What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 140 added, 97 removed, 283 unchanged (46% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share data)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Real estate properties:

35 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Rental income $ 141,316 $ 137,099 $ 288,670 $ 281,623

4 unchanged sentences

Loss on impairment of real estate 4,773 48,197 21,820 55,857

Acquisition and transaction related costs 224 — 224 —

General and administrative 7,083 12,970 12,789 24,242

Total expenses 118,516 162,658 252,611 293,702

Gain on sale of real estate 2,149 54,004

Gain (loss) on sale of real estate ( 11,637 ) 114 ( 9,488 ) 54,118

Interest and other income 16 2 17 7

1 unchanged sentence

( 26,515 ) ( 29,001 ) ( 53,954 ) ( 57,799 )

Income (loss) before income tax expense and equity in net losses of investees ( 12,030 ) 38,691

Income tax expense ( 531 ) ( 435 )

Loss on early extinguishment of debt ( 77 ) ( 11,794 ) ( 77 ) ( 11,794 )

Loss before income tax (expense) benefit and equity in net losses of investees ( 15,413 ) ( 66,238 ) ( 27,443 ) ( 27,547 )

Income tax (expense) benefit 190 121 ( 341 ) ( 314 )

Equity in net losses of investees ( 833 ) ( 580 ) ( 1,679 ) ( 976 )

Net income (loss) $ ( 13,407 ) $ 37,860

Weighted average common shares outstanding (basic) 48,243 48,161

Weighted average common shares outstanding (diluted) 48,243 48,196

Net loss $ ( 16,056 ) $ ( 66,697 ) $ ( 29,463 ) $ ( 28,837 )

Weighted average common shares outstanding (basic and diluted) 48,249 48,165 48,246 48,163

Per common share amounts (basic and diluted):

Net income (loss) $ ( 0.28 ) $ 0.78

Net loss $ ( 0.33 ) $ ( 1.38 ) $ ( 0.61 ) $ ( 0.60 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

12 unchanged sentences

Balance at March 31, 2022 48,425,265 484 2,617,583 162,308 ( 1,323,293 ) 1,457,082

Share grants 31,500 1 1,078 — — 1,079

Share forfeitures and repurchases ( 1,690 ) — ( 21 ) — — ( 21 )

Net loss — — — ( 16,056 ) — ( 16,056 )

Distributions to common shareholders — — — — ( 26,634 ) ( 26,634 )

Balance at June 30, 2022 48,455,075 $ 485 $ 2,618,640 $ 146,252 $ ( 1,349,927 ) $ 1,415,450

Balance at December 31, 2020 48,318,366 $ 483 $ 2,615,305 $ 183,895 $ ( 1,190,291 ) $ 1,609,392

3 unchanged sentences

Balance at March 31, 2021 48,318,366 483 2,615,626 221,755 ( 1,216,866 ) 1,620,998

Share grants 28,000 — 1,176 — — 1,176

Share repurchases ( 12,009 ) — ( 352 ) — — ( 352 )

Net loss — — — ( 66,697 ) — ( 66,697 )

Distributions to common shareholders — — — — ( 26,575 ) ( 26,575 )

Balance at June 30, 2021 48,334,357 $ 483 $ 2,616,450 $ 155,058 $ ( 1,243,441 ) $ 1,528,550

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ ( 13,407 ) $ 37,860

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net loss $ ( 29,463 ) $ ( 28,837 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation 49,455 43,313

2 unchanged sentences

Amortization of deferred leasing costs 4,096 3,766

Gain on sale of real estate ( 2,149 ) ( 54,004 )

(Gain) loss on sale of real estate 9,488 ( 54,118 )

Loss on impairment of real estate 21,820 55,857

Loss on early extinguishment of debt 77 9,294

Straight line rental income ( 5,461 ) ( 9,204 )

9 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Real estate acquisitions — ( 535,902 )

Real estate improvements ( 89,144 ) ( 31,303 )

