personnel and various services required to operate our and SIR’s businesses are and were provided pursuant to business and property management agreements with The RMR Group LLC, or RMR LLC.
−Removed: These agreements were in effect before, and, in our case, remain in effect after, the SIR Merger.
−Removed: As a result, our acquisition of SIR included a substantive process for accounting purposes.
−Removed: The assets acquired and liabilities assumed were recorded at their respective fair values and added to our consolidated balance sheet as of December 31, 2018.
−Removed: We allocated the purchase price based on the estimated fair values of the acquired assets and liabilities assumed in a manner consistent with our purchase price allocation accounting policy described in Note 2.
−Removed: We engaged an independent real estate consulting firm to assist us with determining the purchase price allocations and to provide market information and evaluations which are relevant to purchase price allocations and determinations of useful lives.
−Removed: As of the date acquired, the weighted average amortization periods for capitalized above market lease values, lease origination value and capitalized below market lease values were 5.8 years, 7.2 years and 5.7 years, respectively.
+Added: January 2021 1 Richmond, VA (2)
+Added: 311,000 130,000 54,181 —
+Added: April 2021 1 Huntsville, AL 1,371,000 39,000 — 5,383
+Added: July 2021 1 Fresno, CA 532,000 6,000 — 33,902
+Added: July 2021 1 Liverpool, NY 38,000 650 31 —
+Added: August 2021 1 Memphis, TN 205,000 15,270 287 —
+Added: September 2021 1 Stoneham, MA 98,000 6,650 ( 282 ) 5,911
+Added: October 2021 — Sterling, VA (4)
+Added: — 28,500 24,200 —
+Added: 6 2,565,000 $ 226,915 $ 78,354 $ 45,196
+Added: (1) Gross sales price is the gross contract price, excluding closing costs.
+Added: (2) Properties were classified as held for sale as of December 31, 2020.
+Added: (3) Consists of a warehouse facility adjacent to a property we own located in Kansas City, MO.
+Added: (4) Consists of two vacant land parcels adjacent to properties we own located in Sterling, VA.
+Added: As of December 31, 2021, the following four properties met the criteria to be classified as held for sale in our consolidated balance sheet:
+Added: Date of Sale Agreement Location Number of Properties Rentable Square Feet Gross
+Added: Sales Price (1)
+Added: Loss on Impairment of Real Estate
+Added: December 2021 Rockville, MD (2)
+Added: 1 129,000 $ 6,750 $ 6,236
+Added: December 2021 Chesapeake, VA (3)
+Added: 2 172,000 18,945 —
+Added: January 2022 Milwaukee, WI 1 29,000 3,850 755
+Added: 4 330,000 $ 29,545 $ 6,991
+Added: (1) Gross sales price is the gross contract price, excluding closing costs.
+Added: (2) The sale of this property was completed in January 2022.
+Added: (3) The sale of these properties was completed in February 2022.
OFFICE PROPERTIES INCOME TRUST
1 unchanged sentence
(dollars in thousands, except per share amounts)
−Removed: Disposition Activities
−Removed: The sales completed during the years ended December 31, 2020, 2019 and 2018, as presented in the tables below, do not represent significant dispositions individually (unless otherwise noted) or in the aggregate nor do they represent a strategic shift in our business.
−Removed: As a result, the results of operations of these properties are included in continuing operations through the date of sale in our consolidated statements of comprehensive income (loss).
+Added: As of February 15, 2022, we have entered into an agreement to sell one property that was classified as held for sale as of December 31, 2021 containing approximately 29,000 rentable square feet for a sales price of $ 3,850 , excluding closing costs.
+Added: This pending sale is subject to conditions, accordingly, we cannot be sure that we will complete this sale or that this sale will not be delayed or the terms will not change.
+Added: We also recorded a $ 10,658 loss on impairment of real estate to reduce the carrying value of three properties that were classified as held for sale to their estimated fair values less costs to sell as of September 30, 2021.
+Added: Subsequently, we removed these properties from held for sale status due to a change of plan for sale and recorded an impairment adjustment of $ 425 to increase the carrying value of these properties to their estimated fair value as of December 31, 2021.
+Added: In November 2021, the buyer terminated the previously disclosed agreement to sell five properties located in Brookhaven, GA for a sales price of $ 56,000 .
2020 Disposition Activities
−Removed: During the year ended December 31, 2020, we sold 10 properties containing a combined approximately 906,000 rentable square feet for an aggregate sales price of $ 110,463 , excluding closing costs and including the repayment of one mortgage note with an outstanding principal balance of $ 13,095 , an annual interest rate of 5.9 % and a maturity date in August 2021.
+Added: During the year ended December 31, 2020, we sold 10 properties containing approximately 906,000 rentable square feet for an aggregate sales price of $ 110,463 , excluding closing costs and including the repayment of one mortgage note with an outstanding principal balance of $ 13,095 , an annual interest rate of 5.9 % and a maturity date in August 2021.
Date of Sale Number of Properties Location Rentable Square Feet Gross
1 unchanged sentence
Gain (Loss) on Sale of Real Estate Loss on Impairment of Real Estate
−Removed: January 2020 (2)
−Removed: 2 Stafford, VA 65,000 $ 14,063 $ 4,771 $ —
−Removed: January 2020 (2)
−Removed: 1 Windsor, CT 97,000 7,000 314 —
−Removed: February 2020 (2)
−Removed: 1 Lincolnshire, IL 223,000 12,000 1,179 —
−Removed: March 2020 (2)(3)
−Removed: 1 Trenton, NJ 267,000 30,100 ( 179 ) —
−Removed: March 2020 (2)
−Removed: 1 Fairfax, VA 83,000 22,200 4,754 —
+Added: January 2020 2 Stafford, VA 65,000 $ 14,063 $ 4,771 $ —
+Added: January 2020 1 Windsor, CT 97,000 7,000 314 —
+Added: February 2020 1 Lincolnshire, IL 223,000 12,000 1,179 —
+Added: March 2020 1 Trenton, NJ (2)
+Added: 267,000 30,100 ( 179 ) —
+Added: March 2020 1 Fairfax, VA 83,000 22,200 4,754 —
October 2020 4 Fairfax, VA 171,000 25,100 16 2,954
10 906,000 $ 110,463 $ 10,855 $ 2,954
−Removed: (1) Gross sales price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
−Removed: (2) Held for sale as of December 31, 2019.
+Added: (1) Gross sales price is the gross contract price, excluding closing costs.
(2) We recorded a $ 9,454 loss on impairment of real estate during the year ended December 31, 2019 to adjust the carrying value of this property to its fair value less costs to sell.
−Removed: As of December 31, 2020, we had two properties with an aggregate undepreciated carrying value of $ 55,089 under agreements to sell, as presented in the following table.
−Removed: We have classified these properties as held for sale in our consolidated balance sheet at December 31, 2020.
−Removed: The sales of these properties were completed in January 2021.
−Removed: Date of Sale Agreement Number of Properties Location Rentable Square Feet Gross
−Removed: Sales Price (1)
−Removed: December 2020 — Kansas City, MO (2)
−Removed: December 2020 1 Richmond, VA 311,000 130,000
−Removed: 1 321,000 $ 130,845
−Removed: (1) Gross sales price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
−Removed: (2) Consists of a warehouse facility adjacent to a property we own in Kansas City, MO.
−Removed: In February 2021, we entered into an agreement to sell a property located in Huntsville, AL containing approximately 1,371,000 rentable square feet for a sales price of $ 39,000 , excluding closing costs.
−Removed: This sale is expected to occur before the end of the second quarter.
−Removed: However, this sale is subject to conditions;
−Removed: accordingly, we cannot be sure that we will complete this sale or that this sale will not be delayed or the terms will not change.
OFFICE PROPERTIES INCOME TRUST
2 unchanged sentences
2019 Disposition Activities
−Removed: During the year ended December 31, 2019, we sold 58 properties containing a combined approximately 6,179,000 rentable square feet for an aggregate sales price of $ 848,853 , excluding closing costs.
