OFFICE PROPERTIES INCOME TRUST 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following information should be read in conjunction with our Consolidated Financial Statements and accompanying notes included in Part IV, Item 15 of this Annual Report on Form 10-K. OVERVIEW (dollars in thousands, except per share and per square foot data) We are a REIT organized under Maryland law. As of December 31, 2024, our wholly owned properties were comprised of 128 properties and we had a noncontrolling ownership interest of 51% in an unconsolidated joint venture that owned two properties containing approximately 346,000 rentable square feet. As of December 31, 2024, our properties are located in 29 states and the District of Columbia and contain approximately 17,763,000 rentable square feet. As of December 31, 2024, our properties were leased to 226 different tenants, with a weighted average remaining lease term (based on annualized rental income) of approximately 7.4 years. The U.S. government is our largest tenant, representing approximately 17.0% of our annualized rental income as of December 31, 2024. Leases representing approximately 9.9% and 4.2% of our annual rental income are scheduled to expire in each of 2025 and 2026, respectively, and we may be unable to renew leases or find replacement tenants. Certain shifts in office space utilization, including increased remote work arrangements and tenants consolidating their real estate footprint, as well as declining rents and increasing costs to re-lease space when tenants can be identified, continue to impact the office sector and our portfolio. The demand for office space continues to face headwinds and declining rents and increasing costs to relet space when tenants can be identified continue to impact the market. The duration and ultimate impact of current trends on the demand for office space at our properties remains uncertain and subject to change. Accordingly, we do not yet know what the full extent of the impacts will be on our or our tenants’ businesses and operations nor the long-term outlook for leasing at our properties. Higher interest rates, inflationary pressures, government policies (including the potential reduction of U.S. federal office leases), geopolitical hostilities and tensions, and concerns that the U.S. economy may enter an economic recession have caused disruptions in the financial markets and these factors could adversely affect our and our tenants’ financial condition and the ability or willingness of our tenants to renew our leases or pay rent to us. We also have a significant amount of debt maturing in the next 18 months and we have limited debt and equity financing alternatives available to us to refinance our debt, and recent financing sources we have utilized to refinance debt have increased our cost of capital. The duration and ultimate impact of these factors on our properties and our business remains uncertain and subject to change; however, these conditions continue to have a significant negative impact on our results of operations, financial position and cash flows. As of February 13, 2025, our total available liquidity was comprised of $113,000 of cash and our near-term obligations include lease obligations of $81,865 and principal debt repayments of $26,000 in 2025 and $291,488 in 2026. Given the limited alternatives available to us to obtain debt or equity financing to refinance our maturing debt, the illiquid nature of our real estate assets and our limited ability to incur additional debt while maintaining compliance with the financial covenants in our existing debt agreements, we continue to work with our financial advisor, Moelis & Company LLC, to evaluate strategies to address our upcoming debt obligations, including through asset sales, debt exchanges, and/or equity sales. However, we are not able to conclude that it is probable that these strategies will allow us to satisfy our upcoming debt obligations and maturities. If we are unable to consummate transactions that allow us to refinance certain of our existing debt, our Board of Trustees may consider a reorganization in a bankruptcy court. As a result of the foregoing, we have concluded that there is substantial doubt about our ability to continue as a going concern. For more information about the risks relating to these dynamics and conditions and their impacts on us and our business, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward-Looking Statements” and Part I, Item 1A, “Risk Factors”. 47 Table of Contents Property Operations Unless otherwise noted, the data presented in this section includes properties classified as held for sale as of December 31, 2024 and excludes two properties owned by an unconsolidated joint venture in which we owned a 51% interest. For more information regarding our properties classified as held for sale and our unconsolidated joint venture, see Note 4 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. Occupancy data for our properties as of December 31, 2024 and 2023 was as follows (square feet in thousands): All Properties (1) Comparable Properties (2) December 31, December 31, 2024 2023 2024 2023 Total properties 128 152 118 118 Total rentable square feet (3) 17,763 20,541 16,455 16,444 Percent leased (4) 85.0 % 86.9 % 89.4 % 91.7 % (1) Based on properties we owned on December 31, 2024 and 2023, respectively. (2) Based on properties we owned continuously since January 1, 2023; excludes five properties classified as held for sale, five properties affected by significant redevelopment activities and two properties owned by an unconsolidated joint venture in which we owned a 51% interest as of December 31, 2024. (3) Subject to changes when space is remeasured or reconfigured for tenants. (4) Percent leased includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any, as of the measurement date. The average effective rental rate per square foot for our properties for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, Average effective rental rate per square foot (1) : 2024 2023 All properties (2) $ 30.31 $ 29.41 Comparable properties (3) $ 29.16 $ 29.35 (1) Average effective rental rate per square foot represents total rental income during the period specified divided by the average rentable square feet leased during the period specified. (2) Based on properties we owned on December 31, 2024 and 2023, respectively. (3) Based on properties we owned continuously since January 1, 2023; excludes five properties classified as held for sale, five properties affected by significant redevelopment activities and two properties owned by an unconsolidated joint venture in which we owned a 51% interest. During the year ended December 31, 2024, changes in rentable square feet leased and available for lease at our properties were as follows (square feet in thousands): Year Ended December 31, 2024 Leased Available for Lease Total Beginning of year 17,848 2,693 20,541 Changes resulting from: Disposition of properties (1,196) (1,593) (2,789) Lease expirations (3,602) 3,602 — Lease renewals (1) 1,900 (1,900) — New leases (1) 142 (142) — Remeasurements — 11 11 End of year 15,092 2,671 17,763 (1) Based on leases entered during the year ended December 31, 2024. 