2 unchanged sentences

Proceeds from sale of properties, net 74,183 166,432

Net cash (used in) provided by investing activities ( 8,784 ) 113,896

Net cash used in investing activities ( 17,112 ) ( 400,467 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of mortgage notes payable ( 25,283 ) ( 71,939 )

Repayment of senior unsecured notes ( 300,000 ) ( 310,000 )

Proceeds from issuance of senior unsecured notes, net — 297,699

Borrowings on unsecured revolving credit facility 230,000 420,000

Repayments on unsecured revolving credit facility — ( 35,000 )

Payment of debt issuance costs — ( 941 )

Repurchase of common shares ( 16 ) ( 352 )

Distributions to common shareholders ( 53,268 ) ( 53,150 )

Net cash used in financing activities ( 26,939 ) ( 27,218 )

Increase in cash, cash equivalents and restricted cash 14,543 144,620

Net cash (used in) provided by financing activities ( 148,567 ) 246,317

Decrease in cash, cash equivalents and restricted cash ( 56,766 ) ( 36,774 )

Cash, cash equivalents and restricted cash at beginning of period 84,515 56,855

4 unchanged sentences

(dollars in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid $ 56,490 $ 53,722

Income taxes paid $ 283 $ 287

NON-CASH INVESTING ACTIVITIES:

Real estate improvements accrued, not paid $ 25,706 $ 18,472

Real estate acquisitions $ — $ ( 13,031 )

Capitalized interest $ 1,600 $ 150

1 unchanged sentence

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:

As of March 31,

As of June 30,

Cash and cash equivalents $ 26,006 $ 18,667

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Per Common Share Amounts

We calculate basic earnings per common share by dividing net income (loss) by the weighted average number of our common shares of beneficial interest, $.01 per share, or our common shares, outstanding during the period.

We calculate basic earnings per common share using the two class method.

We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method.

Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share.

The calculation of basic and diluted earnings per share is as follows:

Three Months Ended March 31,

Net income (loss) $ ( 13,407 ) $ 37,860

Income attributable to unvested participating securities — ( 123 )

Net income (loss) used in calculating earnings per share $ ( 13,407 ) $ 37,737

Denominators:

Weighted average common shares outstanding - basic 48,243 48,161

Effect of dilutive securities:

unvested share awards (1)

Weighted average common shares outstanding - diluted 48,243 48,196

Net income (loss) per common share - basic $ ( 0.28 ) $ 0.78

Net income (loss) per common share - diluted $ ( 0.28 ) $ 0.78

(1) For the three months ended March 31, 2022, 22 unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.

For the three and six months ended June 30, 2022 and 2021, there were no dilutive common shares.

Real Estate Properties

As of March 31, 2022, our wholly owned properties were comprised of 174 properties containing approximately 22,941,000 rentable square feet, with an undepreciated carrying value of $ 3,937,509 , including $ 61,543 classified as held for sale.

As of June 30, 2022, our wholly owned properties were comprised of 172 properties containing approximately 22,491,000 rentable square feet, with an undepreciated carrying value of $ 3,918,825 , including $ 95,456 classified as held for sale.

We also had noncontrolling ownership interests of 51 % and 50 % in two unconsolidated joint ventures that own three properties containing 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.

Some of our leases generally require us to pay all or some property operating expenses and to provide all or most property management

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

During the three months ended March 31, 2022, we entered into 21 leases for approximately 572,000 rentable square feet for a weighted (by rentable square feet) average lease term of 10.7 years and we made commitments for approximately $ 32,748 of leasing related costs.

As of March 31, 2022, we have estimated unspent leasing related obligations of $ 128,009 .

Some of our leases generally require us to pay all or some property operating expenses and to provide all or most property management services.

During the three months ended June 30, 2022, we entered into 18 leases for approximately 679,000 rentable square feet for a weighted (by rentable square feet) average lease term of 9.2 years and we made commitments for approximately $ 37,369 of leasing related costs.