+Added: During the year ended December 31, 2019, we sold 58 properties containing approximately 6,179,000 rentable square feet for an aggregate sales price of $ 848,853 , excluding closing costs.
Date of Sale Number of Properties Location Rentable Square Feet Gross
24 unchanged sentences
58 6,179,000 $ 848,853 $ 105,131 $ 12,801
−Removed: (1) Gross sales price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
+Added: (1) Gross sales price is the gross contract price, excluding closing costs.
(2) Represents an individually significant disposition.
−Removed: 2018 Disposition Activities
−Removed: During the year ended December 31, 2018, we sold 19 properties containing a combined approximately 2,175,000 rentable square feet for an aggregate sales price of $ 320,255 , excluding closing costs.
−Removed: Date of Sale Number of Properties Location Rentable Square Feet Gross
−Removed: Sales Price (1)
−Removed: Gain on Sale of Real Estate Loss on Impairment of Real Estate
−Removed: March 2018 1 Minneapolis, MN 194,000 $ 20,000 $ — $ 640
−Removed: May 2018 1 New York, NY 187,000 118,500 17,249 —
−Removed: May 2018 1 Sacramento, CA 111,000 10,755 — 3,029
−Removed: November 2018 1 Golden, CO 43,000 4,000 54 —
−Removed: December 2018 15 Southern Virginia 1,640,000 167,000 3,358 —
−Removed: 19 2,175,000 $ 320,255 $ 20,661 $ 3,669
−Removed: (1) Gross sales price is the gross contract price, includes purchase price adjustments, if any, and excludes closing costs.
−Removed: In February 2018, we entered an agreement to sell an office property located in Safford, AZ with approximately 36,000 rentable square feet for $ 8,250 .
−Removed: We recorded a $ 2,453 loss on impairment of real estate to reduce the carrying value of the property to its estimated fair value less costs to sell during the three months ended March 31, 2018.
−Removed: In April 2018, the buyer
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: terminated the sale agreement and we removed this property from held for sale status.
−Removed: We recorded a $ 322 adjustment to impairment of real estate to increase the carrying value of the property to its estimated fair value during the year ended December 31, 2018.
−Removed: During the year ended December 31, 2018, we also recorded a $ 2,830 loss on impairment of real estate to reduce the carrying value of a portfolio of 34 properties, which was classified as held for sale as of December 31, 2018, to its estimated fair value less costs to sell.
Unconsolidated Joint Ventures
7 unchanged sentences
Total $ 34,838 $ 37,951 3 444,000
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
The following table provides a summary of the mortgage debt of our two unconsolidated joint ventures:
8 unchanged sentences
None of the debt is recourse to us.
−Removed: At December 31, 2020, the aggregate unamortized basis difference of our two unconsolidated joint ventures of $ 7,463 is primarily attributable to the difference between the amount for which we purchased our interest in the joint ventures, including transaction costs, and the historical carrying value of the net assets of the joint ventures.
−Removed: This difference is being amortized over the remaining useful life of the related properties and included in the reported amount of equity in net earnings (losses) of investees.
+Added: At December 31, 2021, the aggregate unamortized basis difference of our two unconsolidated joint ventures of $ 6,977 is primarily attributable to the difference between the amount we paid to purchase our interest in these joint ventures, including transaction costs, and the historical carrying value of the net assets of these joint ventures.
+Added: This difference is being amortized over the remaining useful life of the related properties and the resulting amortization expense is included in equity in net losses of investees in our consolidated statements of comprehensive income (loss).
Rental income from operating leases, including payments derived by index or market-based indices, is recognized on a straight line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable.
3 unchanged sentences
Such payments totaled $ 85,107 , $ 75,851 and $ 91,076 for the years ended December 31, 2021, 2020 and 2019, respectively, of which tenant reimbursements totaled $ 81,295 , $ 71,385 and $ 86,353 , respectively.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
The following operating lease maturity analysis presents the future contractual lease payments to be received by us through 2053 as of December 31, 2021:
6 unchanged sentences
In 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2029, 2030, 2035 and 2040, early termination rights become exercisable by other tenants who currently represent an additional approximately 1.5 %, 8.8 %, 3.0 %, 6.2 %, 2.4 %, 1.7 %, 2.5 %, 1.7 %, 1.6 %, 1.7 % and 1.1 % of our total operating lease maturities, respectively.
−Removed: In addition, as of December 31, 2020, 13 of our tenants have the right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the tenant to meet its obligation.
+Added: In addition, as of December 31, 2021, 14 of our tenants have the right to terminate their leases if the respective legislature or other funding authority does not appropriate the funding necessary for the
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
+Added: tenant to meet its obligation.
These 14 tenants represent approximately 6.2 % of our total operating lease maturities as of December 31, 2021.
−Removed: As a result of the COVID-19 pandemic, some of our tenants have requested rent assistance.
−Removed: As of February 16, 2021, we have granted temporary rent assistance totaling $ 2,546 to 19 of our tenants who represent approximately 3.3 % of our annualized rental income, as defined below in Note 7, as of December 31, 2020, pursuant to deferred payment plans.
−Removed: These tenants are obligated to pay, in most cases, the deferred rent over a 12 -month period, certain of which commenced in 2020.
−Removed: We have elected to use the FASB relief package regarding the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic.
−Removed: The FASB relief package provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as or less than the original lease.
−Removed: Because the deferred rent amounts referenced above will be repaid, the cash flows from the respective leases are substantially the same as before the rent deferrals.
−Removed: The deferred amounts did not impact our operating results for the year ended December 31, 2020.
−Removed: As of December 31, 2020, deferred payments totaling $ 772 are included in rents receivable in our consolidated balance sheet.
+Added: As a result of the COVID-19 pandemic, we granted temporary rent assistance totaling $ 2,483 to 18 tenants.
+Added: This assistance generally entailed a deferral of, in most cases, one month of rent pursuant to deferred payment plans which required the deferred rent amounts be payable over a 12 -month period.
+Added: We elected to use the FASB relief package that provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as or less than the original lease.
+Added: Because the deferred rent amounts were to be repaid, the cash flows from the respective leases are substantially the same as before the rent deferrals.
+Added: The deferred amounts did not impact our operating results for the years ended December 31, 2021 and 2020.
+Added: As of December 31, 2021, we had collected 100% of the granted rent deferrals.
Right of use asset and lease liability.
For leases where we are the lessee, we are required to record a right of use asset and lease liability for all leases with an initial term greater than 12 months.
−Removed: As of December 31, 2020, we had one lease that met these criteria where we are the lessee, which expired on January 31, 2021.
−Removed: We subleased a portion of the space, which sublease expired on January 31, 2021.
−Removed: The value of the right of use asset and related liability representing our future obligation under the lease arrangement for which we are the lessee were $ 168 and $ 174 , respectively, as of December 31, 2020 and $ 2,149 and $ 2,179 , respectively, as of December 31, 2019.
−Removed: The right of use asset and related lease liability are included in other assets , net and accounts payable and other liabilities , respectively, in our consolidated balance sheets.
+Added: As of December 31, 2020, we had one lease that met these criteria, which expired on January 31, 2021.
+Added: We subleased a portion of the space, which sublease also expired on January 31, 2021.
+Added: The value of the right of use asset and related liability representing our future obligation under the lease arrangement as of December 31, 2020 were $ 168 and $ 174 , respectively, and are included in other assets, net and accounts payable and other liabilities , respectively, in our consolidated balance sheets.
Rent expense incurred under the lease, net of sublease revenue, was $ 79 , $ 1,749 and $ 1,670 for the years ended December 31, 2021, 2020 and 2019, respectively.
1 unchanged sentence
We have no employees.
−Removed: The personnel and various services we require to operate our business are provided to us by RMR LLC.