48 Table of Contents During the year ended December 31, 2024, we entered into new and renewal leases as summarized in the following table (square feet in thousands): Year Ended December 31, 2024 New Leases Renewals Total Rentable square feet leased 142 1,900 2,042 Weighted average rental rate change (by rentable square feet) 2.4 % 6.6 % 6.3 % Tenant leasing costs and concession commitments (1) $ 8,584 $ 87,351 $ 95,935 Tenant leasing costs and concession commitments per rentable square foot (1) $ 60.38 $ 45.98 $ 46.98 Weighted (by square feet) average lease term (years) 7.3 8.9 8.8 Total leasing costs and concession commitments per rentable square foot per year (1) $ 8.25 $ 5.17 $ 5.35 (1) Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent. During the year ended December 31, 2024, changes in effective rental rates per square foot achieved for new leases and lease renewals at our properties that commenced during the year ended December 31, 2024, when compared to prior effective rental rates per square foot in effect for the same space (and excluding space acquired vacant), were as follows (square feet in thousands): Year Ended December 31, 2024 Old Effective Rent Per Square Foot (1) New Effective Rent Per Square Foot (1) Rentable Square Feet New leases $ 27.28 $ 42.96 289 Lease renewals $ 22.96 $ 24.02 1,714 Total leasing activity $ 23.58 $ 26.76 2,003 (1) Effective rental rates include contractual base rents from our tenants pursuant to our lease agreements, plus straight line rent adjustments and estimated expense reimbursements to be paid to us, and exclude lease value amortization. During the years ended December 31, 2024 and 2023, amounts capitalized at our properties for lease related costs, building improvements and development, redevelopment and other activities were as follows: Year Ended December 31, 2024 2023 Lease related costs (1) $ 98,988 $ 75,467 Building improvements (2) 20,013 29,330 Recurring capital expenditures 119,001 104,797 Development, redevelopment and other activities (3) 14,450 137,603 Total capital expenditures $ 133,451 $ 242,400 (1) Lease related costs generally include capital expenditures used to improve tenants’ space or amounts paid directly to tenants to improve their space and leasing related costs, such as brokerage commissions and other tenant inducements. (2) Building improvements generally include expenditures to replace obsolete building components and expenditures that extend the useful life of existing assets. (3) Development, redevelopment and other activities generally include capital expenditure projects that reposition a property or result in new sources of revenue. Includes capitalized interest and other operating costs of $1,172 and $10,159 for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had estimated unspent leasing related obligations of $81,865, of which we expect to spend $46,232 over the next 12 months. 49 Table of Contents As of December 31, 2024, we had leases at our properties totaling approximately 2,067,000 and 522,000 rentable square feet that were scheduled to expire during 2025 and 2026, respectively. As of February 12, 2025, we expect tenants with leases totaling approxim ately 1,547,000 and 33,000 r entable square feet that are scheduled to expire during 2025 and 2026, respectively, excluding space that has been re-leased and space for which we are in advanced negotiations to re-lease, not to renew or to downsize their leased space upon expiration, and we cannot be sure as to whether other tenants will renew their leases upon expiration. We continue to proactively engage with our existing tenants and are focused on overall tenant retention. Prevailing market conditions and our tenants’ needs at the time we ne gotiate and enter leases or lease renewals will generally determine rental rates and demand for leased space at our properties, all of which are beyond our control. Whenever we renew or enter into new leases for our properties, we intend to seek rents which are equal to or higher than our historical rents for the same properties; however, our ability to maintain or increase the rents for our properties will depend in large part upon market conditions, which are beyond our control. We cannot be sure of the rental rates that will result from our ongoing negotiations regarding lease renewals or any new or renewed leases we may enter. Also, we may experience material declines in our rental income due to vacancies upon lease expirations, early terminations or lower rents upon lease renewal or reletting. Additionally, we may incur significant costs and make significant concessions to renew leases with current tenants or attract new tenants to our properties. As of December 31, 2024, our lease expirations by year were as follows (square feet in thousands): Year (1) Number of Leases Expiring Leased Square Feet Expiring (2) Percent of Total Cumulative Percent of Total Annualized Rental Income Expiring Percent of Total Cumulative Percent of Total 2025 57 2,067 13.7% 13.7% $ 42,482 9.9% 9.9% 2026 39 522 3.5% 17.2% 18,129 4.2% 14.1% 2027 30 1,789 11.9% 29.1% 46,233 10.8% 24.9% 2028 16 570 3.8% 32.9% 29,157 6.8% 31.7% 2029 33 1,065 7.1% 40.0% 32,706 7.6% 39.3% 2030 29 1,021 6.8% 46.8% 27,079 6.3% 45.6% 2031 20 1,446 9.6% 56.4% 34,786 8.1% 53.7% 2032 13 502 3.3% 59.7% 17,409 4.1% 57.8% 2033 12 1,066 7.1% 66.8% 20,576 4.8% 62.6% 2034 and thereafter 43 5,044 33.2% 100.0% 159,390 37.4% 100.0% Total 292 15,092 100.0% $ 427,947 100.0% Weighted average remaining lease term (in years) 6.9 7.4 (1) The year of lease expiration is pursuant to current contract terms. Some of our leases allow the tenants to vacate the leased premises before the stated expirations of their leases with little or no liability. As of December 31, 2024, tenants occupying approximately 2.1% of our rentable square feet and responsible for approximately 2.3% of our annualized rental income as of December 31, 2024 had exercisable rights to terminate their leases before the stated terms of their leases expire. Also, in 2025, 2026, 2027, 2028, 2029, 2030, 2031, 2032, 2034, 2035, 2036, 2037 and 2040, early termination rights become exercisable by other tenants who occupied an additional approximately 1.7%, 1.5%, 1.7%, 5.1%, 3.1%, 1.9%, 1.0%, 3.5%, 0.3%, 1.0%, 0.2%, 0.2% and 0.4% of our rentable square feet, respectively, and contributed an additional approximately 2.1%, 2.3%, 2.4%, 5.7%, 2.7%, 2.1%, 1.1%, 4.6%, 0.8%, 1.5%, 0.3%, 0.2% and 0.5% of our annualized rental income, respectively, as of December 31, 2024. In addition, as of December 31, 2024, pursuant to leases with five of our tenants, these tenants had rights to terminate their leases if their respective legislature or other funding authority does not appropriate rent amounts in their respective annual budgets. These five tenants occupied approximately 3.6% of our rentable square feet and contributed approximately 3.7% of our annualized rental income as of December 31, 2024. (2) Leased square feet is pursuant to leases existing as of December 31, 2024, and includes (i) space being fitted out for tenant occupancy pursuant to our lease agreements, if any, and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants, if any. Square feet measurements are subject to changes when space is remeasured or reconfigured for new tenants. We generally will seek to renew or extend the terms of leases at properties with tenants when they expire. However, market and economic factors, along with increases in remote work, changes in space utilization and government policies, spending and budget priorities, may cause our tenants not to renew or extend their leases when they expire, or to seek to renew their leases for less space than they currently occupy. If we are unable to extend or renew our leases, or we renew leases for reduced space, it may be time consuming and expensive to relet our properties. 