During the six months ended June 30, 2022, we entered into 39 leases for approximately 1,251,000 rentable square feet for a weighted (by rentable square feet) average lease term of 9.9 years and we made commitments for approximately $ 70,117 of leasing related costs.

As of June 30, 2022, we have estimated unspent leasing related obligations of $ 130,726 .

We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our long lived assets.

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If we change our estimate of the remaining lives, we allocate the carrying value of the affected assets over their revised remaining lives.

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Disposition Activities

During the three months ended March 31, 2022, we sold four properties containing approximately 330,000 rentable square feet for an aggregate sales price of $ 29,470 , excluding closing costs.

During the six months ended June 30, 2022, we sold six properties containing approximately 778,000 rentable square feet for an aggregate sales price of $ 77,720 , excluding closing costs.

The sales of these properties, as presented in the table below, do not represent significant dispositions, individually or in the aggregate, nor do they represent a strategic shift in our business.

6 unchanged sentences

March 2022 1 Milwaukee, WI 29,000 3,775 ( 75 )

May 2022 1 Holtsville, NY 264,000 28,500 1,900

June 2022 1 Fairfax, VA 184,000 19,750 ( 13,537 )

6 778,000 $ 77,720 $ ( 9,488 )

(1) Gross sales price is the gross contract price, excluding closing costs.

As of March 31, 2022, we had three properties containing approximately 583,000 rentable square feet classified as held for sale in our condensed consolidated balance sheet.

During the three months ended March 31, 2022, we recorded a $ 2,184 loss on impairment of real estate to adjust the carrying value of one property that was classified as held for sale to its estimated fair value less costs to sell and a $ 14,863 loss on impairment of real estate to adjust the carrying value of one property that was held and used to its estimated fair value, based on a negotiated sales price with a third-party buyer.

As of April 27, 2022, we have entered into agreements to sell two properties containing approximately 470,000 rentable square feet, including one property that was classified as held for sale as of March 31, 2022, for an aggregate sales price of $ 38,300 , excluding closing costs.

These sales are subject to conditions;

As of June 30, 2022, we had 11 properties containing approximately 1,408,000 rentable square feet classified as held for sale in our condensed consolidated balance sheet, ten of which have been sold or are under agreement to sell for an aggregate sales price of $ 119,600 and are summarized below:

Date of Sale Agreement Number of Properties Location Rentable Square Feet Gross

Sales Price (1)

Loss on Impairment of Real Estate

March 2022 1 Houston, TX (2)

206,000 $ 9,800 $ 15,278

June 2022 2 Chesapeake, VA 214,000 24,000 649

June 2022 3 Birmingham, AL 448,000 16,050 3,709

July 2022 1 Kapolei, HI (3)

109,000 4,000 —

July 2022 2 Everett, WA 112,000 31,500 —

July 2022 1 Salem, OR 233,000 34,250 —

10 1,322,000 $ 119,600 $ 19,636

(1) Gross sales price is the gross contract price, excluding closing costs.

(2) The sale of this property was completed in July 2022.

(3) This property is a leasable land parcel.

During the six months ended June 30, 2022, we also recorded a $ 2,184 loss on impairment of real estate to adjust the carrying value of one additional property that was classified as held for sale to its estimated fair value less costs to sell.

The pending sales in the preceding table are subject to conditions;

accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the terms will not change.

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Unconsolidated Joint Ventures

1 unchanged sentence

We account for these investments under the equity method of accounting.

As of March 31, 2022 and December 31, 2021, our investments in unconsolidated joint ventures consisted of the following:

As of June 30, 2022 and December 31, 2021, our investments in unconsolidated joint ventures consisted of the following:

OPI Carrying Value of Investments at

Joint Venture OPI Ownership March 31,

Joint Venture OPI Ownership June 30,

2022 December 31, 2021 Number of Properties Location Rentable Square Feet

2 unchanged sentences

Total $ 35,310 $ 34,838 3 444,000

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

The following table provides a summary of the mortgage debt of our two unconsolidated joint ventures:

Joint Venture Interest Rate (1)

Maturity Date Principal Balance at March 31, 2022 and December 31, 2021 (2)

Maturity Date Principal Balance at June 30, 2022 and December 31, 2021 (2)

Prosperity Metro Plaza 4.09 % 12/1/2029 $ 50,000

4 unchanged sentences

None of the debt is recourse to us.