+Added: The personnel and various services we require to operate our business are provided to us by The RMR Group LLC, or RMR LLC.
We have two agreements with RMR LLC to provide management services to us:
1 unchanged sentence
and (2) a property management agreement, which relates to our property level operations.
−Removed: Prior to the consummation of the SIR Merger, SIR had similar business and property management agreements with RMR LLC on substantially similar terms, which agreements were terminated in connection with the SIR Merger.
−Removed: See Notes 1 and 6 for more information regarding our relationship, agreements and transactions with SIR and RMR LLC.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
Management Agreements with RMR LLC .
5 unchanged sentences
The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.
−Removed: provided, however, our prior ownership of SIR common shares was not included as part of our real estate investments for purposes of calculating our base management fees due to RMR LLC since SIR paid separate business management fees to RMR LLC.
• Incentive Management Fee .
1 unchanged sentence
• An amount, subject to a cap based on the value of our common shares outstanding, equal to 12 % of the product of:
−Removed: • our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable index, or the benchmark return per share, for the relevant measurement period.
−Removed: Effective as of January 1, 2019, we amended our business management agreement with RMR LLC so that the SNL U.S.
−Removed: Office REIT Index will be used for periods beginning on and after January 1, 2019, with the SNL U.S.
−Removed: REIT Equity Index for periods ending on or prior to December 31, 2018.
−Removed: • For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.
−Removed: • The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if we issue or repurchase our common shares, or if our common shares are forfeited, during the measurement period.
−Removed: • No incentive management fee is payable by us unless our total return per share during the measurement period is positive.
OFFICE PROPERTIES INCOME TRUST
1 unchanged sentence
(dollars in thousands, except per share amounts)
+Added: • our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and
+Added: • the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable index, or the benchmark return per share, for the relevant measurement period.
+Added: Effective as of August 1, 2021, we amended our business management agreement with RMR LLC to replace the benchmark index used in the calculation of incentive management fees.
+Added: Pursuant to this amendment, for periods beginning on and after August 1, 2021, the MSCI U.S.
+Added: REIT/Office REIT Index replaced the discontinued SNL U.S.
+Added: REIT Office Index and will be used to calculate benchmark returns per share for purposes of determining any incentive management fee payable by us to RMR LLC.
+Added: For periods prior to August 1, 2021, the SNL U.S.
+Added: REIT Office Index will continue to be used.
+Added: Accordingly, the calculation of incentive management fees for the next two measurement periods will continue to use the SNL U.S.
+Added: REIT Office Index in calculating the benchmark returns for periods through July 31, 2021.
+Added: This change of index was due to S&P Global ceasing to publish the SNL U.S.
+Added: REIT Office Index.
+Added: For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.
+Added: • The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if we issue or repurchase our common shares, or if our common shares are forfeited, during the measurement period.
+Added: • No incentive management fee is payable by us unless our total return per share during the measurement period is positive.
• The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.
• If our total return per share exceeds 12 % per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable index for such measurement period and 12 % per year, or the adjusted benchmark return per share.
−Removed: In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable index.
+Added: In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable index in any year by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable index in any year, determined on a cumulative basis (i.e., between 200 basis points and 500 basis points per year multiplied by the number of years in the measurement period and below the applicable market index).
• The incentive management fee is subject to a cap.
2 unchanged sentences
Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $ 18,637 , $ 17,358 and $ 21,320 for the years ended December 31, 2021, 2020 and 2019, respectively.
−Removed: The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods.
−Removed: The net business management fees we recognized for each of the years ended December 31, 2020, 2019 and 2018 reflect a reduction of $ 603 for the amortization of the liability we recorded in connection with our investment in RMR Inc., as further described in Note 2.
−Removed: No incentive management fee was payable to RMR LLC under our business management agreement for the years ended December 31, 2020, 2019 or 2018.
+Added: The net business
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
+Added: management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income (loss) for these periods.
+Added: The net business management fees we recognized for each of the years ended December 31, 2021, 2020 and 2019 reflect a reduction of $ 603 , for the amortization of the liability we recorded in connection with our former investment in RMR Inc., as further described in Note 2.
+Added: We did not incur any incentive management fee pursuant to our business management agreement for the years ended December 31, 2021, 2020 or 2019.
+Added: In January 2019, we paid RMR LLC a business management incentive fee of $ 25,817 , which represented the incentive fee for the year ended December 31, 2018 incurred, but not paid, by Select Income REIT, or SIR, which we acquired in 2018.
• Property Management and Construction Supervision Fees .
3 unchanged sentences
For the years ended December 31, 2021, 2020 and 2019, $ 16,507 , $ 17,328 , and $ 19,320 , respectively, of the total net property management and construction supervision fees were expensed to other operating expenses in our consolidated statements of income (loss) and $ 4,596 , $ 3,446 , and $ 2,591 , respectively, were capitalized as building improvements in our consolidated balance sheets.
−Removed: In January 2019, we paid RMR LLC $ 2,185 for SIR’s 2018 business management, property management and construction supervision fees that it had accrued, but not paid, as of December 31, 2018.
−Removed: We also paid RMR LLC a business management incentive fee of $ 25,817 , which represented the incentive fee incurred, but not paid, by SIR for the year ended December 31, 2018.
−Removed: We had assumed the obligation to pay these amounts as a result of the SIR Merger.
+Added: The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.
• Expense Reimbursement .
2 unchanged sentences
Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC.
+Added: Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC.
We reimbursed RMR LLC $ 24,766 , $ 24,919 and $ 26,442 for these expenses and costs for each of the years ended December 31, 2021, 2020 and 2019, respectively.
We included these amounts in other operating expenses and general and administrative expense, as applicable, for these periods.
−Removed: We assumed the obligation to reimburse RMR LLC for similar expenses and costs that RMR LLC had incurred on behalf of SIR in the ordinary course but which SIR had not paid as of December 31, 2018.
−Removed: We reimbursed RMR LLC $ 462 in January 2019 for these SIR expenses and costs.
Our management agreements with RMR LLC have terms that end on December 31, 2041, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.
7 unchanged sentences
We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC.
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
• Transition Services .
5 unchanged sentences
Related Person Transactions
−Removed: We have relationships and historical and continuing transactions with SIR (prior to the SIR Merger), RMR LLC, RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers.
+Added: We have relationships and historical and continuing transactions with RMR LLC, RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers.
RMR LLC is a majority owned subsidiary of RMR Inc.
1 unchanged sentence
and an officer and employee of RMR LLC.
−Removed: David Blackman resigned as our President and Chief Executive Officer, effective December 31, 2020.
−Removed: Blackman will remain in his position as our Managing Trustee, until June 30, 2021 or such earlier date as his successor Managing Trustee is elected to our Board.
+Added: David Blackman resigned as our President and Chief Executive Officer, effective December 31, 2020, and as a Managing Trustee, effective June 17, 2021.
In replacement of Mr.
Blackman, Christopher J.
−Removed: Bilotto was appointed as our President and Chief Operating Officer, effective January 1, 2021.
−Removed: Bilotto previously served as our Vice President and Chief Operating Officer, and he is an officer and employee of RMR LLC.
+Added: Bilotto was appointed as our President and Chief Operating Officer, effective January 1, 2021, and Jennifer Clark was elected as a Managing Trustee, effective on June 17, 2021.
+Added: Bilotto is an officer and employee of RMR LLC, Ms.
+Added: Clark is a managing director and an executive officer of RMR Inc., an officer and employee of RMR LLC and an officer of ABP Trust.
In addition, each of our other officers is also an officer and employee of RMR LLC.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services.
−Removed: Adam Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies.
+Added: Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services.
+Added: Portnoy serves as chair of the board and as a managing director or managing trustee of these public companies.
Other officers of RMR LLC, including certain of our officers, serve as managing trustees, managing directors or officers of certain of these companies.
12 unchanged sentences
See Note 10 for more information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on vesting share awards.