50 Table of Contents As of December 31, 2024, we derived 25.0% of our annualized rental income from our properties located in the metropolitan Washington, D.C. market area, which includes Washington, D.C., Northern Virginia and suburban Maryland. Current economic conditions in this area or a possible recession could reduce demand from tenants at our properties, reduce rents that our tenants are willing to pay when our leases expire or increase lease concessions for new leases and renewals. Additionally, although the current administration has issued so called return to work mandates, there has been a decrease in demand for new leased office space by the U.S. government, including in the metropolitan Washington, D.C. market area, which could increase competition for government tenants and adversely affect our ability to retain government tenants or maintain or increase our rents when leases expire. Our manager, RMR, employs a tenant review process for us. RMR assesses tenants on an individual basis based on various applicable credit criteria. In general, depending on facts and circumstances, RMR evaluates the creditworthiness of a tenant based on information concerning the tenant that is provided by the tenant and, in some cases, information that is publicly available or obtained from third party sources. We consider investment grade tenants to include: (a) investment grade rated tenants; (b) tenants with investment grade rated parent entities that guarantee the tenant’s lease obligations; and/or (c) tenants with investment grade rated parent entities that do not guarantee the tenant’s lease obligations. As of December 31, 2024, tenants contributing 50.4% of annualized rental income were investment grade rated (or their payment obligations were guaranteed by an investment grade rated parent) and tenants contributing an additional 7.5% of annualized rental income were subsidiaries of an investment grade rated parent (although these parent entities were not liable for the payment of rents). As of December 31, 2024, tenants representing 1% or more of our total annualized rental income were as follows (square feet in thousands): Tenant Credit Rating Sq. Ft. % of Leased Sq. Ft. Annualized Rental Income % of Total Annualized Rental Income 1 U.S. Government Investment Grade 2,508 16.6 % $ 72,587 17.0 % 2 Alphabet Inc. (Google) Investment Grade 386 2.6 % 23,004 5.4 % 3 Shook, Hardy & Bacon L.L.P. Not Rated 596 3.9 % 19,604 4.6 % 4 IG Investments Holdings LLC Not Rated 339 2.2 % 18,303 4.3 % 5 Bank of America Corporation Investment Grade 577 3.8 % 17,290 4.0 % 6 Sonesta International Hotels Corporation (1) Not Rated 240 1.6 % 10,828 2.5 % 7 Northrop Grumman Corporation Investment Grade 337 2.2 % 10,781 2.5 % 8 State of California Investment Grade 365 2.4 % 10,570 2.5 % 9 State of Georgia Investment Grade 308 2.0 % 7,713 1.8 % 10 Sonoma Biotherapeutics, Inc. Not Rated 84 0.6 % 7,189 1.7 % 11 Automatic Data Processing, Inc. Investment Grade 289 1.9 % 6,346 1.5 % 12 Allstate Insurance Corporation Investment Grade 458 3.0 % 6,270 1.5 % 13 Compass Group plc Investment Grade 267 1.8 % 6,076 1.4 % 14 Church & Dwight Co., Inc. Investment Grade 250 1.7 % 6,048 1.4 % 15 Leidos Holdings Inc. Investment Grade 159 1.1 % 5,962 1.4 % 16 Primerica, Inc. Investment Grade 344 2.3 % 5,734 1.3 % 17 Science Applications International Corp. Non Investment Grade 159 1.1 % 5,254 1.2 % 18 AT&T Inc. Investment Grade 425 2.8 % 5,251 1.2 % 19 Berkshire Hathaway Inc. Investment Grade 134 0.9 % 4,674 1.1 % 20 Rocky Mountain University of Health Professions, Inc. Not Rated 170 1.1 % 4,606 1.1 % 21 CommScope Holding Company Inc. Non Investment Grade 96 0.6 % 4,546 1.1 % 22 Day Pitney LLP Not Rated 100 0.7 % 4,522 1.1 % 23 Hartford Financial Services Group Inc. Investment Grade 143 0.9 % 4,518 1.1 % 24 BAE Systems plc Investment Grade 165 1.1 % 4,442 1.0 % 25 Greeneden U.S. Holdings I, LLC Not Rated 275 1.8 % 4,380 1.0 % 9,174 60.7 % $ 276,498 64.7 % (1) Effective January 1, 2025, the existing lease with this tenant was terminated and replaced with a hotel management agreement. 51 Table of Contents Disposition Activities During the year ended December 31, 2024, we sold 24 properties containing approximately 2,789,000 rentable square feet for an aggregate sales price of $199,351, excluding closing costs. The net proceeds of these sales were used to repay debt and to increase our liquidity. In February 2025, we sold one additional property with approximately 100,000 rentable square feet for a sale price of $5,750, excluding closing costs. This property previously secured our March 2027 Notes. Accordingly, we expect to use the net proceeds of this sale to redeem a portion of our March 2027 Notes in accordance with the terms of the indenture governing the March 2027 Notes. W e continue to evaluate our portfolio and are currently in various stages of marketing certain of our properties for sale, and we may seek to sell additional properties in the future. As of February 12, 2025 , we have entered into agreements to sell six properties containing approximately 581,000 rentable square feet for an aggregate sales price of $54,763 , excluding closing costs. We cannot be sure we will sell any of the properties we are marketing for sale for prices in excess of their carrying values or otherwise. In addition, our pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the pricing will not change. For more information about our disposition activities, see “Business —Disposition Policies” in Part I, Item 1 of this Annual Report on Form 10-K and Note 4 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. 52 Table of Contents RESULTS OF OPERATIONS (amounts in thousands, except per share amounts) Year Ended December 31, 2024, Compared to Year Ended December 31, 2023 Comparable Properties (1) Results Year Ended December 31, Non-Comparable Properties Results Year Ended December 31, Consolidated Results Year Ended December 31, 2024 2023 $ Change % Change 2024 2023 2024 2023 $ Change % Change Rental income $ 430,752 $ 441,813 $ (11,061) (2.5 %) $ 71,227 $ 91,740 $ 501,979 $ 533,553 $ (31,574) (5.9 %) Operating expenses: Real estate taxes 50,752 51,533 (781) (1.5 %) 11,617 11,298 62,369 62,831 (462) (0.7 %) Utility expenses 23,246 22,273 973 4.4 % 4,221 4,505 27,467 26,778 689 2.6 % Other operating expenses 92,267 90,053 2,214 2.5 % 15,133 19,830 107,400 109,883 (2,483) (2.3 %) Total operating expenses 166,265 163,859 2,406 1.5 % 30,971 35,633 197,236 199,492 (2,256) (1.1 %) Net operating income (2) $ 264,487 $ 277,954 $ (13,467) (4.8 %) $ 40,256 $ 56,107 304,743 334,061 (29,318) (8.8 %) Other expenses: Depreciation and amortization 194,737 209,254 (14,517) (6.9 %) Loss on impairment of real estate 181,578 11,299 170,279 n/m Transaction related costs 1,144 31,816 (30,672) (96.4 %) General and administrative 21,128 22,731 (1,603) (7.1 %) Total other expenses 398,587 275,100 123,487 44.9 % (Loss) gain on sale of real estate (7,410) 3,780 (11,190) n/m Interest and other income 3,668 1,039 2,629 n/m Interest expense (163,745) (110,647) (53,098) 48.0 % Gain on early extinguishment of debt 126,185 — 126,185 n/m Loss before income tax expense and equity in net losses of investees (135,146) (46,867) (88,279) 188.4 % Income tax expense (203) (351) 148 (42.2 %) Equity in net losses of investees (758) (3,031) 2,273 (75.0 %) Loss on impairment of equity method investment — (19,183) 19,183 (100.0 %) Net loss $ (136,107) $ (69,432) $ (66,675) 96.0 % Weighted