At March 31, 2022, the aggregate unamortized basis difference of our two unconsolidated joint ventures of $ 6,855 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.

At June 30, 2022, the aggregate unamortized basis difference of our two unconsolidated joint ventures of $ 6,734 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.

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 condensed consolidated statements of comprehensive income (loss).

4 unchanged sentences

we have determined the fixed non-cancelable lease term of these leases to be the full term of the lease because we believe the occurrence of early terminations to be a remote contingency based on both our historical experience and our assessments of the likelihood of lease cancellation on a separate lease basis.

We increased rental income to record revenue on a straight line basis by $ 2,686 and $ 5,357 for the three months ended March 31, 2022 and 2021, respectively.

Rents receivable, excluding properties classified as held for sale, include $ 85,388 and $ 82,978 of straight line rent receivables at March 31, 2022 and December 31, 2021, respectively.

We increased rental income to record revenue on a straight line basis by $ 2,775 and $ 3,847 for the three months ended June 30, 2022 and 2021, respectively, and $ 5,461 and $ 9,204 for the six months ended June 30, 2022 and 2021, respectively.

Rents receivable, excluding properties classified as held for sale, include $ 86,379 and $ 82,978 of straight line rent receivables at June 30, 2022 and December 31, 2021, respectively.

We do not include in our measurement of our lease receivables certain variable payments, including payments determined by changes in the index or market-based indices after the inception of the lease, certain tenant reimbursements and other income until the specific events that trigger the variable payments have occurred.

Such payments totaled $ 22,536 and $ 18,860 for the three months ended March 31, 2022 and 2021, respectively, of which tenant reimbursements totaled $ 21,475 and $ 17,803 , respectively.

Such payments totaled $ 22,101 and $ 44,637 for the three and six months ended June 30, 2022, respectively, of which tenant reimbursements totaled $ 21,009 and $ 42,484 , respectively.

For the three and six months ended June 30, 2021, such payments totaled $ 17,488 and $ 36,348 , respectively, of which tenant reimbursements totaled $ 16,639 and $ 34,442 , respectively.

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

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.

As of March 31, 2022, the U.S.

As of June 30, 2022, the U.S.

government, 11 state governments and four other government tenants combined were responsible for approximately 28.4 % of our annualized rental income.

As of March 31, 2021, the U.S.

government, 11 state governments and three other government tenants combined were responsible for approximately 36.3 % of our annualized rental income.

government is our largest tenant by annualized rental income and represented approximately 19.4 % and 25.9 % of our annualized rental income as of March 31, 2022 and 2021, respectively.

As of June 30, 2021, the U.S.

government, 11 state governments and four other government tenants combined were responsible for approximately 31.9 % of our annualized rental income.

government is our largest tenant by annualized rental income and represented approximately 18.5 % and 22.0 % of our annualized rental income as of June 30, 2022 and 2021, respectively.

Geographic Concentration

At March 31, 2022, our 174 wholly owned properties were located in 32 states and the District of Columbia.

Properties located in Virginia, California, the District of Columbia, Illinois and Georgia were responsible for approximately 12.1 %, 11.1 %, 10.0 %, 10.0 % and 8.4 % of our annualized rental income as of March 31, 2022, respectively.

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Our principal debt obligations at March 31, 2022 were:

At June 30, 2022, our 172 wholly owned properties were located in 32 states and the District of Columbia.