+Added: In June 2021, we entered into a 30 -year lease agreement with a subsidiary of Sonesta International Hotels Corporation, or Sonesta, in connection with the redevelopment of an office property we own in Washington, D.C.
+Added: as a mixed-use property.
+Added: Sonesta’s lease is for the planned full-service hotel component of the property that will include approximately 230,000 rentable square feet, which represents approximately 54 % of the total square feet upon completion of the redevelopment.
+Added: The term of the lease commences upon our delivery of the completed hotel, which we estimate to occur in the first quarter of 2023.
+Added: Sonesta has two options to extend the term for 10 years each.
+Added: Pursuant to the lease agreement, Sonesta
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
+Added: will pay us annual base rent of approximately $ 6,436 beginning 18 months after the lease commences.
+Added: The annual base rent will increase by 10 % every five years throughout the term.
+Added: Sonesta is also obligated to pay its pro rata share of the operating costs for the property.
+Added: We estimate that the total cost to build the hotel space will be approximately $ 66,000 .
+Added: Adam Portnoy is a director and controlling shareholder of Sonesta and Ms.
+Added: Jennifer Clark is also a director of Sonesta.
On July 1, 2019, we sold all of the 2,801,060 shares of class A common stock of RMR Inc.
2 unchanged sentences
We received net proceeds of $ 104,674 from this sale, after deducting underwriting discounts and commissions and other offering expenses.
−Removed: As described further in Note 1, we completed the SIR Merger effective December 31, 2018.
−Removed: See Notes 3, 11 and 12 for more information regarding the SIR Merger and our former equity method investment in SIR.
Until its dissolution on February 13, 2020, we, ABP Trust and five other companies to which RMR LLC provides management services owned AIC in equal portions.
We and the other AIC shareholders historically participated in a combined property insurance program arranged and insured or reinsured in part by AIC until June 30, 2019.
−Removed: We paid aggregate annual premiums, including taxes and fees, of $ 1,211 and $ 757 in connection with this insurance program for the policy years ended June 30, 2019 and 2018, respectively.
−Removed: Properties we acquired as a result of the SIR Merger were already previously included in this insurance program because SIR was a participant in the program.
+Added: We paid aggregate annual premiums, including taxes and fees, of $ 1,211 in connection with this insurance program for the policy year ended June 30, 2019.
+Added: Properties we acquired as a result of our acquisition of SIR on December 31, 2018 were already previously included in this insurance program because SIR was a participant in the program.
SIR paid an annual premium, including taxes and fees, of $ 1,666 in connection with this insurance program for the policy year ended June 30, 2019.
−Removed: In connection with AIC’s dissolution, we and each other AIC shareholder received an initial liquidating distribution of $ 9,000 from AIC in December 2019 and an additional liquidating distribution of $ 287 in June 2020.
−Removed: See Note 2 for more information regarding our investment in AIC.
+Added: In connection with AIC’s dissolution, we and each other AIC shareholder received an initial liquidating distribution of $ 9,000 from AIC in December 2019, an additional liquidating distribution of $ 287 in June 2020 and a final liquidating distribution of $ 11 in December 2021.
+Added: As of December 31, 2020, our investment in AIC had a carrying value of $ 11 , which was included in other assets in our consolidated balance sheet.
+Added: We recognized income of $ 281 related to our investment in AIC for the year ended December 31, 2019.
+Added: This amount is included in equity in net losses of investees in our consolidated statements of comprehensive income (loss).
+Added: Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which were owned and held for sale by AIC of $ 90 related to our investment in AIC for the year ended December 31, 2019.
Concentration
1 unchanged sentence
We define annualized rental income as the annualized contractual base rents from our tenants pursuant to our lease agreements as of the measurement date, plus straight line rent adjustments and estimated recurring expense reimbursements to be paid to us, and excluding lease value amortization.
−Removed: As of December 31, 2020 and 2019, the U.S.
−Removed: government, 11 state governments, and two other government tenants combined were responsible for approximately 35.3 % and 35.5 % of our annualized rental income, respectively.
As of December 31, 2021, the U.S.
−Removed: government, 13 state governments and three other government tenants combined were responsible for approximately 35.4 % of our annualized rental income.
+Added: government, 11 state governments and four other government tenants combined were responsible for approximately 28.9 % of our annualized rental income.
+Added: As of December 31, 2020 and 2019, the U.S government, 11 state governments and two other government tenants combined were responsible for approximately 35.3 % and 35.5 % of our annualized rental income, respectively.
government is our largest tenant by annualized rental income and represented approximately 19.5 %, 25.2 % and 25.0 % of our annualized rental income as of December 31, 2021, 2020 and 2019, respectively.
+Added: Geographic Concentration
+Added: At December 31, 2021, our 178 wholly owned properties were located in 33 states and the District of Columbia.
+Added: Properties located in Virginia, California, the District of Columbia, Illinois and Georgia were responsible for approximately 12.4 %, 10.5 %, 9.8 %, 9.2 %, and 8.2 % of our annualized rental income as of December 31, 2021, respectively.
OFFICE PROPERTIES INCOME TRUST
1 unchanged sentence
(dollars in thousands, except per share amounts)
−Removed: Geographic Concentration
−Removed: At December 31, 2020, our 181 wholly owned properties were located in 34 states and the District of Columbia.
−Removed: Properties located in Virginia, California, the District of Columbia, Texas and Maryland were responsible for approximately 14.5 %, 12.3 %, 10.9 %, 8.3 %, and 6.6 % of our annualized rental income as of December 31, 2020, respectively.
At December 31, 2021 and 2020, our outstanding indebtedness consisted of the following:
8 unchanged sentences
Senior unsecured notes, 2.650 % interest rate, due in 2026 (2)
−Removed: 650,000 400,000
Senior unsecured notes, 2.400 % interest rate, due in 2027 (3)
−Removed: 310,000 310,000
Senior unsecured notes, 3.450 % interest rate, due in 2031 (4)
−Removed: Mortgage note payable, 5.720 % interest rate, due in 2020
−Removed: Mortgage note payable, 4.160 % interest rate, due in 2020 (1)
−Removed: Mortgage note payable, 8.150 % interest rate, due in 2021
+Added: Senior unsecured notes, 5.875 % interest rate, due in 2046 (5)
+Added: Senior unsecured notes, 6.375 % interest rate, due in 2050
+Added: 162,000 162,000
Mortgage note payable, 8.150 % interest rate, due in 2021 (6)
2 unchanged sentences
Mortgage note payable, 3.550 % interest rate, due in 2023 (8)
−Removed: 71,000 71,000
Mortgage note payable, 3.700 % interest rate, due in 2023
2 unchanged sentences
23,246 23,688
−Removed: Mortgage note payable, 4.050 % interest rate, due in 2030
2,610,301 2,242,842
1 unchanged sentence
$ 2,577,950 $ 2,202,971
−Removed: (1) We assumed these senior unsecured notes and mortgage notes in connection with the SIR Merger.
−Removed: (2) An additional $ 250,000 of these senior unsecured notes were issued in September 2020.
−Removed: (3) The carrying value of this mortgage note of $ 13,128 as of December 31, 2019 is net of unamortized issuance costs of $ 38 and is included in liabilities of properties held for sale in our consolidated balance sheet as of December 31, 2019.
−Removed: This mortgage note was secured by a property in Fairfax, VA that was sold in March 2020.
−Removed: The mortgage note was repaid at the closing of that property sale.
+Added: (1) These senior notes were redeemed in September 2021.
+Added: (2) These senior notes were issued in May 2021.
+Added: (3) These senior notes were issued in August 2021.
+Added: (4) These senior notes were issued in September 2021.
+Added: (5) These senior notes were redeemed in June 2021.
+Added: (6) This mortgage note was paid in full as of its maturity date.
+Added: (7) In February 2022, we gave notice of our intention to prepay this mortgage note at par plus accrued interest.
+Added: We expect to make this prepayment in April 2022.