average common shares outstanding (basic and diluted) 51,806 48,389 3,417 7.1 % Per common share amounts (basic and diluted): Net loss $ (2.63) $ (1.44) $ (1.19) 82.6 % n/m - not meaningful (1) Comparable properties consists of 118 properties we owned on December 31, 2024 and which we owned continuously since January 1, 2023 and excludes five properties classified as held for sale, five properties affected by significant redevelopment activities and two properties owned by an unconsolidated joint venture in which we own a 51% interest. (2) Our definition of net operating income, or NOI, and our reconciliation of net loss to NOI are included below under the heading “Non-GAAP Financial Measures.” References to changes in the income and expense categories below relate to the comparison of consolidated results for the year ended December 31, 2024 compared to the year ended December 31, 2023. Rental income. Rental income decreased $35,564 related to our property disposition activities and $11,061 for comparable properties as a result of increased vacancies and lower rents from lease renewals at certain of our properties in 2024, partially offset by an increase in rental income of $15,051 due to the lease-up of certain properties affected by significant redevelopment activities. Rental income includes non-cash straight line rent adjustments totaling $31,102 in 2024 and $26,194 in 2023, and amortization of acquired real estate leases and assumed real estate lease obligations totaling $402 in 2024 and $252 in 2023. 53 Table of Contents Real estate taxes. Real estates taxes decreased $4,669 related to our property disposition activities and $781 for comparable properties primarily due to successful tax appeals at certain of our properties in 2024, partially offset by an increase of $4,988 due to the substantial completion of redevelopment activities at certain properties in 2024. Utility expenses. Utility expenses increased $973 for comparable properties primarily due to the lease-up of certain previously vacant properties and increased utility expenses at newly vacant properties where tenants previously paid utility expenses directly in 2024 and $563 due to the substantial completion of redevelopment activities at certain properties, partially offset by a decline of $847 related to our property disposition activities. Other operating expenses. Other operating expenses decreased $6,450 related to our property disposition activities, partially offset by increases of $2,214 for comparable properties due to higher repair and maintenance and snow removal costs in 2024 and $1,753 due to the substantial completion of redevelopment activities at certain properties. Depreciation and amortization. Depreciation and amortization declined $20,760 related to our property disposition activities and $5,483 for comparable properties due to certain leasing related assets becoming fully depreciated since January 1, 2023, partially offset by an increase of $11,726 due to the substantial completion of redevelopment activities at certain properties and depreciation and amortization of improvements made to certain of our properties since January 1, 2023. Loss on impairment of real estate . We recorded a $181,578 loss on impairment of real estate in the 2024 period to reduce the carrying value of 18 properties to t heir estimated fair value less costs to sell. We recorded an $11,299 loss on impairment of real estate in 2023 to reduce the carrying value of one property to its estimated fair value less costs to sell. Transaction related costs. Transaction related costs in 2024 consist of costs related to our evaluation of potential financing transactions. Transaction related costs in 2023 consist of costs incurred in connection with our terminated merger with Diversified Healthcare Trust and related financings. General and administrative. The decrease in general and administrative expenses is primarily the result of a decrease in base business management fees resulting from a decrease in our average total market capitalization and a decrease in share based compensation in 2024 compared to 2023. (Loss) gain on sale of real estate. We recorded a $7,410 net loss on sale of real estate resulting from the sale of 24 properties in 2024. We recorded a $3,780 net gain on sale of real estate resulting from the sale of eight properties in 2023. Interest and other income. The increase in interest and other income is primarily due to the effect of higher cash balances invested in 2024 compared to 2023. Inter est expens e. The increase in interest expense is due to higher weighted average interest rates in the 2024 period as a result of debt incurred in 2024. Gain on early extinguishment of debt . We recorded a net gain on early extinguishment of debt of $126,185 in 2024 resulting from the series of debt exchanges we completed during 2024. For more information about our financing activities, see “Liquidity and Capital Resources—Our Investment and Financing Liquidity and Resources” below and Note 9 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. Income tax expense. Income tax expense is primarily the result of operating income earned in jurisdictions where we are subject to state income taxes and can fluctuate based on the timing of our income, including as a result of gains or losses on the sale of real estate or repayment of debt. Equity in net losses of investees. Equity in net losses of investees represents our proportionate share of losses from our investments in our unconsolidated joint ventures. Loss on impairment of equity method investment . We recorded a $19,183 loss on impairment of equity method investment in 2023 to fully write off the carrying value of one of our unconsolidated joint ventures. For further information, see Note 4 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. Net loss. Net loss and net loss per basic and diluted common share increased in 2024 compared to 2023 primarily as a result of the changes noted above. 54 Table of Contents Non-GAAP Financial Measures We present certain “non-GAAP financial measures” within the meaning of the applicable SEC rules, including the calculations below of NOI, FFO and Normalized FFO. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be considered alternatives to net loss as indicators of our operating performance or as measures of our liquidity. These measures should be considered in conjunction with net loss as presented in our consolidated statements of comprehensive income (loss). We consider these non-GAAP measures to be appropriate supplemental measures of operating performance for a REIT, along with net loss. We believe these measures provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation and amortization expense, they may facilitate a comparison of our operating performance between periods and with other REITs and, in the case of NOI, reflecting only those income and expense items that are generated and incurred at the property level may help both investors and management to understand the operations of our properties. Net Operating Income The calculation of NOI excludes certain components of net loss in order to provide results that are more closely related to our property level results of operations. We calculate NOI as shown below. We define NOI as income from our rental of real estate less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions that we record as depreciation and amortization expense. We use NOI to evaluate individual and company-wide property level performance. Other