Properties located in Virginia, California, Illinois, the District of Columbia and Georgia were responsible for approximately 11.8 %, 11.3 %, 10.5 %, 10.2 % and 8.7 % of our annualized rental income as of June 30, 2022, respectively.

Our principal debt obligations at June 30, 2022 were:

(1) $ 230,000 of outstanding borrowings under our $ 750,000 unsecured revolving credit facility;

(2) $ 2,212,000 aggregate outstanding principal amount of senior unsecured notes;

4 unchanged sentences

We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayment is due until maturity.

We are required to pay interest at a rate of LIBOR plus a premium, which was 110 basis points per annum at March 31, 2022, on the amount outstanding under our revolving credit facility, if any.

We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at March 31, 2022.

We are required to pay interest at a rate of LIBOR plus a premium, which was 110 basis points per annum at June 30, 2022, on the amount outstanding under our revolving credit facility.

We also pay a facility fee on the total amount of lending commitments under our revolving credit facility, which was 25 basis points per annum at June 30, 2022.

Both the interest rate premium and facility fee are subject to adjustment based upon changes to our credit ratings.

As of March 31, 2022 and December 31, 2021, the annual interest rate payable on borrowings under our revolving credit facility was 1.6 % and 1.2 %, respectively.

We did not borrow any funds under our revolving credit facility during the three months ended March 31, 2022 or 2021.

As of March 31, 2022 and April 27, 2022, we had no amounts outstanding under our revolving credit facility and $ 750,000 available for borrowing.

As of June 30, 2022 and December 31, 2021, the annual interest rate payable on borrowings under our revolving credit facility was 2.4 % and 1.2 %, respectively.

The weighted average annual interest rate for borrowings under our revolving credit facility was 2.4 % for the three and six months ended June 30, 2022 and 1.2 % for the three and six months ended June 30, 2021.

As of June 30, 2022 and July 27, 2022, we had $ 230,000 and $ 200,000 , respectively, outstanding under our revolving credit facility, and $ 520,000 and $ 550,000 , respectively, available for borrowing.

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 The RMR Group LLC, or RMR, ceasing to act as our business and property manager.

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.

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 March 31, 2022.

At March 31, 2022, three of our properties with an aggregate net book value of $ 187,129 were encumbered by mortgage notes with an aggregate principal amount of $ 97,996 .

Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.

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 June 30, 2022.

Mortgage Note Prepayment

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

2 unchanged sentences

(dollars in thousands, except per share data)

Senior Unsecured Note Redemption

In June 2022, we redeemed, at par plus accrued interest, all $ 300,000 of our 4.00 % senior unsecured notes due July 2022.

As a result of this redemption, we recognized a loss on early extinguishment of debt of $ 77 during the six months ended June 30, 2022, from the write off of unamortized discounts and debt issuance costs.

At June 30, 2022, two of our properties with an aggregate net book value of $ 126,295 were encumbered by mortgage notes with an aggregate principal amount of $ 73,018 .

Our mortgage notes are non-recourse, subject to certain limited exceptions and do not contain any material financial covenants.

Fair Value of Assets and Liabilities

The following table presents certain of our assets measured at fair value at March 31, 2022, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

The following table presents certain of our assets measured at fair value at June 30, 2022, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

Fair Value at Reporting Date Using

1 unchanged sentence

Non-recurring Fair Value Measurements Assets

Real estate properties (1)

$ 9,800 $ — $ 9,800 $ —

Assets of properties held for sale (1)(2)

$ 52,350 $ — $ 49,850 $ 2,500

(1) We recorded an impairment charge of $ 14,863 to reduce the carrying value of one property in our condensed consolidated balance sheet to its estimated fair value based on a negotiated sales price with a third party buyer (Level 2 inputs as defined in the fair value hierarchy under GAAP).

(1) We recorded impairment charges totaling $ 19,636 to reduce the carrying value of six properties in our condensed consolidated balance sheet to their estimated fair values, less estimated costs to sell of $ 819 , based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP).

See Note 3 for more information.