+Added: (8) This mortgage note was prepaid in June 2021.
Our $ 750,000 revolving credit facility is governed by a credit agreement, or our credit agreement, with a syndicate of institutional lenders that includes a feature under which the maximum aggregate borrowing availability may be increased to up to $ 1,950,000 in certain circumstances.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
Our $ 750,000 revolving credit facility is available for general business purposes, including acquisitions.
4 unchanged sentences
Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings.
−Removed: As of December 31, 2020 and 2019, the annual interest rate payable on borrowings under our revolving credit facility was 1.2 % and 2.7 %, respectively.
+Added: As of December 31, 2021 and 2020, the annual interest rate payable on borrowings under our revolving credit facility was 1.2 %.
The weighted average annual interest rate for borrowings under our revolving credit facility was 1.2 %, 2.0 % and 3.3 %, for the years ended December 31, 2021, 2020 and 2019, respectively.
1 unchanged sentence
Our credit agreement and senior unsecured notes indentures and their supplements provide for acceleration of payment of all amounts due thereunder upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR LLC ceasing to act as our business and property manager.
−Removed: Our credit agreement and senior unsecured notes indentures and their supplements also contain covenants, including covenants that restrict our ability to incur debts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances.
−Removed: We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at December 31, 2020.
−Removed: Senior Unsecured Note Issuances
−Removed: In June and July 2020, we issued an aggregate of $ 162,000 of 6.375 % senior unsecured notes due 2050 in an underwritten public offering.
−Removed: Our aggregate net proceeds from this offering were $ 156,226 , after underwriters’ discounts and offering expenses.
−Removed: These notes require quarterly payments of interest only through maturity and may be repaid at par (plus accrued and unpaid interest) on or after June 23, 2025.
−Removed: In September 2020, we issued $ 250,000 of our 4.50 % senior unsecured notes due 2025 in an underwritten public offering.
−Removed: These notes are a further issuance of our existing $ 400,000 of senior unsecured notes due 2025 that were initially issued by SIR in February 2015, which we assumed in connection with the SIR Merger.
−Removed: The public offering price of these notes was 101.414 % of the principal amount, raising net proceeds of $ 251,214 , after underwriters’ discounts and estimated offering expenses.
−Removed: These notes require semi-annual payments of interest only through maturity.
−Removed: Senior Unsecured Note Redemption
−Removed: In January 2020, we redeemed, at par plus accrued interest, all $ 400,000 of our 3.60 % senior unsecured notes due 2020.
−Removed: As a result of the redemption of our 3.60 % senior unsecured notes due 2020, we recognized a loss on early extinguishment of debt of $ 61 during the year ended December 31, 2020, to write off unamortized debt discounts.
−Removed: Mortgage Note Repayments
−Removed: In March 2020, in connection with the sale of one property, we prepaid, at a premium plus accrued interest, a mortgage note secured by that property with an outstanding principal balance of $ 13,095 , an annual interest rate of 5.9 % and a maturity date in August 2021, which was classified in liabilities of properties held for sale in our consolidated balance sheet as of December 31, 2019.
−Removed: As a result of the prepayment of this mortgage note, we recognized a loss on early extinguishment of debt of $ 508 during the year ended December 31, 2020, from a prepayment penalty and the write off of unamortized debt issuance costs.
−Removed: Also in March 2020, we prepaid, at a premium plus accrued interest, a mortgage note secured by one property with an outstanding principal balance of $ 66,780 , an annual interest rate of 4.0 % and a maturity date in September 2030.
−Removed: As a result of the prepayment of this mortgage note, we recognized a loss on early extinguishment of debt of $ 2,713 during the year ended December 31, 2020, from a prepayment penalty and the write off of unamortized debt discounts.
−Removed: In April 2020, we prepaid, at par plus accrued interest, a mortgage note secured by one property with an outstanding principal balance of $ 32,677 , an annual interest rate of 5.7 % and a maturity date in July 2020.
−Removed: As a result of the prepayment of
OFFICE PROPERTIES INCOME TRUST
1 unchanged sentence
(dollars in thousands, except per share amounts)
−Removed: this mortgage note, we recognized a gain on early extinguishment of debt of $ 163 during the year ended December 31, 2020, from the write off of unamortized debt premiums.
−Removed: In August 2020, we repaid at maturity, at par plus accrued interest, a mortgage note secured by one property with an outstanding principal balance of $ 39,635 and an annual interest rate of 2.2 %.
−Removed: At December 31, 2020, seven of our properties with an aggregate net book value of $ 304,227 were encumbered by mortgage notes with an aggregate principal amount of $ 170,842 .
+Added: credit agreement and senior unsecured notes indentures and their supplements also contain covenants, including covenants that restrict our ability to incur debts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to make distributions under certain circumstances.
+Added: We believe we were in compliance with the terms and conditions of the respective covenants under our credit agreement and senior unsecured notes indentures and their supplements at December 31, 2021.
+Added: Senior Unsecured Note Issuances
+Added: In May 2021, we issued $ 300,000 of 2.650 % senior unsecured notes due 2026 in an underwritten public offering, raising net proceeds of $ 296,826 , after deducting underwriters’ discounts and offering expenses.
+Added: These notes require semi-annual payments of interest only through maturity on June 15, 2026 and may be repaid at par plus accrued and unpaid interest on or after May 15, 2026.
+Added: In August 2021, we issued $ 350,000 of 2.400 % senior unsecured notes due 2027 in an underwritten public offering, raising net proceeds of $ 346,607 , after deducting underwriters’ discounts and offering expenses.
+Added: These notes require semi-annual payments of interest only through maturity on February 1, 2027 and may be repaid at par plus accrued and unpaid interest on or after January 1, 2027.
+Added: In September 2021, we issued $ 400,000 of 3.450 % senior unsecured notes due 2031 in an underwritten public offering, raising net proceeds of $ 395,632 , after deducting underwriters’ discounts and offering expenses.
+Added: These notes require semi-annual payments of interest only through maturity on October 15, 2031 and may be repaid at par plus accrued and unpaid interest on or after July 15, 2031.
+Added: Senior Unsecured Note Redemptions
+Added: In June 2021, we redeemed, at par plus accrued interest, all $ 310,000 of our 5.875 % senior unsecured notes due 2046.
+Added: As a result of this redemption, we recognized a loss on early extinguishment of debt of $ 8,581 during the year ended December 31, 2021, from the write off of unamortized debt issuance costs.
+Added: In September 2021, we redeemed, at a premium plus accrued interest, all $ 300,000 of our 4.15 % senior unsecured notes due 2022.
+Added: As a result of this redemption, we recognized a loss on early extinguishment of debt of $ 2,274 during the year ended December 31, 2021, from a prepayment penalty and the write off of unamortized discounts.
+Added: Mortgage Note Repayment
+Added: In June 2021, we prepaid, at a premium plus accrued interest, a mortgage note secured by three properties with an outstanding principal balance of $ 71,000 , an annual interest rate of 3.55 % and a maturity date in May 2023.
+Added: As a result of the prepayment of this mortgage note, we recognized a loss on early extinguishment of debt of $ 3,213 during the year ended December 31, 2021, from a prepayment penalty and the write off of unamortized discounts.
+Added: At December 31, 2021, three of our properties with an aggregate net book value of $ 188,130 were encumbered by mortgage notes with an aggregate principal amount of $ 98,301 .
Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.
None of our unsecured debt obligations require sinking fund payments prior to their maturity dates.
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
The required principal payments due during the next five years and thereafter under all our outstanding consolidated debt as of December 31, 2021 are as follows:
2 unchanged sentences
Total $ 2,610,301 (2)
+Added: (1) In February 2022, we gave notice of our intention to prepay, at par plus accrued interest, a mortgage note secured by one property with an outstanding principal balance of $ 25,055 at December 31, 2021, an annual interest rate of 4.22 % and a maturity date in July 2022.