real estate companies and REITs may calculate NOI differently than we do. The following table presents the reconciliation of net loss to NOI for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Net loss $ (136,107) $ (69,432) Equity in net losses of investees 758 3,031 Loss on impairment of equity method investment — 19,183 Income tax expense 203 351 Loss before income tax expense and equity in net losses of investees (135,146) (46,867) Gain on early extinguishment of debt (126,185) — Interest expense 163,745 110,647 Interest and other income (3,668) (1,039) Loss (gain) on sale of real estate 7,410 (3,780) General and administrative 21,128 22,731 Transaction related costs 1,144 31,816 Loss on impairment of real estate 181,578 11,299 Depreciation and amortization 194,737 209,254 NOI $ 304,743 $ 334,061 55 Table of Contents Funds From Operations and Normalized Funds From Operations We calculate FFO and Normalized FFO as shown below. FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, which is net loss, calculated in accordance with GAAP, plus real estate depreciation and amortization of consolidated properties and our proportionate share of the real estate depreciation and amortization of unconsolidated joint venture properties, but excluding impairment charges on real estate assets and any gain or loss on sale of real estate, as well as certain other adjustments currently not applicable to us. In calculating Normalized FFO, we adjust for the other items shown below. FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to our shareholders. Other factors include, but are not limited to, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations. Other real estate companies and REITs may calculate FFO and Normalized FFO differently than we do. The following table presents the reconciliation of net loss to FFO and Normalized FFO for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Net loss $ (136,107) $ (69,432) Add (less): Depreciation and amortization: Consolidated properties 194,737 209,254 Unconsolidated joint venture properties 2,495 3,395 Loss on impairment of real estate 181,578 11,299 Loss on impairment of equity method investment — 19,183 Loss (gain) on sale of real estate 7,410 (3,780) FFO 250,113 169,919 Add (less): Transaction related costs 1,144 31,816 Gain on early extinguishment of debt (126,185) — Lease termination fees for sold property (10,524) — Normalized FFO $ 114,548 $ 201,735 Weighted average common shares outstanding (basic and diluted) 51,806 48,389 Per common share amounts (basic and diluted): Net loss $ (2.63) $ (1.44) FFO $ 4.83 $ 3.51 Normalized FFO $ 2.21 $ 4.17 LIQUIDITY AND CAPITAL RESOURCES Our Operating Liquidity and Resources (dollar amounts in thousands, except per share amounts) Our principal sources of funds to meet operating and capital expenses, pay debt service obligations and make distributions to our shareholders are the operating cash flows we generate from our properties, net proceeds from property sales and borrowings under our revolving credit facility. Our future cash flows from operating activities will depend primarily upon: • our ability to collect rent from our tenants; • our ability to maintain or increase the occupancy of, and the rental rates at, our properties; • our ability to control operating and capital expenses at our properties; • our ability to successfully sell properties that we market for sale; and • our ability to develop, redevelop or reposition properties to produce cash flows in excess of our cost of capital and property operating and capital expenses. 56 Table of Contents The office industry has been adversely affected by shifts in office space utilization, including increased remote work arrangements and tenants consolidating their real estate footprint. Demand for office space continues to face headwinds and the duration and ultimate impact of current trends on our properties remains uncertain and subject to change. These conditions continue to have a significant negative impact on our results of operations, financial position and cash flows. We are actively pursuing several strategic initiatives to improve liquidity, including asset sales, debt refinancing and equity issuance opportunities. We expect to sell properties, or sell an interest in properties through joint venture arrangements, from time to time, in order to manage leverage levels or to recycle capital into properties that we believe have better long-term earnings potential or that we believe will help diversify our revenue based, improve the average age of our properties, lengthen the weighted average term of our leases, reduce our ongoing capital requirements and/or increase our distributions to shareholders. During the year ended December 31, 2024, we sold 24 properties for an aggregate sales price of $199,351, excludin g closing costs. We continue to evaluate our portfolio and are currently in various stages of marketing certain of our properties for sale. In February 2025, we sold one additional property with approximately 100,000 rentable square feet for a sale price of $5,750, excluding closing costs. This property previously secured our March 2027 Notes. Accordingly, we expect to use the net proceeds of this sale to redeem a portion of our March 2027 Notes in accordance with the terms of the indenture governing the March 2027 Notes. As of February 12, 2025 , we had six properties containing approximately 581,000 rentable square feet which are under agreement to sell for an aggregate sales price of $54,763 , excluding closing costs. We cannot be sure we will sell any of the properties we are marketing for sale for prices in excess of their carrying values or otherwise. In addition, our pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales or that these sales will not be delayed or the pricing will not change. The following is a summary of our sources and uses of cash flows for the periods presented, as reflected in our consolidated statements of cash flows: Year Ended December 31, 2024 2023 Cash, cash equivalents and restricted cash at beginning of period $ 26,714 $ 12,249 Net cash provided by (used in): Operating activities 67,167 141,726 Investing activities 66,610 (194,821) Financing activities 114,674 67,560 Cash, cash equivalents and restricted cash at end of period $ 275,165 $ 26,714 The decrease in cash provided by operating activities in 2024 compared to 2023 was primarily due to decreases in NOI as a result of property dispositions and reductions in occupied space at certain of our properties. The change from cash used in investing activities in 2023 to cash provided by investing activities in 2024 is primarily due to higher proceeds received from property sales and decreased capital expenditures in 2024 related to our redevelopment activities. The increase in cash flows provided by financing activities in 2024 was primarily due to higher net borrowings and decreased distributions to our shareholders, partially offset by the payment of debt issuance costs. Our Investment and Financing Liquidity and Resources (dollar amounts in thousands, except per share amounts) In order to meet cash needs to pay operating or capital expenses and make distributions, we maintain a revolving credit facility. In January 2024, we entered into an amended and restated credit agreement, or our credit agreement, governing a new $325,000 secured revolving credit facility and a $100,000 secured term loan. Our credit agreement replaced our prior revolving credit facility, which had a