2 unchanged sentences

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 March 31, 2022 and December 31, 2021, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

As of March 31, 2022 As of December 31, 2021

At June 30, 2022 and December 31, 2021, the fair values of our financial instruments approximated their carrying values in our condensed consolidated financial statements, due to their short term nature or floating interest rates, except as follows:

As of June 30, 2022 As of December 31, 2021

Financial Instrument Carrying Value (1)

17 unchanged sentences

Total $ 2,257,009 $ 2,037,027 $ 2,577,950 $ 2,661,462

(1) Includes unamortized debt premiums, discounts and issuance costs totaling $ 30,200 and $ 32,351 as of March 31, 2022 and December 31, 2021, respectively.

(2) In April 2022, we prepaid, at par plus accrued interest, a mortgage note secured by one property with an outstanding principal balance of $ 24,863 , an annual interest rate of 4.22 % and a maturity date in July 2022.

(1) Includes unamortized debt premiums, discounts and issuance costs totaling $ 28,009 and $ 32,351 as of June 30, 2022 and December 31, 2021, respectively.

(2) These senior notes were redeemed in June 2022.

(3) Balance as of December 31, 2021 includes a mortgage note secured by one property with an outstanding principal balance of $ 25,055 that was prepaid in April 2022.

We estimated the fair values of our senior unsecured notes (except for our senior unsecured notes due 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.

We estimated the fair value of our senior unsecured notes due 2050 based on the closing price on The Nasdaq Stock Market LLC, or Nasdaq, (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date.

We estimated the fair values of our mortgage notes payable using discounted cash flow analyses and currently prevailing market rates (Level 3 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date.

Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.

We estimated the fair value of our senior unsecured notes due 2050 based on the closing price on The

OFFICE PROPERTIES INCOME TRUST

1 unchanged sentence

(dollars in thousands, except per share data)

Nasdaq Stock Market LLC, or Nasdaq, (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the measurement date.

Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.

Shareholders’ Equity

On June 16, 2022, in accordance with our Trustee compensation arrangements, we awarded to each of our nine Trustees 3,500 of our common shares, valued at $ 18.84 per share, the closing price of our common shares on Nasdaq on that day.

Share Purchases

During the six months ended June 30, 2022, we purchased an aggregate of 790 of our common shares valued at a weighted average share price of $ 20.59 per share, from one of our Trustees and a former employee of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares.

Distributions

During the three months ended March 31, 2022, we declared and paid regular quarterly distributions to common shareholders as follows:

During the six months ended June 30, 2022, we declared and paid regular quarterly distributions to common shareholders as follows:

Declaration Date Record Date Paid Date Distributions Per Common Share Total Distributions

January 13, 2022 January 24, 2022 February 17, 2022 $ 0.55 $ 26,634

On April 14, 2022, we declared a regular quarterly distribution payable to common shareholders of record on April 25, 2022 in the amount of $ 0.55 per share, or approximately $ 26,600 .

We expect to pay this distribution on or about May 19, 2022.

April 14, 2022 April 25, 2022 May 19, 2022 0.55 26,634

$ 1.10 $ 53,268

On July 14, 2022, we declared a regular quarterly distribution payable to common shareholders of record on July 25, 2022 in the amount of $ 0.55 per share, or approximately $ 26,700 .

We expect to pay this distribution on or about August 18, 2022.

Business and Property Management Agreements with RMR

4 unchanged sentences

and (2) a property management agreement, which relates to our property level operations.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $ 4,710 and $ 9,474 for the three months ended March 31, 2022 and 2021, respectively.

Based on our common share total return, as defined in our business management agreement, as of March 31, 2022, no estimated incentive fees are included in the net business management fees we recognized for the three months ended March 31, 2022.

Pursuant to our business management agreement with RMR, we recognized net business management fees of $ 4,492 and $ 9,202 for the three and six months ended June 30, 2022, respectively, and $ 10,551 and $ 20,025 for the three and six months ended June 30, 2021, respectively.