(2) Total consolidated debt outstanding as of December 31, 2021, net of unamortized premiums, discounts and issuance costs totaling $ 32,351 , was $ 2,577,950 .
3 unchanged sentences
Fair Value of Assets and Liabilities
−Removed: Our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, accounts payable, a revolving credit facility, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits.
+Added: The following table presents certain of our assets measured at fair value at December 31, 2021, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
+Added: Fair Value at Reporting Date Using
+Added: Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
+Added: Non-recurring Fair Value Measurements Assets
+Added: Assets of properties held for sale (1)
+Added: $ 10,600 $ — $ 10,600 $ —
+Added: (1) We recorded impairment charges of $ 6,991 to reduce the carrying value of two properties that are classified as held for sale in our consolidated balance sheet to their estimated fair value, less estimated costs to sell of $ 555 , based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP).
+Added: See Note 3 for more information.
+Added: In addition to the assets described in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, accounts payable, a revolving credit facility, senior unsecured notes, mortgage notes payable, amounts due to related persons, other accrued expenses and security deposits.
At December 31, 2021 and 2020, the fair values of our financial instruments approximated their carrying values in our consolidated financial statements, due to their short term nature or floating interest rates, except as follows:
16 unchanged sentences
395,744 388,458 — —
−Removed: Mortgage notes payable (5)
+Added: Senior unsecured notes, 5.875 % interest rate, due in 2046 (6)
— — 301,264 322,028
+Added: Senior unsecured notes, 6.375 % interest rate, due in 2050
+Added: 156,519 177,098 156,326 171,590
+Added: Mortgage notes payable 98,178 100,294 169,729 174,952
Total $ 2,577,950 $ 2,661,462 $ 2,202,971 $ 2,335,352
(1) Includes unamortized debt premiums, discounts and issuance costs totaling $ 32,351 and $ 39,871 as of December 31, 2021 and 2020, respectively.
−Removed: (2) These senior unsecured notes were redeemed in January 2020.
−Removed: (3) An additional $ 250,000 of these senior unsecured notes were issued in September 2020.
−Removed: (4) $ 150,000 of these senior unsecured notes were issued in June 2020.
−Removed: In July 2020, we issued an additional $ 12,000 of these senior unsecured notes in connection with the underwriters’ partial exercise of their option to purchase additional notes.
−Removed: (5) Balance as of December 31, 2019 includes one mortgage note with a carrying value of $ 13,128 net of unamortized issuance costs totaling $ 38 which is classified in liabilities of properties held for sale in our consolidated balance sheet.
−Removed: This mortgage note was secured by a property in Fairfax, VA that was sold in March 2020.
−Removed: The mortgage note was repaid at closing.
+Added: (2) These senior notes were redeemed in September 2021.
+Added: (3) These senior notes were issued in May 2021.
+Added: (4) These senior notes were issued in August 2021.
+Added: (5) These senior notes were issued in September 2021.
+Added: (6) These senior notes were redeemed in June 2021.
We estimated the fair values of our senior unsecured notes (except for our senior unsecured notes due 2046 and 2050) using an average of the bid and ask price of the notes (Level 2 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date.
2 unchanged sentences
Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.
+Added: OFFICE PROPERTIES INCOME TRUST
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (dollars in thousands, except per share amounts)
Shareholders’ Equity
1 unchanged sentence
During the years ended December 31, 2021, 2020 and 2019, we awarded to our officers and other employees of RMR LLC annual share awards of 117,800 , 108,600 and 103,100 of our common shares, respectively, valued at $ 2,994 , $ 2,502 and $ 3,080 , in aggregate, respectively.
−Removed: We also awarded each of our eight Trustees 3,500 and 3,000 of our common shares in 2020 and 2019, respectively, with aggregate values of $ 745 ($ 93 per Trustee) and $ 575 ($ 72 per Trustee), respectively, and each of our then six Trustees 750 of our common shares in 2018 with an aggregate value of $ 254 ($ 42 per Trustee), as part of their annual compensation.
−Removed: In addition, we awarded 3,000 of our common shares, with a value of $ 270 ($ 90 per Trustee) in connection with the election of three of our Trustees in 2019 and 750 of our common shares, with a value of $ 41 in connection with the election of one of our Trustees in 2018.
+Added: We also awarded each of our then eight Trustees 3,500 of our common shares in each of 2021 and 2020, and 3,000 of our common shares in 2019 as part of their annual compensation.
+Added: These awards had aggregate values of $ 837 ($ 105 per Trustee), $ 745 ($ 93 per Trustee) and $ 575 ($ 72 per Trustee) in 2021, 2020 and 2019, respectively.
+Added: In addition, we awarded 3,000 of our common shares, with a value of $ 270 ($ 90 per Trustee) in connection with the election of three of our Trustees in 2019.
The values of the share awards were based upon the closing price of our common shares trading on Nasdaq on the date of grant.
3 unchanged sentences
We include the value of awarded shares in general and administrative expenses ratably over the vesting period.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
A summary of shares awarded, forfeited, vested and unvested under the terms of the 2009 Plan for the years ended December 31, 2021, 2020 and 2019, is as follows:
5 unchanged sentences
Vested ( 120,397 ) $ 30.24 ( 85,173 ) $ 34.02 ( 83,267 ) $ 27.78
−Removed: Unvested acquired in the SIR Merger (1)
−Removed: — $ — — $ — 28,223 $ 27.48
Unvested at end of year 182,224 $ 26.23 157,521 $ 29.26 106,680 $ 40.16
−Removed: (1) Represents unvested shares awarded under SIR’s equity compensation plan that were converted into shares under the 2009 Plan, and which have similar vesting requirements as shares granted under the 2009 Plan.
The 182,224 unvested shares as of December 31, 2021 are scheduled to vest as follows:
5 unchanged sentences
Share Purchases
−Removed: During the years ended December 31, 2020, 2019 and 2018, we purchased 19,589 , 15,588 and 4,984 of our common shares, respectively, at weighted average prices of $ 22.15 , $ 29.76 and $ 46.54 per common share, respectively, from our Trustees and current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.
+Added: During the years ended December 31, 2021, 2020 and 2019, we purchased 37,801 , 19,589 and 15,588 of our common shares, respectively, valued at weighted average share prices of $ 26.55 , $ 22.15 and $ 29.76 per common share, respectively, from certain of our current and former Trustees and officers and certain current and former officers and employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.
Distributions
5 unchanged sentences
2019 $ 2.20 $ 105,868 — % 100.00 % — %
−Removed: On January 14, 2021, we declared a dividend payable to common shareholders of record on January 25, 2021 in the amount of $ 0.55 per share, or $ 26,575 .
−Removed: We paid this distribution on February 18, 2021.
−Removed: Preferred Units of Limited Partnership
−Removed: On May 1, 2018, one of our subsidiaries redeemed all 1,813,504 of its outstanding 5.5 % Series A Cumulative Preferred Units for $ 11.15 per unit plus accrued and unpaid distributions (an aggregate of $ 20,310 ).
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: Equity Investment in Select Income REIT
−Removed: Until October 9, 2018, we owned 24,918,421 , or approximately 27.8 %, of the then outstanding SIR common shares.
−Removed: As described in Note 1, we completed the Secondary Sale on that date.
−Removed: As a result of the Secondary Sale, we recorded a loss of $ 18,665 during the year ended December 31, 2018.
−Removed: We accounted for our investment in SIR under the equity method and had previously reported our investment in SIR as a reportable segment.
−Removed: As a result of the Secondary Sale and the elimination of a reportable segment, our former equity method investment in SIR is classified as discontinued operations in our consolidated statements of comprehensive income (loss).
−Removed: See Note 12 for more information regarding discontinued operations.
−Removed: Under the equity method, we recorded our proportionate share of SIR’s net income as equity in earnings of SIR in our consolidated statements of comprehensive income (loss).