maturity date of January 31, 2024. Our obligations under our credit agreement are secured by a pledge by certain of our subsidiaries of all of their respective equity interests in certain of our direct and indirect property owning subsidiaries and first mortgage liens on 19 properties owned by the pledged subsidiaries with a gross book value of real estate assets of value of $1,030,889 as of December 31, 2024. We can borrow, repay, and reborrow funds available under our revolving credit facility until maturity and no principal repayments are due until maturity. The maturity date of our credit agreement is January 29, 2027, and, subject to the payment of an extension fee and meeting certain other requirements, we can extend the stated maturity date of our revolving credit facility by one year. Our credit agreement contains a number of covenants, including covenants that require us to maintain certain financial ratios, restrict our ability to incur additional debt in excess of calculated amounts and, subject to limited exceptions, restrict our ability to increase our distribution rate above the current level of $0.01 per common share per quarter and enter into share repurchases. Availability of borrowings under our 57 Table of Contents credit agreement is subject to ongoing minimum performance and market values of the 19 collateral properties, our satisfying certain financial covenants and other credit facility conditions. Interest payable on borrowings under our credit agreement is based on a rate of SOFR plus a margin of 350 basis points. We are also required to pay an unused facility fee on the amount of total lending commitments, which was 25 basis points per annum at December 31, 2024. As of December 31, 2024, the annual interest rate payable on borrowings under our credit agreement was 7.9%. As of December 31, 2024 and February 12, 2025, we had fully drawn our $325,000 revolving credit facility and $100,000 was outstanding under our term loan. Senior Secured Notes Issuance and Senior Unsecured Notes Redemption In February 2024, we issued $300,000 in aggregate principal amount of the March 2029 Notes. The aggregate net proceeds from the offering of the March 2029 Notes were $270,712, after initial purchaser discounts and other offering expenses. The March 2029 Notes are fully and unconditionally guaranteed on a joint, several and senior secured basis by certain of our subsidiaries and secured by a pledge of all of the respective equity interests of the subsidiary guarantors and first mortgage liens on 17 properties with a gross book value of real estate assets of $621,506 as of December 31, 2024. The March 2029 Notes require semi-annual payments of interest only and are prepayable, at par plus accrued interest, after March 31, 2028. In March 2024, we redeemed, at par plus accrued interest, all $350,000 of our 4.25% senior unsecured notes due 2024 using the proceeds from the March 2029 Notes and borrowings under our revolving credit facility. Senior Notes Exchanges During June and October 2024, through two exchange transactions, we exchanged $609,999 in aggregate principal amount of the September 2029 Notes and 1,406,952 of our common shares for an aggregate $895,373 of certain of our outstanding senior unsecured notes. The September 2029 Notes are fully and unconditionally guaranteed on a joint, several and senior secured basis by certain of our subsidiaries and are secured by first mortgage liens on 19 properties with a gross book value of real estate assets of $721,375 as of December 31, 2024 and second mortgage liens on the 19 properties securing our credit agreement. The September 2029 Notes require semi-annual payments of interest only and are prepayable, at par plus accrued interest, after June 3, 2028. In December 2024, through an exchange transaction, we exchanged $444,992 of the March 2027 Notes, 11,532,794 of our common shares and cash premiums of $25,000 for $281,514 of the 2025 Notes and $58,486 in cash from certain existing noteholders. This transaction is referred to herein as the 2027 Senior Note Exchange. The March 2027 Notes require quarterly payments of interest and quarterly principal amortization payments of $6,500, and on March 1, 2026, require a mandatory principal payment of $125,000, which is subject to reduction for certain prior redemptions of the March 2027 Notes. The March 2027 Notes are fully and unconditionally guaranteed on a joint, several and senior secured basis by certain of our subsidiaries and are secured by first mortgage liens on 37 properties with a gross book value of real estate assets of $1,279,487 as of December 31, 2024 and second mortgage liens on the 19 properties securing our September 2029 Notes and they are fully and unconditionally guaranteed, on a joint, secured and senior unsecured basis by certain of our other subsidiaries. We redeemed, at par plus accrued interest, the remaining $171,586 of the 2025 Notes with the cash proceeds from the 2027 Senior Note Exchange and cash on hand, in January 2025. During the year ended December 31, 2024, in a series of exchange transactions, we exchanged $15,900 in aggregate principal amount of the 2025 Notes for an aggregate amount of 7,565,722 of our common shares. On February 7, 2025, we commenced a series of exchange offers, or the Exchange Offers, pursuant to which we are offering to issue up to $175,000 in aggregate principal amount of new 8.000% senior guaranteed unsecured notes due 2030, or the New 2030 Notes, and related guarantees in exchange for our outstanding (i) 2.650% senior unsecured notes due 2026, (ii) 2.400% senior unsecured notes due 2027 and (iii) 3.450% senior unsecured notes due 2031. The Exchange Offers are being made subject to the terms and conditions set forth in an offering memorandum dated as of February 7, 2025. For more information about our financing activities, see Note 9 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. 58 Table of Contents As of December 31, 2024, our debt maturities (other than our revolving credit facility), consisting of senior notes, a term loan and mortgage notes, were as follows: Year Debt Maturities 2025 (1) $ 197,586 2026 291,488 2027 348,776 2028 123,487 2029 910,278 2030 and thereafter 329,909 Total $ 2,201,524 (1) Includes $171,586 of the 2025 Notes, which were redeemed in full in January 2025. None of our unsecured debt obligations require sinking fund payments prior to their maturity dates. Our mortgage notes currently require monthly payments of interest only; however, certain of our mortgage notes will require payments of principal and interest after a specified date through maturity. In addition to our debt obligations, as of December 31, 2024, we had estimated unspent leasing related obligations of $81,865, of which we expect to spend $46,232 over the next 12 months. As of February 13, 2025, our total available liquidity was comprised of $113,000 of cash and our near-term obligations include outstanding lease obligations of $81,865 and principal debt repayments of $26,000 in 2025 and $291,488 in 2026. We are currently seeking to refinance the 2026 Notes through the debt exchange described above, and we expect to sell certain properties to raise cash and may pursue other strategies to address our liquidity needs, including equity issuances. We cannot be sure that we will be able to obtain any future financing, and any such financing we may obtain may not be sufficient to repay our debt. If we are unable to obtain sufficient funds, our Board of Trustees may consider a