Based on our common share total return, as defined in our business management agreement, as of June 30, 2022, no estimated incentive fees are included in the net business management fees we recognized for the three and six months ended June 30, 2022.

The actual amount of annual incentive fees for 2022, if any, will be based on our common share total return, as defined in our business management agreement, for the three year period ending December 31, 2022, and will be payable in January 2023.

The net business management fees we recognized for the three months ended March 31, 2021 included $ 5,200 of accrued estimated incentive fees based on our common share total return as of March 31, 2021.

The net business management fees we recognized for the three and six months ended June 30, 2021 included $ 5,911 and $ 11,111 , respectively, of accrued estimated incentive fees based on our common share total return as of June 30, 2021.

We did no t incur an incentive fee payable to RMR for the year ended December 31, 2021.

5 unchanged sentences

REIT Office Index.

Pursuant to our property management agreement with RMR, we recognized aggregate net property management and construction supervision fees of $ 6,128 and $ 4,612 for the three months ended March 31, 2022 and 2021, respectively.

Of these amounts, for the three months ended March 31, 2022 and 2021, $ 4,226 and $ 4,080 , respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 1,902 and $ 532 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Pursuant to our property management agreement with RMR, we recognized aggregate net property management and construction supervision fees of $ 6,394 and $ 12,522 for the three and six months ended June 30, 2022, respectively, and $ 4,914 and $ 9,526 for the three and six months ended June 30, 2021, respectively.

Of these amounts, for the three and six months ended June 30, 2022, $ 4,015 and $ 8,241 , respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 2,379 and $ 4,281 , respectively, were capitalized as building improvements in our condensed consolidated balance sheet.

For the three and six months ended June 30, 2021, $ 3,935 and $ 8,015 , respectively, were expensed to other operating expenses in our condensed consolidated statements of comprehensive income (loss) and $ 979 and $ 1,511 , respectively, were capitalized as building improvements in our condensed consolidated balance sheets.

The amounts capitalized are being depreciated over the estimated useful lives of the related capital assets.

2 unchanged sentences

Our property level operating expenses are generally incorporated into the rents charged to our tenants, including certain payroll and related costs incurred by RMR.

We reimbursed RMR $ 5,966 and $ 6,052 for these expenses and costs for the three months ended March 31, 2022 and 2021, respectively.

We reimbursed RMR $ 6,047 and $ 12,013 for these expenses and costs for the three and six months ended June 30, 2022, respectively, and $ 5,925 and $ 11,977 for the three and six months ended June 30, 2021, respectively.

We included these amounts in other operating expenses and general and administrative expenses, as applicable, in our condensed consolidated statements of comprehensive income (loss).

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

Related Person Transactions

14 unchanged sentences

We lease office space to RMR in certain of our properties for RMR’s property management offices.

Pursuant to our lease agreements with RMR, we recognized rental income from RMR for leased office space of $ 284 and $ 288 for the three months ended March 31, 2022 and 2021, respectively.

Pursuant to our lease agreements with RMR, we recognized rental income from RMR for leased office space of $ 285 and $ 569 for the three and six months ended June 30, 2022, respectively, and $ 287 and $ 575 for the three and six months ended June 30, 2021, respectively.

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.

1 unchanged sentence

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.

The term of the lease commences upon our delivery of the completed hotel, which we estimate to occur in the first quarter of 2023.

The term of the lease commences upon our delivery of the completed hotel, which we estimate to occur in the second quarter of 2023.

Sonesta has two options to extend the term for 10 years each.

5 unchanged sentences

Clark is also a director of Sonesta.

Another officer and employee of RMR is a director and the president and chief executive officer of Sonesta.

OFFICE PROPERTIES INCOME TRUST

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(dollars in thousands, except per share data)

For more information about these and other such relationships and certain other related person transactions, refer to our 2021 Annual Report.

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.

What changed 10-Q

Item 1. Financial Statements