−Removed: During the period from January 1, 2018 to October 9, 2018, we recorded $ 24,358 of equity in earnings of SIR.
−Removed: Our other comprehensive income (loss) includes our proportionate share of SIR’s unrealized gains of $ 28 for the period from January 1, 2018 to October 9, 2018.
−Removed: The adjusted GAAP cost basis of our investment in SIR was less than our proportionate share of SIR’s total shareholders’ equity book value on the dates we acquired the shares.
−Removed: Prior to the Secondary Sale, we were accreting a basis difference to earnings over the estimated remaining useful lives of certain real estate assets and intangible assets and liabilities owned by SIR.
−Removed: This accretion increased our equity in the earnings of SIR by $ 3,233 for the period from January 1, 2018 to October 9, 2018.
−Removed: During the period from January 1, 2018 to October 9, 2018, we received cash distributions from SIR totaling $ 38,124 .
−Removed: During the period from January 1, 2018 to October 9, 2018, SIR issued 63,157 common shares.
−Removed: We recognized a gain on issuance of shares by SIR of $ 29 during the period from January 1, 2018 to October 9, 2018, as a result of the per share issuance price of these SIR common shares being above the then average per share carrying value of our SIR common shares.
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: The following table presents summarized income statement data of SIR:
−Removed: Nine Months Ended September 30, 2018
−Removed: Rental income $ 298,003
−Removed: Tenant reimbursements and other income 60,514
−Removed: Total revenues 358,517
−Removed: Real estate taxes 36,748
−Removed: Other operating expenses 43,714
−Removed: Depreciation and amortization 105,326
−Removed: Acquisition and transaction related costs 3,796
−Removed: General and administrative 47,353
−Removed: Write-off of straight line rent receivable, net 10,626
−Removed: Loss on impairment of real estate assets 9,706
−Removed: Total expenses 257,269
−Removed: Gain on sale of real estate 4,075
−Removed: Dividend income 1,190
−Removed: Unrealized gain on equity securities 53,159
−Removed: Interest income 753
−Removed: Interest expense ( 69,446 )
−Removed: Loss on early extinguishment of debt ( 1,192 )
−Removed: Income before income tax expense and equity in earnings of an investee 89,787
−Removed: Income tax expense ( 446 )
−Removed: Equity in earnings of an investee 882
−Removed: Net income 90,223
−Removed: Net income allocated to noncontrolling interest ( 15,841 )
−Removed: Net income attributed to SIR $ 74,382
−Removed: Weighted average common shares outstanding (basic) 89,395
−Removed: Weighted average common shares outstanding (diluted) 89,411
−Removed: Net income attributed to SIR per common share (basic and diluted) $ 0.83
−Removed: OFFICE PROPERTIES INCOME TRUST
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: (dollars in thousands, except per share amounts)
−Removed: Discontinued Operations
−Removed: As described in Note 1, on October 9, 2018, we sold all 24,918,421 SIR common shares that we then owned in the Secondary Sale.
−Removed: We recorded a loss of $ 18,665 during the year ended December 31, 2018 related to this sale.
−Removed: The sale of our SIR common shares qualifies as discontinued operations;
−Removed: accordingly, our former equity method investment in SIR is classified as discontinued operations in our consolidated statements of comprehensive income (loss).
−Removed: The following table presents the components of income from discontinued operations for the year ended December 31, 2018:
−Removed: Year Ended December 31, 2018
−Removed: Equity in earnings of Select Income REIT $ 24,358
−Removed: Net gain on issuance of shares by Select Income REIT 29
−Removed: Loss on sale of Select Income REIT shares ( 18,665 )
−Removed: Income from discontinued operations $ 5,722
+Added: On January 13, 2022, we declared a distribution payable to common shareholders of record on January 24, 2022 in the amount of $ 0.55 per share, or approximately $ 26,600 .
+Added: We expect to pay this distribution on or about February 17, 2022.
OFFICE PROPERTIES INCOME TRUST
12 unchanged sentences
445 Jan Davis Drive Huntsville, AL 1 — 1,501 1,492 — — 1,501 1,492 2,993 ( 120 ) 12/31/2018 2007
−Removed: 4905 Moores Mill Road Huntsville, AL 1 — 4,592 36,324 2,486 — 4,592 38,810 43,402 ( 2,268 ) 12/31/2018 1979
131 Clayton Street Montgomery, AL 1 — 920 9,084 241 — 920 9,325 10,245 ( 2,438 ) 6/22/2011 2007
7 unchanged sentences
Bayside Technology Park Fremont, CA 1 — 10,784 648 87 — 10,784 735 11,519 ( 75 ) 12/31/2018 1990
−Removed: 5045 East Butler Street Fresno, CA 1 — 7,276 61,118 175 — 7,276 61,293 68,569 ( 28,101 ) 8/29/2002 1971
Mather Boulevard Rancho Cordova, CA 1 — 562 16,923 992 — 562 17,915 18,477 ( 3,658 ) 10/30/2013 2012
14 unchanged sentences
7958 South Chester Street Centennial, CO 1 — 6,682 7,153 812 — 6,682 7,965 14,647 ( 651 ) 12/31/2018 2000
+Added: 350 Spectrum Loop Colorado Springs, CO 1 — 3,650 7,732 503 — 3,650 8,235 11,885 ( 665 ) 12/31/2018 2000
+Added: 333 Inverness Drive South Englewood, CO 1 — 5,711 4,543 63 — 5,711 4,606 10,317 ( 408 ) 12/31/2018 1998
OFFICE PROPERTIES INCOME TRUST
10 unchanged sentences
Acquired Original
−Removed: 350 Spectrum Loop Colorado Springs, CO 1 — 3,650 7,732 86 — 3,650 7,818 11,468 ( 442 ) 12/31/2018 2000
−Removed: 333 Inverness Drive South Englewood, CO 1 — 5,711 4,543 — — 5,711 4,543 10,254 ( 272 ) 12/31/2018 1998
12795 West Alameda Parkway Lakewood, CO 1 — 2,640 23,777 1,441 — 2,640 25,218 27,858 ( 7,510 ) 1/15/2010 1988
11 unchanged sentences
180 Ted Turner Drive SW Atlanta, GA 1 — 5,717 20,017 632 — 5,717 20,649 26,366 ( 4,824 ) 7/25/2012 2007
+Added: 1224 Hammond Drive Atlanta, GA 1 — 13,040 135,459 6,549 — 13,040 142,008 155,048 ( 2,171 ) 6/25/2021 2020
Corporate Square Atlanta, GA 5 — 3,996 29,762 28,004 — 3,996 57,766 61,762 ( 18,642 ) 7/16/2004 1967
9 unchanged sentences
400 South Jefferson Street Chicago, IL 1 49,711 19,379 20,115 779 — 19,379 20,894 40,273 ( 1,744 ) 12/31/2018 1947