reorganization in a bankruptcy court. As a result of the foregoing, we have concluded that there is substantial doubt about our ability to continue as a going concern. Our ability to obtain, and the costs of, our future debt financings will depend primarily on credit market conditions and our creditworthiness. We have no control over market conditions. Potential investors and lenders will likely evaluate our ability to fund required debt service, repay debts when they become due and pay distributions to shareholders by reviewing our business practices and plans to balance our use of debt and equity capital so that our financial profile and leverage ratios afford us flexibility to withstand any reasonably anticipated adverse changes. Similarly, our ability to raise equity capital in the future will depend primarily upon equity capital market conditions and our ability to conduct our business to maintain and grow our operating cash flows. It is uncertain what the ultimate impacts of inflationary pressures, sustained high interest rates, deteriorating office fundamentals and market sentiment toward the office sector or any economic recession will be. A protracted and extensive economic recession, further deterioration of office fundamentals or continued or intensified disruptions in capital markets could limit our access to financing, would likely increase our cost of capital and impact our ability to satisfy covenants and conditions under our credit agreement or senior notes. During the year ended December 31, 2024, we paid quarterly distributions to our shareholders totaling $2,033 using cash on hand. On January 16, 2025, we declared a quarterly cash distribution payable to shareholders of record on January 27, 2025 in the amount of $0.01 per share, or approximately $698. We expect to pay this distribution on or about February 20, 2025 using cash on hand. We determine our distribution payout ratio with consideration for restrictions under our credit agreement, our expected capital expenditures, cash flows from operations and payment of debt obligations. For more information regarding the distributions we paid during 2024, see Note 11 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. We owned a 51% interest in an unconsolidated joint venture which owned two properties at December 31, 2024. As of December 31, 2024, the properties owned by this joint venture were encumbered by $50,000 principal amount of mortgage indebtedness, none of which was recourse to us. As of December 31, 2024, we did not control the activities that are most significant to this joint venture and, as a result, we accounted for our investment in this joint venture under the equity method of accounting. For more information on the financial condition and results of operations of this joint venture, see Note 4 to the Notes to Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K. Other than this joint venture, as of December 31, 2024, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 59 Table of Contents Debt Covenants (dollars in thousands) Our principal debt obligations as of December 31, 2024 consisted of $325,000 of borrowings outstanding under our revolving credit facility, $100,000 outstanding principal amount under our secured term loan, an outstanding principal balance of $2,024,204 of senior notes and mortgage notes with an outstanding principal balance of $177,320. Also, the two properties owned by the joint venture in which we owned a 51% interest secured an additional mortgage note. Our senior notes are governed by indentures and their supplements. Our credit agreement and our senior notes indentures and their supplements provide for acceleration of payment of all amounts outstanding 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 ceasing to act as our business and property manager. Our credit agreement and our senior notes indentures and their supplements also contain a number of covenants, including those that restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, require us to comply with certain financial covenants and, in the case of our credit agreement, restrict our ability to increase our distribution rate above the current level of $0.01 per common share per quarter. As of December 31, 2024, we believe we were in compliance with the terms and conditions of our respective covenants under our credit agreement and our senior notes indentures and their supplements. Our mortgage notes are non-recourse, subject to certain limited exceptions, and do not contain any material financial covenants. As of December 31, 2024, adjusted total assets for covenant purposes as defined in our senior notes indentures were $4,925,410. Assets serving as collateral under our credit agreement, our senior secured notes or mortgage notes represented $4,083,629 of adjusted total assets, as defined in our senior notes indentures. Our unencumbered assets represented $841,781 of adjusted total assets and we had $497,627 of unsecured debt giving pro forma effect for the redemption of the 2025 Notes in January 2025 as if such redemption had occurred as of December 31, 2024. The following table presents the calculation of adjusted total assets to total assets in accordance with GAAP as of December 31, 2024: Total assets (1) $ 3,650,700 Plus: accumulated depreciation 628,680 Plus: adjustments to reflect original cost of real estate assets 995,642 Less: accounts receivable and intangibles (349,612) Adjusted total assets (1) $ 4,925,410 (1) Calculation of public debt covenants is pro forma for the full redemption of the 2025 Notes. Neither our credit agreement nor our senior notes indentures and their supplements contain provisions for acceleration which could be triggered by our credit ratings. Our credit agreement and our senior notes indentures and their supplements contain cross default provisions to any other debts of more than $25,000 (or more than $50,000 in certain circumstances). Related Person Transactions We have relationships and historical and continuing transactions with RMR, RMR Inc. and others related to them. For more information about these and other such relationships and related person transactions, see Notes 6 and 7 to the Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K, which are incorporated herein by reference, and our other filings with the SEC, including our definitive Proxy Statement for our 2025 Annual Meeting of Shareholders, or our definitive Proxy Statement, to be filed with the SEC within 120 days after the fiscal year ended December 31, 2024. For more information about the risks that may arise as a result of these and other related person transactions and relationships, see elsewhere in this Annual Report on Form 10-K, including “Warning Concerning Forward-Looking Statements,” Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors.” We may engage in additional transactions with related persons, including businesses to which RMR or its subsidiaries provide management services. Critical Accounting Estimates Our critical accounting policies are those that will have the most impact on the reporting of our financial condition and results of operations and those requiring significant judgments and estimates. We believe that our judgments and estimates have been and will be consistently applied and produce financial information that fairly presents our results of operations. Our most critical accounting policies involve our investments in real property. These policies affect our: 60 Table of Contents • allocation of purchase prices between various asset categories, including allocations to above and below market leases and the related impact on the recognition of rental income and depreciation and amortization expenses; and • assessment of the carrying values and impairments of long lived assets. We allocate the acquisition cost of each property investment to various property components such as land, buildings and improvements and intangibles based on their fair values, and each component generally has a different useful life. For acquired real estate, we record land, buildings and improvements, and, if applicable, the value of in place leases, the fair market value of above or below market leases and tenant relationships at fair value. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of assets acquired to goodwill. We base purchase price allocations and the determination of useful lives on our estimates and, under some circumstances, studies from independent real estate appraisers to provide market information and evaluations, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others, that are relevant to our purchase price allocations and determinations of useful lives; however, our management is ultimately responsible for the purchase price allocations and determination of useful lives. We compute depreciation expense using the straight line method over estimated useful lives of up to 40 years for buildings and improvements, and up to seven years for personal property. We do not depreciate the allocated cost of land. We amortize capitalized above market lease values as a reduction to rental income over the terms of the respective leases. We amortize capitalized below market lease values as an increase to rental income over the terms of the respective leases. We amortize the value of acquired in place leases exclusive of the value of above market and below market acquired leases to expense over the periods of the respective leases. If a lease is terminated prior to its stated expiration, all unamortized amounts relating to that lease are written off. Purchase price allocations require us to make certain assumptions and estimates. Incorrect assumptions and estimates may result in inaccurate depreciation and amortization charges over future periods. We periodically evaluate our properties for impairment. Impairment indicators may include declining tenant occupancy, our concerns about a tenant’s financial condition (which may be endangered by a rent default or other information which comes to our attention) or our decision to dispose of an asset before the end of its estimated useful life and legislative, as well as market or industry changes that could permanently reduce the value of a property. If indicators of impairment are present, we evaluate the carrying value of the related property by comparing it to the expected future undiscounted cash flows to be generated from that property. If the sum of these expected future cash flows is less than the carrying value, we reduce the net carrying value of the property to its fair value. This analysis requires us to judge whether indicators of impairment exist and to estimate likely future cash flows. The future net undiscounted cash flows are subjective and are based in part on assumptions regarding hold periods, market rents and terminal capitalization rates. If we misjudge or estimate incorrectly or if future tenant operations, market or industry factors differ from our expectations we may record an impairment charge that is inappropriate or fail to record a charge when we should have done so, or the amount of any such charges may be inaccurate. These accounting policies involve significant judgments made based upon our experience and the experience of our management and our Board of Trustees, including judgments about current valuations, ultimate realizable value, estimated useful lives, salvage or residual value, the ability and willingness of our tenants to perform their obligations to us, current and future economic conditions and competitive factors in the markets in which our properties are located. Competition, economic conditions, changing government priorities and other factors may cause occupancy declines in the future. In the future, we may need to revise our carrying value assessments to incorporate information which is not now known, and such revisions could increase or decrease our depreciation expense related to properties we own or decrease the carrying values of our assets. Impact of Climate Change Concerns about climate change have resulted in various treaties, laws and regulations that are intended to limit carbon emissions and address other environmental concerns. These and other laws may cause energy or other costs at our properties to increase. We do not expect the direct impact of these increases to be material to our results of operations, because the increased costs either would be the responsibility of our tenants directly or in the longer term, passed through and paid by tenants of our properties. Although we do not believe it is likely in the foreseeable future, laws enacted to mitigate climate change may make some of our properties obsolete or cause us to make material investments in our properties, which could materially and adversely affect our financial condition or the financial condition of our tenants and their ability to pay rent to us. In an effort to reduce the effects of any increased energy costs in the future, we continuously study ways to improve the energy efficiency at all of our properties. Our manager, RMR, is a member of the ENERGY STAR program, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy that is focused on promoting energy efficiency at commercial properties through its “ENERGY STAR” program, and a member of the U.S. Green Building Council, a nonprofit organization focused on promoting energy efficiency at commercial properties through its LEED® green building 61 Table of Contents program. RMR’s annual Sustainability Report summarizes the environmental, social and governance initiatives employed by RMR and its clients, including us. RMR’s Sustainability Report may be accessed on RMR Inc.’s website at www.rmrgroup.com/corporate-sustainability/default.aspx. The information on or accessible through RMR Inc.’s website is not incorporated by reference into this Annual Report on Form 10-K. For more information, see “Business—Corporate Sustainability” in Part I, Item 1 of this Annual Report on Form 10-K. Some observers believe severe weather in different parts of the world over the last few years is evidence of global climate change. Severe weather may have an adverse effect on certain properties we own. Rising sea levels could cause flooding at some of our properties, which may have an adverse effect on individual properties we own. We mitigate these risks by procuring, or requiring our tenants to procure, insurance coverage we believe adequate to protect us from material damages and losses resulting from the consequences of losses caused by climate change. However, we cannot be sure that our mitigation efforts will be sufficient or that future storms, rising sea levels or other changes that may occur due to future climate change could not have a material adverse effect on our financial results. Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to make disclosures under this Item. Item 8. Financial Statements and Supplementary Data The information required by this item is included in Item 15 of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.