−Removed: 1415 West Diehl Road Naperville, IL 1 — 12,333 20,586 5,787 — 12,333 26,373 38,706 ( 1,339 ) 12/31/2018 2001
+Added: Fulton Chicago, IL 1 — 42,935 258,348 50 — 42,935 258,398 301,333 ( 4,473 ) 6/24/2021 2015
+Added: HUB 1415 Naperville, IL 1 — 12,333 20,586 12,056 — 12,333 32,642 44,975 ( 2,681 ) 12/31/2018 2001
440 North Fairway Drive Vernon Hills, IL 1 — 4,465 441 — — 4,465 441 4,906 ( 38 ) 12/31/2018 1992
16 unchanged sentences
251 Causeway Street Boston, MA 3 — 26,851 36,756 3,665 — 26,851 40,421 67,272 ( 6,205 ) 8/17/2010;
−Removed: 300 and 330 Billerica Road Chelmsford, MA 2 — 4,700 — 6,959 — 4,700 6,959 11,659 ( 20 ) 12/31/2018 1984
+Added: 8/3/2021 1987
+Added: The Connect Chelmsford, MA 2 — 4,700 — 8,256 — 4,700 8,256 12,956 ( 496 ) 12/31/2018 1984
75 Pleasant Street Malden, MA 1 — 1,050 31,086 877 — 1,050 31,963 33,013 ( 9,349 ) 5/24/2010 2008
25 Newport Avenue Quincy, MA 1 — 2,700 9,199 1,593 — 2,700 10,792 13,492 ( 2,823 ) 2/16/2011 1985
−Removed: One Montvale Avenue Stoneham, MA 1 — 1,670 11,035 3,415 — 1,670 14,450 16,120 ( 3,404 ) 6/16/2010 1945
314 Littleton Road Westford, MA 1 — 5,691 8,487 47 — 5,691 8,534 14,225 ( 717 ) 12/31/2018 2007
5 unchanged sentences
3300 75th Avenue Landover, MD 1 — 4,110 36,371 3,140 — 4,110 39,511 43,621 ( 11,474 ) 2/26/2010 1985
−Removed: 2115 East Jefferson Street Rockville, MD 1 — 3,349 11,152 592 — 3,349 11,744 15,093 ( 2,112 ) 8/27/2013 1981
Redland 520/530 Rockville, MD 3 — 12,714 61,377 4,267 — 12,714 65,644 78,358 ( 7,105 ) 10/2/2017 2008
10 unchanged sentences
18010 and 18020 Burt Street Omaha, NE 2 — 6,977 12,500 — — 6,977 12,500 19,477 ( 1,039 ) 12/31/2018 2012
+Added: 500 Charles Ewing Boulevard Ewing, NJ 1 — 4,808 26,002 — — 4,808 26,002 30,810 ( 2,162 ) 12/31/2018 2012
+Added: 299 Jefferson Road Parsippany, NJ 1 — 4,543 2,914 865 — 4,543 3,779 8,322 ( 386 ) 12/31/2018 2011
OFFICE PROPERTIES INCOME TRUST
10 unchanged sentences
Acquired Original
−Removed: 500 Charles Ewing Boulevard Ewing, NJ 1 — 4,808 26,002 — — 4,808 26,002 30,810 ( 1,441 ) 12/31/2018 2012
−Removed: 299 Jefferson Road Parsippany, NJ 1 — 4,543 2,914 823 — 4,543 3,737 8,280 ( 221 ) 12/31/2018 2011
One Jefferson Road Parsippany, NJ 1 — 4,415 5,249 63 — 4,415 5,312 9,727 ( 439 ) 12/31/2018 2009
1 unchanged sentence
5000 Corporate Court Holtsville, NY 1 — 6,530 17,711 4,330 — 6,530 22,041 28,571 ( 5,956 ) 8/31/2011 2000
−Removed: 8687 Carling Road Liverpool, NY 1 — 566 — 8 — 566 8 574 ( 1 ) 12/31/2018 1997
1212 Pittsford - Victor Road Pittsford, NY 1 — 608 78 538 — 608 616 1,224 ( 67 ) 12/31/2018 1965
4 unchanged sentences
9680 Old Bailes Road Fort Mill, SC 1 — 834 2,944 53 — 834 2,997 3,831 ( 247 ) 12/31/2018 2007
−Removed: One Memphis Place Memphis, TN 1 — 1,630 5,645 7,407 — 1,630 13,052 14,682 ( 2,687 ) 9/17/2010 1985
16001 North Dallas Parkway Addison, TX 2 — 10,282 63,071 945 — 10,282 64,016 74,298 ( 5,636 ) 12/31/2018 1987
14 unchanged sentences
1434 Crossways Chesapeake, VA 2 — 3,617 19,527 2,673 — 3,617 22,200 25,817 ( 2,680 ) 10/2/2017 1998
+Added: Enterchange at Meadowville Chester, VA 1 — 1,478 9,594 424 — 1,478 10,018 11,496 ( 2,077 ) 8/28/2013 1999
+Added: Three Flint Hill Fairfax, VA 1 — 5,991 25,536 3,118 — 5,991 28,654 34,645 ( 4,356 ) 10/2/2017 1984
+Added: 7987 Ashton Avenue Manassas, VA 1 — 1,562 8,253 1,059 — 1,562 9,312 10,874 ( 1,311 ) 1/3/2017 1989
+Added: Two Commercial Place Norfolk, VA 1 — 4,494 21,508 575 — 4,494 22,083 26,577 ( 1,744 ) 12/31/2018 1974
OFFICE PROPERTIES INCOME TRUST
10 unchanged sentences
Acquired Original
−Removed: Greenbrier Towers Chesapeake, VA 2 — 3,437 11,241 3,011 — 3,437 14,252 17,689 ( 1,781 ) 10/2/2017 1985
−Removed: Enterchange at Meadowville Chester, VA 1 — 1,478 9,594 424 — 1,478 10,018 11,496 ( 1,808 ) 8/28/2013 1999
−Removed: Three Flint Hill Fairfax, VA 1 — 5,991 25,536 3,021 — 5,991 28,557 34,548 ( 3,164 ) 10/2/2017 1984
−Removed: 7987 Ashton Avenue Manassas, VA 1 — 1,562 8,253 912 — 1,562 9,165 10,727 ( 1,006 ) 1/3/2017 1989
−Removed: Two Commercial Place Norfolk, VA 1 — 4,494 21,508 480 — 4,494 21,988 26,482 ( 1,150 ) 12/31/2018 1974
1759 & 1760 Business Center Drive Reston, VA 2 — 9,066 78,658 7,007 — 9,066 85,665 94,731 ( 15,947 ) 5/28/2014 1987
12 unchanged sentences
351, 401, 501 Elliott Ave West Seattle, WA 3 — 26,640 52,740 5,782 — 26,640 58,522 85,162 ( 4,705 ) 12/31/2018 2000
−Removed: 11050 West Liberty Drive Milwaukee, WI 1 — 945 4,539 103 — 945 4,642 5,587 ( 1,116 ) 6/9/2011 2006
5353 Yellowstone Road Cheyenne, WY 1 — 1,915 8,217 1,882 — 1,950 10,064 12,014 ( 5,551 ) 3/31/1997 1995
1 unchanged sentence
Properties Held for Sale
−Removed: 4300 NE 34th Street (4)
−Removed: Kansas City, MO — — 310 544 134 — 310 678 988 ( 198 ) 3/31/1997 1995
−Removed: 501 South 5th Street (5)
−Removed: Richmond, VA 1 — 14,767 39,101 233 — 14,767 39,334 54,101 ( 2,279 ) 12/31/2018 2009
+Added: 2115 East Jefferson Street (4)
+Added: Rockville, MD 1 — 3,349 11,152 592 ( 8,646 ) 1,678 4,769 6,447 — 8/27/2013 1981
+Added: Greenbrier Towers (5)
+Added: Chesapeake, VA 2 — 3,437 11,241 3,067 — 3,437 14,308 17,745 ( 2,354 ) 10/2/2017 1985
+Added: 11050 West Liberty Drive Milwaukee, WI 1 — 945 4,539 103 ( 1,989 ) 781 2,817 3,598 — 6/9/2011 2006
4 — 7,731 26,932 3,762 ( 10,635 ) 5,896 21,894 27,790 ( 2,354 )
4 unchanged sentences
(3) Depreciation on building and improvements is provided for periods ranging up to 40 years and on equipment up to 12 years.
−Removed: (4) Consists of a warehouse facility adjacent to a property we own in Kansas City, MO that was sold in January 2021.
(4) This property was sold in January 2022.
+Added: (5) These properties were sold in February 2022.
OFFICE PROPERTIES INCOME TRUST
40 unchanged sentences
Brown Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) February 16, 2022
−Removed: Blackman Managing Trustee February 19, 2021
+Added: /s/ Jennifer B.
+Added: Clark Managing Trustee February 16, 2022
Portnoy Managing Trustee February 16, 2022
10 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.